author: By the Court, Monell, J. McCunn, J. (dissenting.)

text:
    David Wallerstein, et al. plaintiffs, vs. The Columbian Insurance Company, defendants.
    An insurance of a cargo in bulk, “ free of particular average,” does not cover a total destruction of the value of the thing insured, by perils insured against, if any of the articles comprising such cargo remain in specie. McCum, J. dissented.
    (Before Moncrief, Monell, and McCunn, JJ.)
    Heard December 11, 1865;
    decided December 30, 1865.
    This action was brought to recover $20,000 upon an open policy of insurance, made in February, 1862, whereby the defendants insured the plaintiffs “ on merchandise free of particular aver age,” by vessels from ports in Europe to New York, risks to be reported for indorsement as soon as known to the assured. In January, 1863, the plaintiffs reported for indorsement 801 bags of coffee, and sixty-four bales of wool, from Havre to New York, by the ship Mortimer Livingston. The indorsement was made accordingly, the defendants adding to the indorsement of each parcel the words u free from particular average.” The ship left Havre in December, 1862, and on the 24th of January, 1863, she went ashore off Cape May, in the state of New Jersey. She became imbedded in the sand, with the water over her main deck at high tide. Her cargo was submerged. The plaintiffs formally abandoned to the defendants both the wool and coffee. The right to abandon was denied by the defendants, and was refused. While the ship lay in this condition, an agreement was made by agents of the ship’s owners, assuming to act for the benefit of all whom it might concern, with a company of wreckers, to save and deliver in New York as much of the cargo and materials as could be saved ; they to receive sixty per cent of the net proceeds. Sixty-one bales of the plaintiff’s wool were taken from the ship, brought to New York, delivered to the ship’s agents, and by them" sold at auction for $1100.02, beyond the auctioneer’s charges. ' A small portion of the coffee was got up from the vessel, swollen with sea water and discolored ; placed in 203 new bags and sent to New York. The coffee lay for several weeks- in the public store after it was landed in New York, when it was sold at auction by the same ship’s agents, realizing $2.44 over the charges and expenses. The process of rescuing the coffee was by dipping it up out of the hold of the vessel with a skimmer ; it was then washed in salt water, and put in new bags sent on from New York. When taken from the ship and landed in New York, the coffee had all" the appearances of coffee, being in kernals or grains, but it was so damaged as to be absolutely worthless.

    A motion was made to dismiss the complaint, which was denied, and the defendants excepted.
    The jury found specially, that the coffee when gotten out of the vessel, at the place of the wreck, was of no value whatever. That the fair value of the labor of getting the coffee out of the vessel and transporting it to New York was $776. That the coffee was gotten out of the vessel and brought to New York by the defendants, at their cost and expense, and that their motive was to make a partial loss.
    The jury also found specially that the coffee, or some considerable portion of it, was, at the time of the wreck, capable of being'transported to New York.
    The jury gave a verdict for the plaintiffs for $22,383.86. The judgment was suspended and the exceptions directed to be heard in the first instance at the general term.

      0. O’Gonor and Theodore O. Gone, for the plaintiffs.
    1. The warranty against particular average is only intended to exempt the underwriters from liability for mere deterioration of, or injury to, a subject insured, and any loss or expense incurred in consequence of such deterioration or injury. Consequently, the defendants were liable for the value of all the coffee and wool which, not being brought off from the wreck, was totally lost.
    1. Whatever may be the inferences deducible from judicial dicta, this is manifestly the import of the warranty. (Mr. Justice Shee’s note No. 1 to Marshall on Ins. p. 603, 5th ed.)

      2. No part of the printed matter contained in a policy reconcilable with the portion in manuscript, is to be set aside by the latter. (Phillips on Ins. § 125. Coster v. Phœnix Ins. Co., 2 Wash. C. C. Rep. 53. Delonguemare v. Tradesmen’s Ins. Co., 2 Hall, 623, 628. Wallace v. Ins. Co., 4 Miller’s La. Rep. 291. Robertson v. French, 4 East, 136.)
    3. By the express terms of this particular policy, all perils of the sea' to “ any part ” of the property put at risk are insured against, unless it be an average or partial loss of such part. This is manifestly an insurance against the total loss of any distinct part.
    II. Under the most rigorous and unfavorable view as ’against the insured which has ever been taken of the clause in question, the underwriter is liable for the total loss of a distinct species ; as, for instance, an entire loss in this case of the wool or of the coffee. Though shipped in the same vessel and constituting part of the same cargo, each distinct species is regarded as the subject of a distinct insurance within the true intent and proper application of the warranty against particular average. (Biays v. Chesapeake Ins. Co., 7 Cranch, 418. Humphreys v. Union Ins. Co., 3 Mason, 440. Guerlain v. Columbian Ins. Co., 7 John. 527. Brooke v. Louisiana State Ins. Co., 4 Martin, N. S. 640. Same v. Same, 5 id. 530. Wadsworth v. Pacific Ins. Co,, 4 Wend. 40, 41, 44. Newlin v. Ins. Co., 20 Penn. R. 317. Ins. Co. v. Bland & Coleman, 9 Dana, 154 to 157, 148. Williams v. Cole, 4 Shepley’s Maine, R. 209. Professor Sharswood, in his note to vol. 67 of the English Com. Law Rep. Phila. citing 2 Arnould on Ins. 855. Ralli v. Janson, 6 Ellis & Blackb. 446; see comment on 'this, 3 Com. Bench, N. S. J. Scott, 19. Duff v. Mackenzie, 3 Com. Bench. N. S. 16. Wilkinson v. Hyde, 3 id. 30. Baily on the Perils of the Sea, 23,24, 25. Shee’s Marshall on Insurance, 182, note b.)

    III. There was what amounts in law to a total loss of the coffee.
    1. When, by a peril, insured against, as, for instance, a total loss of the vessel, the voyage is defeated, and the goods cannot be carried to the port of destination for want of a conveyance, or the disaster has placed the goods in such a condition that they cannot he carried to the port of destination, except at a cost exceeding their value at that place, the loss on the goods is to be treated as total. When such a state of things exists, there is no distinction, as to the rights of the insured, between an insurance against total loss only, and one in the ordinary form. (Delaware Ins. Co. v. Winter, 38 Penn. R. 187. Poole v. The Protection Ins. Co., 14 Conn. R. 47. Roux v. Salvador, 3 Bingham’s N. C. Rep. 266. Phillips on Insurance, §§ 1766 to 1772. Tudor v. New England Ins. Co., 12 Cush. 556. Rosetto v. Gurney, 11 Com. Bench R. 176.)
    2. Cases in which the ship has remained navigable, or has been repaired so as to be capable of pursuing her voyage, and the underwriter, therefore, is "not chargeable merely because a deterioration of the cargo (the very thing excepted from his undertaking) has rendered it unprofitable or inexpedient to to send it forward, are quite irrelevant. (Saltus v. Ocean Ins. Co., 14 John. 145, note a, to p. 141. Maggrath v. Church, 1 Caines, 212, 213. Neilson v. Col. Ins. Co., 3 id. 108, 109. 3 Kent’s Com. 297, side paging.)

    3. Destruction of the ship during the voyage, produces, under this clause, as in all other cases, a loss of the voyage, and, prima facie, a total loss of the cargo. It is true, that if another ship can be procured, it being the duty of the master, qua agent for the shipper, to send the cargo forward, his neglect of that duty will not charge the underwriter. His act in voluntarily relinquishing the adventure which he had the means of prosecuting" to a successful issue, is the act of the shipper.
    4. In the case under consideration, the master had not, in judgment of law, any sufficient means for carrying the adventure to a regular and successful termination. It was an absolute wreck at sea ; not a temporary interruption at or near an intermediate port. (Saltus v. Ocean Ins. Co., 12 John. 111. 18 id. 210. Treadwell v. Union Ins. Co., 6 Cowen, 274.) Sending forward the coffee would have been wantonly mischievous. The ship owner could only earn freight by it at a cost to himself far exceeding the freight earned. To the shipper it would have produced no result except an absolute loss of the freight exacted from him. Consequently, the master did not owe either to the ship owner or the shipper, his only principals, any duty in the premises. (De Caudre v. Swann, 16 Com. B. N. S. 781, 782, 795.) Whether insurance or not, this would be an accurate view of the facts, and of the relations of all concerned in the adventure.
    5. Under insurances against total loss only, there may be an abandonment for a constructive total loss. (Adams v. Mackenzie, 32 Law Jour. N. S. Com. Pleas, 99. 9 Jurist, N. S. 849. S. C. 13 Com. Bench, N. S. 442. Granger v. Martin, 2 Best & Smith, 467, 168. S. C. affirmed, 4 id. 12.)
    6 If the wreckers had brought the coffee to New York, it would not have entitled the ship owners to freight, or barred a claim for a total loss on the policy in suit, (a.) When a salvor brings home goods from a wreck, the ship owner acquires thereby no title.to freight. The owner, if he accepts the goods, pays salvage for the service rendered, instead of freight for the attempted service which failed. • (Dunnett v. Tomhagen, 3 John. 156, (6.) The operation, if performed by the wreckers, would have been a salvage service. The idea of general average was wholly inapplicable to it. (Heyliger v. Fireman’s Ins. Co., 11 John. 85. Lewis v. Williams, 1 Hall’s R. 443, 444. Great Ind. Peninsula R. R. Co. v. Saunders, 1 Best & Smith, 52. (c.) Where every other circumstance necessary to constitute a physical total loss in every sense, is found to concur, the fact that some part, of insignificant value, is saved by extraordinary effort, stimulated by the hope of extraordinary gain, will not prevent the loss from being deemed total, within the true intent and meaning of the clause in question. (Bryan & Maitland v. New York Ins. Co., 25 Wend. 618.) (d.) In the judgment of common sense, the loss was total. (Moss v. Smith, 9 Man. Gran. & Scott, or 9 Com. Bench, 102 to 104. Farnsworth v. Hyde, 29 Lond. Jur. N. S. 349. Lozano v. Johnson, 2 Ellis & Ellis, 178. Granger v. Martin, 2 Best & Smith, 467, 468.) (e.) All the acts of Boyd & Hincken, and of the wreckers were, as it respects the interest of Wallerstein & Kunst in the coffee, illegal and tortious. No part of it ever came in any way to the use of Wallerstein & Kunst. (The Hamburg, 32 Law Jour., N. S., Adm. 161. S. C. on appeal, Durant v. Hart, 33 id. Adm. 115. Richardson v. Young, 38 Penn. Rep. 175. Bryant v. Commonwealth Ins. Co., 13 Pick. 552, 553.)
    7. The interposition of the underwriters to carry to New ■York, by great effort and at enormous expense, a worthless fragment of the subject insured, is an attempted fraud upon their contract, which will be frowned upon in every court of justice before which it may appear.

