SHIP INSURANCE-"ABSOLUTE TOTAL LOSS."

Otago Daily Times, Issue 2050, 31 August 1868, Page 3

SHIP INSURANCE-"ABSOLUTE TOTAL LOSS."

i^jMiiH.; '». .jThe, New. Zeal^d Insurance Company;'—The following judgment/--' which" is of* importance-16 those interested in shipping,- was delivered by Mr Justice Chapman, at the sitting of the Supreme' Court. ;w l Banco) on' the inst.:— :-"•;■•:. ■■:

Thisis "aft action to "recover the amounts of two ;• policies ; bf:': insurance, on- the schooner- JDagniar, of. which .the, plaintiff, was m^ter ; ,and owfleiI.^.:The;1.^. : The ; cause was •feciedr-before me -at the sittings of .thisCourts held; in March last^ and the plain- \ tiff had a verdict.;: At s the close of ,ther" plaintiff's case the learned counsel for'the -defendants moved for a'nonsuit, prince pally on .the, ground that there was no evidence * ofV an.'. ;7^M oitt^6." %^1 Iqss, which was ; the risk, insured against, and algo^/pn^, other t grdun.dsj .namely^that there was no evidence of a constructive total Idssc; .that',the notice of abandonment was _ too late ; and that, even if not 'too la^e,:4t vitiated by an unjustifiable sale. Qn the construction of the policy, I was inclined to agree with the-iearAed' counsel; .but, as, Id id 'not recollect any express authority 1 on the", subject and none was cited, I "let -the'"' case gb 'tp t .the , jury, reserving the:point,, and givipg the ' learned counsel le^ye r t6 move! to s§t aside the verdict, and enter a nonsuit. ; At ■the.; close of the trial,, he also ; had leave ]to move to set aside the verdict ; fpr the: plaintiff,; and -enter: the. .same ■ for the • defendants, on the ground, that there was a total absence of; ■'evidence-that the: sale was justifiable':• The rule'1 also is for a new 'trial, on tjh.e; ground that the. Verdict was against revidenc&f Thq '■firs'ir' point is of great importance, and .turns, entirely, - upon - the construction of the* cbntrae't. What is "the nature of the loss against which the • insurers undertake jio Indemnify the insured! ; ,And, ; did ;the loss come..mthin theriskiinsured against 1 The words of the policy- -show ' that the\ insurers were not to be liable exqept-in the case of " absolute-totalloss." Thelearned, counsel tor the plaintiff contends that the v N abandbriinent puts an end to all,, distinction, and a partial loss, or a' constntctive 'total'loss, is,, by .notice of abandonment, converted into an.actual or, absolute total loss, and lie relies on the recent case .of; Adams; v.s,M; t'Keri.zy3.,.i{£n that case the words of the policy were that the insurers were to bei liable in the .case of ' c total loss onlyi" '--. The < loss was, one which is commonly calle'dia " construbtive1' total loss," that is";a-partial!loss- rendered total, 'bjni'otice of abandonment, and the Court considered that the word "'only," did /lioi; ~!m'ake' it Ibss a total loss." Erie, C. ~j. r s,aid^the question is, ; whether; this' is a total loss ? The jury have found it so. "We thinlc it is a total loss." rlndeed. it be difficiilt for the most-ingenious' criticism to find out what difference there:-j is between a ''totalloss,"1 and ; a ''total loss only," and; it ihas ,never--been doubted that a loss which- ' stops' short of being"-total/may,- under certain recognised -<;irbumstances>; be^ converged.into a total loss "by 'abaridoti- 1 jnent tq'the' Insufefs." ' The case, therefore,,, .djpes not' help 'ils "in .determining 'whetifef "any'and■';what effect"blight to be given to."ifchp qualifying wprd" absolute," as used in these Policies!" Policies." of; in--surance, though framed by ihe Insurers, are founded on-a proposal: by^he Insured;; and by the pjaymentof the premium,they become the contract between thefparties. J By the employment ;of the qualifying word •' absolute" before the words total 11 loss,;it is to be presumed that it< was intended toj bear some significari'ce; 'Does it mark any well recognised distinctionj "The law clearly recognises two kinds of total loss: the one, where the ship or 'thing msuyed^ totally .destroyed: • and the other, wliere,.^although the, ship or iihing remains in specie, its restoration would cost more than it would be worth when restored. These two .are ■; distinguished in numerous cases, the former feeing called- " absolute total loss," or sometimes, but less commonly, "actvial total loss ;" and the latter., '''constructive' total loss." "AbsoMfce totalloss req\iires t hq notice of , abandonment,; constructive totalloss is that in which sucli notice is

