Walden v. New-York Firemen Insurance — 12 Johns. 128

Majority

p. 128

Walden and Walden against The New-York Firemen Insurance Company.

Headnote

. The insured disclose to the circumstances Ss whicL°theaísimie!06^»' dudedarby> tber express or

insu red, unsolicited, 19 not bound to disclose cir- - MTvTto^thé of’the’ ship,6 m; eareiemnera”® economy in the master, provided they do wt tend to

barratry, there duTeVteintent“'

ing-employ competent" oF andÜCof $$ genera! ^cha-; facts or infer-his ° carelessgan¿e,eXanda my,'‘ riskH^barran<rt’ be'disSoi =ed-

THIS was an action on a policy of insurance, on the ship Suffolk, Cartwright,, master,, from Belf ast to Lisbon^. and thence to New-York. The bause- was,tried.at the New-Yofk sittings, in April last, when a1 bill of exceptions was taken by the defondants- to the evidence admitted -by the -judge, and to his charge to the jui-y. • „ ' ' ‘ ' a.,

The Suffolk sai-léd from New-¡Or leans in September,,1810', for ^e¥asi> but on the way thither was compelled to.put. into:the Havanna, in the island of. Nuba-, for a supply of water. Whiter . ’ . , • . . , ,rr / _ 1 , m the Havanna, the master oí the ship drew a bill on the plañir, tiffs, for about 800 dollars, in favour of a mercantile house in-that place, which bill was never accepted or paid-by the plaintiffs", for these.reasons.:- that they had had- information from the" -tM the vessel put into’the Havanna, merely for water ; and, that the bill was unaccompanied with any account or: in--' * ' - . , ( ■ of repairs or supplies’furnished fche vessel there. The vessel, after asjiort stay in the,Havanna, resumed her voyage-for Belfast; but by reason of damage arising from tempestuous weather, she was compelled to put into Cork, In Ireland, w herd-she arrived on the 18th of January, 1811; and, having undergone thorough repairs, left, there-on the 29th of April, and-arrived in BelfastoP the 3d; of May,

The vessel andcargo had been placed by the plaintiffs under the general direction, and control of Cropper Sr Co., of Liverpool, and while at Cork, Harvey Sr Co. acted as agents: for the ship. On the 19tli of March, 1811, Harvey Sr Co.'wrote a to" Cropper Sr Go., stating that “a vessel had got foul of the Suffolk, and- carried away her bowsprit; that they feared that Captain Caitmright vvas careless of. his' business, and that his amount of repairs and expenses would astonish them all; that they had no control further than to recommend, as he was Ms own master; . that, his detention had been very great, yet he seemed very easy under it.” Á copy of this fetter was transmitted by. Cropper fff; Co., in a letter of the 23d of March, 181 to. the plaintiffs, -in .which they say, « This day we shall write

p. 129

again [to Cartwright] pointedly, and urge that necessity of economy and despatch which we early enjoined him to observe. All that in us lies shall be done to get the Suffolk on to Belfast, and to guard your interest; but if a master of a ship will not do his best, an agent is placed in ungrateful circumstances. The accident to his bowsprit will cause some further (but we hope not much) delay to pursuing her voyage.”

The above letters were received by the plaintiffs before insurance was effected, but they were not communicated to the insurers, nor was the circumstance of the bill drawn by Cart» ■wright at the Havanna, on the plaintiffs, nor the letters immediately following from the plaintiffs to Cropper 8r Co.

In answer to the above-mentioned letter from Cropper <§• Co. the plaintiffs, on the 10th of May, 1811, write, “ that they had received their letters of the 19th and 25th of March, which confirm their apprehensions as to Captain Cartwright’s conduct; that if he is still under their control, they wish them to discharge him, if they can procure another master well qualified; and not to pay him any thing, but leave it to them to settle with him in New- York ; and to transmit to them their accounts of advances to him, with necessary vouchers.” In a subsequent letter of the 13th of May, to the same persons, the plaintiffs say, “ Annexed is a copy of our last, to which refer; and we confirm our instructions then given, as to the dismissal of Captain Cartwright from the command of our ship Suffolk, if you should think it necessary to our interest.”