      A. C. Morris, for the defendant.
    I. The insurance being free from particular average, and a large part of the coffee (203 out of 801 bags) having been saved and delivered at its port of destination, the defendants are not liable for any part of the loss. The law upon this point in this state is well settled. “ Free from average unless general,” “free from particular average,” and “against total loss only,” are equivalent terms. (2 Parson’s Mar. Law, 338, note 2. Phillips on Ins. § 1767. Le Roy v. Gouverneur, 1 John. Cas. 226. Maggrath v. Church, 1 Cai. 196. Neilson v. Columbian Ins. Co., 3 id. 108. Saltus v. Ocean Ins. Co., 14 John. 141. Depeyster v. Sun Mutual Ins. Co., 19 N. Y. Rep. 273. Wadsworth v. Pacific Ins. Co., 4 Wend. 33, op. Ch. Walworth, p. 41. Phillips on Ins. § 1773.)
    II. If in the present case the owners of the ship had abandoned her, as derelict, and refused to bring the cargo to New York, it would have been the duty of the assured upon the coffee, as between themselves and the insurers, to have used every effort to save it, no matter what the expense might be. So long as the coffee physically existed and was capable of being transported to its port of destination, the assured could have no claim against the insurers.
    Upon this point the law of England differs materially from our own. In England insurance free from average is regarded as an insurance against total loss, actual or constructive, and in determining the question of constructive total loss no difference is made between memorandum and other articles. Arnould says, (vol. 2, side p. 1124,) “ The warranty to be free from average makes no difference in this country, (England,) in considering whether the loss be on principle, total or partial.” But adds in a note (i.) “ It is different in the United States, where there can be no constructive loss on memorandum articles.” The cases of Moss v. Smith, (9 Com. B. 94;) Rosetto v. Gurney, (11 id. 176;) Parry v. Aberdeen, (9 B. & C. 411 ;) Germon v. Royal Exchange Ins. Co., (6 Taunt. 585;
      Holdsworth v. Wise, 7 B. & C.;) Hunt v. Royal Exchange Co., (5 M. & S. 47;) Thomley v. Hobson, (2 B. & A. 513;) and Roux v. Salvadore, (2 Bing. 266,) turn upon the question of the totality of the loss.
    That the total destruction of the value of an article constitutes, for all practical purposes, a total loss of such article, cannot be disputed ; but such principle can have no application to a case where, by the very terms of the insurance, the underwriter is not to be liable for a total loss in value, while the article itself still remains in specie, and within the control of the assured. Where by some disaster the subject of insurance is placed in a situation of peril, from which it would cost more to relieve it, and forward it to its port of destination, than its sound value, there would be some reason in holding it to be a total loss. But the same manner of reasoning, when applied to. damaged goods, would lead to the injustice of indirectly charging the insurer for deterioration of the goods, for which by the terms of his contract he is made not answerable. The point under consideration came up in this court in a somewhat different shape, but involving precisely the same principle, in the case of Ogden v. General Mutual Ins. Co., (2 Duer, 204, 215.)
    III. Where there is an insurance upon the goods free from particular average, and the vessel is stranded and abandoned by the crew, as derelict, and the owner of the goods neglects to make any effort to save them, the insurer has a right to rescue them himself; and upon delivering them to the assured at the port of destination, his obligation has been fully performed. It is not of the slightest importance what the cost of saving them has been. His undertaking with the assured is, that his goods shall arrive at the port of destination in specie, and this undertaking being performed, he is exonerated. It follows that it is not of the slightest importance, in this case, 'whether the goods were saved by the wrecking company, or were saved by the defendants.
    IV. But the evidence is clear and uncontradicted, that the goods were not saved by the defendants, but by the owners of the vessels, through their agents, the wrecking company. It cannot be denied that the defendants, anxious to save themselves from loss, sent their inspector to the wreck to look after their interests. He found the vessel in the lawful possession of a wrecking company, who derived such possession from the owners themselves. An agent of the wrecking company, (Capt. Post,) had charge of the wreck, and another agent, (Capt. Pierce,) was in the vicinity, with his lighter, to receive the cargo as it came across the beach. Possibly without. the active intervention of Captain Barkman, the wool and coffee would have been neglected by the wreckers, and lost. It was for the interest of the plaintiffs that it should be lost, and of the defendants that it should be saved. The interest of the wreckers was on the-side of the defendants, who, by furnishing the empty bags, and the services of Captain Barkman gratuitously, offered an inducement to the wreckers to give the wool and coffee a preference. The result was that the owners of the vessel, through their agents, (the wrecking company,) brought to Hew York, the port of destination, nearly all the wool, and 203 bags of coffee, out of 801. Upon the arrival of the coffee at Hew York, it was subject to the orders of the plaintiffs, upon their paying sixty per cent of its appraised value. This would leave to the assured 82 bags, free from all charges', except freight.
   By the Court, Monell, J.

The single question presented in this case is, whether the defendants are liable upon their policy, as for a total loss of the property insured. The words “ free from particular average,” in the policy, are understood to mean free from partial loss, and are equivalent to “free of average,” or “ free of average except general.” Such a policy is an insurance against a total physical loss only. Underwriters, being unwilling to indemnify against the deterioration of perishable property, stipulate to pay only in the event of a total loss of the thing insured, by reason of any of the perils insured against. The contract between the parties was, that the defendants would indemify the plaintiff for a total loss of the property insured; for any thing less than a total loss they should not be liable ; and such is the precise meaning of the words “ free of particular average.”

The words “ total loss ” have received much judicial construction. In a literal sense, they mean complete physical annihilation and destruction of the thing; in another and more liberal sense, they signify a loss total to the owner, as where the goods are seized and taken away, or are rendered worthléss for the uses or. purposes for which they were designed.

It is obvious from the nature of the contract of indemity, that the loss must be actually or constructively total.

The doctrine which prevails in this state, and I may say in the country generally, is that if' the goods insured arrive at the port of destination, existing in specie, the underwriters are not liable, although the goods are of no value whatever. Thus, fish absolutely spoiled, (Cocking v. Frazer, Park on Ins. 151,) and corn which was putrid, (Neilson v. Columbian Ins. Co., 3 Caines, 108,) were held to exist in specie. .

In this state the construction of these contracts has been rigidly strict. The courts have, with great uniformity and unanimity, required a total annihilation of the subject insured; or that it should be in such a state as to have lost all appearances of what it was; in other words, that it no longer existed in specie.

The English rule has been somewhat moderated by recent decisions, it "being now held that if the article has become valueless, or if the expense of shipping it to the port of discharge would be equal to its value there, it is a total and not a partial loss. (Moss v. Smith, 9 Com. B. 94. Rosetto v. Gurney, 11 id. 176.) Such a rule is undoubtedly founded in common sense, as well as in common justice. The underwriters stipulate against a total loss, and it is violently straining the meaning of words if a complete and entire loss of the thing to the assured by reason of its entire loss of value, is not a total loss. If perishable goods arrive at the port of destination so damaged by the perils of the sea as to be absolutely of no value whatever, the loss is as. complete to the assured as if they were sunken to the bottom, or thrown broadcast upon the surface of the seas, beyond the reach of human power to recover.

The condition, “free of particular average,” and similar conditions, were designed to protect the underwriters from liability for partial loss to perishable goods, by inherent perish-ability ; but it was never intended to absolve the insurers from losses total in their nature by reason of the destruction of all value to the thing insured, although in appearance it retains a semblance of what it was It is not unfair towards underwriters to insist that the total loss of value in the thing insured, is within the spirit and intent, if not within the letter, of the contract. Their indemnity is against a total loss, and there can be no difference between annihilation and complete loss o'f value.

