before that time, and was then in safety, subject only to the (1) Bainclaim for salvage. Lord Ellenborough said, that, to give effect bridge v. to the abandonment under these circumstances, would grievous- East, 329; 1 Neilson, 10 ly enlarge the responsibility of the underwriters; it would be Camp. 237. to make them answerable, not for the actual loss, but for a sup- (2) Parsons v. posed total loss, which had in fact ceased to exist. And all the Scott, 2 judges were of opinion that an abandonment could be made, Falkner v. only according to the facts at the time of making it. They Ritchie, 2 M. thought it inexpedient to extend the right of abandonment, and & S. 290. they supposed that the limiting the right to the state of facts was Robertson, 2 more conformable to the principle of indemnity.(1) Taunt. 363; (3) Smith v. Dow, 482. v. Del. Ins. This opinion has been confirmed by other decisions.(2) But (4) Marshall Lord Eldon seems to have entertained doubts on this subject, Co. 4 Cranch, respecting which he reserved his judgment, by' protesting against 202. See also being considered as giving an opinion agreeing or not agreeing Alexander v. with these decisions.(3) Balt. Ins. Co. 4 Cranch, 147; Slocum Ins. Co. 1 Johns. Cas. 151; Murray This subject has been particularly considered by the supreme 370. court of the United States. A vessel having been captured, (5) Mumford was restored on the 9th of July. The assured having heard of . Church, the capture, but not of the restoration, abandoned to the under-1 Johns. Cas. writers on the 19th of the same month. In giving the opinion r. United of the court, Chief Justice Marshall said, 'It appears to us to consist with the nature of the contract, which is a contract of indemnity, that the real state of the loss, at the time the aban- . Unit. Ins. donment is made, is the proper and safe criterion of the rights of Co. 2 Johns. the parties. Might they depend absolutely on the state of in- Cas. 168; formation, a seizure, which scarcely interrupted the voyage, Hastie, 3 might be, and frequently would be, converted into a total loss; Johns. Cas. and the contests respecting the real state of the information 293. might be endless."(4) Livingston v. (6) Church v. Caines' Cas. In New York it was decided, in a number of cases, that abandonment might be made according to the facts of which the assured had knowledge ;(5) but this opinion was overruled in the court of errors, where it was held that an abandonment must 28. be authorized by the facts existing at the time of making it ;(6) (7) Penny v. and the courts of that state have adhered to this rule in subse- N. York Ins. quent cases.(7) The rights of the parties, says Chief Justice Kent, will be determined by the state of things existing at the time of the abandonment.'(8) And the same rule is adopted in Pennsylvania.(9) Co. 3 Caines, 155. (8) Schieffelin Ins. Co. 9 (9) Adams v. The concurrence, in opinion, of so many courts, affords a very strong presumption in favour of this doctrine, notwithstanding Del. Ins. Co. the apparent doubts of Lord Eldon, and the opposite opinions 3 Binn. 287. formerly given in Massachusetts and New York. It is said, in opposition to this doctrine, that an anterior risk Objections to may be insured against, and if the assured makes a fair disclo- the rule limiting the right sure, and violates no stipulation, he will be entitled to recover of abandonfor a loss which had in fact happened before the policy was ment to the made. The representation is made, and the policy is subscribed, existing facts. with reference to an anterior state of facts, and if the parties knew what had subsequently happened, they would not enter into the contract; since, if the property was safe, the owner would not pay the premium, and if a loss had occurred, the insurer would not undertake to make indemnity. And it is said, that, to make the rule as to abandonment analogous to this practice, the assured ought to have the right to abandon, according to the state of facts at the date of his last intelligence. But one of these rules is not necessarily involved in the other. Though parties may make a contract in reference to a previous state of facts, and a risk that has already been incurred, it does not follow that the assured ought to be entitled to indemnity, according to a previous state of a loss. There is no inconsistency in adopting one rule and not the other; since the two cases differ. In making insurance against a previous risk, the ignorance of the parties as to what may have taken place, is a condition of the validity of the contract. As to the obligation of the contract, past events, unknown to the parties, are the same as future events. They are able to contract, not merely because they do know what was the anterior state of the property and risk, but also because they do not know what has been the effect of the perils in the mean time. The ignorance of the parties of intermediate facts, is not a reason why a contract, relating to a past risk, should be made; it only takes away a reason why it should not be made, or rather why it could not be made. If the parties do not know the result of a past risk, they can contract respecting it; and then the question occurs, whether there is any legal objection to permitting such a contract. There is no reason why parties should not be permitted to make a contract of indemnity relating to a past risk, provided it is fairly