The embargo being taken off in May, the captain reloaded a Russian emgreater part of the cargo which had been on board in Novem- bargo cases ber, but taken out and ware-housed during the winter; and he remained at Cronstadt until the third day of July to complete his cargo; when the ship sailed, and she afterwards arrived safe at Liverpool, and earned freight. The captain had given bills of lading to the several shippers in November, but in the spring he gave new bills of lading for that part of the cargo which had been shipped in the autumn, and was again taken on board in May. Lord Ellenborough said, 'He felt great difficulty in saying, that after an abandonment of the ship, the owner could abandon the freight, which seemed to follow the property in the ship, being the earnings made by the subsequent use of that which was then become the property of others. If it had been a chartered ship he should have known better how to deal with the difficulty; but in the case of a seeking ship, as this was, he did not well know how to separate the character of owner of the ship from that of freight, where the freight was to be earned on each parcel of the goods shipped and brought home.' But the judges gave no deliberate opinion upon this point, which was Gladstone, 7 not made a part of the case presented to the court.(1) Thus after all these cases, in which the question of the effect of the abandonment of the ship, in respect to freight, was elaborately and repeatedly argued, the question remained undecided. But a judgment has since been given upon it, both in the court of King's Bench and that of the Exchequer Chamber. (1) Sharp v. East, 24. In case of capture in the course of a voyage from Rio Janeiro In England to Liverpool, the ship and freight were abandoned to the re- the abandonspective underwriters on each, and the abandonment of each ment of the ship is held interest was accepted, and a total loss was adjusted and paid to include the upon the ship, and subsequently a total loss was also adjusted pending and paid upon the freight. The ship and cargo were recaptur- freight. ed and brought into London, and were restored to the owners, on the payment of salvage. The freight was earned by the delivery of the cargo at the port of destination, and was received by the assured for the use of the parties-whether underwriters on the ship or the freight-who should establish their claim to it. The court of King's Bench were of opinion, that the abandonment of the ship transferred to the underwriters on the ship, the whole freight pending at the time of capture, and subsequently earned. Mr. Justice Bayley, however, dissented. He thought that the abandonment of freight transferred to the insurer of that interest the right of receiving the freight.(2) The same case was brought before the court of Exchequer Chamber, where Chief Justice Dallas, giving the opinion of the court, said, 'It is not denied that, generally speaking, an assignment of the ship includes freight, but it is said that it does so because such is the natural effect of such assignment, where there is no agreement between the parties to the contrary; whereas, in cases of abandonment, such agreement is to be implied from the practice of making separate insurances, which Davidson, 5 (2) Case ". M. & S. 79. (1) Davidson Price, 542; S. In New York of the ship carries a rateable part of the pending freight. the law permits; and that the law will therefore keep the interests of the parties separate, giving the freight to the underwriter on freight abandoned.' That such a practice has prevailed is true, but there is a fallacy in confounding the fact of that practice with the legal effect of a contract of insurance. Such a practice, if of sufficient prevalence and notoriety to raise a presumption of general knowledge, would show the understanding of the parties, with reference to which they must be taken to deal, and therefore would form the basis of a contract between those who were respectively privy to it. But it was admitted that there had been no such settled practice; the underwriters on the ship having, in every instance, resisted the claim of the underwriters on freight, asserting that the freight belonged to themselves, as owners of the ship, on the abandonment being made.' "There being then no actual or implied agreement between the two sets of underwriters, what is the legal operation of their respective contracts? In resolving this question, I put no stress upon the fact, that freight passes under a general assignment of the ship; because that appears to me to be begging the ques tion-the question arising on the distinction, existing in cases of abandonment, as being different from common transfer by the ordinary modes.' 'The case seems to me to result to this: in every other case of transfer the freight follows the assignment of the ship; and if abandonment be but a different name for assignment, and the same in effect, unless modified to a different purpose, by the agreement of parties; and if in this case, so far from there being any such agreement, the contrary is to be implied, the reason fails for taking the case out of the general law. Consequently the underwriters on the ship, under an abandonment, are entitled to the freight.'