The reasoning in favor of annihilation, or a total destruction of the species, is not satisfactory. It requires that the species itself should disappear ; that the form should become changed, and their original character be entirely lost by decomposition. It seems to me this is shutting in, within very narrow limits, the obligations which underwriters impose upon themselves by their contract, and leaves but little scope for indemnity to the assured.

It may be regarded, I think, as another step towards moderating the views long entertained of the precise extent of the underwriters’ liability, that judges in England, at least, are attaching the liability for .total loss of value, as well as for total loss by annihilation ; and were we allowed to follow the modem English cases, (to some of which I have referred,) we should find enough to sustain the verdict in this case.

The current of decisions, however, in this state, is so strong and uniform that we are forced, by their authority, to ignore the more just and reasonable rule, now seemingly being adopted by the English courts.

From the earliest reported cases in this state, (Magrath v. Church, 1 Caines, 196,) down to the present time, (DePeyster v. Sun Mutual Ins. Co., 19 N. Y. Rep. 272,) our courts have adhered to the doctrine that there must be an actual destruction of the article, and not such a technical loss as would authorize an abandonment. Hence, if any part of the insured property arrives at the port of destination, in specie, although utterly valueless, the underwriters are not liable.

We are not at liberty to disregard law so long and so thoroughly settled, and although opposed, in our. judgment, to the true spirit and meaning of the contract of indemnity, we must nevertheless yield to its authority.

A portion of the coffee covered by the defendants’ policy was recovered, and arrived in specie, at the port of destination. Mr. Parsons says, (2 Pars. Mar. Law, 381,) that the primitive meaning of the word specie is appearance,” and it is in this sense that it is commonly applied to memorandum articles. Nearly all the witnesses testified that the coffee which arrived here from the wreck retained the appearance of coffee. It was in the kernel or berry, and although so damaged by sea water as to be absolutely of no value, it nevertheless bore the resemblance of the article, and could readily be recognized as coffee. It therefore (within the cases in this state) arrived at this port in specie, and the underwriters are relieved from liability. Strictum jus alone can uphold such a result.

The special findings of the jury do not help the plaintiffs’ case. The question is, did the coffee arrive here in specie ? The instrumentalities used to effectuate the arrival are of no consequence; and I can see no reason why the defendants could not with propriety, to make the loss partial, employ wreckers or others to rescue the cargo. Certainly, in the absence of any fraud or overreaching, they had the right to avoid liability by saving the property insured. Nor is their doing so any evidence of an acceptance of a supposed abandonment to them, by the assured ; especially after their denial of the right to abandon.

The law of this state, as applied to the facts of this case, being opposed to a recovery by the plaintiff, it was error in the judge to refuse to dismiss the complaint. The objection was therefore well taken. The verdict must be set aside, and there must be a new trial, with costs to the defendants, to abide the event.

Moncrief, J. concurred.

McCunn, J. (dissenting.)

This action is on the ordinary printed policy of insurance, with the words, free of particular average,” inserted in the manuscript. The policy covered 801 bags of coffee, part of the cargo of the ship Mortimer Livingston, bound from Havre to New York. On the 24th of January, 1863, in approaching the Capes of Delaware, at midnight, in a terrific gale, the ship was driven on a lee shore and totally lost. Weeks after the ship foundered, a portion of the coffee was fished from the bottom of the sea, rebagged, and brought by wreckers employed by the company to this city. The portion thus recovered was found saturated with salt water, swollen and utterly worthless.

On the trial at the circuit, the jury found specially that the .coffee was of no value whatever; that it was retrieved from the wreck by the defendants, at their sole expense, and for the express purpose of making the loss a partial one in a technical sense ; they also found the loss to be total, and rendered judgment in favor of the plaintiffs for $22,883.86.

The company now contend that, despite the loss of the vessel and cargo by the perils insured against, yet, because they succeeded in securing from the wreck a portion of the worthless coffee, it still retaining "its form, appearance and species, notwithstanding its utter want of value, they are not responsible under this policy.

I am clearly of opinion that they are responsible ; that the loss was total and irreparable, and the jury were entirely justifiable in their verdict.

The position taken by the plaintiffs, that the underwriters are responsible for an entire loss of the wool or of the coffee, seems to me to be fully supported by the numerous authorities cited by the plaintiffs’ counsel. This point is, however, conceded by the defendants, who simply rest their defense upon the broad principle that, as part of the coffee, although entirely worthless, was gathered by the company from the wreck, so that the plaintiffs might possess themselves of it, therefore a recovery for a total loss cannot be had.

I am-well aware of the seeming conflict of authorities, but on a thorough examination of the cases cited for the defense, . it will be seen that there is no analogy between them and the one under consideration. In all these cases the ships and cargo were not lost. They were merely damaged, and were both brought to port. In this case the ship and cargo were totally and irrevocably lost.

The company indemnified against a total loss; that is to say, if the article is destroyed by the perils of the sea, the underwriters are bound to make compensation for the whole value thereof. On the contrary, if the goods are only partially destroyed or injured by such peril, they are not liable. The question, then, that clearly presents itself in this case is, whether, in view of the facts that the coffee went to the bottom, and weeks after it was submei'ged, a small portion of it was scooped up by the* defendants out of the ship’s skeleton, and rebagged by them, although entirely worthless, (for so the jury found,) the company can, under such circumstances, be relieved from the responsibility of a total loss ? To my mind, it certainly cannot.

More than a century since, (1740,) when underwriters inserted in their policies the qualifications free from particular average,” or words of equivalent import, it was understood to be, and so held to mean, a protection to companies against inherent defects in certain commodities, such as the heating, rotting, rusting, monlding or fermentation of grain, hides, coffee, or the like, closely packed in the ships’ holds, where it was liable to damage without the intervention of sea perils, and at a time when navigation was imperfectly understood, and long voyages were the natural consequences of such enterprises. It is true that some eminent judges have given such a construction to this qualification as to include injury by perils, where a total annihilation of the species does not take place, but I am happy to say that other judges, both here and in England, as learned, and quite as eminent, have taken the common sense view of the case, and have held that where, by the perils' insured against, the property has been so injured that it is rendered valueless, so much so that a person without insurance would abandon the property, deeming further attention to it unprofitable, in such a case the property was a total loss, although the species was not annihilated.

How absurd is the proposition contended for by the defense when you seriously consider its import and consequence. At their request you insure your property against certain perils of the sea, for which you pay a very large premium. On the homeward voyage your property is lost by the very perils insured against; yet, after you had abandoned all hope of saving any ■ portion of the property, are the company to be released because for the mere purpose of defeating the object of the insurance, (for so the jury found in this case,) they succeed in fishing up, at an enormous expense, a worthless portion of the article insured, and present the same at the port of destination, claiming thereby a total exemption from ‘all liability under their contract with you ? The proposition in itself is preposterous ; nay, ruinous, for it destroys all confidence between the merchant and the company, and I cannot, in reason or conscience, indorse it.

Companies should not be permitted to take advantage of ambiguities in their policies, because the object of insurance is to make the contract an indemnity, and the policy should be construed in the strictest manner in favor of the insured, and against the insurers.

I shall now examine the principal cases upon which the defendants rely- as authority.

The first is that of DePeyster v. Sun Mut. Ins. Co. (19 N. Y. Rep. 272.) That was a case of injury to hides occasioned by the vessel shipping water, in heavy weather, on the homeward voyage, so that the hides became putrid and valueless. The vessel stood away” for a port of distress, and while there, part of the hides, from their intolerable stench, had to be sold, and part cast into the sea. The hides sold were dried and brought to Boston, and resold at a great sacrifice on their original cost. Counsel for the company requested the judge to charge that the plaintiff could not recover for a total loss of the hides, because a portion of the property remained in specie, and was of some value. The judge declined so to charge, but left it to the jury to say whether it was possible and profitable, under the circumstances, to transport the hides safely to Hew York. The jury found a verdict against the company, and the Court of Appeals refused to disturb the judgment, holding (p. 278) that the verdict of the jury was conclusive. The case at bar is precisely similar in this respect, to that just cited. Moreover, in the DePeyster case, the vessel arrived in safety at the end of her voyage, and the hides could have been brought in specie to their place of destination, although at great inconvenience. How, this is the latest case cited by the defense, and, although adduced as an authority in their favor, it clearly settles the law in the case under discussion, against themselves.

The next authority is the case of Le Roy v. Gouverneur, (1 John. Cas. 227.) That action had no resemblance to this. The vessel, having been loaded with corn, shipped water in heavy weather, and put in to the Capes of Delaware, where, in consequence of yellow fever prevailing at that time in Philadelphia, and the necessary delay and detention of the vessel at the Capes, it was found that the corn was so injured by-water and delay that it could not be reshipped. In that case, neither the ship nor the corn was lost, for the vessel arrived in safety at Philadelphia with the corn in bulk as it was shipped, the latter being of some value.

The next case is that of Neilson v. The Columbian Ins. Co., (3 Cai. Rep. 108.) There the court say, that the question should have been left to the jury (in this case it was) as a material point, and on that ground alone, namely, because it was not left to the jury, the judgment was reversed. But even in that case, the ship came safely to port with the cargo in bulk. (See cases cited in note A to the case.)

