text:
    Martha Garner, and others v. William Hannah.

      “ Ordinary and yearly taxes,” stipulated in a lease to be paid by the tenant, do not constitute in law any portion of the “ rent” reserved by sueli lease.
    Where a lease, executed in 1S43, six years before the establishment of the “ Croton Department” under the croton water acts, but after the passage of the act for supplying the city of New York with pure and wholesome water, (1834,) contained a provision, that the lessee should pay “ the ordinary and yearly taxes,” held, that the annual water rent charged on the premises, according to the rates established by the Croton Department, is within the meaning of the covenant properly to be considered as embraced within that description of “ taxes.”
    On a breach of the covenant for the payment of rent, in a lease containing the usual clause of re-entry, or the non-performance by the lessee of the covenant on Ms part, the lessee does not become a tenant by sufferance or at will; he continues tenant under the provisions of the lease, subject to the exercise of the right of re-entry by the landlord. Such right is asserted by the commencement of the action to recover the possession without actual entry, and without previous notice to the tenant to quit, and where the covenant broken is that for the payment of “ taxes,” the right of action is perfect without a previous demand of the tenant of the payment of such taxes, or of the repayment to himself if he has paid them for his tenant.
    The provisions of § 3 of the act of 13th May, 1846, entitled “An act to abolish distress for rent, and for other purposes,” providing for fifteen days’ notice to the tenant before making re-entry, do not apply where the right of re-entry arises on the breach of any other covenant than that for the payment of " rent.”
    The clause of re-entry, as applicable to the covenants for the payment of rent or taxes, or any other sum certain, is in equity treated as a security for the payment of money, and precise compensation can be made for the breach of it, and in such case, the court will, in the exercise of its equitable powers, relieve from a forfeiture, even after judgment in the action of ejectment, or such terms as may be just.
    A motion for leave to file a supplemental answer, setting up new matter, for the purpose of equitable relief, cannot properly be made at the trial Such motion must be made on notice, or order to show cause.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    October 30, 1856;
    January 3, 1857.
    Motion on the part of the plaintiff for judgment on a verdict taken, subject to the opinion of the court at General Term upon r¿uestions of law.
    The action was brought to recover possession of a lot of ground in 28th street, in the city of New York, and was tried before Bosworth, J., and a jury, in June, 1856.
    The following are the material facts of the case, as they appear from the pleadings, and were established by the evidence on the trial.
    The plaintiffs claimed that they were entitled to recover under a clause of re-entry contained in a lease made by one John Garner, the ancestor of the plaintiff, to Thomas Davis, of a lot in 28th street, dated the 1st of May, 1843, for a term of twenty years, and which was assigned by Davis to the defendant, on the 1st of October, 1850. The lot, when leased, was vacant, and a dwelling-house had been erected on the premises, in pursuance of one of the covenants of the lease.
    The lessee covenanted to pay1 the yearly rent, and farther that he would “ from year to year during the term of the lease, pay or cause to be paid all ordinary and yearly taxes on said lot,” and the lease contained the usual stipulation, that if any rent should be due and unpaid, or if default should be made in any of the covenants contained therein, it should be lawful for the lessor to reenter the premises, or to distrain for any rent that might remain due thereon.
    It was admitted on the -trial, (subject to an objection, that the evidence offered to prove it was inadmissible under the pleadings, the complaint being general in its form, and making no allusion to the lease or the default), that the taxes for the year 1854 had not been paid by the defendant, but that the same were paid by the plaintiff, in March, 1855, amounting, with interest, to $30.30. It also was admitted that the defendant had omitted to pay the Croton water rent for the year 1850, in consequence whereof the property was sold in June, 1852, for one hundred years, for $10.45, and that the plaintiff, on the 2d of March, redeemed the same, and paid on the redemption the sum of $16.35, principal and interest. It was also admitted that the Croton water rents of 1852, amounting to $8.05, had not been paid, and that the same was paid by the plaintiffs.
    To show that he was surprised by the general form of the complaint, as to the true character of the plaintiff’s cause of action, the defendant proved, that in June, 1855, after the commencement of the action, he made a search for unpaid taxes at the proper office, and that by the return on the search no taxes appeared to be unpaid, and to explain this, the witness stated that if a tax is paid by any person, or if the property has been sold for taxes and redeemed, the tax is not returned as unpaid, though the sale, redemption, and by whom redeemed, all appear in the sale book, and can be seen by any person examining.
    It was admitted that there was, at all times, sufficient property on the premises to satisfy a distress for rent.
    It was also admitted that the rent had been regularly paid up to the first of November, 1854, but there was no evidence to show that at the period of the payment of rent subsequent to the breach of the covenant, the plaintiff knew any thing of the breach.
    It was proved, on the part of the defendant, that on the 9th of June, 1856, after the commencement of the suit, the defendant went to Ward, one of the plaintiffs, with $200 in his pocket, and told him that he had come to pay the arrears of taxes, rents, and all other charges against the property, and that Ward replied that he knew nothing about the matter, and would not accept any1 thing.

      A motion was made for a nonsuit, on the ground that no notice to quit, or of the landlord’s intention to terminate -the lease, had been given prior to the commencement of the suit; also for leave to amend the answer, by setting forth therein the defendant’s offer to pay all rent and taxes in arrears, with all costs and charges thereon, with a prayer.for equitable relief therefor, or to file a supplementary answer for such purposes, both which motions were overruled, and a verdict was directed for the plaintiff, subject to the opinion of the court, etc.
    The complaint simply set out the plaintiff’s title, alleged that the defendant was in wrongful possession, and unjustly withheld it from the plaintiffs, and demanded judgment.
    The answer set up the lease, by the plaintiff’s ancestor, to Davis, and its assignment by him to defendant, possession under it, and averred, generally, payment of rent when demanded, and that “ all the ordinary and yearly taxes on said lot, which were required to be paid by said lessee, have been fully paid and discharged,” and that all the covenants, on the part of the lessee, had been performed.

      E. P. Voorhis, for plaintiffs.

      J. Goit, for defendant.
   By the Court. Slosson, J.

I had occasion, in another action by the same plaintiffs against the tenants of other premises held -under a similar lease, in which the pleadings were in all respects, in substance, lilce those in the present action, to consider the question of the sufficiency of a complaint in this form, under the Code, in connection with an answer setting up the lease and averring performance of its covenants. I held it, in that case, to be sufficient, and see no reason to change my views in that respect.

The objection to the evidence on that ground was, therefore, properly overruled.

It was contended by the defendant, on the argument, that all taxes which the tenant is bound by the terms of his lease to pay, are to be treated, in law, as part of the rent reserved, and that if .this be so, the present action must fail, since, he contends, there are but three modes in which ejectment for non-payment of rent can be sustained, to wit:

First, By a demand of the rent on the day it is due, under the old rule at common law.

Second, By proceeding under the provisions of 2 R. S. 505, giving a right to the action, where a half-year’s rent, or more, is in arrear, and no sufficient distress is found on the premises to satisfy it.

Third, By proceeding under the provisions of the act of 1840, ch. 274, “to abolish distress for rent, etc.and that the case does not fall under either of these, since there is ho pretence of a demand of the payment of the taxes (rent) by the landlord, nor of the giving of fifteen days’ notice of the intention to .re-enter, as provided by the act of 1846, and the case admits there was a sufficiency of distress on the premises, which would take it out of the provisions of 2 Revised Statutes.

