the assured at the same time, it was held that the underwriters were liable for a total loss without notice of abandonment (u); and, the same conclusion was arrived at under similar circumstances in an action upon a policy of insurance on cargo (x). In all other circumstances, however, the giving of a notice of abandonment is a necessary preliminary to the right to recover for a constructive total loss. In treating upon this subject, it is necessary to distinguish between an abandonment and a notice of abandonment. An abandonment is an inseparable incident of every admitted claim for a total loss. It is that act of cession whereby the assured, on claiming for a total loss, consents, as was said by Lord Cottenham in Stewart v. The Greenock Marine Insurance Co. (y), to "give up to the underwriters all the remains of the property recovered, together with all the benefit and advantage belonging to or incidental to it; or rather" (he adds) "such property belongs to the underwriters." A notice of abandonment is a notification by the assured to the underwriters that he elects to treat the case as one of total loss, made while the happening of the loss is prospective. Under such circumstances, it is reasonable that the assured should on deciding to claim for a total loss, promptly intimate his intention to the underwriters, in order that the latter may be given the opportunity to take any steps which they may deem advisable for the recovery of the property, or for the realization of the salvage to the best advantage, if the property is irrecoverable. No specific form is necessary for giving notice of abandonment, nor is it essential that it should be made in writing, though it is customary and advisable so to give it. It is absolutely necessary that the notice should be made in terms which clearly convey a tender on the part of the assured to abandon to the underwriters all his interest in the thing insured (z). (u) Farnworth v. Hyde, 2 Mar. L. C., O. S. 187, 429. (x) Roux v. Salvador, 3 Bing. N. C. 266. (y) 2 H. of L. Cas. 183. (*) Arnould, 4th ed., p. 850. The With respect to the time when it is incumbent upon the assured to give notice of abandonment, if he elect to adopt that course, it has been held that the obligation arises so soon as information is received which is sufficiently certain and definite to allow of a decision being formed (a). The assured must, therefore, decide within reasonable time, upon the happening of a casualty which involves a presumption of total loss, whether or not he will give notice of abandonment; and, he may not lie by to await the issue, or to see whether it is more to his interest to abandon or to attempt the recovery of the property. Should he fail to take advantage of the opportunity in time, it will not recur, unless a renewed option is given by a change of circumstances (b). The underwriter, upon receiving a notice of abandonment may either accept or decline it. If he accept, the rights of the parties are fixed by the acceptance; and, neither of them can draw back, whatever may be the event. If he decline, the right of the assured to recover will depend upon whether the state of the case at the time when action is brought is such as to justify a claim for a constructive total loss. There is no particular form of words by which an acceptance of abandonment has to be expressed; but, any oral or written statement to that effect is sufficient. There must, however, be an explicit statement by the underwriter of his acceptance of the abandonment, for mere silence on the receipt of the notice is deemed equivalent to a refusal to accept it. An acceptance of abandonment may be inferred from the actions as well as from the words of underwriters. The performance by the underwriter of an act which can only be following forms are given in "Marine justified upon a right derived from abandonment will amount to a constructive acceptance of that position. Thus, if notice of the abandonment of a ship is given by the assured to the insurers, and the latter then neither say nor do anything, the conclusion is that they do not mean to accept the abandonment; but, if they by their agent take possession of the ship, and then repair her and retain her in their possession for some time without repudiating the notice or informing the assured as to the character in which they are acting, there is a constructive acceptance of the abandonment by the insurers (c). If, however, a vessel is stranded, and notice of abandonment is thereupon given to the underwriters, who decline it, but nevertheless send an agent to the spot, by whom the ship is got off the ground, taken to a place of safety and repaired sufficiently to enable her to lie there in security, the action of the underwriters will not of necessity involve a constructive acceptance of abandonment, for it is consistent with the supposition that they acted merely as salvors (d). VI.