In the case of Saltus v. The Ocean Ins. Co. (14 John. 145,) both ship and cargo arrived in port. Moreover, there was no evidence that the corn was rendered worthless. The court simply said that the plaintiff could not recover for a total loss in consequence of a deteriorated state of the cargo.

The case of Wadsworth v. Pacific Ins. Co., (4 Wend. 40,) was one in which the ship arrived safely in port, with a sound cargo of skins, but some of them were lost from the deck of a lighter. In this case, the court held, that as the skins were stowed in bulk on board the ship, and as only part of. a particular kind, which was insured in bulk, was lost, therefore the plaintiff could not, by reason of a partial loss, recover for a total loss ; and this is all that case decides.

In Moss v. Smith, (9 Com. B.) the lord chief justice left the question of total or partial loss to the jury, and they found in favor of a partial loss only. In this case the same question was left to the jury, who found in favor of a total loss. The case of Moss v. Smith is therefore strong authority in favor of the plaintiff’s recovery in this suit.

I have thus carefully examined all the principal cases cited by counsel for the defense, which would seem to support his theory of this case, and I am of opinion that not one of them sustains him. .

Now, let us examine the numerous authorities adduced by the learned counsel representing the plaintiffs.

The first is that of Bryan v. The New York Insurance Company, (25 Wend. 617.) In that case the vessel sailed from one of the Carolinas, laden with nearly 2000 barrels of corn and bound for New York; was wrecked in a gale on Beacon Shoals, and taken possession of by wreckers, who saved some 27 barrels of the corn. Chief Justice Nelson, the presiding judge in the trial of the case, held that, merely because a comparatively small portion of the article insured was saved in specie, the loss should not be regarded as partial. a It was, in fact,” says the learned judge, “a total loss, as much as if the whole cargo had gone to the bottom of the sea.” This case is irresistibly conclusive in favor of the plaintiffs in this suit.

The next case of importance is that of the schooner Lodge, which also sailed from one of the Carolinas, on the 18th of November, 1823, with a cargo of corn (8000 bushels) and, in thick weather, ran ashore on Cape Hatteras Bank. The corn was so injured by water and sand, (as in this case,) that it was sold at public auction for only $70.55, and after paying the expenses of getting the grain ashore, and thence to market, $22 were left, which were paid to the consignees. In this case, the Supreme Court held that the loss was total, and the learned justice, in delivering the opinion of the court, held “ that the contrary rule would be unreasonable in itself, and not called for, in order to enforce in good faith the execution of the contract.”

The case of Whitney v. The New York Firemen’s Insurance Company, (18 John. 208,) was that of the ship Samuel Whitney, which sailed in August, 1815, from Archangel to New York, with a general cargo, consisting of hemp, and other articles. In September she experienced head winds and heavy weather, becoming thereby damaged and leaky, so that it was necessary for her to seek refuge in a port of safety. After survey, the vessel was condemned, and the cargo found to be wet arid damaged. Under the direction' of the captain, the ship and cargo were sold at auction “ for whom it may concern.” The Supreme Court held that the plaintiff had a right to break up the voyage, and abandon the cargo to the underwriters as a total loss.

The case of Saltus v. The Ocean Insurance Company, (ubi sup.) was that of the ship Hudson, which sailed from Riga in October, 1810, for Hew York, part of the cargo being 126 tons of hemp. In the Horth Sea she experienced severe gales; and leaked so badly that she had to bear away for Kinsale, on reaching which port the captain ran her ashore to prevent her foundering. The vessel was surveyed and condemned. The hemp was unloaded in a damaged condition, and sold at auction. The residue of the cargo was forwarded to Hew York by another vessel. At the trial the judge left it to the jury to say (as in this case) if, in their opinion, the hemp could not be reshipped to Hew York in a merchantable condition, and if when sold, would not bring more than the expense and freight for taking it there, they would be justified in finding as for a total loss. The jury found for the plaintiffs, and the Supreme Court refused to set aside the verdict.

A very pointed case in favor of the plaintiffs’ recovery in this action is to be found in the Massachusetts Reports, (12 Cush. 554.)

The case of Walter v. The Delaware Insurance Company, (38 Penn. Rep. 187,) was that of the schooner Orb, which put to sea in May, 1851, bound for Portland, Oregon, with a general cargo, valued at $17,000. In doubling the cape, she encountered severe weather, and, as the sea was running high, she stood away for Rio Janeiro. The vessel and cargo was surveyed, condemned and sold, except a small portion of the cargo, some boots and shoes, which were sent to Baltimore. This the court held was a case of constructive total loss, although the sea damage was shown to be less than fifty per centum.

The next case is that of Poole v. The Protection Insurance Company, (14 Com. Bench, 47,) and the opinion in that case merits particular attention, because it discusses, in the most learned manner, the very question under consideration. In that case 280 hides were shipped on board the ship General ,Warren, bound from Mobile to Eew York, and were “ free from particular average.” She sailed on the 24th of February, 1837, and, in the course of her voyage was wrecked near Nassau. The cargo was submerged for days. The wreckers came to the assistance of the ship, and succeeded in saving a portion of the hides, 89 in number, but in a bad condition. They were, however, dried and sold, for whom it may concern.” Deducting all expenses, they brought $39.84, which sum was remitted to the owners. It was held that the insurers were liable as for a total loss of the whole property insured. The presiding justice in delivering the opinion of the court, remarked, The objection strongly urged by the counsel for the defense, that a recovery here is precluded, because a part of the property existed in specie and was not physically destroyed, but of some value at the termination of the risk, is not, in our opinion, applicable to a case like the present, where the goods neither came to the hands of the owner’s nor reached their port of destination and again : “ By the termination of the risk in cases where if the property exists in specie, the insurer is held to be protected by the memorandum clause, is meant the termination of the risk as contemplated in the policy—the arrival of the goods at their place of destination— and not a forced termination of the risk by a peril insured against, which prevents the property from being carried to its original destination. Indeed, it is against such forced termination that it was the very object of the policy to furnish an' indemnity.”

I have now discussed nearly all of the American cases on the subject, and feel entirely satisfied that they fully sustain me in my favorable view of the position taken by the learned counsel for the plaintiffs in this case.

From the earliest insurance cases, the English courts have uniformly held, where the circumstances were, in any degree, similar to those existing in this case, that the companies were bound for a total loss.

It is quite true that Lord Mansfield, in the case of Cocking v. Fraser, (Marsh. 227,) hinted at a contrary doctrine. That case, however, was not, in any respect, similar to the case under discussion. In it, and indeed in all cases looking to the doctrine that as long as the article remains, and is brought to the port in the ship in specie, the company is discharged,” it is to be observed that the vessels all arrived at their port of destination, with the cargoes in bulk, but either injured or destroyed. The judges, even in those cases, decided the question in favor of the insurance companies, on the strictest technical ground, that the vessels in which the goods were shipped brought the article into port, although damaged, yet in specie.

Lord Mansfield, moreover, decided the case of Cocking v. Fraser expressly on the ground that the ship was not wrecked or stranded, but arrived safely at port. He says : what is a total loss ? The total loss of the thing is the absolute destruction of it by the wreck of the ship.”

But let us suppose that the very learned judge did entertain, in that case, the views which the defendants propound. Mark how promptly this doctrine was disposed of in the English courts. The first we learn of particular average,” as I have said, is in 1749, when companies, for the purpose of protecting their risks from the inherent decay to which certain commodities are liable, inserted a provision, that they should not be responsible for loss or deterioration where it was not occasioned by the perils of the sea, and so loosely were the words employed, that when the question was seriously discussed, it was found that a much wider construction could be placed on the phraseology. Some of the judges of this country, encouraged by Lord Mansfield, fascinated, no doubt, by his transcendent abilities, and perhaps, with a desire to imitate or follow so great a light, held that the words free from particular average,” were quite broad, even to include the perils of the sea, as well as perils arising from inherent decay, when it fell short of absolute annihilation of the article and its species ; and these judges, without distinguishing the case of Cocking v. Fraser from the cases before them, have applied the doctrine in that case to others not analogous. . It is due to every judge to take his words with reference to the cases before him, and not to state the doctrine in the abstract; and I have no doubt that if Lord Mansfield had been required to adjudicate upon many of the cases contained in our books, where this line of reasoning has been carried to extreme^, and where his- views in Cocking v. Fraser have been cited to justify their course in following him, he would have placed on record his' emphatic disapproval of such a dangerous, untenable *and inconsistent doctrine.

Immediately after the decision in Cocking v. Fraser, the English courts, supposing that Lord Mansfield, from his remarks in that case, intended to establish such a rule, embraced the first opportunity of-condemning bis course, and we find Lord Kenyon, in the case of Burnett v. Kingston, saying in emphatic language : “ I cannot subscribe to the doctrine of Lord Mansfield in the case of Cocking v. Fraser. Lord Alvanly, too, in the case of Dyson v. Rowecraft, condemned such a rule, and, in language not less forcible. Lord Ellenborough, in the case of Colgan v. The London Assurance Co., (5 M. & S. 447,) says : “ Considering the contract of indemnity, it surely cannot the • less he a total loss because the commodity subsists in specie, if it subsists only in the form of a nuisance.” This view was also entertained by Lord Lyndhurst, in the case of Blackett v. The Royal Exchange Company.

