U.S. Supreme Court Morean v. United States Insurance Company, 14 U.S. 1 Wheat. 219 219 (1816)
Morean v. United States Insurance Company
14 U.S. (1 Wheat.) 219
ERROR TO THE CIRCUIT COURT FOR
THE DISTRICT OF PENNSYLVANIA
A total loss, for which only the insurer on memorandum articles is liable, can never happen where the cargo or any part of it is sent by the insured and reaches the original port of its destination.
Thus, where the ship being cast on shore near the port of destination, the agent of the insured employed persons to unlade as much of the cargo (of corn) as could be saved, and nearly one-half was landed, dried, and sent on to the port of destination and sold by the consignees at about one quarter the price of sound corn, leaving a very inconsiderable sum for the owner, after paying the expenses, this was held not to be a total loss, and the insurer was held not to be liable.
This was an action commenced by the plaintiff in error upon a policy of insurance dated 14 December, 1812, on goods on board the brig Betsey, at and from Cape Henry to Lisbon, at a premium of six percent, on which $5,000 were underwritten by the defendants, and valued at that sum, declared to be against all risks except British capture, warranted American property. The jury found a verdict for the plaintiff, subject to the opinion of the court upon the following facts agreed by the parties. The cargo consisted of 4,406 bushels of Indian corn, 100 barrels of navy bread, and 20 barrels of corn meal. The brig sailed from Baltimore on 11 November, 1812, and from Cape Henry on 13 the same month. She experienced on the voyage many and severe gales of
wind. On 18 December, she passed the rock of Lisbon and came to anchor about four miles below Belem Castle. She leaked considerably in consequence of the injury she had sustained from the severe gales to which she had been exposed. After passing the rock, the wind died away, and the current being adverse, she came to anchor. The master and supercargo landed, went through the customary forms at Belem to obtain a permit to pass the castle, and then proceeded to Lisbon. The health boat visited the brig and ordered her to get above the castle as soon as possible.
On the 19th, she was again exposed to a heavy and fatal gale, and drove ashore near to Belem Castle, the sea breaking over her, and the crew hanging by the rigging to preserve their lives. The supercargo considered both vessel and cargo as totally lost. By directions of the custom house, as much of the cargo as could be got out was unladen by a number of French prisoners who were employed for that purpose. The cargo was all wet, and the part of it which was then taken out was carried to the fort, where it was spread and dried. From thence it was carried to Lisbon in lighters, and was sold in the corn market by the consignee of the cargo. The quantity so saved and sold amounted to about 1,988 bushels, which was sold at 50 cents a bushel, whereas the price of sound corn was $2.25 a bushel. The supercargo petitioned for liberty to sell the corn at the place where it was first deposited and dried, which could not be granted, and he was obliged to submit to the custom of the place and allow it to be sold at the corn market.
The brig was so completely wrecked that she was sold, with her materials, where she lay, in lots. Had the supercargo been left to the free exercise of his own judgment, he would not have attempted to save any part of the cargo, in consequence of the total damage and the great expense of saving it. The net proceeds of the cargo were not much more than the expenses of saving it, including those of the supercargo. The port of Lisbon commences above Belem Castle, and the custom of the place is to discharge cargoes of corn between that castle and Cantara, which latter place is from one to two miles below Lisbon. The vessel never arrived at her port of discharge. On 22 December she was entered at the custom house by the American vice-consul, which he said was necessary, but port dues do not attach to vessels till they pass the castle. Still, as part of the cargo was carried to Lisbon, the entry was made by the consul, and the dues were paid. On 11 March, 1813, the plaintiff, having received notice of the shipwreck, offered to abandon, which was refused. Upon these facts, the circuit court gave judgment for the defendants and the cause was brought by writ of error into this Court.
WASHINGTON, J., delivered the opinion of the Court, and after stating the facts, proceeded as follows:
All considerations connected with the loss of the cargo, in respect to quantity or value, may at once be dismissed from the case. As to memorandum articles, the insurer agrees to pay for a total loss only, the insured taking upon himself all partial losses without exception.