To sustain these views, which a,re not without plausibility, he cited that provision of the general tax law, (1 R. S. 419, § 6,) which provides, in effect, that where a tenant has been obliged to pay a tax which the landlord was, by the terms of the lease bound to pay, he may recover it back from the landlord-by action, “or retain it from any rent due,” or accruing from him to the landlord. We see nothing in this provision which can properly be construed as sustaining this argument; it is a provision of convenience merely, by which the tenant is eitabled, if he so elect, to obtain an early indemnity for the payment he has made out of a fund in hand, and without suit. Rent has a fixed legal meaning, and to consider all payments which, by the terms of a lease, a tenant is bound to make, as coming within its definition, would lead to a confusion of ideas without necessity or advantage.

It is said that the payment of taxes is part of the return made by the defendant to his landlord for the use of the property, and, therefore, properly comes under the definition of rent. But in one sense the performance of every covenant on the part of the lessee is a return made by the tenant for the use of the land. Yet it would hardly be contended that money stipulated to be expended in repairs or for insurance, or in the way of improvements, was any portion of the rent. -Taxes, being payable annually, ap-. proach, it is true, to the idea and- character of rent, which is -a certain yearly return reserved to the landlord in money, or kind, or service for the enjoyment of the freehold; but they are distinguishable from rent in this, that they are uncertain both as to amount and time of payment, and are payable not to the landlord but to the government, and are imposed for the benefit of the public, and the landlord may, by the terms of his agreement with the tenant, be relieved from their payment; taxes are not, on that account, any more rent than the expenditure of money for insurance, under a' covenant to that effect on the part of the lessee. '

The forfeiture in the present action is claimed on two grounds,

First. That the taxes for the year 1854 were not paid by the defendant.

Second. That the Croton water rent of 1850 was left unpaid, by reason whereof the premises were sold and the plaintiffs were compelled to redeem, for their own protection.

At the time the lease in question was executed, the Croton water had not been introduced into the city, and no such thing was known as a Croton water rent. The plaintiffs, however, contend that notwithstanding this, it became, from the time the rent was established in 1852, an “ordinary yearly tax,” within the meaning of the covenant in the lease.

It is, perhaps, unnecessary to the support of the present action, that the plaintiff should establish this proposition, since there is a clear default by the nonpayment of the ordinary tax of 1854, but as the point has been made it may be well to dispose of it here.

The act for supplying New York with pure and wholesome water was passed May 2, 1834.

Various additional and amendatory acts were subsequently passed.

By the act of April 11, 1842, the corporation of the city were authorized “ to organize a department, with full powers, for the management of such works (connected with the supply of the water) and the distribution of said water.”

By the act of April 11, 1849, the “ Croton Aqueduct Department” was organized, and .the corporation of the city were authorized to establish, by ordinance, a scale of annual rents for the supply of the water, to be called “regular rents,” and to be apportioned to different classes of buildings in the city, in reference to their dimensions, number of families or occupants, or eonsumption of water, etc., etc., and to alter, amend, and increase the scale from time to time; such rents, when established, are to be collected from the owners or occupants of the buildings situated on lots adjoining any street or avenue in which the distributing pipes are or may be laid, and from which they can be supplied, and they are made a charge and lien on said houses and lots respectively.

By the 21st section of the act, the President of the Croton Acqueduct Department is required, at the termination of each water .year, to cause lists of the unpaid rents to be prepared with the names of the owners, etc.

By the act of 1851, to amend the act of 1849, (Sess. Laws of 1851, ch. 298,) these lists are to remain in the department until the 1st of January thereafter, for the purpose of receiving the arrears of rent. On the 1st of January in each year, the president of the department is to transmit to the comptroller a list of all unpaid water-rents for the preceding water year, and the comptroller is thereupon directed to advertise and sell the property on which said water-rents are a lien in the same manner as for unpaid taxes; and'the rents so in arrear are made a lien on the property, to be collected and recovered by a sale of the premises as provided by law in the case of unpaid taxes in the city.

By section 28 of the act of 1849, it is provided that “ For the collection of the water-rents to be imposed by virtue of the act, it shall take effect on the 1st of May, in the year after that in which the Common Council determines to carry its provisions into effect, and for the transmutation of the unpaid rents into a direct tax in the description of buildings to which they may be made to apply by ordinance of the Common Council.”

This last clause is rather obscure in the order in which it stands, and should be read in immediate connection with the first clause of the section.

•The Common Council, by ordinance approved 20th of Marp.b, 1851", established a scale of water-rents, as authorized to do by this act, fixing the rates upon the buildings of the city according to classes. .

By the terms of the act, therefore, its provisions in respect to the collection of the rents took effect on the 1st of May, 1852. The property in question was sold in June following.

It will thus be seen that these rents possess many of the essential elements of a tax; they are general and annual, and imposed for a public purpose, and from the time of their imposition become both “ordinary and yearly” burdens; they constitute a lien on the property, and are collectable in the same manner as ordinary taxes; indeed, by non-payment they become, by the terms of the act of 1849, “ transmuted into a tax.” The tenant, moreover, derives all the benefit from the use of the water, and the payment of the rent by him therefore works no hardship.

I think, therefore, that they may fairly be considered as embraced within the term “ taxes,” within the meaning of the covenant.

But it is said, no such charge could have been in the contemplation of the parties, as the lease was made in 1843, and the Croton Department was not created till 1849; that it was, therefore, a tax not in use at the time the lease was executed, nor was it a tax of a like nature with any before imposed.

This is true, but the act for supplying the city of New York with pure and wholesome water was passed as early as May, 1834, and acts amendatory of it were passed in each successive year down to the period of this lease, and the possible, or even probable imposition of some charge on the property for the use of the water if introduced within the term demised, may fairly be presumed to have been within the contemplation of the parties.

The language of the covenant is, to pay “ all ordinary yearly taxes.” In the case of Kearney v. Post, (1 Sandf. R. 105,) this court held that a covenant to pay all assessments, etc., which should be imposed on the premises during the term, extended to assessments imposed under statutes passed subsequently to the lease, and the decision was affirmed by the Court of Appeals. (2 Coms. R. 394.)

If this, therefore, was an ordinary tax, as we have considered it to be, the case referred to is decisive on the point. (See also the cases of Corporation of New York v. Cushman, 10 J. R. 96.; Bleecker v. Ballou, 3 Wend. R. 263.)

The point most relied upon by the defendant is, that from the time of the breach of the covenant, the defendant was in the position of a tenant at sufferance, and could not, therefore, be ejected without a previous notice to quit.

If it had been a condition of this lease that, on a breach of any of its covenants, the lease should become void, and the defendant, after a breach, had remained in possession by permission, or by the laches of the landlord, he would have been either a tenant at sufferance or at will, as the case may be, and entitled to notice to quit before he could have been ejected; but the provision is, that on default of - the tenant in respect to any of the covenants, the landlord may either re-enter or distrain. It is therefore, a lease not void, but voidable at the election of the landlord, and the estate of the tenant still continues, subject to the right of re-entry. (Stuyvesant v. Davis, 9 Paige R. 427; Parmelee v. Oswego, etc., R. R. Co. 2 Selden R. 80.)

How is this election to be manifested ?

The defendant contends it must be by a notice to quit.

The answer is, he is neither a tenant at sufferance, nor at will.