-EFFECT OF ABANDONMENT. The effect of a valid abandonment is "to transfer the entire interest in what remains of the thing insured," with all the benefit or advantage incidental thereto, "from the assured to the underwriters, in proportion to the amount of their several subscriptions" (e). This transfer includes not only the property insured, but all rights and liabilities attached to its ownership; and, it is retrospective, reverting to the time of the casualty which gave the right to abandon (ƒ). It results from the cession which takes place upon an abandonment, that, in the case of a constructive total loss on ship, the underwriter who has accepted abandonment is entitled to any freight which may be earned by the vessel subsequently to the casualty which gave the right to abandon (g). Where, however, the original ship is condemned at a port of refuge, and the freight is earned by a substituted ship, the underwriter who has accepted abandonment on the ship, is not entitled to claim such freight or any part of it, as the earning thereof is not incidental to the ownership of the ship insured. Whenever a loss is paid, whether total or partial, the underwriter who has paid it acquires a right to whatever may be recovered by the assured from third parties with respect to the loss, but, in the absence of an abandonment, the right is limited to the recovery by the underwriter of the sum which he has paid (h). This right of subrogation which, in the case of partial (g) Stewart v. Greenock Marine Insurance Co., 2 H. of L. Cas. 159. Where the shipowner surrenders pending freight to the abandonees of ship, he fails to acquire any right of recovery against the underwriters on the freight, as there has been no loss of freight by a peril insured against. The shipowner is thus placed in an unfortunate position; but he may avoid it, as was pointed out by Lord Blackburn, in Simpson v. Thompson, "by claiming only for a partial loss, keeping the property in himself, and so keeping the right to earn the accruing freight." Simpson v. Thompson, 3 Asp. Mar. L. C., p. 572. (h) Subrogation is an equitable arrangement which is common to fire insurance, marine insurance, and every other contract of indemnity, the effect of which is, to use the words of Lord Blackburn in Burnand v. Rodocanachi (L. R. 7 H. of L. 339), that, where "a loss happens, anything which reduces or diminishes that loss, reduces or diminishes the amount which the indemnifier is bound to pay; and, if the indemnifier has already paid it, then if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid the full indemnity is entitled to be recouped by having that amount back." A person who suffers a loss which is recoverable either upon a policy of insurance, or from a third party, may elect to claim upon either in the first instance; but if he elect to recover under the policy, his right to obtain compensation from the third party is diminished to the extent of the amount recovered under the policy of insurance. To that extent, the underwriter is put in the place of the assured, and is "entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss" (Per Cairns, L. C., in Simpson v. Thompson, 3 Asp. Mar. L. C. 569; cf. Mason v. Sainsbury, in Marshall on Insurance, p. 794); but the substitution of the underwriter for the assured which takes place on the payment of a loss, is limited to the amount paid under the policy, for, "the doctrine of subrogation is to be applied merely for the purpose of preventing the assured from obtaining more than a full indemnity (Per Brett, L.J., in Castellain v. Preston, L. R. 11 Q. B. D. 386); or, as it was expressed in the judgment of the Court of Chancery, in Randall v. Cochran (1 Ves. Sen. 97), loss, is relative to the interest which the underwriter has acquired in the thing insured, and operates merely to the extent of his loss (i), is made absolute by abandonment, so that the abandonee is entitled, in the proportion which the sum insured bears to the policy value, to whatever may be recovered with respect to the thing insured, though it exceed the amount paid. by him. Thus, in an action upon a policy for insurance for £6,000 on a ship, valued thereat, where it appeared that the vessel had been sunk by collision, and the underwriters had settled a claim for total loss, it was held that they were entitled to the whole of the damages recovered from the owners of the other ship, though the amount thereof was computed with reference to £9,000, which was the actual value of the ship insured (k). "I take it," said Cockburn, C.J., in delivering judgment in that case, "to be clearly established, that it is one of the rights of the underwriter in the case of a total loss, that whatever remains of the vessel in the shape of salvage, and whatever rights accrue to the owner of the thing insured and lost, pass to the underwriter the moment he is called upon to satisfy the exigency of the policy, and he does so satisfy it” (l). "the assured stands as a trustee for the insurer, in proportion for what he (the latter) paid." (i) See Tunno v. Edwards (12 East, 487), where Lord Ellenborough observed - "It never was contended before, and there is no principle on which it can be contended now, that an underwriter who has paid so much per cent. on a partial loss, is a purchaser of the goods pro tanto;" also Goldsmid v. Gillies (4 Taunt. 802). (k) North of England Iron Steamship Insurance Association v. Armstrong, L. R. 5 Q. B. 244; 4 App. Cas. 755. (7) Mar. L. C. 333. It is to be ob served that although an abandonment has the effect of transferring to the underwriter the ship and all rights derivable from her ownership, it will not transfer contracts entered into by the shipowner which have reference to the ship, but are not properly incidental thereto. Accordingly, where a ship was sunk by a collision, it was held that the underwriters, who had settled for a total loss, were not entitled to appropriate damages recovered by the shipowner from the owners of the other vessel for the loss of chartered freight. Sea Insurance Co. v. Haddon & Wainwright, L. R. 13 Q. B. D. 707. |