Whitney v. American Insurance — 3 Cow. 210

Majority

p. 210

Whitney against The American Insurance Company.

Headnote

The contract In a valued policy is to pay the assured the whole valuation, if the subject of the policy he lost; and the valuation in the policy is conclusive as to the amount of recovery, if the subject be lost by the pe'ils insured against, unless there he fraud or imposition infixing the value. Where the insurance was of goods, valued at $14,000, on hoard a ship and the returns of those goods on a voyage out and home; in^the6 course of the voyage round were delivered to X. upon his ndvance, of §7,000, and his receipt, promising to answer drafts of the assured to §3,000 the goods to he sold by X. for his re-imbursement and the proceeds remitted to the assured ; and the $7,000 were vested in a return cargo, together with $1621, for ■ which he drew on X. making in the whole an investment to $8469,85 ; 'and X. paid the draft as he had agreed ; and the return cargo was lost by the perils insured against; and the outward cargo, on actual sale, did not bring enough to re-imburse X. by §4680,26, for which he drew on the assured ; held, that the assured was entitled to recover, as for a-total loss, the §14,000, and interest.

Assumpsit' on a policy of Insurance, tried the 13th April, 1822. at the New-Yur/c sittings, before Mr. Justice Wood-worth ; when a verdict was taken, by consent, for the plaintiff fur $20,000, subject to the opinion of the Court, and to adjustment, upon the following case, with liberty to either party to turn it into a special verdict or bill of exceptions.

The policy was dated July 1th, 1818, and was effected by the plaintiff in his own name, and upon his own account, an.d underwritten by the defendants, upon all ltinds of lawful goods and merchandizes, laden or to be laden on board the ship America, Vibberts, master, on a voyage at and from New-York to Bourbon, with liberty to use the Isle of France, and two ports in Java, and back to a port of discharge in the United States, and with liberty to use either port first, being upon 137 whole, and 48 half pipes of wine out, and returns home, valued at $14,000, being the sum insured, at a premium of 6 per cent. to return one half per cent, for each 1 1 e 2 port not'used, and the risk ending safely. By a memorandum endorsed on the policy, signed by the defendants, and dated the 2 ist day of July, in the same year, in considera- . ..... , ‘ • r , . . tion of an additional premium ot one per cent, permission was given by the defendants to use Calcutta, without prej- ° , , .* / udice to the policy, the one per cent, to be returned, if the perm;s3j0n should not he used, r

The policy, in ajl other respects, was in the usual printed

But it would be otherwise, if part only of the value of the goods had been invested in the return cargo.

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form of policies commonly used in the city of New-York, and either party had permission to refer to it upon the argument.

On the 3d oí July in the same year, the plaintiff shipped, and laded on board the America, in the port oí New-York, for his own account, the wine specified in the policy, the invoice cost of which was $14028,87, and took from Capt- Fibberts a bill of lading, under that date, for the wine thus shipped, deliverable at the Isle of France to Elmslie Garrigues and William A. Field or their assigns, as the consignees, who went out in the America as supercargoes upon the voyage insured.

The ship sailed from the port of New-York with the wine on board upon the voyage insured, on or about the 7Ih of of July in the same year, and arrived in safety at Bourbon, on or about the 21 si October following, where she remained a short time, and proceeded thence to Batavia, being a port in Java, at which latter place she arrived in safety, having the insured wine still on board, on or about the 25th day of December in the same year.

At Batavia, the supercargoes, owing to the depressed state of the market at that time, being unable to dispose of the wine there, unless at a very great sacrifice, made an arrangement with Abraham E. Loesman of that place, by which he was to receive the wine for sale, and make an advance upon it of $7,000, and permit the supercargoes to draw upon him from Calcutta to any amount not exceeding $3000 more, the whole of which was supposed to be less than what the proceeds of the wine would be, he holding the wine for his reimbursement, and accounting to the plaintiff for the proceeds when sold. The wine was, pursuant to this arrangement, landed at Batavia, and by the consignees and supercargoes delivered to Loesman, who thereupon gave them a receipt in the following words : “ Batavia, January 15, 1819. Received from Elmslie Garrigues & William A. Field, supercargoes of the ship America, of New-York, one hundred and thirty six pipes, and forty-seven half pipes of Catalonia wine, to be sold by me for account of Mr. Stephen Whitney, merchant, New-York, and proceeds to be remitted to him. (Triplicate.) A. E. LoesmanN

