Storer, J.
A careful examination of the pleadings, and the evidence contained in six hundred pages of the bill of exceptions, presents these questions for our decision :
First. Was the loss of the vessel caused by the peril against which she was insured ?
Second. Was the loss a total one absolutely or constructively total only ?
[209]*209Third. Was • the vessel rebuilt, resulting in a new and different structure, or was she simply repaired, subjecting her to the deduction of one-third new for old, in the adjustment of the loss ?.
Fourth. ”i7as the policy forfeited by a disobedience of any laws of the United States, forbidding certain species of merchandise from being carried on the vessel without a license ?
There is no denial in the answer that the loss was the consequence of fire, although it is alleged the flames which consumed the vessel were produced by the contact of the America with some packages of aqua fortis on ■board the United States, which the plaintiffs were prohibited from transporting on their vessel by the act of Congress of August 30,1832. 10 Statutes at Large, sec. 46, p. 63.
It is immaterial how the fire was produced, whether by mere accident or the negligence even of the officers of the vessel, if there has been no fraudulent or barratrous conduct on their part to which the loss may fairly be attributed. This rule we regard as authoritatively settled, and another rule also, that in all cases of loss within the perils insured against, the proximate, not the remote cause of the injury, is to be regarded in determining the liability of the underwriter. 2 Arnauld on Ins., 3d ed. 670; Busk v. Royal Fxchange Co., 2 B. & Ald. 73; Walker v. Maitland, 5 Ib. 171. These cases have established the law in England, and have been approved by numerous subsequent decisions.
This also is the law as we find it recognized by our own courts. Columbia Ins. Co. v. Lawrence, 10 Pet. 517; Waters v. Merchants’ Ins. Co., 11 Pet. 215; Perrin v. Protection Ins. Co., 11 Ohio, 147. See also 2 Phillips on Ins. 1032.
If we apply these principles to the evidence we find in the record, we are satisfied the' loss of the vessel was caused by the direct peril against which the plaintiffs were insured, and no fraud can be imputed to the plaintiffs in producing it.
[210]*210The jury might well have found as they did, and we think upon this point their verdict ought not to be disturbed.
Second. Was the loss a total one, or merely constructively total, which requires, on the part of the insurers, a formal abandonment to the underwriters?
When the vessel founders at sea, or is so broken up by being wrecked that it is obvious the subject insured ceases to be of any value as a vessel, although some of the planks may remain, we may regard the liability of the insurers is fixed, though there be no abandonment. The circumstances of each case must therefore determine the extent of the loss. This doctrine is very clearly stated and explained by Lord Abinger, in Rowe v. Salvador, 3 Bingham N. C. 266, in the Exchequer Chamber, in a most exhaustive examination of the question. See also the case of Cambridge v. Anderton, first reported in Ryan & Moody, 61, at Nisi Prius, afterward in the King’s Bench, 3 Bingham N. C. 203, and 2 B. & C. 691; see also Gardner v. Salvador, 1 Moody & R. 116.
An abandonment is but the formal cession of what may become salvage, when the vessel that has suffered from the peril against which the owners have been insured is yet susceptible of repair, and only confers the same right the insurers would have had by subrogation on payment of the sum insured. Meanwhile the master of the vessel, up to the time of the abandonment, is the agent both of the insured and the insurer; if the offer to abandon is accepted or refused, he is the agent of the underwriter only.
We understand a constructive total loss, as the law now exists, both in England and the United States, takes place, to use the language of 2 Arnauld, 850, “ where the subject insured is not destroyed,but its destruction is made highly probable, and its recovery, though not utterly hopeless, is either exceedingly doubtful or too expensive to warrant the attempt; or where the vessel could not be made navigable, except at a cost greater than her repaired value.” [211]*2112 Arnauld, 955. The application of the rule thus stated is extended in the United States to those cases where the cost of repairs will exceed half the value of the vessel. Peele v. Merchant Ins. Co., Cr. 3, Mason, 27; Bradlie v. Maryland Ins. Co., 12 Peters, 278.
It seems to be admitted by all the writers upon marine insurance, that in every case of a constructive total loss, there must be, as a general rule, evidence of an abandonment by the owners to the insurers.
