seem to be agreed, that when an abandonment is made, it must be CHAP IX. a total, not a partial one; that is, one part of the property insured shall not be retained and the other part abandoned; a regulation certainly founded in justice.a The propriety and justice of abandoning in certain cases to the insurers being apparent, it will be proper to consider in what cases and under what circumstances the insured is intitled to exercise this power for although in all cases the insured has a right to say he will not abandon, yet he cannot at his pleasure harass the insurer by saying he will abandon, and thereby turn that which, in its own nature, was only a partial, into a total loss.b In questions of this nature, the opinion of learned foreigners Foreign must always have weight, because they are not questions of positive jurists. regulation or municipal law, but of general and extensive import, not confined to any particular state, but founded on the great principles of reason, justice, and universal law. But in no country have the principles of abandonment been more accurately defined than in England, and it must be remembered that the decisions from which the following principles are selected are of the greatest authority; that they are not merely the opinions of private speculative men, but the solemn and deliberate judgment of the grave and learned judges of the English courts-judgments formed after mature deliberation and serious argument, some confirmed on appeal to the House of Lords-all established upon the solid and permanent basis of reason and good sense. From these decisions we gather this general rule: namely, that if the General subject-matter insured remain in specie, though in a damaged state, rule. a notice of abandonment is necessary to entitle the assured to make a claim as if it had been actually destroyed. But if the property do exist in specie, in a damaged state, may he abandon in all cases? No; he can only abandon when he is in a condition to satisfy a jury that an owner, if on the spot and uninsured, and acting prudently, would abandon the adventure.c There may be a total loss of part of the freight, but there can be Loss of no partial loss of the whole. If the owner of the ship he interested freight. in the freight as well, an abandonment of the ship is an abandonment of all his interest in both ship and freight. But if the loss of freight arise from the abandonment of the ship, and not from a peril issued against, the underwriter is not liable. In Roux v. Salvador the important question arose, whether, when a total loss has taken place before the termination of the risk incurred, with a salvage of a portion of the subject insured, which is surance. sold. Park on In- converted into money, the insured is bound to abandon before he can regain for a total loss. But the court said the abandonment Where part was not in that case necessary; as to the sale it was said: When is saved and such a sale takes place, and in the opinion of the jury is justified by necessity and a due regard to the interest of all parties, it is made for the benefit of the party who is to sustain the loss; and, if there be an insurance, the net amount of the sale, after deducting the charges, becomes money paid and received to the use of the underThe assured writer, upon the payment by him of the total loss. Mark, the assured may preclude himself from recovering as for a total loss, if, clude him- by any view to his own interest, he voluntarily does or permits to be covering, as done any act whereby the interests of the underwriter may be prefor a total judiced in the recovery of that money.” may pre self from re loss. A party is not in any case obliged to abandon; neither will the No obliga- want of an abandonment oust him of his claim for that which is in tion to aban- fact an average or total loss, as the case may be on the other hand, a partial loss cannot be converted into a total by notice of abandonment.b don. Requisites of notice. An abandonment to the underwriter on ship transfers to him, not merely the hull, but the use of the ship, and the advantages resulting from the completion of the voyage. A notice of abandonment is still necessary, though the ship or cargo has been sold and converted into money when the notice of the loss is received.d In Knight v. Faith the question was raised, whether notice of abandonment might be dispensed with when there has lawfully been a sale by the master, but as the sale there was not shown to be lawful, the court declined to express any opinion therein.o The not 'ce of abandonment may be by parol or by word of mouth; but the prudence of giving it in writing, and of using the word abandon, is too obvious to need further remarks. It should be express and direct,f and unconditional. It must be an abandonment of the whole and not of part. It must be given within a reasonable time after the assured has received intelligence of the loss, and extent of damage has been ascertained. But if the insured, hearing that his ship is much disabled and has put into port to repair, express his desire to the underwriters to abandon, and be dissuaded from it by them, and they order the repairs to be made, they are liable to the owner for all the subsequent damage occasioned by that refusal, though it should amount to the whole sum insured. Because the reason why notice of abandonment is deemed necessary, is to prevent surprise and fraud upon the underwriter, but in the case a n. b. ; and Mellish v. Andrews, 15 East, 13. Fleming v. Smith, 1 H. of L. Ca. c Carr v. Davidson, 5 M. & S. 79. e 15 Q. B. 656. f Thelluson. Fletcher, Esp. 73; Parmeter v. Todhunter, 1 Camp. 541. 