necessary.. Not only is the distinction between the two kinds .of total loss re-: cognised by the law, but they are distinguished by equally well recognised: names. In the case of Adams v M'Kenzie, which I have already noticed, which turned on the use of the woyd •only, there is a suggestion of / s|r Justice "Willes, on which Mr1 Cook relies ; . arid, -which1, although', extrajudicial, "'is entitled to r .respect. He is reported to have said that i£ the jword " absolute" had been used it would, not liave altered the case. But this seenis/to me to be unsupported :by any authority,* and to break down, the distinction which nearly all the cases recognise. The distinction which Lord Campbell draws,'in Knight v. tfaith (15, Q. B. 659) is of thevery; essence o£ the"' judgment" which turned on the necessity for notice of abandonment: "This, we think, is -not an actual toted loss, and if a coiistruciwe total loss, the insurers; can only be ?enr : tiered -liable for the. sum insured 'by ; a notice of abandonment;",and he refers,to Lord Abinger's judgment in Rouxu1 Salvador (3, B. :15r.C.,281), which dispensed ■with notice of abandonment, on the •ground thatthe subject matter insured was •virtually destroyed. *' It appears to.iis " said LordAbinger, "that this is not a

case of-what has been called comtructive total loss, but of an absolute total loss of the goods ;" and it is -worthy of note that the italics are in the report of Lord Campbell's judgment, which was a written judgment after taking time. Abandonment, then, has the effect of converting what at its inception is only a partial loss into a fetal loss. Without abandonment (if the policy do not in its terms exclude partial loss) the insured may still recover the amount of his actual damage. " A party," says Lord Ellenborough, "isnot in any case obliged to abandon,' neither will the want- of abandonment pust him from his claim, .for that which is infact either Waverageor a total loss, as the case may be. . . / Abandonment is only necessary to make' a constructive total loss," Mellishu East (15, East JL6); and,again in tunno v. Edwards (12 East,':49i), His Lordship "says, "Where i the thing insured; subsists in specie^ and there is a chance of its recovery, in order to make it a total loss, there must be an abandonment" Where, therefore, Ifind the distinction clearly recognised between absolute and. constructive total loss-—the former meaning the "destruction, pf the thing in.specie, so as to require no abandonnient j and *thY latter ■meaning an1 amount of damage which, stopping short of destruction, may, nevertheless, be; cpnyefted into total loss constructively by means of abandonment-^a distincticX'as' well understood mercantile and nautical men as by iawyeips-:i-whe'n I find that in a policy, the contract between the .in-, surerg ami the insured, the' insurers ate that they are only; to;become'liable'" for an : absolate total loss, and the insured5 accepts the policy on those terms,' I' can, c6ni<3:' tp .no "other , conclusion, than that their meaning was to exclude liability arising. out. of a loss,which. couM'.pKly lio. rendered constructively total., by -notice c;',; Abandonment*; Bich being, in' my Opinion, thelproperintibrpretatioh of'. ' t^e.contract, there still remains the question; whether |his isj to "beconsjclered !an' abfeoluteVor a; constructive, total iloss.' ?