But if the claim of the defendants should have been sustained as to the extent of the loss, it is settled in every such case that circumstances may exist which will excuse what might otherwise have been the duty of the insured to prove. Now,- in the case before us, while there is a denial in the answer of any loss under the policy, there is no allegation of the constructive loss, or of a neglect to abandon, or even of any loss total or partial; but we have no doubt under the averment of a total loss it may be proved to have been a constructive total loss only, and we notice this fact merely to warrant the belief that the insurers did not intend to admit their liability in any event.
The contract of insurance is said to require the utmost good faith of all the parties interested. “Uberrimafides” is the maxim which the writers on this branch of the law have applied to the insured as well as to the underwriter. The acts of either may estop them, if inconsistent with fair dealing, and this is the same rule we always recognize where one party to a contract has so demeaned himself toward the other that he has been led to believe certain facts have thereby existed, and has acted on this presumption, there may well be an estoppel “ in pais.”
It is on this principle the law will never require a vain thing to be done, if it can be ¡fairly inferred the performance of an agreement has been waived.
Hence it is preliminary proof of loss is always required to be given in every suit upon a policy of insurance unless it is waived. This maybe by an absolute refusal to pay the [212]*212loss, or the silence of the insurers- and other acts from which it may be implied the proof would not be demanded. 2 Phillips, §§ 1812,1813, where the cases are collected. And we see no reason why we may not extend the principle to the waiver of an abandonment; the one is equally the right of the underwriters to require as the other. Mr. Arnauld, vol. 2, p. 888, admits the rule where he says: “And so e converso, in a case where the insured would be entitled otherwise to notice of abandonment, the underwriters by their own conduct may forfeit their right to insist upon it.” See also the opinions of Buller and Ashurst, JJ., in Da Costa v. Newham, 2 T. R. 407.
Free access — add to your briefcase to read the full text and ask questions with AI
Storer, J.
A careful examination of the pleadings, and the evidence contained in six hundred pages of the bill of exceptions, presents these questions for our decision :
First. Was the loss of the vessel caused by the peril against which she was insured ?
Second. Was the loss a total one absolutely or constructively total only ?
[209]*209Third. Was • the vessel rebuilt, resulting in a new and different structure, or was she simply repaired, subjecting her to the deduction of one-third new for old, in the adjustment of the loss ?.
Fourth. ”i7as the policy forfeited by a disobedience of any laws of the United States, forbidding certain species of merchandise from being carried on the vessel without a license ?
There is no denial in the answer that the loss was the consequence of fire, although it is alleged the flames which consumed the vessel were produced by the contact of the America with some packages of aqua fortis on ■board the United States, which the plaintiffs were prohibited from transporting on their vessel by the act of Congress of August 30,1832. 10 Statutes at Large, sec. 46, p. 63.
It is immaterial how the fire was produced, whether by mere accident or the negligence even of the officers of the vessel, if there has been no fraudulent or barratrous conduct on their part to which the loss may fairly be attributed. This rule we regard as authoritatively settled, and another rule also, that in all cases of loss within the perils insured against, the proximate, not the remote cause of the injury, is to be regarded in determining the liability of the underwriter. 2 Arnauld on Ins., 3d ed. 670; Busk v. Royal Fxchange Co., 2 B. & Ald. 73; Walker v. Maitland, 5 Ib. 171. These cases have established the law in England, and have been approved by numerous subsequent decisions.
This also is the law as we find it recognized by our own courts. Columbia Ins. Co. v. Lawrence, 10 Pet. 517; Waters v. Merchants’ Ins. Co., 11 Pet. 215; Perrin v. Protection Ins. Co., 11 Ohio, 147. See also 2 Phillips on Ins. 1032.
If we apply these principles to the evidence we find in the record, we are satisfied the' loss of the vessel was caused by the direct peril against which the plaintiffs were insured, and no fraud can be imputed to the plaintiffs in producing it.
[210]*210The jury might well have found as they did, and we think upon this point their verdict ought not to be disturbed.
Second. Was the loss a total one, or merely constructively total, which requires, on the part of the insurers, a formal abandonment to the underwriters?
