Gilchrist v. Chicago Ins. Co.

• Decision Date: 19 May 1899
• Docket Number: 446.
• Citation: 104 F. 566
• Parties: GILCHRIST et al. v. CHICAGO INS. CO. et al. [1]
• Court: U.S. Court of Appeals — Seventh Circuit

104 F. 566

GILCHRIST et al. v. CHICAGO INS. CO. et al. ^[1]

No. 446.

United States Court of Appeals, Seventh Circuit.

May 19, 1899

Robert Rae, for appellants.

C. E Kremer and John C. Richberg, for appellees.

Before HARLAN, Circuit Justice, and WOODS, Circuit Judge.

HARLAN Circuit Justice.

The case made by the amended libel is as follows:

On or about the 6th of May, 1894, the schooner American Union owned by the respondent Annetta S. Godman, while prosecuting a voyage on Lake Huron, was stranded at Thompson's Harbor, and thereafter, on the 19th of May, 1894, went to pieces and became a total wreck.

Before and at the time of the disaster the respondent companies were underwriters on the vessel, as follows: Chicago Insurance Company of Chicago, $1,500; London Assurance Company of London, England, $1,500; Western Assurance Company of Toronto, Canada, $2,000; and Commercial Union Assurance Company of London, England, $1,000.

At the time of the insurance the vessel was valued at $9,000, so that its owner became and was her own insurer for $3,000.

The respective policies of the underwriters provided that 'no abandonment in any case whatever, even when the right to abandon may exist, shall be held or allowed as effectual or valid, unless it shall be in writing, signed by the insured and delivered to the said company or its authorized agent nor unless it shall be efficient, if accepted, to convey to, and vest in, the said insurance company as unincumbered and perfect title to the subject abandoned.'

On the 19th of May, 1894, James Godman, the master and attorney in fact of the owner, made a verbal abandonment of the vessel, and afterwards, on the same day, in accordance with the provisions of the policies, made a like abandonment in writing, serving the respondents with proofs of loss on the 4th day of June, 1894. No objection was made to the abandonment on the part of the underwriters.

The policies also contained a provision that, 'in case of loss or misfortune to said vessel, it shall be lawful and necessary to and for the insured, her agents, factors, servants, and assigns, to give insurers prompt notice of the disaster, and submit the plan adopted for recovering and saving the property, and to make all reasonable exertions in and about the defense, safeguard, and recovery of the said vessel, or any part thereof, without prejudice to this insurance; and after recovery and the holding of a survey, made under oath by two persons, * * * the insured is to cause the same to be forthwith prepared in accordance with the surveyors' specifications;' and they further provided that 'to the expenditures and amount whereof the said insurance company will contribute according to the proportion the sum insured bears to the valuation aforesaid.'

While the vessel lay stranded, as above stated, the respondents employed libelants, the present appellants, as wreckers for the purpose of saving the vessel or as much thereof as could be saved.

In pursuance of that employment, the libelants went to the wreck with a large and valuable amount of wrecking apparatus, tackle, apparel, and furniture, box hawsers, lighters, and diving outfits, and a large number of men, worked at and upon the vessel for a period covering (including the return of the outfit to the port of departure) some 30 days or more, and laid out and expended in the saving of the vessel, at the request of the agents of the respondents, a very large sum of money; the job being completed on or about the 18th of May, 1894.

The services so rendered were necessary and proper in order to save the vessel, and the prices charged for labor and materials, pumps, hawsers, lighters, and diving outfits, amounting to the sum of $3,665.75, with interest from May 18, 1894, were reasonable and customary for like services.

The libelants saved from the wreck the vessel's tackle, apparel, furniture, anchors, chains, boats, rigging, sails, and the like, which were taken possession of by the wrecking master of the underwriters and sold, the proceeds being received by him as the representative of the underwriters.

By the custom of the Great Lakes and seas, and by the maritime law, the salvage charges were in the nature of general average charges and expenditures, and by the custom of merchants were to be adjusted and paid as such.

