Smith v. Bell , 2 Cai. Cas. 153 ( 1805 )

Per curiam, delivered by Lansing, chancellor.—

On this case, only two questions are presented for the consideration of the court. 1st. Whether, on a policy of insurance, on the estimate of repairs of a vessel, injured by any of the perils insured against, new materials substituted for the old, do not entitle the insurer to an allowance ? and if so, 2d. At what period is the allowance to be admitted ?

These questions are open here. They must, in a great measure, depend upon general reasoning, drawn from the nature of the contract of insurance) and that reasoning may be comprised in very narrow limits.

The vessels employed in commercial enterprises, are of various degrees of strength and durability, and more or less adapted to resist the perils of the seas ; but the lowest grade in which they are recognised, as subjects of insurance, is when they are barely seaworthy.

The hull, masts, sails and rigging of a vessel may be in a situation to constitute her seaworthy, and yet be much inferior to what they were when they came from the hands of the workmen who constructed them; and a regular gradation may easily be conceived between a vessel perfectly new, well-built, rigged and furnished, and one that is barely seaworthy. When an injury is sustained by a vessel of the latter description, and it becomes necessary to supply her old masts, timbers, sails and rigging with new, it is evident that in all these particulars, she must, in most instances, be placed in a better state by the repairs, than she was before the injury received, the ordinary wear and tear not being within the purview of the policy. Hence, the repairs are carried to a point beyond the mere reinstatement of the vessel, and beyond the indemnity intended.

In the case of Da Costa v. Newnham,^* determined in the British court of King's Bench, since the revolution, the usage which obtained with respect to the repairs of allowingone-third, new for old, seems to have been acknowledged, and it is now urged in argument, that at any rate, whether or not the defendant was entitled to this allowance, was a question for the jury, as it depended upon usage.— Butter, justice, speaks of it as a usual .allowance, and Ashhurst, J. observes, that the allowance of one-third of the repairs, is the rule, where the ship is repaired and delivered over again to the owner, for his benefit. That case arose, on a technical total loss, which the insured did not avail himself of, by abandoning. The recovery was for an average loss of upwards of eighty per cent. The ship had been repaired at the instance of the insurers. They refusing to pay for the repairs, a bottomry bond was executed on the vessel, in consequence of which, she was sold to satisfy the debt.

It was contended that the value of one-third of the repairs ought to be deducted, and the answer to this, which appears to me conclusive, was, that the repairs, having added to the value of the vessel, must have been compensated for, in the sale, on the bottomry bond, and the owners never had the ship, so they could not be the better for the repairs.

From the expressions made use of by the judges, who decided this case, it does not appear that they relied upon the usage of any particular trade ; but upon the usage of trade generally; and as there is no power on earth, to enact positive regulations for the wide extended regions of marine enterprises, general usage, established from the principles of general convenience, and sanctioned ~by the experience and practice of merchants, is the only source of general maritime law.

The rule that constitutes the loss of more than one-half the value of the subject insured, a total loss, is a positive one, originating in the convenience of having a determinate and precise test in all cases, which, by its universality and uniformity, may render inquiries into minute objects, rather calculated to perplex than to elucidate, unnecessary.

The precise difference between the value of the old and new materials, must generally be difficult to ascertain. That difficulty is much increased, by the estimate necessarily required of the value of the old, at the home port, and of the new, at the port of repair. It is, therefore, desirable, to have some invariable standard, not calculated, for that is impracticable, to meet precisely all the variety of cases, which may occur, so as to render exact justice in .each ; but such a rule as will nearest approximate to producing that effect, if generally applied. That effect, if a rule respecting the subject is to obtain, it was not contended, might not be produced in the pro. portion alluded to in the case of Da Costa v. Newnham. From the nature of the contract of insurance, I think the allowance for replacing the old materials, with the new, is reasonable and proper; and, if so, that, as the deduction is professedly made, on the principle that the value of the subject insured, has been-enhanced to that amount, that deduction ought to be made, before the test of technical total loss or not is applied; for the doctrine of technical total loss is expressly founded on the position that the subject insured, has been deteriorated more than one-half.

I am, therefore, of opinion, that the judgment of the supreme court be reversed.

Judgment of reversal.

* 2 D. & E. 407. 413. 411.