8 Ib.; and McMasters v. Shoolbred, 1 Esp. 237. h Marsh, 600; 2 Wms. Saund. 203, n. i Mitchell v. Edie, 1 T. R. 608; Mellish v. Andrews, 15 East, 15; Aldridge v. Bell, 1 Stark, 498; Gorham v. Sweeting, 2 Wms. Saund. 203, n. put, they have, by their own act, superseded the necessity of CHAP. X. notice.a It seems to have been formerly thought that, if the right of abandonment once vested, and was acted upon in time, it could not afterwards be divested by subsequent intelligence of other circumstances and events; but this is not so now.b Once a total loss, always so, is no longer a principle of our insurance law. We have thus taken a view, in this and the eight preceding chapters, of the nature of that instrument by which the contract of insurance is effected; and of the different modes by which it may be construed. We have treated of the various losses, to which the underwriter subjects himself by that contract; we have shown when the losses are to be considered as partial, when as total; and in what cases, and under what circumstances, the insured shall be allowed to abandon to the underwriter. The course of our inquiry now naturally leads us to observe in what instances the insurer is discharged from any responsibility; either on account of the contract being void from its commencement, by reason of some radical defect; or because the insured has failed to perform some of those conditions necessary to be fulfilled on his part, before he can call upon the insurer for an indemnity. CHAPTER X. FRAUD. In treating of those causes which make policies void from the beginning, or, in other words, which absolutely annul the contract, it will be proper, in the first place, to consider how far it will be affected by any degree of fraud. In every contract between man and man, openness and sincerity are indispensably necessary to give it its due operation; because, fraud and cunning once introduced, suspicicn soon follows, and all confidence and good faith are at an end. contract can be good unless it be equal; that is, neither side must have an advantage, by any means, of which the other is not aware. No This being admitted of contracts in general, it holds with double force in those of insurance; because the underwriter computes his risk entirely from the account given by the person insured; and the efore it is absolutely necessary to the justice and validity of the contract that this account be exact and complete. Accordingly, the learned judges of our courts of law, feeling that the surance. b Park on In- very essence of insurance consists in a rigid attention to the purest good faith and the strictest integrity, have constantly held that it is vacated and annulled by any the least shadow of fraud or undue concealment. After what has been said, it will hardly be necessary to mention that both parties, the insurer and insured, are equally bound to disclose circumstances that are within their knowledge; and, therefore, if the insurer, at the time he underwrites, can be proved to have known that the ship was safe arrived, the contract will be equally void as if the insured had concealed from him some accident which had befallen the ship. In perusing the numerous cases and decisions which, I am sorry to say, are to be found in our books under this head, it occurred to me that they were liable to a threefold division 1st, The allegation of any circumstances, as facts, to the underwriter, which the person insured knows to be false; 2ndly, The suppression of any circumstances which the insured knows to exist, and which, if known to the underwriter, might prevent him from undertaking the risk at all, or, if he did, might entitle him to demand a larger premium; and lastly, a misrepresentation. The last of these, a misrepresentation, seems to fall under the first head, the allegatio falsi; and so, in some measure, it does; because wherever a person knowingly and wilfully misrepresents anything, he asserts a falsehood. But it was thought necessary to make a division for itself; because, if a material fact be misrepresented, though by mistake, the contract is void, as much as if there had been actual fraud: for the underwriter has computed his risk upon information which was false. Of each