U.S. Supreme Court Marcardier v. Chesapeake Insurance Company, 12 U.S. 8 Cranch 39 39 (1814)
Marcardier v. Chesapeake Insurance Company
12 U.S. (8 Cranch) 39
ERROR TO THE CIRCUIT COURT
FOR THE DISTRICT OF MARYLAND
Where a technical total loss is sought to be maintained upon the mere ground of deterioration of the cargo at an intermediate port to a moiety of its value, all the deterioration of memorandum articles must be excluded from the estimate. Therefore, in a cargo of a mixed character, no abandonment for mere deterioration in value during the voyage can be valid unless the damage on the nonmemorandum articles exceed a moiety of the value of the whole cargo, including the memorandum articles.
Where the general owner of a ship retains the possession, command, and navigation of the same and contracts to carry a cargo on freight for the voyage, the charter party is to be considered as a mere affreightment sounding in covenant, and the freighter is not clothed with the character or legal responsibility of ownership.
In such case, the general owner is also owner for the voyage.
Consequently, if he be master of the vessel, he is incapable of committing barratry.
Barratry is an act committed by the master or mariners of a ship for some unlawful or fraudulent purpose contrary to their duty to their owner whereby the latter sustains an injury.
The facts of this case were thus stated by STORY, J. in delivering the opinion of the Court.
This is an action on a policy of insurance, underwritten by the defendants on 29 October, 1806, for $31,000, upon any kind of lawful goods on board the brig Betsey, whereof Alexander McDougal was then
master, on a voyage at and from New York to Nantes. McDougal was the general owner of the brig, and on 1 October, 1806, by a charter party of affreightment made with the plaintiff, granted and to freight let to the plaintiff the said brig, excepting and reserving her cabin for the use of the master and mate and for accommodation of passengers, as therein mentioned, and so much room in the hold as might be necessary for the mariners and storage of water, wood, provisions, and cables, for the voyage from New York to Nantes, and McDougal, by the same instrument covenanted to man, victual, and navigate the brig at his own charge during the voyage and to receive on board any shipment of goods, not contraband, which the plaintiff should tender at the side of the ship or within reach of her tackles at New York and to stow and secure the same and proceed therewith to Nantes and there discharge the same. The passengers on board the brig were to be at the joint expense of the parties, and the passage money was to be equally divided between them. The other clauses in the charter party are not material to be stated except that the plaintiff covenanted to pay the stipulated freight and demurrage. The cargo, put on board by the plaintiff, was of the invoice value of $29,889, of which $7,439 was in memorandum articles. The brig sailed on the voyage under the command of McDougal on 9 November, 1806, and during the voyage was compelled by stress of weather and other accidents to bear away for the West Indies, and arrived at the port of St. Johns, in Antigua, on 22 December. There the master made application to the vice admiralty for a survey, &c.;, and such proceedings were had upon his application that the cargo was landed, and by a decretal order of the court of 31 January, 1807, the same was ordered to be sold for the benefit of all concerned, reserving the question as to freight. Under this decree the cargo was accordingly sold, and the sales completed before 28 March, 1807, and the net proceeds of the whole of the plaintiff's property amounted to $13,767. The net proceeds of the memorandum articles, included in the same sum, were $6,863.30. The whole proceeds were paid over to an agent appointed by McDougal, and the freight for the whole voyage was allowed him by the admiralty upon a report
of commissioners, to whom the question was referred. The brig was repaired at Antigua within a reasonable time at the expense of one sixth only of her value, and capable of performing the voyage with the original cargo, but McDougal voluntarily abandoned the voyage at Antigua for his own emolument and advantage. Of the cargo, 99 bags of coffee were spoiled and thrown overboard, and the residue greatly damaged by the perils of the seas, and the whole cargo, including the memorandum articles, sustained a damage during the voyage exceeding a moiety of its original value. On 4 Feb. 1807 and within a reasonable time after receiving information of the loss, the plaintiff abandoned the whole cargo to the underwriters.
The declaration contained two counts for a total loss -- 1st by the perils of the seas and 2d by barratry of the master. At the trial, the court below, upon the facts and circumstances above stated, held that the plaintiff was not entitled to recover as for a total loss of the cargo insured, including the memorandum articles, and the cause came up to this Court upon a bill of exceptions to that opinion.
STORY, J. delivered the opinion of the Court as follows:
The plaintiff in this case contends that there was a total loss which authorized an abandonment by both of the perils stated in the declaration viz.,
1st. By the perils of the seas, and
2d. By barratry of the master.
And first, as to a total loss by the perils of the seas.
It seems now clear that a technical total loss may arise from the mere deterioration of a cargo by any of the perils insured against if the deterioration be ascertained at an intermediate port, of necessity, short of the port of destination. In such case, although the ship be in a capacity to perform the voyage, yet if the voyage be not worth pursuing, or the thing insured be so damaged and spoiled as to be of little or no value, the insured has a right to abandon the projected adventure and throw upon the underwriter the unprofitable and disastrous subject of insurance. It has therefore been held that if a cargo be damaged in the course of the voyage, and it appear that what has been saved is less in value than the amount of the freight, it is a clear case of a total loss. It does not, however, appear that the exact quantum of damage which shall authorize an abandonment as for a total loss has ever become the direct subject of adjudication in the English courts. The celebrated treatise Le Guidon, ch. 7, art. 1, considers that a damage exceeding the moiety of the value of the thing insured is sufficient to authorize an abandonment. This rule has received some countenance from more recent elementary writers, and from its public convenience and certainty has been adopted as the governing principle in some of the most respectable commercial states in the Union, and perhaps is now so generally established as not easily to be shaken. 1 John., c. 141, p. 1; John. R. 335, 406; Marsh. Ins. 562, Note 92, Am.Edit., 1810; Park, p. 194, 6th ed.