An adjustment of the expenditures was made at the port of Chicago, according to the custom at that port, by competent adjusters of marine losses, copies of the adjustment being served on the respondents, respectively, before the time fixed for the payment of the loss to the owner by the underwriters, and within 60 days from the date of abandonment and proofs of loss served by the owner upon the underwriters.

The libelants claimed that there was due to them the above sum of $3,665.75, with interest.

The Western Assurance Company of Toronto in its answer denied that it ever employed the libelants or any one else as wreckers for the purpose of saving the vessel or as much thereof as could be saved, or that it ever authorized the employment of the libelants or any one else for that purpose, or that the libelants in pursuance of any agreement with the respondent performed the wrecking services set forth in the libel, and averred that, if any of the salvage mentioned in the libel was received and sold by any one, it was not as its representative or agent or on its behalf. It alleged that it insured the owner of the vessel against loss by the perils of navigation for $2,000, upon a valuation of $9,000 for the vessel, with the right to demand other and further insurance upon the vessel for $4,000, leaving an uninsured interest at the risk of the owner of the vessel of $3,000, so that the interest of the respondent amounted to and did not exceed a two-ninths interest, and it could in no event be held liable for any charges or claims incurred on behalf of the vessel to the extent of more than two-ninths thereof. It further alleged that in consequence of the loss of the vessel, together with her freight, if any there was pending, the same was totally lost, and was of no further value, and respondent claimed the benefit of the act of congress passed June 26,1884, and of the eighteenth section thereof, wherein it is provided that the individual liability of one who has an interest in the vessel shall be limited to the proportion of any and all debts and liabilities which such interest in the vessel bears to the whole, and that the aggregate liabilities of such interest in the vessel on account of the same shall not exceed the value of the vessel and freight pending. The respondent, in claiming the benefit of that act, said that by the total loss of the vessel and her freight pending it was not liable for the whole or any part of the claim of the libelants, and that if any liability ever existed the same was and became extinguished by the total loss of the vessel and her pending freight.

Similar defenses were made by the other underwriters, who filed a joint answer to the amended libel.

Respondent Annetta S. Godman, in her answer to the original libel, after stating that the vessel became a complete wreck, and that the master gave notice of the abandonment of the vessel to the underwriters, averred that as soon after such abandonment as she had opportunity to do so, namely, on the 4th of June, 1894, she served her proofs of loss on the insurance companies, executing a written abandonment as required by the policies of the respective companies; that on the same day she conveyed all her right, title, and interest in the vessel, her bills of sale and abandonment being duly accepted by the companies without objection; and that afterwards all of the underwriters paid the full amount of her loss to the extent of the face of the policies. She also averred that the underwriters by virtue of the abandonment became from the moment of the casualty the owners of the vessel, and that she (respondent) ceased to have any interest therein, and that the master of the vessel became the master of the underwriters from that time until the vessel became a total loss. She further insisted that in consequence of the abandonment and loss of the vessel, together with her freight, if any there was pending, the vessel became and was a total loss, and was completely destroyed, and of no further value to her at the moment of the casualty; but if it should be found that she was owner of any interest in the vessel after the moment of the casualty, or would be liable for any portion of the salvage services, she claimed the benefit of the act of congress of June 26, 1884, § 18.

After the district court filed its opinion in the case (79 F. 970), but before a decree was entered, that court, on motion of the libelants, dismissed the libel as to the respondent Annetta S. Godman.

A decree was rendered in the district court adjudging that the libelants recover from respondents, the underwriters, the sum of $2,296, or two-thirds of the amount claimed, each underwriter paying in proportion to its interest in the vessel. From that decree the libelants have prayed and were allowed by the district court an appeal to this court. In a petition for an appeal which was allowed August 2, 1897, the libelants stated that they would seek a new decision on so much of the cause as denied to petitioners the whole of their demand.

After the decree in the district court the respondents filed what is called in the record a 'writ of cross errors,' to the effect that the court erred (1) in finding that the respondents were not entitled to the benefit of the act of congress passed June 26, 1884; (2)...