When the vessel founders at sea, or is so broken up by being wrecked that it is obvious the subject insured ceases to be of any value as a vessel, although some of the planks may remain, we may regard the liability of the insurers is fixed, though there be no abandonment. The circumstances of each case must therefore determine the extent of the loss. This doctrine is very clearly stated and explained by Lord Abinger, in Rowe v. Salvador, 3 Bingham N. C. 266, in the Exchequer Chamber, in a most exhaustive examination of the question. See also the case of Cambridge v. Anderton, first reported in Ryan & Moody, 61, at Nisi Prius, afterward in the King’s Bench, 3 Bingham N. C. 203, and 2 B. & C. 691; see also Gardner v. Salvador, 1 Moody & R. 116.
An abandonment is but the formal cession of what may become salvage, when the vessel that has suffered from the peril against which the owners have been insured is yet susceptible of repair, and only confers the same right the insurers would have had by subrogation on payment of the sum insured. Meanwhile the master of the vessel, up to the time of the abandonment, is the agent both of the insured and the insurer; if the offer to abandon is accepted or refused, he is the agent of the underwriter only.
We understand a constructive total loss, as the law now exists, both in England and the United States, takes place, to use the language of 2 Arnauld, 850, “ where the subject insured is not destroyed,but its destruction is made highly probable, and its recovery, though not utterly hopeless, is either exceedingly doubtful or too expensive to warrant the attempt; or where the vessel could not be made navigable, except at a cost greater than her repaired value.” [211]*2112 Arnauld, 955. The application of the rule thus stated is extended in the United States to those cases where the cost of repairs will exceed half the value of the vessel. Peele v. Merchant Ins. Co., Cr. 3, Mason, 27; Bradlie v. Maryland Ins. Co., 12 Peters, 278.
It seems to be admitted by all the writers upon marine insurance, that in every case of a constructive total loss, there must be, as a general rule, evidence of an abandonment by the owners to the insurers.
But if the claim of the defendants should have been sustained as to the extent of the loss, it is settled in every such case that circumstances may exist which will excuse what might otherwise have been the duty of the insured to prove. Now,- in the case before us, while there is a denial in the answer of any loss under the policy, there is no allegation of the constructive loss, or of a neglect to abandon, or even of any loss total or partial; but we have no doubt under the averment of a total loss it may be proved to have been a constructive total loss only, and we notice this fact merely to warrant the belief that the insurers did not intend to admit their liability in any event.
The contract of insurance is said to require the utmost good faith of all the parties interested. “Uberrimafides” is the maxim which the writers on this branch of the law have applied to the insured as well as to the underwriter. The acts of either may estop them, if inconsistent with fair dealing, and this is the same rule we always recognize where one party to a contract has so demeaned himself toward the other that he has been led to believe certain facts have thereby existed, and has acted on this presumption, there may well be an estoppel “ in pais.”
It is on this principle the law will never require a vain thing to be done, if it can be ¡fairly inferred the performance of an agreement has been waived.
Hence it is preliminary proof of loss is always required to be given in every suit upon a policy of insurance unless it is waived. This maybe by an absolute refusal to pay the [212]*212loss, or the silence of the insurers- and other acts from which it may be implied the proof would not be demanded. 2 Phillips, §§ 1812,1813, where the cases are collected. And we see no reason why we may not extend the principle to the waiver of an abandonment; the one is equally the right of the underwriters to require as the other. Mr. Arnauld, vol. 2, p. 888, admits the rule where he says: “And so e converso, in a case where the insured would be entitled otherwise to notice of abandonment, the underwriters by their own conduct may forfeit their right to insist upon it.” See also the opinions of Buller and Ashurst, JJ., in Da Costa v. Newham, 2 T. R. 407.
If, then, notice of an abandonment was necessary, the conduct of the underwriters, when applied to for an adjustment of the loss, was such as to waive the right to require it. The claim when made to the defendants was for a total loss, and it was held by Judge Johnston, in Patapsco Ins. Co. v. Southgate, 5 Pet. 604, that such a claim was equivalent to an abandonment, and the case of Cassidy v. La. State Ins. Co., 18 Martin, 421, is to the same effect. 2 Parsons on Ins. 172-176; Twyng v. Washington Ins. Co., 10 Gray, 443; Portsmouth Ins. Co. v. Brazee, 17 Ohio, 81.