But this rule has never been deemed to extend to a cargo consisting wholly of memorandum articles. The legal effect of the memorandum is to protect the underwriter from all partial losses, and if a loss by deterioration exceeding a moiety in value would authorize an abandonment, the great object of the stipulation would be completely evaded. It seems, therefore, to be the settled doctrine that nothing short of a total extinction, either physical or in value, of memorandum articles at an intermediate port would entitle the insured to turn the case into a total loss where the voyage is capable of being performed. And perhaps, even as to an extinction in value, where the commodity specifically remains, it may yet be deemed not quite settled whether,
under the like circumstances, it would authorize an abandonment for a total loss. Dyson v. Rowcroft, 3 Bos. & Pull. 474; Maggrath v. Church, 1 Caines 212; Cocking v. Frazer, Marshall 227; Park 152, 6th ed.
The case before the Court is of a mixed character. It embraces articles of both descriptions -- some within and others without the purview of the memorandum. If in such a case a deterioration exceeding a moiety in value be a proper case of technical total loss, it will follow that in many cases the underwriter will indirectly be rendered responsible for partial losses on the memorandum articles. Suppose in such a case the damage of the memorandum articles were 40 percent and to the other articles 10 percent in the whole amounting to half the value of the cargo, the underwriter would be responsible for a technical total loss, and thereby made to bear the whole damage, from which the memorandum meant to exempt him. Indeed, cases might arise in which the damage might exclusively fall on memorandum articles, and if it exceeded the moiety in value of the whole cargo, might load him with the burden of a partial loss in manifest contravention of the intention of the parties. A construction which leads to such a consequence cannot be admitted unless it be unavoidable. And we are entirely satisfied that such a construction ought not to prevail. The underwriter is in all cases of deterioration entitled to an exemption from partial losses on the memorandum articles, and in order to effectuate this right, it is necessary, where a technical total loss is sought to be maintained upon the mere ground of deterioration of the cargo at an intermediate port to a moiety of its value, to exclude from that estimate all deterioration of the memorandum articles. Upon this principle, on a cargo of a mixed character, no abandonment for mere deterioration in value during the voyage can be valid unless the damage on the non-memorandum articles exceed a moiety of the value of the whole cargo, including the memorandum articles. The case is considered, as to the underwriter the same as though the memorandum articles should exist in their original sound state. In this way full effect is given to the contract of the parties. The underwriter
is never made responsible for partial losses on memorandum articles, however great, and the technical total losses for which alone he can be liable are such as stand unaffected by the perishable nature of the commodity which he insures.
In the present case, the facts alleged by the plaintiff do not show a depreciation of a moiety in value, excluding the memorandum articles. There is no evidence of the quantum of depreciation of any part of the cargo. The forced sales at Antigua could not, under the circumstances, constitute a medium by which to ascertain it. Admitting, therefore, the rule to be correct that the party had a right to abandon where the depreciation exceeds a moiety of the value, the plaintiff has not brought himself within that rule as applied to a cargo of a mixed character like the present. The court below was right, therefore, in deciding that there was no total loss proved by the perils of the seas.
The next question is whether there was a total loss by the barratry of the master. And this depends exclusively upon the consideration who was owner of the brig for the voyage, for it is conceded on all sides that the conduct of the master was barratrous if he was in a situation to commit that offense. Barratry is an act committed by the master or mariners of a ship for some unlawful or fraudulent purpose, contrary to their duty to their owners, whereby the latter sustain an injury. It follows, therefore, from the very terms of the definition that it cannot be committed by a master who is owner for the voyage, because he cannot commit a fraud against himself. But it may be committed against a person who is owner for the voyage, although he may not be the general owner of the ship. A person may be owner for the voyage who, by a contract with the general owner, hires the ship for the voyage and has the exclusive possession, command, and navigation of the ship. Such is understood to have been the case of Vallejo v. Wheeler, Cowp. 143. But where the general owner retains the possession, command, and navigation of the ship and contracts to carry a cargo on freight for the voyage, the charter party is considered as a mere affreightment sounding in covenant, and the freighter is not clothed with the character
or legal responsibility of ownership; such was the case of Hooe & Co. v. Groverman, 1 Cranch 214. In the first case the general freighter is responsible for the conduct of the master and mariners during the voyage; in the latter case the responsibility rests on the general owner. On examining the charter party in the present case, there can be no doubt from the terms and stipulations that it falls within the latter class of cases. The master, who was the general owner, retained the exclusive possession, command, and management of the vessel, and she was navigated at his expense during the voyage. The whole charter party, except the introductory clause, sounds merely in covenant. The ownership was not divested by the covenant of affreightment, and consequently the master was incapable of committing barratry. There was, then, no total loss on the second count in the declaration.
The opinion of the circuit court on this exception must be sustained. But there are other exceptions on the record in which it is admitted by the parties that the circuit court erred. The points intended to be raised in these exceptions have in effect being decided by this Court in Caze & Richaud v. Baltimore Insurance Company, 11 U. S. 358 . For the errors in these exceptions, the judgment must be
Reversed with directions to the circuit court to award a venire facias de novo.