If the property arrive at the port of discharge reduced in quantity or value to any amount, the loss cannot be said to be total in reality, and the insured cannot treat it as a total and demand an indemnity for a partial loss. There is no instance where the insured can demand as for a total loss that he might not have declined an abandonment and demand a partial loss. But if the property insured be included within the memorandum, he cannot under any circumstances call upon the insurer for a partial loss, and consequently he cannot elect to turn it into a total loss. These principles are clearly established by the case of Mason v. Skurray, Neilson
v. Columbian Insurance Company, Cocking v. Frazer, McAndrews v. Vaughan, Dyson v. Rowcroft, and Magrath and Huggins v. Church. The only question that can possibly arise in relation to memorandum articles is whether the loss was total or not, and this can never happen where the cargo, or a part of it, has been sent on by the insured and reaches the original port of its destination. Being there specifically, the insurer has complied with his engagements; everything like a promise of indemnity against loss or damage to the cargo being excluded from the policy. If the question turn upon the totality of the loss, unconnected with the subject of loss by deterioration of the cargo in value or reduction in quantity, there is no difference between memorandum and other articles. If the loss be total in reality or is such as the insured is permitted to treat as such, he is entitled to abandon and recover as for a total loss in the case of memorandum articles, but always with this exception that he is not permitted to turn a partial into a total loss. Keeping this distinction in view, the loss of the voyage by capture, shipwreck, or otherwise may be treated as a total loss. This is the doctrine in the case of Dyson v. Rowcroft, in which the right to abandon was placed not upon the ground of deterioration of the cargo, but upon the justifiable necessity which resulted from it of throwing the cargo overboard.
This was in effect the same thing as if it had in a storm been swept from the deck. Such too was the case of Manning v. Newnham. In Cocking v. Frazer, no such necessity existed, and the breaking up of the voyage was attempted to be justified by the damaged state of the cargo, which per se did not justify the insured in putting an end to the voyage, and thus to turn a partial loss, for which the insurer was not liable, into a total loss. Magrath and Huggins v. Church establishes the same doctrine.
Now what is the present case? The ship being thrown on shore within a mile or two from her port of destination, the agent of the insured employs persons to unlade as much of the cargo as could be saved, and nearly one-half was, by his exertions, landed, dried, and sent to the market at Lisbon and sold by the consignees at about one quarter the price of sound corn, leaving a very inconsiderable sum for the owner after paying the expenses. Is not this precisely the case of Neilson v. Columbian Insurance Company and Anderson v. Same, with this difference only, that in the first case the insured declined sending on the corn when he might have done so, and consequently he was not permitted to turn a partial into a total loss by his own neglect, and in the latter case, part of the cargo having been rescued from the wreck before the offer to abandon was made, the insured could not claim as for a total loss, either on account of the injury which
the corn had sustained, or of his own act in not sending it forward to its port of destination. In the case now before the Court, the cargo which was saved was sent forward and sold at the port of its destination.
In addition to the cases above referred to, the cases of Biays v. Chesapeake Insurance Company
and Marcardier v. Same, in this Court, are strongly applicable to the present, and seem in a
great measure to settle it. But it is contended by the counsel for the plaintiff, that if the loss be such
as that the insured might at one time have treated it as total, it continues to be so, unless at the time
when the offer to abandon is made clear of the effects of the peril, and in a condition to prosecute the voyage, it is restored to his possession. Now this is certainly not the condition of property which, at the time of the offer to abandon, is in the possession of a recaptor, who has a right to retain it until he is paid his salvage. But in the present case the corn never was out of the possession of the agents of the insured, who exercised every act of ownership over it, subject, nevertheless, to the laws and customs of the country to which it was sent, with which the insurer and insured are supposed to have been acquainted at the time they entered into this contract and to which they impliedly agreed to submit. The cargo which was landed not only continued in the possession and under the direction of the agents of the insured, but it was relieved from the effects of the peril, as between the insurer and insured, and it was not only in a condition to prosecute the voyage, but it did in reality complete it. Upon the whole, it is the opinion of the Court that this is not such a loss as the defendants engaged to indemnify against, and that judgment should be given in their favor.