The object of a notice to quit is, to terminate the tenancy, and it is proper only in cases where no agreement exists between the parties, determining the period when, or the contingency on which, the tenancy shall cease. Such is the character of a tenancy at will or at sufferance, which are the only two cases in which notice to quit is prescribed by statute. A tenancy at sufferance is created by holding over after the termination of a lease or letting, without the permission of the landlord; but even then the tenant is not entitled to notice to quit, unless the landlord has permitted the tenancy to continue for such a length of time after the expiration of the term as to imply an assent on his part, and it has been held that three months was not sufficient, under certain circumstances, to create such implication of assent. (11 Wendell R. 616.)

If, in addition to the holding over, the landlord receives rent, it becomes an estate at will, or from year to year. Where either of these tenancies exist, or, in other words, where a tenancy exists not regulated and defined by express agreement between the parties, a notice to quit is highly proper, as a convenient and just mode of putting an énd to it; it comes in place of an express stipulation between the parties. But where the parties have, by their own agreement ascertained and determined at what period the term demised shall terminate, a notice to quit is unnecessary, and a tenant holding over after such period may be proceeded against by ejectment forthwith, .unless the holding over continues, as before stated, for such a period as to imply assent to its continuance on the part of the landlord, or unless he receives rent, and thereby converts the tenancy into an estate at will. (Rowan v. Little, 11 Wend. R., 616; Adams’s Eject. [Ed. 1854] 140, 1; 2 Serg. & R. Rep. 49; Messenger v. Armstrong, 1 T. R. 53; Right v. Darby, 1 J. R. 162; Woodfall L. and T. 177; Taylor’s Land. and Ten. 44, 5; 4 Kent’s Com. 118; Graham’s Prac. 848; Sander’s Pl. and Ev. Tit. Eject.; Allen v. Jaquish, 21 Wendell R. 631.)

The difficulty arises in applying this general rule to the case in hand. Where atenant holds over after the termination of his term fixed by the agreement between the parties on a day certain, it will not be contended that he is entitled to notice to quit, except in the contingency of a continuance in possession for so long as to imply assent on the part of the landlord, but the breach of the covenant in question, not of itself working a forfeiture by the terms of the lease, the term does not cease at the moment of the breach. In what position is the tenant after the breach? He does not hold over, for the term has not ended, yet he has committed a default, by reason of which the landlord may re-enter and terminate the lease. The difficulty, however, is more seeming than real. The right to the ejectment arises at the instant of the breach; but it is a right which the landlord may or may not exercise. His election is determined by the commencement of the action without actual entry. (Lawrence v. Williams, 2 Duer’s R. 587.) And from the moment of the election, the tenant is, in the eye of the law, a trespasser; until this exercise of his election by the landlord, the tenant continues tenant, under the terms of his lease, but liable to be' ejected if the landlord elects to enforce the forfeiture already incurred; the question, thenceforth, becomes one of election to enforce or waive the forfeiture on the part of the landlord.

The forfeiture being claimed under a breach of the covenant for payment of taxes, was a demand of the taxes necessary before the right of entry occurred, as in the case of a forfeiture for nonpayment of rent at common law ?

In the case of Jackson v. Harrison, (17 J. R. 66,) in which the forfeiture was claimed for a breach of the covenant to pay taxes, as well as of that for the payment of rent, the court, Van Hess, Justice, says: “ The plaintiff equally fails in showing a right of re-entry by reason that the defendant did not pay the United States tax, because the indispensably necessary step of making a demand of the defendants within the period required by law, in order to create a forfeiture, was not taken.”

I concur with the learned counsel for the plaintiffs, in thinking this dictum of that eminent Judge, not well considered.

Where a forfeiture was claimed for the non-payment of rent, a demand of the rent must be shown, unless the proceeding is under the statute, (2 Revised Statutes, 505, § 31); but taxes, as has been shown, form no part of the rent, they are not payable to the landlord, nor on a day certain, and no demand could properly be made by the landlord of his tenant in respect thereto, except to repay what the landlord had been compelled himself to pay by reason of his tenant’s default; this would be a demand for reimbursement merely, whereas the default which works the forfeiture, is the non-payment óf the taxes to the government, and it is not perceived how a mere refusal to repay the amount expended by the landlord for taxes, could work a forfeiture, when no covenant of repayment is contained in the lease; if so, a demand of repayment can not be a necessary pre-requisite to the right of action.

Besides, the payment of the taxes by the landlord, in case of the tenant’s default, is not necessary to his right of action; that is complete on the breach of the tenant’s covenant; a demand of their re-payment by the tenant must, therefore, be unnecessary.

As this is not a case of default in the payment of rent, the statute of May, 1846, providing for a notice of fifteen days, in lieu of a distress, does not apply. Moreover, the statute is applied in terms to the case of a lease, reserving a right of re-entry in default of a sufficiency of goods and chattels whereon to distrain;” whereas, the lease at bar contains no clause of distress whatever.

The defendant claims that, even if in strict right the plaintiff is entitled to judgment in the action, it is nevertheless a case in which equity, even after judgment, will administer relief on full compensation being made; and he contends that such relief may be given in the present suit, on his complying with certain com ditions to be prescribed by the court, as payment of the taxes in arrear, interest, and costs. (Code, §§ 150, 274.)

On the trial he proved, without objection, that on the 9th of June, 1856, (after suit eommeneed, and just before the trial,) he went to one of the plaintiffs with $200 in his pocket, and offered to pay the arrears of taxes, rents, and all other charges against the property, but the plaintiff refused to accept any thing.

It may be admitted that this offer covered the costs of the action. Is the defendant entitled, on this state of facts, to any affirmative relief in the judgment to be rendered in the action under section 274 of the Code ? I strongly incline to the opinion that he is not.

The “ affirmative relief” to which the defendant may be entitled, under this section of the Code, means, I think, such relief as may properly be given within the issues made by the pleadings, or according to the legal or equitable rights of the parties, as established by the evidence, not to that redress which is equally applicable after as before judgment, and may be obtained on motion or by action. If, therefore, facts had been set up in a supplemental answer, would they have constituted a defence to the action, either legal or equitable ? I apprehend not, for an offer of indemnity, and refusal to accept, cannot avoid the forfeiture; that is a right fixed by the contract; and all the court can do, by way of relief, is to stay the plaintiff’s proceedings on compensation being made.

The defendant loses nothing for the want of a supplemental answer, for the proof is in, without objection, and we can pass on its sufficiency as a defence as well as though the facts had been pleaded.

That the defendant will be entitled to relief, notwithstanding judgment may pass against him, I think perfectly clear.

The court has equitable as well as legal jurisdiction of the actions of which it has cognizance, and I take the rule to be well settled, that equity will readily, where the breach is not willful, relieve from a forfeiture or penalty, aswhere the stipulation is intended as a mere security for the payment of money, and precise compensation can be made.

The following authorities will be found to sustain this doctrine: Wafer v. Mocatto, 9 Mod. R. 112; Sanders v. Pope, 12 Ves. R. 282; Davis v. West, 12 Vesey R. 475; Hill v. Barclay, 18 Vesey R. 55; Reynolds v. Pitt, 19 Vesey R. 133; Baxter v. Lanning, 7 Paige R. 350; Story’s Eq. §§ 1314, 1315, 1319, 1321-2-3-4.