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Loesman accordingly advanced in Batavia, and upon the receipt of the wine, 6930 Spanish dollars and 69 cents to the supercargoes, for the use and benefit of the plaintiff, which1 sumi allowing one per cent, premium for Spanish dollars, mac*e ^ie sum of $7000. The supercargoes thereupon gave Loesman a receipt for the advance in these words : “ Batavia, January 18, 1819. Received of Mr. A.E. Loesman six thousand nine hundred and thirty Spanish dollars, and sixty-nine cents, which, with one per cent, for Spanish dollars, will make seven thousand dollars.

Elmslie Garrigues,for self &

69.30 69 Wm. A. Field.”

69 31

tvvv

The supercargoes, on the same day, shipped and laded the dollars on board the America, in Batavia, and took a bill of lading therefor, signed by Captain Vibberts, deliverable to themselves at Calcutta. The ship, with the dollars on hoard, sailed from Batavia on or about the 1 st of February4 18l9,and proceeded direct for Calcutta, at which latter place she arrived in safety with the specie, on or about the 28tfi March following.

While the America lay at Calcutta, the supercargoes recéived the specie from Captain Vibberts, and with it, and the amount for which they drew on Loesman, purchased there goods for the account of the plaintiff, the invoice cost of which was $8469,85 ;• for the difference between which and the advance made by Loesman, they drew on him to the' amount of $162'i, pursuant to the arrangement between them, and he paid that sum accordingly.

The goods so purchased in Calcutta were there by the supercargoes shipped and laded on board the America, for which they took Captain Vibberts5 bill of lading, dated in Calcutta the 20Ih of June, 1819, deliverable to the plaintiff, or his assigns, in Philadelphia, that being understood and intended as the ship’s port of discharge in the United States, Upon her return. The America, with a Valuable cargo, including these goods, left Calcutta on or about the 1st day of

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July following for Philadelphia; and was afterwards, on or about (he 19ZA December following, and before the termination and in the due prosecution of the voyage, cast away and totally lost near Sandy Hook by means of the perils insured against.

Loesman subsequently sold the wines deposited with him, which, after debiting the plaintiff with the $7000 advanced, and the $i 621 drawn for by the supercargoes, and crediting the plaintiff with the nett proceeds of the wine, left a balance due from the plaintiff to Loesman of $4680,26, for which amount he drew upon the plaintiff.

G. Griffin, for the plaintiff,

took two grounds; 1. That the policy being a valued one, and on the voyage round, the valuation is to regulate the amount of the recovery; 2. It makes no difference that the return cargo was purchased with monies advanced in anticipation of the sales of the outward cargo, as the whole of its proceeds, and even a greater amount, were, in fact, invested in the return cargo.

1. Insurances, he said, are of two kinds, open and valued. In the latter, the valuation always controls unless there be fraud. (Lewis et al. v. Rucker, 2 Burr. 1171. Feise et al. v. Aguilar, 3 Taunt. 506. Miner v. Tagert, 3 Bin. Rep. 204 . Hodgson v. Mar. Ins. Co. 3 Crunch, 110, 111, per Cushing, J. The Mar. Ins. Co. of Alexandria v. Hodgson, 6 Cranch, 206 . Davy v. Hallett, 3 Caines’ Rep. 16 . Kane v. The Commercial Ins. Co. of N. Y. 8 John. Rep. 229 .) And the fraud must be gross and palpable, like the case put by Lord Mansfield in Lewis v. Rucker ; an insurance of £2000, when the insured had no interest beyond a cable. In The Marine Ins. Co. of Alexandria v. Hodgson, the difference in value was $2000, that is, the valuation at $10,000, and the real value at $8000 ; yet this striking difference was not admitted in evidence, because there wras no fraud. Here goods were shipped beyond the value in the policy. A valued policy upon goods will not be opened where there is no fraud, except in the single instance of leaving part of the goods on shore, upon the same principle that a valued poli-

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cy upon freight was opened in Forbes v. Aspinall, (13 East. 323.)