(1) A ship and the freight were insured with different sets of unabandonment derwriters, from Bangor in Wales, to New York. The ship being compelled, by stress of weather and sea-damage, to put into Rivadeo in Spain, was abandoned to the underwriters upon her, who accepted the abandonment, and paid a total loss. The ship, being repaired, afterwards performed the voyage, and earned freight. The freight was insured after the owner heard of the vessel's putting into Rivadeo. The question was made, whether the insurers, to whom the ship had been abandoned, were entitled to the whole, or any part of the freight. Mr. Justice Radcliff said, 'I think the insurer on the ship can in no event gain by means of the freight. The effect of an abandonment is to substitute the insurer in the place of the assured. It bears no analogy to a sale. I can discover nothing to support the insurer's right to recover what he did not insure. By accepting the abandonment, the insurers became owners of the ship, but they could only take her cum onere, subject to the situation in which she was placed, and the engagements of the voyage they had insured, and to the rights of all parties concerned in the adventure. The ship may belong to one per son, the freight to another, and the cargo to a third. Suppose in that case the assured on the ship to abandon, could the underwriters by any construction be entitled to the freight which originally was, and continued to be, the property of another? Mr. Justice Kent said, 'Abandonment, if accepted, is equivalent to an absolute sale of the property. The insurer must consequently become entitled to the freight subsequently earned, for freight is incident to the ownership of the vessel, and follows it as closely as rent does the reversion. All the subsequent charges must be borne by the insurer, and as he takes the burthen, he ought to reap the advantage. And upon principles equally strong, the insurer must be entitled to the freight carning or accruing at the time of the abandonment, in like manner as if a person sell land, after the crop is sown, or assign the reversion before the rent becomes payable, the emblements in one case, and the rent in the other, will pass with the land.' 'If any portion of the freight had already become due, the same would undoubtedly remain with the assured, and not be affected by the abandonment. But the growing freight must pass with the ship, for want of a precise and definite rule of apportionment. The case of a voyage, partly performed, is not susceptible of an accurate adjustment of a rateable freight. It is very questionable whether the owner can preserve his claim against the insurer on freight, if he abandon the ship.' 6 Mr. Justice Benson was also of opinion that the right to the whole pending freight passed to the insurers by abandonment. Lewis, J. My opinion is, that the freight ought to be apportioned, and that the insurers should recover so much as was earned subsequently to the peril that caused the abandonment.' Lansing, C. J. was also of this opinion.(1) (1) Unit. Ins. Co. v. Lenox, 1 Johns. Cas. 377; S. C. 3 Caines, 251. (2) S. C. 2 Johns. Cas. 443. The same case was brought before the court of errors, a majority of whom were of opinion, with Chief Justice Lansing, and Mr. Justice Lewis, that the freight should be apportioned.(2) Accordingly, in a subsequent case of abandonment of ship and freight to the respective sets of underwriters, on account of the capture of the ship after she had performed eight ninths of the voyage insured, the court said,' According to the decision in The United Insurance Company v. Lenox, the underwriters on the freight are entitled, in virtue of the abandonment, to all the (3) Leavenvessel's earnings, previous to her abandonment, that is to say, Delafield, 1 eight ninths; and those on the ship, to the remaining ninth.'(3) Caines, 578. Chief Justice Kent says, 'It was determined in the United Insurance Company v. Lenox, that upon abandonment of the vessel, the owner of freight being also owner of the ship, did not thereby abandon the freight in toto, but retained a certain part to be apportioned pro rata itineris, and therefore to be carried down to the time when the loss happened."(4) In a subsequent case, it is said by the same judge, 'Whether the abandonment of the ship deprives the insurer on freight of his salvage, I need not say, though the better opinion is, that it does.' He adds, that it is a question between the respective insu worth v. (4) Davy v. Hallett, 3 Caines, 20. (1) Livingston v. Col. Ins. Co. 3 Johns. 49. Co. v. Unit. Ins. Co. 9 See Peters v. Rawle, 28; Union Ins. Co. In Massachu setts the pro ratâ freight, rers of ship and freight. 'It would be an anomaly in the law, if, when both ship and freight are insured, you cannot abandon the one subject without defeating your right on the other policy."(1) In a suit between the two sets of underwriters to determine (2) Mar. Ins. their respective interests in the freight pending at the time of the abandonment of both subjects, the court said, 'The rule by which the freight is to be apportioned, appears to be settled with us by the case of The United Insurance Company v. Lenox. Co. 3 Serg. & The principle contained in the final decision of that case, is, that the freight, prior to the loss, goes to the ship-owner, or to his representative, the insurer on freight, to whom it was abandoned; and that the freight earned subsequent to the time of the loss, goes, on abandonment, to the underwriter on the ship.'