In the case of Davis v. West, above cited, which was a motion . for an injunction to restrain execution on a verdict in ejectment, brought on a breach of the covenant for payment of rent, the Lord Chancellor referred to the authorities as establishing “that where covenants are broken, and there is no fraud, and the party is capable of giving complete compensation, it is the province of a court of equity to interfere to give the relief against the forfeiture for breach of other covenants, as well as that for payment of rent.”

In Skinner v. White, (17 J. R.,) above cited, in the court of errors, Yates, Justice, says: “I cannot accede to the principle that a Court of Chancery is restricted in giving “ relief to cases of absolute forfeiture or penalty only. Relief may be granted against the breach of an agreement, not willful or fraudulent, where full compensation can be made, so as to render the party perfectly secure and indemnified, and place him in the same situation as if the occurrence had not happened.”

In England, as in this state, where the forfeiture rests on a breach of the covenant for payment of rent, the relief may, under a special statute, be obtained in the action at law without going into equity. (4 Geo. II., ch. 28; 2 R. S. 505, §§ 33, 34.)

In a similar action to the present, between the same plaintiffs and the tenants of another building owned by the plaintiffs, for breach of a precisely similar covenant, and to which I have alluded in the commencement of this opinion, (the case of Garner v. Sykes,) I relieved the defendants on motion after judgment, (no objection being made to the form of the application,) on the terms of making full compensation and paying all the costs, and on appeal the decision was sustained by the General Term, so that the question must be considered as settled as respects this court.

The difficulty in the way of granting this relief now in the form of a judgment is, that the defendant does not waive his defence to the action on the legal right, but relies upon the tender and refusal as constituting in itself a sufficient ground for the court to decree equitable relief. Had the defendant, in addition to proving the tender and refusal, offered to bring the money into court, or had he made a distinct motion to pay what the court should consider to be just, before judgment, waiving any defence to the action, I am clear that the "relief could have been granted. The question is certainly not free from difficulty and doubt, but under our present view of it, the defendant cannot be prejudiced as to the relief by the mere fact of judgment passing for the plaintiff; we think this a proper disposition to be made of the case, reserving to the defendant his rights to apply after judgment.

It may be proper to advert to the motion made by the defendant on the trial for leave to amend the answer, by setting up the offer to pay the taxes in arrear, etc., and by inserting a prayer for equitable relief, or to file a supplemental answer for the like purposes. The motion was denied, and the defendant excepted.

So far as the refusal to allow the amendment is concerned, that was clearly in the discretion of the Judge, and is not a subject of exception. (6 Barb. R. 308.)

Was the Judge bound to have suspended the trial, and allow the defendant to set up the new matter in a supplemental answer?

The facts arose after the commencement of the June Term, at which the cause was tried.

A plea oí puis darrein tendered at the trial, and properly verified, was, under the old practice, a matter of right, if a term had not intervened, whether the plea was good or bad, as a defence, (3 Caine’sR.172,) and if this motion was to be determined by the rules which formerly governed such a plea, the Judge would probably have been bound to have allowed it.

This court, in the case of Hoyt v. Sheldon, has recently decided that section 177 of the Code has established one uniform mode of applying to the court for leave to file a supplemental proceeding, to wit, by motion, and this is properly made on motion or on an order to show cause.

We think the Judge properly refused to allow the motion made at the trial.

Judgment must be for the plaintiffs, with liberty to the defendant to apply to the court for such relief against it as he may be entitled to, and without prejudice to his right to bring an action for such relief, if he deem the latter the proper course.


source: Caselaw Access Project

author: By the Court. Hoffman, J.

license: Public Domain

text:
    James McWilliams v. John M. Mason
    The question was, whether a party could hold a surety, bound by an obligation he had entered into, the terms of whichhadbeen changedbetween the principal and creditor, without the surety’s assent ?

      Held, that the question of benefit or prejudice arising to the surety was not the test of his responsibility. That if the terms upon which he engaged are not fully observed; if any practice or deceit has taken place which makes the contract between the debtor and creditor different from that assented to; or if, without deceit, a material change has been made, and this is not communicated, the surety is discharged.

      Held, that where a party agrees to become bound for $1600, expected to be advanced in cash to the principal for business purposes, and but $1000 was actually so advanced, and the chief portion of the residue was adjusted by discharging an old debt to the party maldng the advance, and no notice was given of this to the surety, he was exempt from liability.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    October 22, 1856;
    January, 1857.
    Appeal frorn a judgment on the report of a referee in favor of the plaintiff. AH the material facts are stated in the opinion of the court.

      J. W. Edmonds, for appellant.

      E. W. Stoughton, for respondent,
   By the Court. Hoffman, J.

Thomas Carlisle applied to one E. M, Townsend for an advance, by way of loan, of $1500, offering to give him his bond, guaranteed by the defendant. He was then indebted to Townsend in an unpaid note of $197.

Mason consented to guarantee his bond for the repayment of such intended loan of $1500. Carlisle informed Townsend of such consent, and the latter agreed to make the loan.

A bond, dated the 28th. of March, 1848, was then executed by Carlisle to Townsend, in the usual form, on which Mason indorsed his guaranty, dated the same day, as follows:—

“ In consideration of the sum of one dollar to me in hand paid, by B. M. Townsend, the obligee named in the within bond, the receipt whereof, etc., I, John M. Mason, do hereby guaranty and promise to the said R. M. Townsend, the payment to him, his heirs, executors, administrators and assigns, of the principal sum of $1500, mentioned in the condition of the said bond, or obligation, and the interest thereon, at the times and in the manner mentioned in the condition and agreement, written under said bond or obligation.”
“ In witness, etc.” (Signed) “ J. M. Mason.”

With this-bond Carlisle effected with Townsend a negotiation in the following manner:&emdash;The note of the former, with interest, (being the sum of $229.87,) then past due, was given up and treated as so much advanced. A bond and mortgage of one Little and wife, for the sum of $1200, with interest due of $93.55, was assigned by Townsend to Carlisle, for the residue of the loan. Thus the face of the debit to Carlisle, so made up, was $1523.49. Carlisle signed a statement to the effect that such account was correct, he being credited with the bond of March 28, 1848, for $1500, leaving him debtor $23.49. The old note of Carlisle was worthless.

But Carlisle, at the period of this transaction, had, with Townsend’s privity, negotiated with one Strong to cash the Little bond and mortgage. The sum of $1075 only was advanced upon it by Strong, and Townsend made the assignment of the bond and mortgage directly to Strong.

The questions to be considered may be thus presented:

Can a surety who has guaranteed the payment of $1500 to be advanced to his principal be held responsible for $1000, being the whole amount actually advanced?

Again, can a surety who has guaranteed an advance to a given amount, to be made in cash, be held liable when part of that amount was made in cash, and the residue,(about one-fifth of the whole amount,) was agreed, between the principal and creditor, to be applied in extinction of an old debt of the principal, who also was insolvent?

May the surety, in this last case, be held liable for the actual cash advance, if not for the whole sum?

But it is first to be observed, that the evidence to all the facts which give rise to the defendant’s defence in this case is by parol. The instrument of guarantee is the written indorsement on the bond, making himself responsible for the payment of the $1500, according to its condition. But the consideration of the bond, like the contents of a receipt, is open to explanation by parol testimony. The principal obligor could show how he received the amount, or that he received less. The surety has the same right, and thus the facts are made out, by legal evidence, to raise the questions above indicated.

The questions are of interest, and I have examined a number of the leading authorities which appear to bear upon them.