■- The < plaintiff;Hbreated; it 'as /the; latter^: :'ky giving notibepf;, abandonment; ; put Mr Cook has attempted to sho^ that the; 16* ii t was of sucn a nature" as tb requite'no' notice of,'abandonment, and therefore, that it was in-fact ''absolute or cj' actual^'-;- ■■ TK^; vessel; jobk the" ground 4n<T was" considerably "damaged, 1 but regained in specie, t capable,,of being repaired, and thfe' possibili^ of repairing frerj not being' hp^elessV'. S!o inquiry qr esti^ate^'w^^tia^de^^^of'tne/.pfpbabiecos!; of repairs,'so as to ascertain the proportion •• which that cost 1 would- bear tb'liisr. value when, repaired. The; whole cvi-; dence seems to me to show a partial loss/c'apable "of being; converted into; a Constructive total loss by; notice of abandonments. There was nothing to shoW."that she couM not have been got off and riioyed, o\ warped, into a place'of-safeby.. In r]ustifylfi^ ! an" immediate sale,1 the witr: nesses proved that the river was sometimes liable to freshes, ; and that if a fresh had come on, she might, have beenbodily^ cameii'out": to';sea.' '!feut this was mere: speculation on a remote.contingency; and although* it jgpes tip the qtieslibn' ;oi the, jlrppneiiy,, of tlie sale, it does not affect thei .nature of the loss, which, in my opinion; waM1 ■such' ias~t6' reijuirl nbticeotabandon;ment, to it total... But Mr Cook r|elies also^upon the, ; sale itself;; as rendering this an absolute, lotal loss. But. ■ eVen ju stifiable • ; = sale < ■ /has- iip •' •; sricK e;ffecfc =^ 'The;,question,••:■ whether ' a '•' loss is tons^ructiy/ely tptil Has ;bften'turned, bri thje'- .point; , whether ' the sale by< the .master was .justifiable' urider the cirqum'stance'sr ( ; That . which gives ■, the right to abandon, is not the mere fact ofth^s^l§ By; the .master, but the^reyipus: staiieiof^fie"ship which justifies the Bah* "There .is no such head; of Insurance; lay!^'"saidß^iyley■':J!jin Grardner w., Sal-V vador (1 Moore and Reb. i 116),'" as loss; :by,:sale. s'^ ;The;case decides,th'at the mas-. ter,;eyenby. &}ionqjidz sale, cannot con-; vert an average or partial; into ar total loss: ■ This decision, wasiattemptecl >o■ Ibe"catlei in question in the Court of Exchequer ; but :.&^rule Jw^s.refused.;; Keadi}...Benhain,r in,,3.8. "and;Bs',;-A47, is a very strong case in pointy .^Nbtice ;prabandonni^nt,:hMbeen^^yenj^hich'tlie'.insiir^ refused to accept. ; The ship had been disabled, and' could iq.ol .be * kept.at sea F^but exten.-* ;sive repairs;? ; the captain couid. raise no; moneyr' The Court- said :-r-" A case;bf' stronger .necessity for: a- sale has- never, beenimadeiinown: The- captain could not procure money for repairs, and it •npt.to; be expected that he shouldilet.the^ ship rot;?''- Accordingly :the:sale; was held" ,to be; justifiable, and ...the' loss constructively- tptal*^-the> notice of alaandonment' nbein^; considered;; sufficient.; th'K; justifiableness of the sale is one thing-^----of the loss, another1. ;, The pro-' •ipnety of j the sale may-sometimes be used to ;• determine 'whether the loss.' iscoristruictiyely; 'totaLrr-Miller ' v. . Fletcher (1, ■ Doug', ,^ 238);, rin likejaaanner, an absolute tptal loss would justify the master1 in selling allvthat /remained 'of the' wreck ; biit; there ismoj authority for saying the" sale converts that which...wouldv otherwise ; be a constructive total loss into an absolute total lpss.; 'As' the'rule tb enter the fbf" 'the defendants was not ob.* twined1 on these grounds, but-on ;the .ground that, there .was no evidence,,.tp': justify, the .sale, "this .rule can: be made I absolute, on . the first: branch.' only-1^•", namely, to enter, a riohsuit, ;V I .;. <■, Rule, accordingly, -v- ■~ <