made. The grounds for allowing of such contracts, are precisely the same that they are for permitting insurance in respect to a future risk. If, therefore, there is any reason why abandonment on account of the former state of the property and degree of loss, as distinguished from the present, should not be allowed, it shows that the cases of contracting respecting past risks, and abandoning according to a former state of a loss, are not analogous in principle, although they resemble each other in relating to past events of which the parties are not informed. The reasons for and against abandonment according to the existing facts, are drawn, for the most part, from the principle of indemnity. Where the property still remains, the damage which the assured has sustained by the perils insured against, can, in very many instances, be better ascertained from the existing, or from subsequent facts, than from any former condition of the property. Where it appears, by the intelligence, that the property, or a greater part of it, is irrecoverably lost and gone, this question does not arise; since, in such a case, the former state of facts shows what the present must be. If these facts constitute an absolute or constructive total loss, the assured is, no doubt, entitled to recover immediately for such a loss. It is only in relation to cases where the peril had not ceased to act, at the date of the last intelligence, and where the property still subsisted, that this question can arise. It is, therefore, plain, that the rule of abandoning according to the existing facts, will, in general, more completely adapt the indemnity to the actual loss. But it may be asked, why should not the assured, in cases of capture and detention, wait for the condemnation of the property, or for the continuance of the restraint a certain time, before he has a right to recover for a total loss? And it would be difficult to give any reason why he should not. A provision to this effect is inserted in very many policies, and a rule which it is found to be expedient for the parties generally to agree upon, it is equally expedient to adopt as one of the principles of interpreting the contract, if it can be adopted. But a rule of this sort cannot well be framed and adopted by a court, without the interposition of an ordinance; such a general regulation must be of a positive nature, and is more properly a legislative, than a judicial act. But it is still better to leave it to the parties, since ordinances concerning the making or interpreting of contracts, ought not to be resorted to excepting in cases where some unquestionable and pressing evil is to be remedied. It is said, in favour of abandonment according to the facts known, that insurance ought to afford the assured a speedy return of his capital. But, on the other hand, insurance is a contract of indemnity, and not of sale of the property insured. And one of these principles ought not to be lost sight of in following the other. A detention by superior force is no greater interruption of the adventure, than a 'detention for the same length of time, by adverse winds, or to repair sea-damage; and as far as it can be conveniently done, in either case, courts will prevent the assured from converting a contract of indemnity into one of sale. On this ground there are very strong reasons for imposing a restraint upon the right of abandonment, by limiting it to the existing facts. The rule is put upon this ground by the courts, and though it operates unequally, according to the length of the voyage, yet it seems to be the only definite, convenient rule which is of easy application, that can be adopted upon the subject. This rule affects the right of recovering for a total loss, in proportion to the distance of the property from the place where the abandonment is made. This distance is generally limited by the length of the voyage insured. Where any great delay of the assured's right of recovering for the loss, is occasioned by this rule, it is in voyages which were originally expected to Occupy a very considerable time, and in adventures, therefore, in which a delay of a few months, more or less, is not very likely to derange the operations of the assured. Another reason for not very speedily enforcing the claim for a total loss against the underwriters, is, that, in case of insurance upon the freight or cargo especially, if the detention has ceased before the abandonment, the freight may have been earned and received, or the goods have arrived at the intended market, and been sold, and the proceeds come to the use of the assured, be An abandon ment made telligence is not valid. fore the abandonment is made; and the underwriter ought not to be compelled to pay the assured the value of the subject, and give him credit for the salvage. A rule is of doubtful expediency, in such case, which is founded upon the principle of suddenly winding up such wide and extensive concerns. The rule, that the assured shall abandon immediately, is not at all inconsistent with the rule that the right depends upon the existing facts, since there is the same reason why he should be determined by the extent of the loss, and not by the state of the markets, whether the right of abandoning refers to the exist ing, or to a former state of facts. He will no doubt be influenced by the state of the markets, and the rate at which the property is valued, but the rule is intended to