In Phillips v. Astling, (2 Taunton, 206,) the contract was to guarantee a bill of exchange for a certain sum, viz., the price of goods supplied by the plaintiff. A bill was accepted for a larger sum, and the surety was held not liable for even the amount he had agreed to secure.

In Evans v. Whayle, (5 Bingham, 485,) the defendant guaranteed the plaintiff to the extent of £50, for any gold he might supply Evan Evans, for the purpose of working in his business, which was that of a goldsmith. The plaintiff discounted bills for Evans, and paid him, partly in money and partly in gold. The latter was used in the business. It was a purchase of bills, not a sale of gold in the way of trade. The surety was held not responsible.

Whitcher v. Hall, (5 Barn & Creswell, 269,) was a strong case of a comparatively immaterial difference between the contract guaranteed, and that substituted between the creditor and debtor. “The question is not as to the amount of the difference, but whether the contract performed by the plaintiff is the original contract to which the defendant was a party.”

See, also, Baron v. Chesney (1 Starkie, 192).

Islyn v. Hartell, (8 Taunton, 208,) is a' leading authority upon one point in this cause. The guarantee was: “I will be answerable for the extent of £5000, for the use of the house of Spitta, Moiling & Co.” The declaration had treated this as prospective, and the court inclined to think it was so. The plaintiffs, upon receiving the guarantee, cancelled a previous indebtedness by surrendering the vouchers and taking a new note. It was held that the surety was not liable.

So in Bouter v. Cox, (4 Beavan’s Rep. 380,) John Cox, as a surety of Richard Cox, executed two notes “for value received by a draft at three months’ date.” The meaning was, that the parties to whom the notes were given, were to advance the money on a three months’ credit. The goods were sold payable on demand. These parties made the advances directly, so as to give them a right to demand immediate payment. The right of the creditor was thus materially different from that which was intended by the surety, and it was not a sufficient answer that no demand was made of the surety within the three months for which credit was given.

And in Bonar v. McDonald, (1 L. and Eq. Rep. 1, in the House of Lords,) Lord Brougham states the rule thus, as given in a note of Lord Oottenham, and expressed his concurrence in it: “Any variation in the agreement to which the surety has subscribed, which is made without the surety’s knowledge or consent, which may prejudice him, or which may amount to a substitution of a new agreement for a former agreement, and though the original agreement may, notwithstanding such variation, be substantially performed, will discharge the surety; and, as to Scotland, in Bell’s Principles, 71, the rule is laid down that the cautioner is Reed by any essential change consented to by the creditor in the principal obligation or transaction.”

The late case of Owen v. Homan, (3 McNaughten and Gordon, 378,) is one of much importance upon the general question, and some of the propositions are pertinent to the present question.

“The cases,” says Lord Truro, “which are reported, have generally arisen out of transactions in which there has been a personal communication between the creditor arid the surety; and the clear law deducible from these decisions is, that the creditor must make a full, fair, and honest communication of every circumstance calculated to influence the decision of the surety, in entering into the required obligation.”

He then adverts to the question, how the case would stand when the creditor leaves the debtor to communicate to the surety, and declines, or, at all events, abstains, from communication with the surety ? He refers to Pidcock v. Bishop, (3 Barn, and Cres. 605,) and a dictum of Ch. J. Tindal, in Hone v. Caupten, (5 Bing. N. C. 142.) The motion before him (for a receiver) did not call for a decision of the question at that time.

In Pidcock v. Bishop the facts were these: The defendant signed the following guarantee: “ At the request of Mr. Thomas Tichell I beg to inform you that I will guarantee you in the payment of £200 value, to be delivered to him in pig iron.” This was dated 16th December, 1822. The plaintiffs supplied pig iron to the amount of £82 10s., and, upon default of payment, sued upon the guaranty. The defendant proved that Tichell agreed with the plaintiffs, that if they would let him have the iron at the market price, he would pay John Pidcock (manager of the plaintiff’s business at the iron works, and one of the associates) ten shillings for each ton, to be applied to an old debt from Tichell to him. On these terms, and a guarantee to be given, the bargain was made. Tichell then procured from the defendant the instrument sued upon, but did not communicate the arrangement as to the ten shillings.

Abbott, Oh. J., said:—“ The effect of the bargain would be, to compel the vendor to appropriate to the payment of the old debt a portion of those funds which the surety might reasonably suppose would go towards paying the debt for which he became responsible.”

And Littledale observed:—“The surety might fairly suppose that the vendee would be able to pay the market price of the iron out of its produce when manufactured, and he gave the guarantee under that supposition. If he had known the bargain, he would have known that the vendee would have so much less to appropriate in payment for the iron, and, consequently, that his risk would be thereby increased.” A nonsuit was entered.

There is a series of cases in the courts of our own country which impose a rule of equal strictness upon the creditor in his relations with the surety. And when there is a variance of a material nature, the question is not permitted to influence the decision whether the surety is, in fact, injured or not. (Miller v. Stewart, 9 Wheaton, 680; United States v. Tillotson, Paine’s C. C. Rep. 305; Nixon v. Palmer, 4 Selden, 398.)

It is, then, manifest that the question of benefit or prejudice directly arising to the surety is not now the test of his responsibility, ' If the terms he engaged upon are not fully observed, if any deceit has been practised or connived at, which makes the contract between the debtor and creditor different from the one he prescribed or assented to; or if, without deceit, a material change is 'made, and the creditor has not communicated it, the surety will be discharged. Now, in the present case, the difficulty has occurred to us, that the contract of the surety, as well as the terms of the contract, as performed, are proven by parol. In most of .the cases, the conditions of the surety’s engagement are defined in the instrument. The written undertaking is simply to pay according to the condition of the bond if the obligor did not. The material element of the defendant’s contract was, that a loan of $1500 was actually tó be made—a clear new advance in cash. That is proven by parol.

But it may be questioned whether such evidence be at variance with the written document. If the consideration of the bond be fully open, it may well result that the consideration of the surety’s engagement is also open to similar testimony. But chiefly we consider, that here was what is equivalent to a deception and legal fraud upon the surety. Townsend knew that he intended to be bound for a cash advance, and Townsend changes that into the extinction of an old debt due to himself and a partial cash advance. The difference is, that Carlisle actually received but $1052 for the $1500 which the defendant expected, and guaranteed upon such expectation. Townsenff does not communicate this to the defendant. Our conclusion is, that the evidence is admissible, and, as a necessary consequence, that a case is made out, within the authorities we have cited, for the exemption of the defendant.

Another point was raised by the pleadings, and referred, of course, to the referee; that is, that the transaction was tainted with usury, by reason of the transfer of the Little bond and mortgage, upon which $1075 only was received, it being, on its face, of the value of $1293.55.

The referee does not, in terms, pass upon the question of usury; but, as he finds the sum of $1075 due, with interest, he, of course, finds that there was no usury.

That question is one upon which serious doubts may be entertained. But it must be observed that it is by no means clear that 'the bond and mortgage were not, in fact, worth, in Townsend’s hands, the whole of the apparent amount due upon them. If the case, then, was nakedly, that Carlisle, to meet his necessities, sold at a large discount, securities really worth their face, it would be difficult to make out a case of usury. At any rate, we are not prepared to place our judgment upon this point. As the conclusion upon the former point disposes of the case, we forbear considering this question further.