One of the principal English cases cited on this point is that of Roux v. Salvador, (3 Bing. N. C. 266.) The action was on a policy of insurance on goods shipped from South America to France. The policy contained the usual particular average clause, and covered • one thousand hides, valued at eleven hundred pounds. On the homeward voyage, in stiff, heavy weather, the vessel sprung a leak, and in consequence hauled up for a port of distress, where the goods insured- were unshipped, and being found in a damaged condition, were sold, realizing thereby £270. The vessel was repaired and sailed again for her port of destination. Lord Abinger, chief baron, after hearing one. of the most learned discussions on record, held “ that the existence of the goods, or any part of them in specie, is neither a conclusive, nor, in many cases, a material circumstance to the question.” His lordship said, moreover, “ the object of insurance is to make the contract an indemnity, and nothing more, and that upon that principle is founded the whole doctrine of abandoment, in our law.” * * * “In all these cases, or in any similar, if a prudent man, not insured, would decline any further expense in prosecuting an adventure, the termination of which will probably never be successfully accomplished, a party insured may, for his own benefit, as .well as the underwriters, treat the case as a total loss, and demand the full sum insured.” Now, if the law was in any. degree unsettled in England before 1836, the very able and learned opinion delivered in this case by the Lord Chief Baron, and concurred in by all the other barons of the court, fully settled the question in England ; and we now find the English courts uniformly following the rule laid down in that case. See the opinions of Lord Chief Justice Campbell, in the case of Logan v. Jamison, (2 Ellis & Ellis 179,) and the opinion of Mr. Justice Blackburn, in the case of Granger v. Martin, (2 Best & Smith, 408,) where a doctrine, precisely similar to that laid down by Lord Abinger, is held.

In a very recent case, (1865,) in the English common pleas, (see the Jurist, vol. 116, p 650, N. S.) the ship Avon, on the home voyage from Quebec to Liverpool, with a cargo of timber, was^frozen up in her passage down the St. Lawrence. The ship and cargo- having been sold after a survey, it was held, all the justices concurring, that it was right to sell the cargo, because.it was not practically possible, in a merchantable sense, to have it carried to its. destination. In other words, as remarked by the learned justice, in delivering the opinion, “because, the cost of bringing the cargo added to the amount of depreciation, would, not have left any appreciable margin of profit to the owners.” This was a total loss.

In a most learned opinion delivered by Mr. Justice Shee, in the Queen’s Bench, in June last, (Kemp v. Halliday, 2 Bar. R. 250,) this doctrine was ably discussed and sustained..

By- a careful examination of the elementary writers on this subject, it will be seen that they all favor the doctrine that a complete depreciation in the value of the article, without the annihilation of the species, is a total loss of the article. In discussing the question, they examine nearly all the authorities up to that date, making very few comments, in consequence, no doubt, of the embarrassment arising from what they deem an apparent conflict in the cases collated.

They all agree, however, in saying that the extinguishment' in value of the memorandum articles was equivalent to its ex-tinguishment in specie, and amounted to a total loss. Such is the rule propounded by Kent in his Commentaries, 9th edition, vol. 3, p. 291; and by Phillips on Insurance, vol. 2, pp. 461, 465 and 467 ; also by Arnould on Insurance, 990; 1 Duer on Insurance, 161.

The object of the policy is to obtain indemnity for any loss which the insured may sustain, in the goods being prevented, ■by the perils of the sea, from arriving safely at the port of destination ; and the destruction of the value of an article, by the perils of the voyage for which it is insured, to such a degree that it is not equivalent to the freight for the voyage, seems to me to be as absolute a loss of the article, and of the voyage, as is possible.

Applying that rule to the case in review, the judgment should, beyond a doubt, be affirmed, with costs. For here we have a ship driven in the wildest weather on a bleak seashore, and totally lost with all her cargo. The fact that this company, weeks after the disaster, proceeded to the scene of desolation, and, at enormous expense, with the express purpose (as the jury found) of defeating this policy, fished out of the sea a portion of the worthless coffee, brought it to this city, rebagged it, and went through the farce of a sale, claiming that they saved a portion of the article in specie; these acts should not be entertained for one moment by the court as a defense against what I regard a perfectly just and legal claim.

Hew trial granted.


source: Caselaw Access Project

author:
      Robertson, Ch. J.
      McCunn, J. Barbour, J. (dissenting.)

license: Public Domain

text:
    Samuel C. Reed, plaintiff and appellant, vs. David Allerton and Philip Nussbaum, defendants and respondents.
    1. A judgment creditor of one of two members of a firm, who had, before the recovery of such judgment, assigned all their property, consisting solely of a small amount of partnership goods and chattels, and of real estate belonging to the other partner, to a trustee in trust to pay, first, their partnership, and secondly, their individual debts, cannot hold such assignee responsible for the value of the land assigned, to the extent of such judgment, merely because such assignee had reconveyed such real estate to its original grantor, after the latter had bought up and compromised all the debts of the firm, which exceeded the value of such land, and after the Supreme Court had, upon petition, with the assent of all the partnership creditors, discharged the assignee from his trust, upon reconveying the land to the grantor.
    2. Such judgment being against one partner individually, and not against the firm, nor for a firm debt, the party recovering it has no equity to entitle him to have the individual property of the other partner applied to pay it.
    3. If the order of the Supreme Court, relieving the assignee from all responsibility as trustee under the assignment, was obtained improperly, or on false suggestions, the remedy of such judgment creditor is by an application to that court to set it aside; but so long as such judgment remains in full force, not set aside or modified, it is a complete bar to any action brought by such judgment creditor against him.

      4. The Supreme Court, as the successor of the Court of Chancery, has jurisdiction to accept the resignation of a trustee who is assignee of an insolvent debtor, and to discharge him from all liability to account to the cestuis que trust, under the assignment.
    (Before Robertson, Ch. J., and Barbour and McCunn, JJ.)
    Heard May 10, 1865;
    decided December 30, 1865.
    The object of this1 action was to compel the defendant Allerton, as assignee of the defendant Nussbaum and Mr. Strauss, to pay the plaintiff a claim due by the former. The assignment in question was of all the property of the assignors, upon trust, first to pay partnership debts due by them, and secondly individual debts. No property ever passed into the hands of such assignee under such assignment, except individual property of Strauss. Allerton by it accepted the trusts and covenanted to discharge them. There were no other parties to such assignment, except the assignors and the assignees. It never was recorded in the office of the clerk of any county; no inventory, statement or schedule, as required by the statute of 1860, relative to the division of estates of insolvent debtors, assigned by them among their creditors, {Laws of-1860, p. 594,) was ever filed or presented to any judge,- and no bond was ever given by such assignee, as required by that statute.
    Prior to the 18th of March, 1862, and some time after the making of such assignment, many of the partnership creditors of Hussbaum- & Strauss signed an agreement in-writing, dated two months previously, by which, after reciting the insufficiency of the property assigned to pay their claims in full, and that they had agreed to receive, in discharge of the whole, one quarter in cash from such assignee, and another quarter in notes of the assignors at eight months, "(satisfactorily secured;) also to release such assignee, and permit such assignment to be surrendered and canceled ; the subscribers thereto agreed, in consideration of the payment of such cash and delivery of such notes, the receipt whereof was thereby acknowledged, to discharge the defendant Allerton from all claim" under such assignment, and that the same might be surrendered and canceled, and, an order of court to that effect obtained; and also to discharge the assignors from all further claims against . them., • :
    The names of eight of the persons named in such instrument appeared, by the form of the signature and the certificates of proof appended, not to have been signed by themselves, (J.. & J. Rególe, Westheimer, Katz,,O’Connor, Budd, Kelly, Ulney and Rider,) yet the subscribing witness (Hiscrodt) testified before the notary by whom such certificate was signed, that three of them so signed it (Begole, Westheimer and Katz,) in his presence ; that he signed the names of two, (O’Connor and Budd,)'as assignee of their claims,, and. of three by authority, (Kelly, Ulney and Rider.) Ho proof was- given of such. assignment to Hiscrodt, or of. such, authority .to him. The instrument itself was signed by the defendant Allerton, although it .contained no .stipulation by him, and opposite Ms name was placed the only seal affixed to such instrument. Its attestation clause declared one seal thereto affixed to be thereby adopted by each of the subscribers thereof,, as their separate seal. No other evidence was furnished of its being adopted by the parties signing, as their seal.
    - The creditors of the defendant Nussbaum alone signed a written instrument not under seal, dated in February and acknowledged on the 18th day of March, 1862, releasing the defendant Allerton from all claims against him as assignee under the assignment, and agreeing that the assignment to him should be surrendered, and an order of court to that effect entered. •
    On the 17th March, 1862, the defendant Allerton applied to the Supreme Court of this state, by petition, to accept his signature as assignee of such property ; in which petition the defendants Nussbaum & Strauss joined. It prayed for such acceptance, and also for liberty to the assignee to surrender the assets in his hands to the assignors. The instruments of compromise before mentioned were annexed to such petition, and their contents recited therein. Nussbaum & Strauss averred therein, to the best of their knowledge,, information and belief, that such instruments -were signed by all their creditors, and that the names of all their creditors who had an interest in such assignment, and the trust therein contained, were affixed thereto. Without any further notice to any one, the Supreme Court made an order, on the 18th of March, 1862, directing the defendant Allerton to surrender such assignment and restore to the assignors the assigned property and its proceeds remaining in his possession or under his control, and discharging him from the trusts contained in such assignment. He shortly thereafter did so restore such property and its proceeds to such assignors, which consisted of some real estate, previously the property of Strauss, whose value above incumbrances was only three thousand dollars, and some wagons and horses of little value.
    This action was tried before a referee. By his report he found that all the property assigned was not worth one half of the debts due to the partnership creditors of Nussbaum & Strauss; that the defendant Allerton applied all the money-received by him on account such assigned estate, being nine thousand dollars, to paying such creditors one quarter of their claims ; that the defendants, Nussbaum & Strauss,.delivered their notes to such creditors, for another quarter of such debts ; and that they were secured satisfactorily to such creditors ; that therupon such creditors consented and agreed that such assignment should bé surrendered and canceled, and that. Allerton gave up and released to Nussbaum & Strauss all the assigned property conveyed to him and unconverted, with' knowledge of an action then pending, brought by the plaintiff to recover his claim against Ntissbaum. The report found, also, good faith on Allerton’s part, in all the transactions.
    The referee’s conclusions of law Upon the facts, were as follows ;
    1st. The disposition made by the defendant Allerton, of the property assigned to him, was to the use and for the benefit of those who were, in equity, exclusively entitled to the whole and every part thereof, and extinguished liabilities to a greater amount than could have been satisfied by the proceeds of said property arising from a sale thereof, and was in no way or sense prejudicial to any right or interest of the plaintiff in or to the property under said assignment.
    2d. The order of the Supreme Court, of the date of March 18, A. d. 1862, discharged Allerton from the trusts created by the assignment.
    3d. That the plaintiff was not entitled to any relief in this action, against the said defendants, or either of them.
    4th. That the defendants were entitled to a judgment in this action, dismissing the plaintiff’s complaint, with costs.
    Judgment being entered accordingly, the plaintiff appealed.