The above letters were, at the trial, given in evidence on the part of the defendants; the plaintiffs likewise, afterwards, offered in evidence the letter of the 13th of May, above mentioned, and which had previously been read on the part of the defendants, which was objected to, but was admitted, by the judge, and his opinion excepted to by the defendants.

The ship left Belfast on the 2d of July, with instructions to proceed to Lisbon, and from thence to New-York. She arrived at Lisbon on the 14th of July, and having taken in eighty mays of salt, for which the master gave a bill of lading to deliver the same in New York, she left Lisbon on the 19th of August, after being cleared out for New-York, with verbahdirections from the consignees at Lisbon to proceed to New-York. - Two weeks before the ship left Lisbon, the master expressed to his mate aft

p. 130

intention of going to Nem-Orleans ; but - on .-being questioned % One of the consignees -at Lisbon, who had heard a Yeport of having given such an intimation, he denied it, and .declared his intention t.o bé'to proceed to New-York. ] '

The vessel; notwithstanding, proceeded-to Nejt-Orlearis, and, ■ as was stated in. the deposition of the mate, the mastery instead -of pursuing what he,- the-deponent, pndérstpód to be the usiral course from Lisbon to Nen-Orleans, for vessels drawing no more water than the Suffolk, steered’ for Antigua,, and- passed, just to the north of it;. thence between St- Bartholomews and Barbuda; thence to the northward of the. Firgin.Islands, Porto Rico, and Hispaniola,- and thence . through . the Old ,Straits¡ ■' While passing through the Stfpits, the ,ship' cameio an anchor, und her cables were parted; whereupon, by the direction, of the captain, the cables were cut close to. the vessel; for which the mate, as-he stated in his'depbsitidh,'believed there was no necessity., After tliis, the ship proceeded íor Matanzas, in the island of Cuba, where. ;She arrived on the 7 th of. October, axié the.captain • wént to .-the ítaoama; Jo obtain a new cable , and anchor, ■ which were brought on - boárd the ship about'the 18 th of October ; shé Was, notwithstanding, unnecessarily detained by the master until the 29th of November. -. . •'

WJiild at the captain hypothecated the ship .to one Francis Drake,, for 1,563 dollars; but how the debts which were -thus secured had- arisen, or -how tlie money raised by the bah*' tomry had been appropriated,' did -not appear. - He likewise-•gave a- bill of lading, on account of some' advances 'made to -him, of the- salt .on board liis ' ship, to one■ Mudan-, ■ a merchant ■xt'Mejtahzas,- to -Be delivered- to<bne Morgan,..at Netu-Orteami

The vessel arrived at Nen-Orleans- in December,. 1811. The agent for the plaintiffs at Nen-Orleans, by the direction of the-plaintiffs,- demanded of the captain to deliver lip. the ship lo them;, which, on his refusing to do, he proceeded, in the district 'court, to dispossess the-master, and, during the pendency of such 'proceedings, the ship was libelled in the parish- court of NenOrleans, on the bottomry' bond ■ to -Drake, ■ and' was,-'by the - order of the court, soldfor-the’behefit of all parties; The salt on board of the Suffolk was claimed by Morgan, by virtue of the before-mentioned bill of lading to'; and on the plain-,' tiff's .agent opposing the: delivery of it to- him, an attachment .was, at the instance.of 'Morgan^ ísmeé out of the parish court

p. 131

of Nerv-Orlcans against the salt, and also the ship; and, by order of the court, the salt was appraised, and bonded by the plaintiffs’ agent. .

The judge charged the jury, that the evidence of barratry was conclusive, and that the insured were not bound to communicate to the insurers, at the time of making insurance, any of the letters above mentioned which were in their possession, nor any of the circumstances within their knowledge respecting the master of the ship. The jury found a verdict for the plaintiffs, and the defendants excepted to the opinion of the judge ; and the bill of exceptions, according to the directions of the statute, was returned to this court; on which a motion was made to set aside the verdict, and for a new trial.

S. Jones, jun. for the defendants.

The conduct of the master did not amount to barratry ; but we shall not discuss that question.

The principal objection is, that there was a material concealment on the part of the plaintiffs. The letters and other matters relative to the conduct and character of the master, in their knowledge, at the time the insurance was effected, ought to have been disclosed to the defendants.