confine him, as far as it can be done, to the reasons arising from the extent of the loss; and where he has obtained the information on which he abandons, he ought to make an abandonment immediately, to whatever state of facts it relates. Section 9. Upon what Intelligence Abandonment may be made. As the assured must, at the time of abandoning, state the grounds upon which he makes the abandonment, it is necessary in order to make the act valid, not only that the existing facts should constitute a total loss, but also that the assured should be informed of the accident which occasions the loss. He cannot abandon merely upon the apprehension that a total loss may have taken place, and afterwards establish his right so to do, by facts that subsequently come to his knowledge, and which were wholly unknown to him at the time of making the abandonment. This raises a question as to the kind of information which will authorize an abandonment. Although an abandonment may be made upon intelligence of a total loss, and may be considered to be properly made, since upon false in the intelligence justified it, yet if the intelligence prove to be false, the abandonment will be a nullity. It is not enough that the abandonment is justified by the intelligence; it must be authorized by the facts of which the assured has intelligence. Lord Ellenborough says, 'The effect of an offer to abandon, is, that if the offer appear to have been properly made upon supposed facts, which turn out to be true, the assured has put himself in a condition to insist upon his abandonment. But it is not enough that it was properly made, upon supposed facts, if it turn out that no such facts existed. It may be said to be properly made upon notice received, and bonâ fide credited, by the assured, of his ship having been wrecked, whether such intelligence were true or not, and though the letter conveying it turn out to be a forgery; and yet clearly no right of action would (1) Bainrest in him, founded upon an abandonment made upon false inson, 10 East, telligence. If the facts be all imaginary or founded in misconception, the whole foundation of the abandonment fails. (1) In bridge v. Neil 341. upon gence through In one case the court said upon this subject, 'The informa- Abandonment tion received by the assured, upon which the abandonment was intellimade, was a mere newspaper account; and if information in any the newspacase, derived through such a channel, would be sufficiently authen- pers. tic to warrant an abandonment, we think in the present instance it was too imperfect to afford sufficient data to the assured to calculate his actual loss."(1) (1) Muir v. Unit. Ins. Co. 1 Caines, 54. Abandonment The assured abandoned upon a report that the property was captured. Lord Ellenborough said, 'No certainty existed as to upon a report the capture at the time of the abandonment; but in cases like of the loss. this, men must act upon probable information, and leave the effect of their acts to be determined by the eventual truth or falsehood of the intelligence they receive. If I hear of my ship's being taken in the East or West Indies, I am not obliged to wait till I certainly know the event by the testimony of those who were present. Provided the thing has once existed, what I do, believing it to have taken place, must be valid and effectual. If an abandonment is made where there has been no capture, of course it goes for nothing, however strongly the circumstance may have been reported. Assuming the fact, then, that the assured had reason to believe that their ship was captured, and (2) Bainthey were acting bonâ fide, I think they were authorized to aban- bridge v. Neildon, and that, as the ship proves actually to have been captured, 237. son, 1 Camp. the abandonment stands good.'(2) Section 10. Within what time Abandonment must be made. In all cases of total loss the assured may abandon, if he avails himself of the right in due time. While the total loss still con- (3) 8 Mass. tinues he may abandon immediately on having intelligence of Rep. 502; 10 Mass. Rep. it, unless the policy contains some stipulation to the contrary. 112, 347. 273. A provision is often inserted in the policy, that, in case of (4) 8 Johns. capture or restraint, the assured shall not abandon until the 237; 9Johns. property shall be condemned, or until it shall be proved to have 1; 10 Johns. been under detention ninety days,(3) or six months.(4) This (5) Dorr r. provision means, not merely that the assured shall not abandon Un. Ins. Co. within the ninety days, or other specified time, but that he shall 8 Mass. Rep. have the right to abandon only for a restraint or capture that (6) Ogden r. continues during such time ;(5) unless the property is sooner con- Col. Ins. Co. demned.(6) If the policy contains no provision in regard to the time within which abandonment is to be made, the assured must, on receiving intelligence of a loss, make his election speedily, whether he will abandon or not ;(7) he must give notice to the underwriters within reasonable time.'(8) Mr. Justice Ashhurst says, he must signify his election the first opportunity ;'(9) and Chief Justice Gibbs; he must elect in the first instance-the first instance means after the assured has had a convenient op portunity of examining into the circumstances, to ascertain what is the degree of damage-if the assured had treated it as in 6 502. 10 Johns. 273. Allwood r. . R. 608. |