Hogan v. Manselly

12 F. Cas. 313, 1842 U.S. App. LEXIS 533

Opinion

BETTS, District Judge.

The case must be taken to present these leading particulars: That the fund in court sought to be decreed the complainants was subject to the hypothe-cation of the bottomry bond. It is so expressly decreed by the district court, and affirmed on appeal by the circuit court, and this action cannot raise the inquiry whether those decisions are correct or not That the bottomry debt was issued to the defendant, and that he has realized the amount of his loss from the policy, abetting the sum in court or entirely, leaving this fund to be disposed of according to the legal rights of parties.It is clear upon the statement of facts that the freight fund was the primary one for satisfaction of the bottomry debt; and that leaves only, as an open question, the consideration whether, if the insurers satisfied the policy in full, this sum belongs to them, or to the plaintiffs, under rights posterior, in law and equity, to the bottomry claim. We conceive it undeniably established in the law of insurance that the insurers are entitled to be placed in the equity of the insured in respect to all means primarily applicable to his indemnity or security. They stand only to cover his actual losses, and, instead of compelling him in the first instance to exhaust his remedies from other sources, the law permits him to come directly upon the insurers for ' indemnity, and then invests them with all his legal and equitable means of compensation.’ The cases are collected and stated in 2 Phil. Ins. (2d Ed.), and both the American and English ’ decisions assume it as a fundamental principle of the contract of insurance that the insurer has a right to be subrogated to all the powers and privileges of the insured in respect to the subject insured, on satisfaction of his loss. It was urged on argument that in marine insurances this privilege of substitution takes place only in case of abandonment or salvage. But the cases point out no such distinction, nor is the principle discerned that should sanction its adoption. Interests accruing upon abandonment or salvage are those of most frequent occurrence as means of reimbursing insurers in cases of maritime loss, but they are only incidents elucidating the character and operation of the contract, and are not the rule or principle giving it vitality. Thus the ship or goods are abandoned to the insurer, on his acquiring right to salvage proceeds, not as the consideration enforcing his contract to indemnify, but as the consequence of having in the indemnity paid their value to the insured, and thus became, if not by common-law purchase, by equitable novation, empowered to stand as owner in respect to them.