St. Paul Fire & Marine Ins. Co. v. Beacham

• Decision Date: 26 April 1916
• Docket Number: 19
• Citation: 97 A. 708,128 Md. 414
• Parties: ST. PAUL FIRE & MARINE INS. CO. v. BEACHAM.
• Court: Maryland Court of Appeals

97 A. 708

128 Md. 414

ST. PAUL FIRE & MARINE INS. CO. v. BEACHAM.

No. 19

Court of Appeals of Maryland

April 26, 1916

Appeal from Superior Court of Baltimore City.

"To be officially reported."

Assumpsit by Harrison T. Beacham, trading as J. S. Beacham & Bros. against the St. Paul Fire & Marine Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Argued before BOYD, C.J., and BRISCOE, BURKE, PATTISON, URNER STOCKBRIDGE, and CONSTABLE, JJ.

Stuart S. Janney, of Baltimore (Harrington, Bigham & Englar, of New York City, and Ritchie, Janney & Griswold, of Baltimore, on the brief), for appellant.

John H Skeen, of Baltimore (Arthur D. Foster, of Baltimore, on the brief), for appellee.

PATTISON J.

The appellee in this case brought an action of assumpsit against the appellant in the superior court of Baltimore city upon an insurance policy, the certificate of which is incorporated in the declaration. This certificate is dated May 29, 1913, and provides that the company insures the assured in the sum of $2,400 "on bills and disbursements free of particular and general average." The declaration alleges that the effect of issuing said certificate of insurance was that the defendant company insured the plaintiff in the sum of $2,400 against the loss by said plaintiff (on account of marine disaster to the schooner Josephine), of a certain unpaid balance due him on a repair bill for work and labor done and goods and materials furnished by him to and upon said schooner, amounting to the sum of $2,473.17, as of June 7 1913. It also alleges that said schooner Josephine in the month of July, 1913--

"met with a marine disaster while on a voyage from Savannah, Ga., to New York, N. Y., to wit, stranding off Ocracoke, N. C., and as a consequence of said stranding became a constructive total loss, and that said disaster was not a case of particular or general average."

It is unnecessary to state more of the declaration in deciding the question presented by this appeal. The defendant demurred to the declaration, and, the demurrer being overruled, and the defendant failing to plead within the time allowed him, a judgment was entered for the plaintiff upon his motion because of such default of the defendant.

The sole question presented by this appeal is whether the appellant is liable upon the policy sued on in case of "a constructive total loss" of the vessel insured. If it should be held that the insurer is liable in such case, then the demurrer was properly overruled, but, on the other hand, if there is no such liability, the demurrer should have been sustained.

In considering and determining the question involved, it may be well for us to state the meaning of some of the terms here used. By the use of the term "particular average" is meant a partial loss as distinguished from a total loss or a general average loss. 26 Cyc. 670; Hughes on Admiralty, page 83; Arnould (9th Ed.) §§ 1008, 1009, and 1023. A general average loss in marine insurance is the amount lost to the owner of the ship, cargo, freight, or other interest for any voluntary sacrifice made or any extraordinary expense incurred by one interest for the benefit of all, or, as defined by Mr. Hughes, in his work on Admiralty, page 39:

"It is the principle of law which requires that the parties interested in a marine venture shall contribute to make up the loss of the sufferer when there is a voluntary sacrifice of part of the venture made by the master, as representative of all concerned, for the benefit of all."

The certificate in this case was issued free of both particular and general average, and, as we have said, the declaration alleges that there was a constructive total loss of the vessel.

Under the American rule there is a constructive total loss, although not actually total when the insured has the right to abandon the vessel, and this right inures to him if the cost of saving and repairing the vessel exceeds one-half her value when repaired, in which case, the owner, by giving the underwriter notice of abandonment, may surrender his vessel and claim for total loss. By the English rule it is only so when such cost exceeds the full value. Hughes, pages 78 and 80; 26 Cyc. 689; Arnould's Marine Insurance (9th Ed.) § 1117.

There is an actual total loss when the subject-matter is wholly destroyed, or lost to the assured, or where there remains nothing of value to be abandoned to the insured. 26 Cyc. 686; Hughes, 78.

It is conceded by the plaintiff that, to enable him to recover under this policy, it being issued free of particular and general average, it must be shown that there was a total loss of the vessel, but that it need not be an actual total loss; that a constructive total loss is all that need be shown to entitle him to recover. The defendant, however, insists that an actual total loss must be shown; otherwise the plaintiff cannot recover under the policy. It is admitted by the demurrer that there was a constructive total loss, and thus we have only to determine the legal effect of the clause contained in the policy "free of particular and general average."

"'Particular average,' as used in this policy, means partial loss, and 'free of particular average' is equivalent to 'against total loss only."' Pierce et al. v. Columbian Insurance Co., 14 Allen (Mass.) 320. In Adams v. McKenzie, 32 L. J. C. P. 92, a policy of insurance on a ship contained a clause that the insurance was against "total loss only," and there was shown to be a constructive total loss. It was there held that the owners were not excluded by the terms of the policy from recovering upon it. In Heebner v. Eagle Insurance Co., 10 Gray (Mass.) 131, 69 Am. Dec. 308, the policy insuring the steamer Chesapeake and upon which the action was brought contained the clause "against total loss only." One of the questions there presented was whether the plaintiff could recover for a constructive total loss. Chief Justice Shaw, speaking for the court, said:

"The natural and grammatical construction of the language, 'liable for a total loss only,' is, 'any total loss,' as that term is known and understood by those conversant with the practice and law of insurance. The distinction between an actual and constructive total loss is well known and understood; and, if the parties intended to qualify it, and limit the liability, to either particular species of total loss, we think they would so have expressed it. But there is nothing in the policy to indicate that the insurers are not to be liable for a constructive total loss, if perfected as such by an abandonment; and we see nothing in the principles of the law of insurance from which such a distinction can be implied against the letter of the contract. *** There seems to be no reason in the nature of the contract, or of the business to which it refers, why the liability of the insurers should not extend as well to a constructive, as to an actual, total loss. *** All further navigation of the vessel was defeated and put an end to. *** The court are therefore of opinion that under this policy the defendants were liable for a constructive total loss by the perils insured against, if

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