of these in order. Kinds of fraud. d From the cases under the first head we may collect this principle, that a false assertion in a policy will vitiate the contract, even though the loss happen in a mode not affected by that falsity. An observation is suggested by the perusal of the case of Woolmer v. Muilman. It arose upon a warranty; and the learned judges declared that, the warranty being false, there was no contract. Now, as we shall see when we come to the chapter on Warranties, the general rule with respect to them is this, that the non-compliance with them does not vacate the contract from the beginning; but it amounts to much the same thing, namely, that the insured, not having complied with those conditions which he had taken upon himself to perform, cannot recover against the underwriter. But the following answer is submitted, which, if allowed, will reconcile any seeming difference that arises in the cases upon the subject. Wherever a man warrants a thing to be true, which at the time he does so he must unavoidably know to be false, it comes under the allegatio falsi, and the contract is void, as in the case just reported. But if he warrant or undertake that a certain thing shall be done, for instance, that a ship shall sail with convoy or on a particular day, these being circumstances materially varying the risks, the underwriter shall not be responsible a 2 Black. Comm. 460; Grot. de Jure Belli, lib. 2, c. 12, s. 23: Puff. de Jure Nat. 1. 5, c. 9, s. 8; Bynk. Quest. Jur. Priv. 1. 4, c. 26; Code de Com. 1. 2, tit. 10, s. 1. b Carter v. Boehm, 3 Burr. 1909. c Dougl. 247. d Woolmer v. Muilman, 3 Burr. 1419; McIntosh v. Marshall, 11 M. & W. 116; Elkin v. Janson, 13 lb. 659. for a loss if they are not complied with: but the contract is not void · CHAP. X. from the beginning, nor does the insured incur any moral guilt, because they do not depend entirely for their performance upon the will of the person insured, nor could they be within his knowledge at the time he entered into the contract. A short time after the case of Woolmer v. Muilman had been decided, another very similar case came on at Guildhall, before Ld. Mansfield. It was an action on a policy of insurance on goods laden on board such a ship, warranted a Portuguese. The insurance was made during the French war, when the premium would have been much higher on an English ship. The plaintiff gave partial evidence of her being a Portuguese, and that she was obliged, on account of perils of the sea, to put into a French port, by which the cargo was spoiled. This was admitted by the defendant, who contended that, during her stay at the French port, she was libelled, and condemned as not being Portuguese; and that, although the goods were lost by a different peril, yet in fact the ship was not Portuguese (being insured as such), and that this vitiated the policy ab initio, and this was agreed to be law. In order to prove that she was not Portuguese, the defendant produced the sentence of condemnation, and the confirmation thereof in the courts of France; and an answer of the present plaintiff in the Court of Chancery here, by which it was admitted, that the ship was condemned as not being, or under pretence of not being, Portuguese. Ld. Mansfield:- 'As the sentence is always general (without expressing the reason of the condemnation), attested copies of the libel ought, in strictness, to have been produced, to show upon what ground the ship was libelled against. But, as the plaintiff has by his answer in Chancery admitted that she was condemned as not being Portuguese, when added to the expression used in the sentence of confirmation, that the ship was condemned in the court of prizes, there is sufficient evidence for us to proceed upon." The defendant, the underwriter, had a verdict. The second species of fraud which affects insurances is the concealment of material circumstances known only to one of the parties entering into the contract. Upon this head the principles of law are perfectly clear, free from doubt or possibility of error. Concealment of material circumstances vitiates all contracts, upon the principles of natural law. Insurance is a contract of speculation. The facts upon which the risk is to be computed lie, for the most part, within the knowledge of the insured only. The underwriter must therefore rely upon him for all necessary information, and must trust to him that he will conceal nothing material, so as to make him form a wrong estimate. If a mistake happen, without any fraudulent intention, still the contract is annulled, because the risk is not the same which the underwriter intended. As well expressed in a recent case, material mis-statement or concealment vitiates the contract; and whether it be fraudulently made or not is a matter which is wholly immaterial, except with reference to the return of the pre a Fernandez v. De Costa, Sitt. after Hil. T. 4 C. 3. 1 Black. Rep. 465. c Ib. 594. |