      E. W. Chester, for the appellant.
    I. The assignment of Nussbaum & Strauss to the defendant Allerton, and the acceptance of the same by Allerton, and his covenant therein, imposed on him a legal obligation to pay, every creditor of Nussbaum to the extent of' the property assigned.
    II. The release of all the creditors of Nussbaum, with the exception of the plaintiff, left the property assigned liable to the payment of the plaintiff’s judgment, and the defendant Allerton was bound in law to apply whatever remained in his hands to the payment of the judgment.
    III. Allerton, by giving up and releasing to the assignors property sufficient in value to pay the judgment of the plaintiff, knowing of the existence of the debt, became liable in law to the plaintiff for the amount of his judgment.
    IV. The defendant Allerton has shown no equitable circumstances, sufficient according to any recognized principles of equity jurisprudence, to discharge him from his strict legal liability. Indeed, has shown nothing to commend him to the favor of the court. He acted fraudulently towards the plaintiff, concealing his application to the Supreme Court from the plaintiff, who he knew had an action pending against Nussbaum, and obtaining an order for his discharge by false swearing.
    V. The proceedings in the Sup-eme Court were a nullity, except as to the parties consenting thereto.
    1. The Supreme Court had no jurisdiction or rightful power to make such an order.
    2. Nor, if it had power thus to deal with the assignment, could the order made affect the plaintiff in his rights, he not being a party thereto, and having no notice of the same.
    3. So far as respects the plaintiff, the court was induced, by fraud and false swearing, to make the order. The action of the plaintiff was then pending against Nussbaum, and Allerton acknowledges that he knew it.
    VI. The referee erred in admitting these proceedings in evidence on the trial before him, and the exception of the plain- . tiff to admitting the same was well taken.
    VII. The referee erred in his seventh finding of facts. There was no evidence from which the referee could find or infer ■Allerton’s good faith to the plaintiff as one of the creditors of Hussbaum, for whose benefit the assignment was made.
    VIII. The referee erred in hisj^rsi conclusion of law. The evidence, and also the referee’s' finding, show that property exceeding in.value.the*amount of the plaintiff’s judgment, instead of being disposed of to the use and for the benefit of those who were, in equity, exclusively entitled to it, was surrendered up to the assignors. The compromise was effected with other means.
    The second conclusion of law can be sustained. by no principle of law as already shown ; the third and fourth conclusions of- 'law resting upon the. first two, necessarily fall with them. ■

      S. H. Thayer, for the respondent, Allerton.
    ■I. The appellant hás never had any interest whatever in any property which passed to the assignee under or by virtue of the assignment.! He had none in the partnership property, because that must go- to pay the partnership debts, and there was not enough of it to pay twenty-five per cent of them. Ho individual property of his debtor, Hussbaum went to the assignee, because there was none to assign. The "referee so finds, and the respondent does not except. . The individual property of Strauss could not be taken for the individual debt of Hussbaum : -this would be to make one man pay the debts of another,, without any consideration, and without any- provision or agreement to that effect. The direction in the assignment to “ pay the ¡private and individual debts of the said parties, or- either of them,’’ does not direct or consent -that the individual property of either be applied to the individual debts of the other, and the court will imply no such consent from the- words used. This" clause can only mean that if. either owes individual debts they are to be paid out of the proceeds of his individual property, and out of his share of any surplus- of partnership property. (Eyre v. Beebe, 28 How. 334.) The- object of -the assignment-was not "to give to any party any right-or interest which he was not already entitled to by law, but to secure a fair distribution of the property among the creditors, according to law.
    II. The appellant has not been subjected to any loss or damage, nor in any manner prejudiced by the acts of the assignee. Had the assignee- proceeded to execute to the letter the trusts of the assignment, not a dollar of the proceeds could have reached the appellant. He has, therefore, lost nothing, and has no reason to complain. The whole of the assigned premises were insufficient to pay fifty per cent of the partnership claims. This being undeniably the fact, the partnership creditors had a right -to appropriate them, divide them, and dispose of them in any manner most satisfactory to themselves, subject only to any equities of Strauss’ individual creditors, not one of whom complains. If in so disposing of them, they have been made -to satisfy the whole of the partnership debts, so much the better for the debtors, and incidentally for the appellant, as his debtor, Nussbaum, owes so much less.
    III. The assignee has acted in good faith, and is protected by an order of the Supreme Court. There is no allegation or pretense of any fraud, or unfairness on his part, either in his management of the property, his settlement with the creditors, or the obtaining of his discharge. The order of the court is absolute. It was made by consent of all the parties who had any beneficial interest in the assigned premises, and of some who had not. It was made by a court of competent jurisdiction,-upon an application by the party and in the form prescribed by the statute. (3 R. S. 22, 5th ed. § 8. Id.. 16, § 55.)
    It was made with full knowledge of all the facts in the case.
    ' IV. The proceeding of the appellant is irregular and improper. It seeks, virtually, to vacate and avoid the effect of án order of the Supreme Court, and to hold an assignee liable under the trusts of an assignment, after the Supreme Court has discharged him. and ordered the assignment canceled.
    The proceeding should have been in the other court, and under another form.

      Maclay & Perry, for the respondent Nussbaum.
   Robertson, Ch. J.

The case before us is to be considered, so far as the plaintiff is concerned, precisely as' if the assignment in' question were gratuitous, and executed by Strauss, who was not liable to the plaintiff, to pay first the debts due by him jointly with the defendant, Hussbaum, and secondly those due by both separately. There being no obligation by Strauss to pay the plaintiff, the latter is in no better condition by reducing his debt to judgment, than if it had remained at large.