The judgment entered upon the report of the referee, must be reversed, and judgment dismissing the complaint be rendered, with costs.


author: By the Court. Hoffman, J. By the Court. Hoffman J.

text:
    Ernest Fiedler v. The New York Insurance Company. The same v. The same.
    The cost of repairing a vessel disabled by the perils of the sea must exceed a moiety of her value in the policy, making the usual deduction of one-third new for old, to warrant a recovery for a constructive total loss.
    In the first case, the vessel was valued at $16,000 in the policy, and the jury found that the whole cost of repairs would have been $12,000, thus, (making the usual deduction,)leaving $8,000 as the actual cost for which alone the insurers could be liable. Held, therefore, that it was only a partial loss that the plaintiffs were entitled to recover.
    In an estimate of the cost of repairs, in order to determine whether there was a constructive total loss justifying an abandonment, surveyors fees and general average losses are not to be included.

      Seld, in the second case, in which the policy was upon freight, that as there was not a constructive total loss of the vessel, and the cargo had been delivered, there had been no loss of freight for which the defendants could be liable.
    Even where there has been a constructive total loss of the vessel, yet, if before an abandonment for that cause, the cargo has arrived and been delivered at its port of destination, no loss of freight is recoverable. The freight, in such a ease, belongs to the assured, and the loss is his if he fail to collect it.
    (Before Hoffman, Slosson and Woodruff, J.J.)
    Heard and decided, January Term, 1857.
    Motion on the part of the plaintiff in each of these causes for judgment upon a verdict in his favor, which, by order of the Judge who tried the causes, was taken subject to the opinion of the court at General Term, and judgment in the mean time suspended. The verdict in the first case was for $13,000, in the second, for $3,000; the amount of each verdict was agreed on by the parties, and made subject to future adjustment. By the like agreement, there was but one case, upon which both causes were heard, for although the questions of law were different, the evidence and the facts in both were the same.
    In the first action, the plaintiff claimed to recover a total loss, under a policy of insurance made by the defendants upon the bark Helen, M. Fiedler. The voyage, described in the policy, was at and from San Francisco, to a place or places in the Columbia River, and at and from thence back to San Francisco. The sum insured was $8,000, and the vessel was valued in the policy at $16,000.
    The second action was on a policy of insurance upon freight made by the defendant upon the same vessel and voyage; the sum insured was $2,000, and a total loss was demanded. The causes were tried before Duer, J., and a jury, in April, 1854, and upon the trial there was a great conflict of evidence as to the probable cost of the full repairs of the vessel at San Francisco, and the possibility of making them. The Judge instructed the jury, in the action upon the vessel policy, to find a general verdict for the plaintiff, who, at any rate, was entitled to recover a partial loss, and he required the jury to answer specially the following questions:—
    1. What would have been the whole cost of repairing the vessel at San Francisco, so as to render her entirely seaworthy for voyages on the west coast of America ?
    2. Gould the vessel have been fully repaired at San Francisco ?
    3. What would have been the whole cost of full repairs at San Francisco, upon the supposition that they could there have been made?
    The answer of the jury to the first question was, $5220; to the second, yes; to the third, $12,000. Exceptions were taken by the counsel of both parties to different portions in the charge of the Judge, and also to some of his rulings upon the trial; but it is unnecessary to state them, as they were all rendered unimportant by the grounds upon which the court, at General Term, placed its decision.
    The following are the material and uncontradicted facts proved upon the trial, upon which the questions of law arose that were determined by the court.
    The vessel on her return voyage to San Francisco, with a full cargo of lumber on board, and while still in Columbia River, was seriously damaged by the perils insured against, and with a view to her preservation threw overboard a small part of her cargo. She returned, however, to San Francisco without further loss, and then delivered her cargo to a mercantile firm, who were its consignees and part owners. A regular survey was then had upon the vessel, for the purpose of ascertaining the nature and extent of her injuries, and the surveyors, in their report, calculated the cost of repairs, exclusive of copper, at the gross sum of $12,000, but stated, at the same time, that from the want of the necessary means and materials, full repairs could not be made at San Francisco, and upon that ground advised the sale of the vessel. She was accordingly sold at public auction for the sum of $3450. The sale was on the 2d of April, 1850, and the plaintiff abandoned to the defendants on the 29th of May following.

      F. B. Cutting, for the plaintiff,
    contended that there was sufficient proof of a constructive total loss to entitle the plaintiff to a judgment; that surveyors’ fees, tonnage, commissions, and that share of the general average resulting from the disasters in Columbia River, which was chargeable to the vessel, should be added to the $12,000 found by the jury, as the cost of full repairs, and that with this, the cost of full repairs, after making the usual deduction, would be found to exceed a moiety of the sum at which the vessel was valued in the policy. (2 Arnould Ins. 1106; Pezant v. The National Ins. Co., 15 Wend., 453). The counsel also contended that the estimate made by the surveyors, and their recommendations, fully justified the master in selling the vessel for the benefit of whom it might concern, and that the sale thus made, created of itself a total loss, for which the defendants were liable. (The Fortitude, 3 Sumn. 267). The counsel was proceeding to argue that the verdict of the jury upon the special questions submitted to them, was against evidence, but the court refused to entertain the question.
    The right of the plaintiff to recover a total loss of freight, was placed by the counsel on the grounds that there was a total loss of the vessel by the disasters in the Columbia River, that the abandonment related to that period, and from that time vested in the defendants, so as to entitle them to her subsequent earnings, which were thus lost to the plaintiffs.

      B. Emmett, for the defendants,
    insisted that as the rule is settled, that to constitute a technical total loss of a vessel, the cost of her repairs, deducting one-third new for old, must exceed a moiety of the sum at which she is valued in the policy; the plaintiff was concluded by the answers of the jury to the questions submitted to them, and upon the facts so found, it was certain that no technical total loss had occurred. There were also other grounds, upon which the counsel contended that a total loss was not recoverable; the vessel on her arrival at San Francisco, her port of destination, was capable of being repaired, and after her arrival in that state, there could be no abandonment even had it been proved that the cost of her repairs would have exceeded a moiety of her value. (Marshall on Insurance, 2 ed. 503; 2 Phillips, 3 ed. 293; 15 Wend. 453.)
    Again, the vessel was not entitled to full repairs, but only to such as would have rendered her competent to perform the voyages on which she was to be employed, that is, voyages off the west coast of America, and the evidence on the trial proved that she could have been rendered navigable for such voyages for an inconsiderable sum.
    As to the sale of the vessel the counsel argued that even if made in good faith it was wholly unwarranted by the existing circumstances, either upon the ground of necessity or as an exercise of sound discretion. (He cited Robinson v. Commonwealth Ins. Co., 3 Sumn. 226; Hall v. Franklin Ins. Co., 9 Rider, 466; Hunter v. Parker, 7 Mees. & Wels. 342; Ruckman v. Merchants’ Louisville Ins. Co., 5 Duer, 342, and other cases.) As to the freight the counsel argued that there was in reality no loss whatever, and that the abandonment as for a total loss was a nullity. The vessel had arrived at San Francisco, and had there delivered her cargo to the consignees, the freight was then earned, and when earned belonged to the plaintiff. By such arrival and delivery the rights of the parties were fixed, and could not be changed by a subsequent abandonment of the vessel, even had a technical total loss been proved. (McCarthy v. Abel, 5 East. 388; Marine Ins, Co. v. Turner, 20 Eng. L. & Eq. R. 24.)