The instructions asked of the judge as to the application of the rule one-third new for old were properly refused, but in his general charge he stated the law very fully as we understand it.
No underwriter can claim the deduction where no repairs as such have been made, and where the salvage is appropriated to build a new vessel, the idea of repair can not be entertained, else an anchor or boat or some portion only of the wreck may be saved, and if used on a new vessel, it might, with the same justice, demand the rigid application of the doctrine in the adjustment of a loss. If the defendants have received the full value of the salvage, in a credit of the amount in the policy, they have obtained all the benefit they could derive, if they had undertaken to raise the vessel themselves, as it is evident they would [213]*213not have succeeded better than the plaintiffs in reconstructing her, as they must necessarily have expended a hundred thousand dollars in the operation.
Another ground of defense set up in the answer was the alleged unseaworthiness of the United States, by the non-compliance of the owners with sections 45 and 46 of the law of Congress, 10 Statutes at Large, 63. These sections prohibited the transportation of “ gunpowder, oil of turpentine, camphene, and other burning fluids,” except secured in metallic vessels, and except in cases of special license, and affix the penalty of one hundred dollars for the neglect to obtain the license, as well as for receiving the property on board the vessel as freight.
It is in evidence that the plaintiffs did obtain, as early as the 22d February, 1868, from the local inspectors whose duty it was to grant the same, a license to canyon board the United States oil of vitriol in the manner prescribed by the law.
But we do not apprehend that a non-compliance with this statute, where no forfeiture is imposed of the vessel or the forbidden merchandise, can per se make the vessel unseaworthy.
This question has often been mooted before the courts^ and the decision always has been, that the omission of the carrier to perform the duties prescribed by similar statutes does not affect the insurance on the vessel or cargo. Deshon v. Merchants’ Ins. Co., 11 Met. 209; Warren v. Manuf. Ins. Co., 13 Pick. 521; Clark et al. v. Protection Ins. Co., 1 Story, 124.
Counsel have agreed that if they have proved the loss was caused by the neglect or unskillfulness of the oflicers of the America, they have the right to be subrogated to any claim against the owners of that boat; but how it 'is that this proposition can be predicated upon anything we find in the record we can not readily perceive. There is no evidence, in our opinion, which can authorize it, and there is none to raise the implication of any dereliction of duty on the part of the oflicers of the America. It is [214]*214mere hypothesis only, and if there was any ground to make the assertion, it could only be permitted to the insurer to demand a subrogation after he has, in good faith, paid the insured for the loss of his vessel: such payment ex vi termini being a virtual assignment of all the rights of the assured against third persons growing out of the loss.
The consideration of the questions that have been made in argument has demanded more of our time than is usually allotted to the examination of causes submitted for our decision, not so much for the novelty and difficulty this litigation presents, but rather for the many points urged by the able counsel engaged, the decision of which has required us to review the whole record, and glean from its many pages whatever was pertinent to the issue. Our labors would have been greatly lessened had there been less cumulative testimony, tending, as it always does, to obscure rather than enlighten.
But we have, nevertheless, without dissent, arrived at a conclusion satisfactory to ourselves upon every point made in the cause. ¥e believe the loss of the vessel uirder the circumstances may have been regarded as absolutely total, though it may have been in reality but constructively total; that what was equivalent to a waiver of abandonment was proved; that the conduct of the deféndants made it unnecessary, as it would have been useless, to offer what they had already practically refused to accept, even if made in a formal manner; that the plaintiffs, in raising the wreck and towing it from the place of the accident to Cincinnati, were justified by the facts proved; that there was no repair of the former structure, but the building of a new boat, and no claim of one-third new for old can be set up by the defendants, as by the verdict the entire amount of salvage was allowed to the underwriters in settling the loss.
. And we fully coincide with the opinion of our colleague who tried the case, as he has lucidly stated it in his charge, [215]*215and upon which, the jury, after determining the facts before them, rendered their verdict.
We are all of the opinion the motion for a new trial must be overruled and judgment entered on the verdict.