2. The return cargo was the returns of the wines within-the language of the policy, and indeed upon the most rigid technical construction of the term. It makes no difference whether the wines were hypothecated or sold, to procure the return cargo. It was not only the same in its legal, but in its actual effect; for the wines were finally sold to pay the money actually invested in the proceeds. Haven v. Gray, ( 12 Mass. Rep. 71 ) is a case precisely in point for the plaintiff, except in the single particular that the word pro* eeeds is used there instead of returns as here.

Nor let it be said that this is a hard case- ■ There must be . some fixed and uniform rule applicable to both parties. Suppose the case bad been the other way, the goods lost far above the value insured, would the Court open the policy for the benefit of the assured ? This never would be thought of. Shawe v. Felton, (2 East, 109) shows the inflexibility of the rule. The assurers were holden to the value, though the property was deteriorated before the loss,, by the act of the assured himself. I appeal particularly to the strong: language of Ld. Kenyon in that ease, (p. 114 & 115.)

J. Duer D. B. Ogden, for the defendants,

made the-following points : 1. That the policy never attached upon-the goods lost, they not being the returns of the outward-cargo ; 2. If the defendants are liable, it is only for a partial. loss ; 3. If the policy be construed to attach upon the goods- lost, although not the returns of the- outward cargo,, the loss should be adjusted as upon an open policy.

They said, the plaintiff claims $14,000, when, by his own» shewing, he has lost but about $-8000. The general presumption of law is, that an insurance is for the mere purpose of indemnity; and where a party sets' up an agreement controlling the general intendment of law, he must, as in all cases of a special agreement, bring himself precisely within its terms. What did the parties understand by ■mines out, and returns home ?' It is said the latter words mean any returns. This we deny. It must be returns of

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ihe wines. To constitute this, the wines should be exchan* ged for, or sold and invested in the return cargo. If any thing else had been meant, would not the parties have said so in their contract ? The plaintiff understood the sense of the clause as we do, at the trial ; and the struggle was to shew the return cargo purchased on the credit of the outward cargo.

The parties also intended that, to make the policy attach on the return cargo, there should be a total shipment of the whole proceeds—not a partial one. The contrary course would give rise to frauds innumerable. One fourth in value may be re-shipped,—lost; and the whole original value recovered ; and by and by, the residue sold in a foreign country. The underwritero have nothing to do with the market. It was Whitney’s duty to sell the wine, and invest it in a return cargo ; for which alone the defendants were liable. An advance of $10,000 might have been had, for it was offered ; but only $8,000 were received. The truth is, the whole was no more than a loan by Whitney, and an after purchase entirely distinct from, and independent of the avails of the outward cargo. The wine was pledged merely as a collateral security ; and the receipt conchde- with a promise to remit the proceeds ;—When ? Why, when sold ; and yet it is now contended that, even before the wines were sold, their proceeds had been shipped, and were on their return voyage. The supercargoes then gave a receipt for the money, without saying on what account, and whether on the credit of Whitney, or the wines. Loesman has since drawn upon Whitney for the balance over and above the avails. Whitney’s personal credit was evidently pledged. Then the money was not the proceeds of the wine, but of Whitney’s credit. The rights of the parties are to be tested by the state of things at the time the caigo was shipped—not by any thing which transpired afterwards.