The first question that presents itself is, whether the Supreme Court had jurisdiction to accept the resignation of the defendant Allerton, as trustee, and discharge him from his duties and all liability to account to the plaintiff as cestui que trust under the assignment in question. By the original provision of the Revised Statutes of 1830, (1 R. S. 730, § 69,) the court of chancery was authorized to accept the resignation of a trustee, upon his petition merely, and discharge him from the trust. It was required, also, to establish regulations for the purpose, and determine the terms upon which such resignation should be accepted, having reference to the rights and interests of the persons interested in the execution of such trust. The court of chancery had no such power previously, unless by consent of all parties. (Matter of Van Wyck, 1 Barb. Ch. 565. Matter of Wadsworth, 2 id. 381.) The trustees, by making such application, virtually surrendered the administration of his trust to such court, (see 2 Spence, Eq. Jur. 918,) and deprived the cestius que trust of the power of proceeding against him adversely, until such application was disposed of. (Groshen v. Lyon, 16 Barb. 461.) The better practice sanctioned in such cases, seems to be to order a reference to inquire into the facts and circumstances under which the resignation is offered. (Matter of Miller, 15 Abb. Pr. 277.) But as to the statutory form of proceeding by petition, without notice to any one, it does not necessarily require a litigation inter partes ; the court which acquires jurisdiction can exercise it in any mode it thinks proper, provided it does not transgress its limits; and when exercised, it precludes all the world. It would undoubtedly not follow, that every provision in an order discharging a trustee must he valid, because the court has power to accept his resignation; (Matter of Crossman, 20 How. 350;) but any exercise of such power within such jurisdiction, however indiscreet, cannot be corrected in a collateral proceeding, because it does not, by such indiscretion, become void. Where no trustee remains vested with the legal estate, by the discharge of the petitioner, it would seem to be an incomplete exercise of power to leave the subject of the trust without a legal, owner ; but such power of appointment is the subject of a separate provision in the statute just cited. (2 R. S. 730, § 71.) There is nothing to prevent a court having the power to appoint trustees from appointing the original creators of the trust as such. There could have been, therefore, no obstacle, in this case, to the appointment of either Strauss or the defendant Nussbaum, or both, trustees to carry out the trusts of the assignment; it was a matter entirely in the discretion of the court. The Supreme Court has, of course, succeeded to all the authority of the court of chancery in regard to matters of this kind. How far Strauss and Nussbaum became such trustees in place of the defendant Allerton, by the order of the Supreme Court' directing the latter to transfer to the former any unconverted property and the proceeds of any sold, it is perhaps not necessary now to discuss. Clearly, the property itself would not thereby become freed from the trusts. The Supreme Court undoubtedly ordered Allerton to deliver the custody and title to all the property in his hands to the assignors, either as trustees, or else preparatory to the appointment of new trustees. Whether that was or not an indiscreet exercise of authority, it cannot be overhauled in this action, collaterally. It the acceptance of Allerton’s resignation was within the jurisdiction of the court, and completed, he ceased forthwith to have any control over the property, and was not bound to administer the trust any further for the benefit of the plaintiff, or any other person. If the property was left in his hands until a successor was appointed, he was bound to deliver it over to such successor immediately on his appointment. It, therefore, results that Allerton is not responsible to the plaintiff for- any property in His' hands when he was discharged, unless the order of the Supremé Court is to be entirely disregarded. ' If it was obtained improperly, or on false suggestions, the remedy of the plaintiff is by an application to that court to set it aside, where the merits of the whole matter can be inquired into. If this' action had been commenced while such application was pending undetermined, under the "authority of the case of Groshon v. Lyon, already referred to, (ubi sup.) this court would have' been bound to stay proceedings in it. I, therefore, fully concur with the learned referee, in this case, in the opinion, that without regard to the effect of the direction in the order of the Supreme Court to restore the property to the assignors, it discharged the defendant Allerton from all liability as trustee, even" if it left the property in hi's hands, to become subject to ;the original trusts, in the hands of his successor. The remedy of the plaintiff was to have applied to the Supreme Court, to appoint a successor to Allerton, (if Nussbaum and Strauss were not made so by such order,) and through him to.have compelled Allerton to deliver over to him the property in his hands. It certainly would be unjust, in any event, to order the plaintiff’s debt to be paid in full,without any allegation or proof respecting the existence of any other creditors of the assignors entitled to an equal sharé. If this were an action for an accounting, all the cestius que trust should be parties, or théir non-existénce should be alleged and proved. •

I think it, however, extremely doubtful, whether, even if the order of the Supreme Court were disregarded, and the defendant Allerton were still a trustee, he could be made .responsible to the -plaintiff for the property handed over to the assignors. The plaintiff had no right in the subject matter of the assignment until the. partnership creditors were satisfied. So long as the property- assigned was not sufficient to pay the preferred debts,- he had no claim. If by any means they were discharged, of course he became interested jointly with other postponed creditors of Nussbaum & Strauss. This operated to relieve such assets from all claim by them, so as to make the plaintiff a cestui que trust of what remained. It is to be recollected, however, that part of the agreement of compromise was that the assignment was to be surrendered and canceled ; if that was not done, part of the consideration for the .agreement to discharge failed, and the creditors in question had a right to insist on the full amount of their debts ; in other words, if the plaintiff is entitled to any benefit from the discharge of the preferred debts he is bound to ratify the stipulation which discharged them. The effect of a surrender or cancelment of the assignment, as it was termed in each agreement, was to revest the assignors with the ownership of the assigned property ; for that and their discharge from indebtedness, they gave their notes with new security therefor. Such assignors, and particularly Strauss, were under no obligation to the plaintiff, so far as the property assigned was concerned, to pay their partnership debts off out of other resources, so as to let the plaintiff come in and claim it. There was no legal restriction upon the right of such assignees to buy the assigned assets, except that the possession of them after the assignment might be a badge of fraud in regard to it, of which no complaint is made; the connection, therefore, of the transfer back of such assets, with a discharge of their indebtedness where there was the additional consideration of new notes and security therefor, did not invalidate either. If the partnership creditors chose simultaneously to receive in place of the proceeds of the assigned assets, notes of the assignors, which would in part be a continuation of a part of the same indebtedness, and discharge the latter only from the rest of it, I know no principle of law to prevent them. They were substantially the equitable owners of such assets to the extent of their claims, and could have taken them at their fair value in satisfaction of a similar amount of such claims, and the plaintiff had no right to interfere. I am at a loss to perceive why they would not be entitled to take them, or consent to their destination or to their transfer to any third person, provided they agreed to extinguish as much of their claims as was equal to their value.

In the argument presented on behalf of the plaintiff, the discharge of the partnership debts is separated from the transfer by the property, as having previously occurred, instead of being part of one transaction, and simultaneous with, and forming part of, mutual considerations. There would have been no difficulty in their arriving at the same result more circuitously ; namely, by the partnership creditors taking all the assets in satisfaction of their debts, and selling part of them to the assignors for their notes, duly secured, which was exactly what the agreement in question accomplished. The plaintiff would have no right in such case to interfere, and does not acquire it by the same result being reached directly.

The partnership creditors and assignors could by no means which they could resort to destroy or cancel the assignment, so far as rights of any other persons were concerned. The purport, therefore, of surrendering or canceling the assignment must, by the agreement between them, be understood from the whole agreement as meaning nothing more than surrendering the assigned property, which was subsequently carried out, and was sanctioned by authority of the Supreme Court. It may not have been the most felicitous expression they could have used to express such meaning, but such purpose being legal, while the literal interpretation would make the agreement illegal, the former is to be preferred.

The covenant contained in the assignment, by the defendant Allerton, to discharge the trusts contained in it, was not to the plaintiff, and did not enable him to bring any action at law upon it. I am also at a loss to conceive of any mode of reasoning by which the power of the Supreme Court to accept the resignation of a trustee who is an assignee of an insolvent debtor can be superseded impliedly by the powers of a county judge to decree upon petition an accounting and distribution of assets, and prosecution of an assignee’s bond under the statute of 1860. (Laws of 1860, p. 596, §§ 4, 5.)

I, therefore, am of opinion that the judgment appealed from should be affirmed, with costs.

McCunn, J.

The defendant Nussbaum, and one Strauss, were partners in trade, and on the 6 th of January, 1862, they made an assignment of their property for the benefit of their creditors. The defendant Nussbaum had no individual property, or assets, to assign. The firm of Nussbaum & Strauss had some little personal property. Strauss had real estate of his own, which, of course, under the assignment, went to pay the partnership debts. The partnership- debts were all paid or compromised by Strauss. By order of the Supreme Court, after such payment, and by and with the consent of all their creditors, the real estate belonging to Strauss was reconveyed to him by the assignee, and the assignee relieved from all the trusts under the assignment.

The plaintiff herein, after the defendant had been relieved as assignee from all the trusts, and after he had reconveyed the property to Strauss, obtained judgment against Nussbaum for an individual indebtedness, and now he seeks to hold the assignee personally responsible for the amount of said judgment obtained against Nussbaum, because the assignee reassigned the real estate, which originally belonged to Strauss, back to Strauss again.

I fully concur with the chief justice in saying that the plaintiff, in this action, cannot recover, and that the judgment below should be affirmed, for two reasons.

First. When Nussbaum joined in the assignment with Strauss, he had no individual property, and therefore could assign none; consequently, the real estate that reached the hands of the assignee, through the assignment, was the individual property of Strauss, and the judgment by the plaintiff, in this case, being against Nussbaum individually, and not against the firm, "or for a firm , debt, the plaintiff herein has no equity to entitle him to have the individual property of Strauss applied to pay a judgment against Nussbaum.

Second. The order of the Supreme Court relieving the defendant herein from all responsibility as trustee, under the assignment, not having been set aside, or modified, and it having been offered and received in evidence in this case, is a complete bar to the action. (See the cases cited in the chief justice’s opinion.)

Barbour, J. (dissenting.)

As I understand the evidence, and the findings of the referee, in this case, the defendant Allerton actually received, under and by virtue of the assignment to him, not only lands and real estate of which Strauss was the owner individually, amounting in value to some nine thousand dollars, but, also, a quantity of beef, and some cattle, horses, carts, and wagons, belonging to the firm, together with their books of account containing charges against sundry debtors to the amount, nominally, of seventy-five or eighty thousand dollars.

It is, probably, not very important, however, so far as concerns this case, whether the assigned property was wholly that of Strauss, or in part, belonged to the firm. The assignment purports, by its seal, to have been founded upon a suffificient consideration, and it was valid within the statute, as a trust for the payment of debts. It is entirely immaterial, therefore, whether it was or was not a trust to pay the indebtedness of a person other than the one who furnished the property.

The duty of the assignee, under this trust, was fully expressed in the instrument itself. He was required to convert the whole of the property and assets into money, and to apply the proceeds, in the first instance, to the payment of the debts of the copartnership, and, secondly, to pay over the surplus, or so much thereof as should be necessary, to the creditors of each of the assignors, individually.