(2) In a case of constructive total loss by sea-damage, which compelled the ship, on a voyage from Holland to the United States, to put into England, where she was repaired, and afterwards performed the voyage and earned freight, the ship having in the mean time been abandoned, Mr. Justice Putnam, giving the opinion of the court in Massachusetts, said, that as the property in the ship remained in the assured until the time of the loss, the freight or her earnings belong to him till that time, if he stands his own insurer for the freight; otherwise to the insurer on the freight.' The subsequent freight was considered to belong to the insurers, to whom the ship had been abandon(3) Coolidge ed since, the ship, repaired at an expense exceeding half her v. Gloucester value, must, to all legal purposes, be considered a new ship, as Mar. Ins. Co. much as if the insurers had procured a new keel, and wrought up iron and timbers into a vessel of a different kind and form.(3) subsequent to ment, goes to the abandon the insurers. 15 Mass. Rep. 341. 6 All the preceding cases establish the doctrine-which seems to be in itself almost too obvious to need any elaborate reasoning in support of it-that the earnings of the ship belong to the owner. No difficulty occurs in applying this doctrine, except in the case of a freight pending at the time of a total loss, and earned partly before, and partly after, the happening of the loss. An application of the doctrine to this case, evidently requires an apportionment of the freight pro ratâ, between the owners before the total loss, and the insurers, who are the owners after the loss has taken place. The only objection made to this application of the doctrine, is the supposed difficulty of making it; but this objection does not seem to be of great weight, since nothing is more usual than an allowance of pro ratâ freight in other cases, and the difficulty of apportioning freight is not greater than that of adjusting a general or particular average in ordinary cases. Admitting the apportionment to be practicable, of which there can be no doubt, the reasons in favour of making it are quite obvious. There seems to be no reason why the underwriter, to whom the ship is abandoned, should be entitled to the advantages accruing from what she had previously done towards earning freight. The assured must abandon the ship free of incumbrance, and the insurer is not entitled to the benefit of a pending charterparty, or what has been done towards earning freight under it. The insurer is not entitled, in conse quence of the abandonment, to an assignment of the charterparty from the assured. If the assured tranships the goods, and completes the earning of freight, by another ship, the insurer to whom the original ship is abandoned, has no right to object. The terms of the charterparty may prevent this, but as the charterparty is a contract between other parties, the underwriters are not entitled to the benefit of its stipulations. Suppose the goods to be delivered before the freight is paid, it does not appear how the underwriters can recover the whole freight. They cannot recover it under the charterparty, to which they are strangers; and they cannot recover it for services rendered by the use of their ship in transporting the goods, since the goods have been transported in their ship for a part, only, of the voyage. Allowing the underwriters to be freed from any legal embarrassment in recovering the freight directly from the shippers, it does not appear upon what ground they could recover more than the price of transporting the goods subsequently to the constructive total loss. Admitting that the underwriters have a lien on the cargo for the entire freight-which lien they cannot have as owners of the ship, in consequence of the abandonment, but they have it, if at all, as representing, and being substituted for, the assured, as a party to the charterparty-still this affords no reason why they should retain the whole freight, merely because they have the means of enforcing the payment of it. There seems to be no satisfactory reason for allowing the whole freight to the underwriters, unless that alleged by the French writers is to be admitted, who consider the freight earned, or what has been done towards the earning of freight, to be a compensation for the diminution of the value of the ship by wear and tear, and consumption of provisions; which principle is not applicable in England or the United States, where freight is a distinct insurable interest; and where, in case of shipwreck, and the saving of the cargo, and an allowance of freight pro ratâ, for the delivery of the cargo to the consignee at an intermediate port, it has never been suggested or imagined, that the underwriters, to whom the ship is abandoned, are entitled to such freight. This is an exclusion of the principle, that the underwriters are entitled to the freight, as a compensation for the diminution of the value of the ship. Section 18. Amount Recoverable. The assured can recover for a total loss, as such, only the value at which the subject is insured. But besides this amount, the insurers may also be liable for a partial loss on account of repairs actually made, and they may also be liable for expenditures in addition to a total loss. Lord Ellenborough said, 'There may be cases in which, though a prior damage be followed by a total loss, the assured may, nevertheless, have claims, in respect of that prior loss, which may not be extinguished by the subsequent total loss. |