      In the actions upon the vessel’s policy, the views and decisions of the court were expressed in the following opinion.
   By the Court. Hoffman, J.

The chief difficulty of the court has arisen from the state of the record.

The action is brought upon a policy of insurance on a vessel, claiming to recover for a technical total loss. The value of the ship in the policy was $16,000.

The Judge, at the trial, was requested by the plaintiff to charge certain propositions, which he declined in the form presented. The Judge embodied his actual charge in nine propositions. Each party took exceptions. He also requested the jury to answer, in writing, three particular questions, which they did; and they found a general verdict for the plaintiff.

All the requests—all the propositions in the charge of the Judge, except the ninth, and all the exceptions bear upon the question of a total loss. And if there had been no special finding sought from the jury, and assuming that the law of the Judge was right throughout, the general verdict would have entitled the plaintiff to judgment for a total loss.

Again, but for the ninth proposition before noticed, we should have been compelled to compare the general verdict with the special finding; and the Code (section 262) provides that where a special finding of facts shall be inconsistent with the general verdict, the former shall control the latter, and the court shall give judgment accordingly.

If, then, the general verdict alone would have warranted judgment for a total loss, and the special finding would not, the plaintiff could not recover for such loss. Still it might have been the duty of the court to reconcile the two if possible; and if the testimony disclosed facts which would reconcile them, but which were not involved in the verdict, a new trial might have been had to establish them.

But the ninth proposition in the charge of the Judge, before alluded to, supersedes all these considerations.

In that proposition the jury were told, that if the plaintiff was-not entitled to recover for a total loss, he would still be entitled to an average loss, including a general average, which could be adjusted under the direction of the court. The Judge then submitted the whole case to them, requesting them to find the particular facts.

The jury were then instructed that they must necessarily find for the plaintiff, as upon either theory as to the nature of the loss, he must recover; and the plaintiffs contend, and the defendants admit, this to have been the case. The general verdict then determines nothing, and imports nothing, upon those propositions which would involve the question, whether the loss would be a total or a partial one ? It is nakedly, that the plaintiff is entitled to recover; a total loss, if something besides the verdict gives it to him, a partial loss otherwise.

And thus the case depends upon the answers to the special questions; in truth, upon that to the third question.

In reply to such third question, the jury have said, that the whole cost of full repairs at San Francisco would have been $12,000. Deducting one-third," new for old, we have then $8,000, which will not make up a total loss. The rule is not to be questioned, that there must be an excess of a moiety. The value in the policy was $16,000. Then the counsel for the plaintiff presents this proposition, to establish a total loss. Surveyor’s fees were paid, amounting to $144; and this is proven in the case. Now, either the jury have included such fees in the estimate of $12,000 as necessary and sufficient to make complete repairs, or they have not. Surveyor’s fees are to go into the estimate, but not to be subject to the abatement of one-third. Hence, if included by the jury, the deduction should not be made, and then the cost will be $8048 after the deduction. If not included, then the fees $144 are to be added to $8000..

We need not notice the point, that we are thus compelled to find as a fact, that the surveyor’s fees were paid; and that the Court of Appeals forbids us, at General Term, to deduce facts from evidence, and give judgment upon them. There is an answer more decisive.

We consider it settled, that in making an estimate of the extent of the injury which warrants an abandonment, surveyor’s fees are not to be included.

In deciding what may be taken into the account, in estimating a constructive total loss, the Supreme Court of Massachusetts has settled a principle which will exclude such fees entirely. In Hall v. The Ocean Insurance Co., (21 Pick., 472,) which was an action to recover for a total loss, the Judge at the trial laid down the rule, that the expenses incurred for the purpose of ascertaining the extent of the loss, should not be comprised in the charges which were to determine whether the losses amounted to fifty per cent, of the value. In this the court fully sustained him.

The court also declared the rule, that the items which should properly be carried to the account of general average, should not be included.

The court are of opinion that the particular average loss is to be made up in the usual manner, deducting one-third new for old, independently of the general average, and of the expenses of ascertaining and proving the loss, and if, upon such a calculation, the sum exceeds one-half of the amount insured, then, and not otherwise, the insured has a right to abandon for a total loss.”

In Orrock v. The Commonwealth Insurance Company, the Supreme Court sustained the ruling of the Judge, that in making up fifty per cent., which authorizes an abandonment, the vessel’s proportion of items of general average should not be included. The evidence of Mr. Tyler in this case showed the custom of Boston. The expense of a survey while the cargo was on board, would be charged as general average, and the expense of a second survey of the vessel, after the cargo was out, would be partial loss; that the cost of the carpenter’s work and labor, and the expenses necessary in order to make surveys, would follow the surveys respectively, and be general average or partial loss, as the principal to which they were incident was the one or the other.

The adjustment of Mr. Phillips, the eminent writer on Insurance, in Potter v. The Ocean Insurance Company, (3 Sumner, 27,) was upon a similar principle. He had charged one-half of surveyor’s fees to general average, and one-half to particular average against the ship. He then deducted one-third from these sums. Justice Story held, that the deduction ought not to be made from such items.

By the 369th article of the Code of Commerce of France, an abandonment may be made when the loss or average is not less than three-quarters of the value of the property insured, The writers distinguish between losses real and legal. The case of a capture is of the last character; that of destruction to the amount of three-quarters, of the former. The latter is the presumption of an entire loss. (Boulay-Paty, vol. 4, 222.)

In making the estimate of damage to such an amount, nothing is to be considered but what has fallen corporally, and by the peril of the sea, upon the thing insured. No expenses which the assured is obliged to make, and which, indeed, increase the price of the goods to him, are considered. (Boulay-Paty, 4, p. 251.)

The rule as to a vessel is, to take her value as stated in the policy and her market value at the place of the accident, and ascertain whether the latter is one-fourth of the former. The comparison is not with the amount judged necessary to repair her. (Boulay-Paty, 4, p. 251.)

It is not eligible and just, that when a partial loss to a vessel alone, or a loss to which she as well as cargo and freight are to contribute, is adjusted, surveyors’ fees should be charged to underwriters. They have resulted from the peril and the damage. The case is different when the question to be solved is, what would it cost to replace the vessel in the same situation she was before the injury, deducting as usual ? The result of that inquiry is the test amount, without the expenses of ascertaining it. The moiety rule is itself an arbitrary one, and not a favorite of the-law. The admission of items to make up the sum should be rigidly limited to what the rule exacts.

Although the damage to the vessel at the Columbia River may have formed a ground of general average, yet it was included in the estimate at San Francisco. That was the aggregate of injury sustained by her as she then existed. The mere fact of a previous damage constituting a claim for general average, could not add to an estimate which was to include the total injury.

The liability of the ship to contribute any thing in general average to the owners of the lumber sacrificed in the river, could not upon any principle be added.

The result is, that there was not a total loss. The finding is conclusive.

It has been intimated that neither party desires a new trial, being content to take the decision of the court upon the question as to a total or partial loss, upon the record as it'stands. If so, we need not enter upon the consideration of many important questions upon the ruling of the Judge, the exceptions, or the grave objections to the finding upon the evidence, supposing the record enables us to examine them. Unless, therefore, we have misunderstood the counsel, the judgment will be for a partial loss. The counsel, it is supposed, would agree upon the principles of adjusting this. If not, they can be settled by one of the Justices before whom the appeal has been heard.