It never should be the interest of the assured, that a loss should happen. In Forbes v. Aspinall, cited for the plaintiff, a case of valued policy on freight, exactly analagous in principle, the reasoning of Lord Ellenborough,

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Ch. J. meets the present case precisely. “ And so, (says, he) if, hy the perils insured against, the freight of part only of the goods to be carried be lost, the assured can only recover in respect to that loss, according to the proportion which that part b.ears to the whole, sum at which the entire freight was estimated in the valuation. If, for instance, the insurance be generally upon goods, and the goods intended to be protected, be 500 hogsheads of sugar, and a valuation be made accordingly, but the ship, b.y accident, takes on board 100 only, and sails, and is afterwards lost by one of the perils insured against, with those 100''on board ; can.-it be Contended that the assured shall recover to the full amount of the valuation, that is, for the whole 500, when he has lost only 100 ? So in the case of freight; if the ship would carry 500 tons, and in fixing the valuation, the assured calculate his freight upon 500 tons, but when he reaches the loading port, he can get 10 tons only upon freight, and sails upon the voyage insured, with those 10 tons only; is it to be allowed, that if the ship be lost by any of the perils insured against, and he thereby loose freight upon 10 tons, he shall be entitled to the valuation, which includes the ■ freight upon 500 tons ? And yet to this extent the plaintiff’8 argument in this case is carried. The proposition is mon-» strous. Instead of confining the policy, as it ought to be confined, to a contract as nearly as may be of indemnity, against what may be lost- in respect of freight by the perils insured against it converts it into a contract of indemnity against a different class of accidents, which may operate to prevent the assured from being able to procure a full cargo upon freight, and may make it the interest of the assured, which it never ought to be, that a loss'should happen.” So here, the plaintiff asks the Court to convert this contract into the risk of a market in India ; or the circumstance which, prevented his getting the full proceeds on board, as a return cargo.

Rather than admit this consequence, the Court will divide the policy, making it a valued one on the outward, but an open one on the return cargo. If the construction contended for by the plaintiff be correct, we should' be liable to

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the extent of the valuation, though the return cargo should contain but a single bale of goods. Of the value of the outward cargo, the parties always have the means of judging. In this case, all the articles were enumerated. The paties presumed they would continue at the value fixed throughout the voyage. As to this, they ran a mutual risk. After the avails of the outward, are once fairly invested ■in a return cargo which is shipped, the policy is not to be opened, merely because the latter may he worth less than the former. It was upon this principle, that Havens v. Gray, cited for the plaintiff, was decided. (Philips on Ins. 311.) We admit that Havens v. Gray a pa ears to be against us as to the return cargo being really the proceeds of the outward ; yet, however respectable the Court by whom that ca e was decided, it is not-binding upon this tribunal. This Court will not yield to it as an authority ; but only so far as the arguments by which it is supported shall be found convincing.

J. 0. Hoffman, in reply.

It is very easy to cite and establish the general principle, that insurance is for indemnity merely ; but to what extent is the saying applicable ? This must depend on the nature of the contract; and accordingly the rule never extends to a valued policy. The valuation is for the very purpose of avoiding the question of indemnity according to the value. In an open policy, the two items of proof are the loss and the value. Upon a valued policy, you stop at the first; for the agreed valuation is the measure of damages. In this valuation, it is right to include certain cha ges which would not be reached by an open policy, and you may anticipate port chagas, extraordinary dutiés, commissions, and even freight. The whole may be covered by the valuation. Hence the principle that nothing shall avoid the valuation short of fraud. (Philips on Ins. 306.) Even gaming policies are allowable in this stale : for the statute, 19 Geo. 2, has not been enacted here. All the law on this question, will be found collected in Philips on Insurance, 307.

I admit, as a general principle, that the underwriter is

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not to be affected by the fall of the market. But I deny that the rule extends to a valued policy. Here, even the market may be insured.