It is a general and well-séttled rule, that every fact and circumstance which could influence the mind of a prudent and intelligent insurer, in determining whether he will underwrite the policy, or not, is material, and ought to be communicated to him.^[7] So, a suppression of circumstances, a knowledge of which might have induced the insurer to demand a higher premium, will vitiate the policy.^[5] Even doubtful rumours respecting the safety of a ship have been held material, and the concealment of them will avoid the policy.^[6]

The safety and success of the voyage insured materially depend on the character and conduct of the master. It is of the . , . , , , greatest importance to the insurer to know whether the master be prudent, vigilant, and discreet; or improvident, careless, and extravagant, in the management of the business and property entrusted to his charge. The barratry of the master is one of the perils insured against, and the insurer is, therefore, interested in being informed of those habits of extravagance and carelessness, which naturally lead persons, in that situation, to the commission of barratry. That the master had a. fair cha

p. 132

racter’when he sailed:from New-York, is an additional reasqri for. requiring from ■ the insured a communication.-of. the facts relative to his subsequent badconduet, as .the defendants, rely-i’n§ on. that previous :fair Character, would fee more easily iúdiiced to take upon themselves the ris,ks- of the. policy. It is the 'moral conduct of' the. master, in relation to his trust,, in which the insurers are interested, for it is against Ms fraudulent. Conduct that théyrhafé insured. Whatever may fee his ter -or".conduct, in this respect, his nautical, skill may be. the same. The bad character of the master, therefore, cannot be said- -to come within any implied- warranty; as' to seaworthiness.' ' _ ’ . -. • ... .. ' ; -

Griffin and T. A. Emmet, contra.

In case- of a’ warranty^ express dr implied, no communication -is-required on the " part of the insured. Seaworthiness is-an implied-warranty." It is a a part of this implied condition tjiat the ship should, have every , thing nCcessary.to her .safe navigation, suchas a sufficient crew, and a captain of: competent nautical skill.^[7] The nautical-skill-, of the mastery is _at .the risk of-the insured. ’ It. is a matter -for which they undertake. So. far as any other quality entering, into his general character’ goes-to his- fitness for the- employinent, it also enters into his nautical character’and competency. It is, therefore,-a-paft of the implied warranty of .the assured, that the master shall have ordinary, integrity, or a good general character;, at the- placCTrom whence- the: vessel- sáiís,, or when the risk commences. 1 " - ’ - - ' '

The, extravagance of the master, in repairs, is nothingfor if Be expends more than he ought, thé owners, not the insurers, pay the excess. A bad captain for the owners, máy be a very goo'd one for the insurers. ‘ ■ " ■ ; ■ ' > '

Again, the letters,: the concealment of .which is complained of, contained-, only hihts. ánd: suspicions; and the real objection is, that the insured did: hot Communicate these suspicions,and apprehensions, which.might have .injured, very unjustly, the character of the master. It is facts, not suspicions, which the' insured is bound to' disclose. It is'not every thing which inCreases; the risk, the Aoncealmént ofrwhich will vacate, the policy.^[5] In the case of Haywood v. Rodgers,^[6] which was insurance at and. from Trinidad, - the ■- insured had received a letter fromdhe captain', informing him,' that he had been obliged.'

p. 133

to have a survey on the ship, at Trinidad, on account of her bad character, but the survey which accompanied the letter gave the ship a good character, it was held, that the nondisclosure of the letter and survey to the insurers, did not vacate the policy; though, if they had been communicated, it would have enhanced the premium. To constitute such a concealment as will vitiate the policy, it must be of something palpably material to the risk, and about which there can be no doubt.

Again, the insured could not certainly know, at the time the policy was underwritten, who was the captain, for they had previously written to their correspondents, Cropper Sr Co., authorizing them, in their 'discretion, to discharge Cartwright, and appoint another captain.

Wells, in reply.

The assured had received such information of the conduct of Captain Cartwright, as had destroyed all their confidence in his integrity. It was not a matter of mere suspicion or rumour. It was believed by them to be true, and, they acted on that belief, as to the fact of his misconduct. In Sperry v. The Delaware Insurance Company,^[7] Washington, J. held, that even if the materiality of the communication was doubtful, it ought not to be withheld, for it is the duty of the insured to give the other contracting party an opportunity of judging, equally with himself.