Upon the freight policy, the following was the judgment of the court.

By the Court. Hoffman J.

is a case submitted up.on points, and it is admitted that the case made in the cause of Fiedler against the same defendants, in the action upon the policy on the vessel, with all the answers of the jury, shall be treated as found in this case; the amount of the verdict being, however, $3000, subject to adjustment.

The action is upon a freight policy on the barque Helen M. Fiedler, for $2Q00. The claim is for $2000. The claim is for a total loss.

The vessel proceeded from San Francisco to the Columbia River, and there took in a cargo of lumber. She met with various accidents and perils on her return, and at the mouth of the river she was driven ashore, and portions of the lumber were placed alongside in rafts, and some quantity swept away by the current and drift wood. The quantity or value is not stated.

The vessel carried the great bulk of her lumber to San Francisco, and delivered it there to order, or into the hands of the consignees or owners. These were the Messrs. Ward and Company, who were also the agents of the owners of the vessel, Burgoyne and Company, Russel the mate, and the master. Burgoyne and Company, paid their share of the price of the lumber, and the vessel was consigned to Ward & Co. After that, the proceedings and survey, and sale of the ship took place, and' the vessel was abandoned to the insurers as for a constructive total loss, as stated in the other cause.

We understand that counsel agree to our finding these undisputed facts from the testimony in the case, and these are all that are material to determine the claim for a total loss of the freight.

There is no ground for the claim of the plaintiff upon an actual total loss of freight from the failure of the vessel to earn it through any of the perils insured against. It is not placed upon this basis.

It may appear somewhat singular, that the claim should be asserted at all, when the cargo, (what was actually lost in the river being wholly undetermined,)was carried to the port of destination, was actually delivered, and the freight was received, or was legally payable, and when the agents of the owners of the vessel received, or were entitled to demand it.

The reasoning to sustain the claim we understand to be this—

The abandonment to the underwriters on the vessel, being for a total loss, and retrospective, carried a title to the ship as she was at Columbia River. The freight collected at San Francisco, passed to the underwriters of the ship, and when collected by Ward & Co., belonged to such underwriters. Such freight was, therefore, lost to the plaintiffs by the perils of the sea, as much as if the ship had foundered at the Columbia River.

It might be sufficient to say, that in this case, in the action against the underwriters on the ship, we have decided that there. was not a constructive total loss.

But let it be assumed, in the present case, that there was such a loss of the vessel, we apprehend that the plaintiff must still fail in his demand.

The important case of The Scottish Marine Ins. Co. v. Turner, (20 L. & Eq. 24,) in the House of Lords, and cases cited, are the only authorities necessary to be referred to. That ease embraces the whole of the law which is applicable in the present instance. A ship was insured for £7500, by the appellants for £1500, and by the Greenock Insurance Co. for the balance. The present appellants were insurers on the freight for £1500.

The ship was much damaged in the early part of the voyage,. by coming in contact with an iceberg, but reached her port of discharge, where she met with much further damage. After this, the owners abandoned her for a total loss, and in an action, it was established that she was properly abandoned. The cargo had, 'however, been delivered, and the freight earned and paid by the consignees to the owners. It was decided, (in a previous action,) that the freight belonged to the insurers of the ship, the owners having accounted to such insurers, the abandonees, for the freight, brought the present action on the freight-policy of the defendants below. All the. Judges in the Scottish Courts, except Lord Moncrief, sustained the claim. The case went to the House of Lords on appeal.

The decision was there reversed.

The Judges in the House of Lords take this distinction :—If the abandonment of the ship is made during the voyage, and before the freight is earned by delivery of the cargo, the áction mpy be sustained; but it cannot be when there is no abandonment until the ship had arrived in port, and when the owners were in a condition to insist on the payment of freight, and the freight had been paid to them. They adopt the language of Baron Alderson, that “ there is no instance to be found in which an action for a total loss of freight has been held to be maintainable where the freight has been actually earned.”

Lord Truro, after stating, that, “ in his opinion, the decision that there had been a total loss of the ship was in advance of previous decisions,”, stated the import of the contract of insurers on freight. .“The underwriters on freight” he says “bind themselves to indemnify the assured against any loss of freight occasioned by the ship being prevented performing the voyage insured by any of the perils mentioned in the policy, and thereby the freight insured being earned. They do not engage that the assured should be able to procure a loading, or that they should be entitled to retain the freight, as between themselves and any other persons, after it shall have been earned.

“The expression, ‘the loss of freight,’ has two meanings; freight may.be lost in the sense, that by reason of the perils insured against, the ship has been prevented earning freight; or ‘ loss of freight,’ may be used in the sense that it may be lost to the .owners after it has been earned, by some circumstances unconnected with the contract between the underwriters on the freight and the assured.

“ For a loss of freight, in the first sense, the underwriters on the freight are liable; but for any loss of freight incurred by the owners after it has been earned, I conceive the underwriters are not liable. I can extract no obligation whatever from the policy which should subject them to such a loss.

“ The underwriters on the freight have engaged that the ship should not be prevented, by the perils of the sea, from enabling the owners to earn freight; nor was she so prevented, for, in spite of those perils, she arrived in port, and the owners obtained payment of the freight. The right of the underwriters to claim payment of that freight from the owners, arose, not from the perils of the sea, but from the election made by the owners, after the freight had been earned and paid, to treat the ship as wholly lost on or before the 11th of August, before she got into dock.”

The case in which it was decided that the freight was to be paid to the insurers, was Stewart v. The Greenock Marine Insurance Co. (2 House of Lords, and Cases, 159). The facts of the present case are nearly identical with that of The Scottish Company v. Turner. This vessel, indeed, met all the disaster and injury at the Columbia River; the vessel in that case met some in the Gulf of St. Lawrence, and more in harbor, but before getting moored. This difference is immaterial. In each case the lumber was delivered, and the freight earned. In each case the freight went into the hands of the ship-owners, or their agents. In each case the abandonment was subsequently made, after the freight had been earned, and was paid or payable. In the Scotch case, the underwriters on freight were among the underwriters on the ship. Here, as far as the case shows, these defendants were the only underwriters on ship and freight.

We find, again, that before the insured brought their action they were obliged to account to the insurers of the vessel for the freight. The Judges, in the court below, relied much upon this, holding that the owners of the vessel never received the freight above for their own use, but for the underwriters.

This argument was answered by Lord Truro: “In this case, at the time the owners received the freight, they so received it on their own account, for their own benefit, and, as the facts then stood, were entitled to retain it against all the world. The contract between the owners and the underwriters on the freight had been entirely performed, and the relation between them determined, and the assured were entitled, then, not only to retain the freight but to recover comnensation for any damage to the ship. But they preferred to claim a total loss and abandon the ship. By virtue of that election, the freight, received for their own benefit, became an item of account between them and the underwriters on the ship.”

We may also observe, that the rights of the parties under "these separate policies ought to be. determined upon the same principles as if they were made by different assurers.

Tn our judgment the claim for a total loss is untenable

The parties, it is stated, are prepared to admit, among themselves, any claim for a partial loss on the lumber swept away in the Columbia River,

       Since this opinion was prepared and the judgment delivered, I have met with the case of Greely v. The Fremont Ins. Co. (9 Cushing Rep., 415). It was there expressly held that general average losses are not to be added to the cost of repairs in order to determine the question of an excess of half the value upon a constructive total loss.