I admit that the valuation was on the outward cargo, and j agree, that if only part of the returns were on board at the time of the loss, the plaintiff is entitled to no more than a pro rata allowance. But the entire proceeds were on board. I am at a loss to discover how, when the advance is on the credit of the fund, you can distinguish it from the .proceeds of the fund. There.can be no doubt that the credit of the wines was employed. They were deposited as security. If the advance had been on Whitney’s personal credit solely, I agree that it could not be considered the returns or. proceeds of the wines. But the outward cargo was applied in payment. Loesman received if for sale, made an advance of $7000, and authorized a draft for the whole ; and a partial draft was answered, conformably to the arrange ment. So says the case in terms. It might as well be said that money is advanced on the personal credit of a mortgagor, or by a factor who holds the goods of his principal, or by a consignee of goods under the usual agreement to answer drafts for § of the value. Were we bound to take the market as we found it, and make an absolute sale ata sacrifice ? or lie by and wait for a market till the vessel rotted ? No. The object was a speedy sale and investment, if to be had. According to gentlemen, we could even recover back the premium, because no risk on the return cargo ever commenced. The ground taken, certainly leads to this extravagant consequence. No. The object of all was, that a home investment should be as large as possible. Had we sold for a trifling sum, the defencewould have been fraud in the sale.

But the question is with us upon authority. Havens v. Gray has been questioned ; and to this has been opposed the authority of Lord Ellenborough, in Forbes v. Aspinall. If there be any difference in the two cases, Havens v. Gray is as binding here as Forbes v. Aspinall. The former was- decided at nisi prius, by that great master of commercial law, the late Ch. J. Parsons ; and his decision was

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sanctioned by the learned Judges of the Supreme Court of Massachusetts, after full deliberation, in the time of his suecessor, Ch. J. Parker. And the opinion will be found fully sustained by the reasons assigned for it.

Curia,

The contract in this valued policy is, “ that the goods shall come safe to the port of delivery ; or, if they do not. to indemnify the plaintiff to the amount of the prime cost, or value in the policy.” (2 Burr. 1172, per Ld. Mansfield.) The valuation is admitted in the policy : it is the amount to be recovered, if the property insured is lost by the perils insured against. (Philips on Ins. 307. 3 taunt. 506. 6 Cranch, 220 -1. 3 Caines’ Rep. 20 . 3 T. R. 362.) And this value is conclusive upon the underwriters, when there is no suggestion of fraud or imposition. (id. 8 John. Rep. 234 . 2 East, 109. 2 Campb. 69.) There is no question, in this case, that the whole quantity of wine insured was on board during the outward voyage ; and an amount beyond its avails was invested in the return cargo-. The exception, therefore, established by Forbes v. Aspinall, (13 East, 323) where part, only, of the goods insured are on board, at the time of the loss, does not apply.

. Had the wines themselves been lost on the outward Voyage, there could be no doubt as to the amount of the recovery ; but the loss was of the return cargo. The insurance being upon the wine out, and returns home, valued at §14,000, the remaining question, and the principal one made at the bar is, whether the goods lost were the returns of the' wine? Had the wine been sold for §7,000, and the return cargo purchased, with the avails, there is no doubt the defendants would have been liable under the authorities cited, for the whole §14,000. Now, whether the money was paid by Loesman, on a sale of the wines, or advanced on a pledge of them, makes no sort of difference to the defendants; though it would be otherwise, if the advance had been less than the value of the wine—one half, for instance. In such a case, if the plaintiff were permitted to recover to the extent of the valuation, he would compel the defendants to pay for the whole of his wine, and yet would have the one half safe at Batavia.. It should appear, therefore, that

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the whole proceeds of the wine were invested in the goods lost. The policy then attaches for the whole, though it may be more than a mere indemnity. (Havens v. Gray, 12 Mass. Rep. 76 .)

Although when the $7,000 were advanced, the wine was Supposed to be worth more than $ 10,000, yet the actual sales were subsequently made for less than $4,000. The whole proceeds, therefore, or returns of the wine, and more, were invested in the goods lost. I cannot consider the $8,621, advanced by Loesman, as loaned upon the plaintiff’s personal credit. Loesman advanced the money upon the deposit of the wine, and that was all the security he took ; no doubt, supposing it amply sufficient to indemnify him, and something beyond, as we find provision made in the receipt for a remittance of the balance. Subsequent events have shewn,1 however, that the advance exceeded the whole proceeds.

I am, therefore, of opinion, that the plaintiff is entitled to-' recover the $14,000, and interest.-

Judgment accordingly.'