An honest departure from a literal compliance with the direction to convert the assets into money, would, doubtless, have been excusable in some supposable cases. If, for instance, the assignee had, under an agreement to that effect with all the creditors of the first class, transferred to them, or to their appointee, the whole or a portion of the assigned property itself, at its fair value, in satisfaction, entirely or pro tanto of their just claims, instead of first converting it into money, such transfer would have been held, in equity, a good execution of the trust, to that extent. But that was not done in this case. None of the property covered by the assignment was conveyed or delivered, in specie, to the creditors of the firm, nor, even, was its redelivery to the assignors provided for in the composition deed. But, on the contrary, the assignor paid to them about $9000 in money, which he had received from sales or collections, and, in consideration of that payment, and the execution to them of new notes by the assignors, to the amount of twenty-five per cent of the indebtedness, such creditors of the partnership acknowledged, in writing, a full satisfaction and discharge of their claims, and consented that the assignment be surrendered and canceled, and that an order of court should be made and entered, if necessary, to that effect.

It appears to me that the status of the assigned estate and effects which were in the hands of the assignee at the time of the execution of this composition deed remained, and was, wholly unaffected thereby. No provision was made in that instrument for the application of such assets to the payment of any part of the indebtedness of the firm ; nor, it may be added in this connection, does it appear that they were, in fact, so applied, either in the arrangement between the parties to the deed, or otherwise. The permission given to the assignee to surrender and cancel the assignment was, of course, inoperative as to any of the eestuis que trust, except those who were parties to the deed. Indeed the consent so given by the first class creditors was simply a permission to the assignee to do an act which, so far as they were concerned, he would have been legally entitled to perform without their assent, upon a satisfaction and discharge of their claims, and was therefore quite useless. In its bearings upon this case, therefore, the arrangement between the parties to the composition deed must be considered as intended merely to discharge the indebtedness of the firm to its creditors of the first class, and to release the assignee from further liability to them under the trust, in consideration of the receipt of some nine thousand dollars from the assets, which then belonged in equity to those creditors, and a further sum in new promissory notes1 of the assignors themselves, in place of other obligations or liabilities of theirs for a larger amount, which were provided for in the assignment. In a word, the claims of the partnership creditors which remained unpaid by the assignee, were satisfied by the debtors themselves, and not out of the assigned property, nor, I think, by any arrangement which impaired the right of the creditors of the second class to have the trust estate and effects which remained in the assignee’s hands when the composition deed was executed, applied to the satisfaction of their claims ; and it follows that it was the duty of the assignee, notwithstanding such arrangement, to proceed in the execution of his trust for the benefit of those concerned in interest, unless, and until, he should be legally discharged from the obligation he had assumed.

After the composition deed was executed, and when the order of the Supreme Court was made, the assignee held the title to all the real estate covered by the assignment, as well as three horses and some old wagons. The referee has found that the horses and wagons were of but trifling value. It can hardly be supposed that he considered their value so small as to bring them within the maxim “ de minimis non curat lex.” He probably used the term comparatively, and with reference to the aggregate value of all the assigned property. Be that as it may, however, the real estate, certainly, can hardly be deemed liable to such an objection, as it was worth some $3000, at least, over and beyond all incumbrances upon it.

The question then is, whether the order of the Supreme Court, conditionally releasing and. discharging the assignee from all .further duties under the trust, legally empowered him, as against the rights of the plaintiff as a cestui que trust, to reconvey and return the assigned property to the grantors ; or whether, by obtaining that order and making such reconveyance, or either, he has incurred a liability to the plaintiff for which he is answerable in this action.

As a general rule, and except for the statute, (2 R. S. 730, § 88,) a trustee of an express trust, having accepted the same and entered upon its duties, must continue to execute the same, unless excused therefrom by all the parties interested in such trust. (Wood v. Wood, 5 Paige, 596. Shepherd v. McEvers, 4 John. Ch. 136. Cruger v. Halliday, 11 Paige, 314. Diefendorf v. Spraker, 10 N. Y. Rep. 246. Matter of Van Wyck, 1 Barb. Ch. 565.) The reconveyance of the estate by him to the grantor is a violation of the trust. (Diefendorf v. Spraker, ubi sup.) For such a reconveyance, if effective, is the destruction of the trust estate itself j and if it results to the injury of the cestui que trust, the trustee will be liable to him therefor. The justification of the defendant Allerton, if any he has, for the reconveyance of the trust property to his assignors, and the consequent destruction of the estate, must therefore be sought for in the order of the Supreme Court.

The section of the statute upon which that order was founded is in the following words :

Upon the petition of any trustee, the Supreme Court may accept his resignation, and discharge him from the trust, under such regulations as shall- be established by the court for that purpose, and upon such terms as the rights and interests of the persons interested in the execution of the trust shall require.” (2 R. S. 730, § 88, [69.] )

The legislature undoubtedly intended, in this section, to empower the Supreme Court to release and discharge a trustee who found it impossible or inconvenient to act further in the execution of the trust; and the power conferred upon the court to settle the terms on which such discharge should be effected, was given for the purpose of enabling it to preserve and protect the rights and interests of the beneficiaries, by the imposition of such conditions, in regard to the settlement of-the accounts of the outgoing trustee, and the disposition of the trust fund and property, &c. as such court should deem necessary for that purpose. It is impossible to suppose they designed to vest the court with the power, upon an ex parte application of the trustee, to which the Gestuis que trust were not parties, to- destroy or to authorize, by its order, the destruction of the trust estate itself. That would be entirely inconsistent with the authority given to the court to fix such terms as the rights of the persons intrusted in the execution of the trust shall require ; the only terms, be' it remarked, that the court is authorized by the statute in question to impose. The terms mentioned in the act were intended, as its letter shows, for the protection of the persons interested in its execution ; and not such as would authorize the trustee to destroy the trust estate and, with it, all the rights and interests of the beneficiaries. So much of the order, therefore, as directs “ that the assignee be permitted to surrender the said assignment, and to reassign and restore the assigned property, or the proceeds thereof,” to the assignors, is unauthorized by the statute, and as to the plaintiff, who was not a party to the special proceeding upon which it was obtained; wholly inoperative and void ; and for that reason, such order affords no justification to the defendant Allerton, for the assignment and restoration of the property to the assignors, and the consequent destruction of his estate therein in trust. It may be added, that even had the statute expressly authorized just such an order and reassignment as have been made in this case, upon a mere exparte petition of the trustee, I should find but little difficulty in arriving at the conclusion that the unpaid cestuis que trust could not thus be divested of their- equitable interests in the trust fund; for that would be to deprive them of their property without that due process of law which the paramount law of the land contemplates.

Again : The order in question does not command or require the assignee to reconvey and restore the property to the assignors, nor declare, in presentí, that he is discharged of his trust; but it simply directs that he be permitted to do so; and declares that, upon the restoration of the property and the surrender of the assignment to the assignors, he shall be discharged from the trust. The order, therefore, left it entirely optional with the assignee to. make such restoration and surrender, while he yet remained the trustee of an express trust, as yet. unexecuted in part, and thereby to destroy the trust estate, or to refrain therefrom. It was, at best, but a mere permission to the defendant Allerton to do an illegal act, at his own risk and. hazard.

I am also of opinion that the order of the Supreme Court cannot, in equity, be so construed upon the trial of this action as to authorize a return of the property to the assignors, and the cancelment or surrender of the assignment, so long as the trust remained unexecuted. Being an order in a special proceeding, under a statute, it should be read in the light afforded by the petition of the assignee, on which it was founded, in order to ascertain its object, scope and meaning, as well as the design and intention, not only of the court by whom it was granted, but of the petitioner himself. Now, as the petition of the assignee alleges, in effect, that all the creditors who are interested in the trust have been satisfied and have released the assignors, the order ought, in equity, to be considered upon the trial of this action as having been designed to meet just that case, so presented by the petitioner ; and as authorizing the assignee to return the property to the assignors, and surrender the assignment at a future time, when the facts stated in the petition should really exist, and such surrender and return could be made legally, and without depriving any of the beneficiaries of their rights and equitable interests in the property belonging to the trust estate. The principle of the rule laid down in Haydon’s Case, (3 Rep. 7,) and still adhered to by all courts, authorizes us, I think, to ascertain the intention of the court in the manner above suggested; and “ Omne actum ab ag'entis intentions est judicandum."

If, however, we consider the order as authorizing the return of the property and surrender of the assignment at the time those things were done, although the claim of the plaintiff then remained unpaid, then, it appears to me, we are compelled to hold that the trustee is, in equity, estopped by his petition to claim, upon the trial of this action, that an ex parte order procured by and through his own misrepresentations, can justify an act inequitable in itself, which was not contemplated by the court when such order was made. To decide otherwise would be to permit such trustee to obtain an advantage by means of his own wrongdoing ; which is permissible neither at law nor in equity. “ Nullus commodum capere potest injuria sua propria.”

I am of opinion, therefore, that the order of the Supreme Court furnishes no justification for the defendants ; and that, upon the facts found by the referee, the plaintiff was entitled to a judgment.

The judgment appealed from should be reversed, with costs, and a new trial awarded.

Judgment affirmed.