U.S. Supreme Court
Insurance Company v. Gossler, 96 U.S. 645 (1877)
Insurance Company v. Gossler
96 U.S. 645
1. So long as a vessel exists in specie in the hands of the owner, although she may require repairs greater than her value, a case of "utter loss," within the meaning of a bottomry and respondentia bond does not arise, and she continues subject to the hypothecation.
2. The holder of such a bond, which was conditioned to be void should an utter loss from any of the enumerated perils occur, is, upon a wreck of the vessel during the specified voyage not amounting to such loss, entitled to the proceeds of the cargo saved by his efforts, as against the insurers thereof, who accepted an abandonment by the owners as for a "total loss" and paid the amount of their policies, said proceeds being insufficient to satisfy the bond. So held in this case, which relates solely to such proceeds.
The plaintiff, the Delaware Mutual Safety Insurance Company, was insurer of a cargo of sugar on board the Frances from Java to Boston. After leaving her port of departure, the vessel encountered a hurricane, which compelled her to proceed to Singapore, where she was repaired and fitted to continue the voyage.
To meet the expenses of repairs, the master was obliged to borrow at Singapore the sum of $26,055.43, Singapore currency, and to execute, on the twelfth day of July, 1872, a bottomry bond for that sum, with marine interest at twenty-seven and a half percent, upon the vessel and freight.
The bond contained the following stipulation:
"Provided nevertheless, and it is hereby agreed, that if, in the course of the said voyage, an utter loss of the said vessel by fire,
lightning, enemies, men-of-war, or any other perils, dangers, accidents, or casualties of the seas or navigation, shall unavoidably happen, then the said loan and interest shall not be payable, and all parties liable therefor shall be wholly discharged therefrom, and the loss shall be wholly borne by the said lenders or bondholders, and everything herein contained for payment thereof shall be void and determined, save and except only, and provided in such case, that the said lenders or bondholders shall be entitled to such average as can be hereby lawfully secured to them on all salvage recoverable in respect to the said vessel, freight, and goods, or any of them."
The vessel sailed from Singapore for Boston, encountered a storm in the month of December following, and was cast ashore on Cape Cod, Mass.
The defendants, Gossler & Co., who were agents of the bondholders and assignees of the bond, succeeded in saving somewhat less than half the sugar on board, and forwarded it to Boston.
The vessel, as she lay upon the beach, was surveyed, and, having been found incapable of repair, was broken up, and her materials were sold. When she was sold, she lay "on the beach, full of water, as high as she could, but so low as to be submerged at high water." The chains and anchors, sails and rigging and hull were sold separately at auction by the underwriter in January, 1873; the chains, anchors, and other utensils bringing $1,494.75, the sails and rigging, $2,323.70, and the hull $2,000.
Upon learning of the disaster, the owners of the cargo made abandonments in writing to the plaintiff as the underwriter thereon, and claimed payment for a total loss under their respective policies.
The letters of abandonment were dated, respectively, Dec. 28, 30, and 31, 1872.
In March, 1873, the plaintiff paid to each owner the amount of a total loss under his policy, and received on the same date from them so insured and paid an assignment and transfer in writing of "the sugar of said owners and all their right, title, interest, trusts, claim, and demand therein and thereto." chanroblesvirtualawlibrary
The defendants, as agents of the bondholders, with the consent of the owners of the cargo, proceeded to sell the sugar saved, and now hold the proceeds, claiming them on account of said bond, such proceeds not being sufficient to satisfy it. The plaintiff, having at all times claimed them as the underwriter who accepted abandonments and paid a total loss thereon, brought this action to recover them.
The case was tried by the court below, and, judgment having been rendered for the defendants, the company brought the case here. chanroblesvirtualawlibrary