The moral character of the captain is not included in the implied warranty of seaworthiness, which extends only to the nautical skill of the captain and crew. Yet this moral character may be very essential to be known by the insurers, in regard to the risk of barratry assumed by them. If, under the implied warranty of seaworthiness, the insured were to be considered as warranting the moral character of the master, that warranty would extend also to the crew, which will hardly be pretended. Such a doctrine would put an end to the business of insurance. All that we contend for is, that the insured shall not employ a master or agent whom they know to be destitute of integrity, or incompetent. As regards the implied warranty of seaworthiness, the knowledge or ignorance of the insured as to the fact, makes no difference.

It is said to be a part of the implied warranty, that the mas* ter had a good general character at the place of departure Now the fact is, that the master, in this case, had lost all cha

p. 134

racier before lie arrived at Belfast. If so, then, on the doetrine of 'the. plaintiffs,-there has been a'-breach, of'the warranty, which puts" an end to tlje contract'.' Biut- how is the warranty, to the moral character of the master, tó bé reconciled xvith the undertaking'of the assured to indemnify agaitist thp barratry or fraudulent conduct, of the master ?. . - .. -

The Whole doctrine,. as to concealment, rests on this principie, that it is not the, duty of the insurer to-inquire, but that óf the insured to.disclose.-''

.deli vered the opinion of the court* This " case is presented in the form of a bill of exceptions,, and the' counsel' for thedefendants move to" set aside the verdict on the following .grounds: "viz. ' i •• 1 '• T --

I. That improper evidence was admitted.

2, That the judge.misdirected the jury*

3. That the:.verdict is against laW'.and .evidence.

The question of undue concealment in-this ,case presents hvo aspects: . '

■ ' First, in regard to secmbrihiness, which-implies a. warranty on the part of the . assured tiiat the. ship shall be in a fit- condition" for-the voyage,, with all her'equipments; and,' also, that she-shall have, a competent .master'and. crexv. -".

Secondly,"the express, warranty in the, policy, against bar-, miry. ■ " : "" , ;

. With respect to the first,!' it.is not- necessary- that there-should, be any. representation,; because the seaworthiness of the ship;is;,, an implied condition .of the contract of insurance.

The rule is, that thére should-be’a representation of every fact within the knowledge of the" assured which is material to the risk incurred by the underxvritef ; '"except it be coxcred by a warranty on the part of the" assured! (Shoolbred v. Nutt, Park, 300.) Both "parties,. therefore, as to the facts-which constitute seaxvorthinéss,'have a .right to.remain silent at the timé of making the contract; ?.nd then, if, in fact, the ship" be not in all-respects seaxvorthy at the time when, the risk .was to com-,1 menee, the policy is void.;

Unseaxvorthiness,. under' this policy, ,(xyhich is in vthe- com-. moil form,) is at thé risk of the assured; and,- therefore, they-' are not. bourid to disclose any thing, ■ unsolicited, on that subject. . ;■ ■ /■: ' ;' V ; - ;.' .

p. 135

If we suppose a policy wherein the underwriter expressly warrants the ship to be seaworthy, then, indeed, the duty of making disclosures would apply with full force against the assured. If the underwriter, however, (upon the ordinary policy,) chooses to make inquiries, the assured is bound to answer truly. (Haywood v. Rodgers, 4 East, 590.)

The practice of omitting to make inquiries as to seaworthiness, arises, I presume, from this prudent consideration, that every material disclosure on that subject would lessen the obligation of the implied warranty on the part of the assured; and the underwriter, wishing to leave that obligation unimpaired and unqualified, generally chooses to receive no communications as to the condition of the ship or the character of the master. For so far as the representation extends, according to the truth of facts, the implied warranty of seaworthiness ceases on the part of the assured.

The case of Shoolbred v. Nutt, (Park, 300. 1 Marsh. 475 .) was an insurance upon a ship from Madeira to Charleston. The ship had sailed from London to Madeira. The plaintiff procured insurance, without communicating to the underwriters two letters which he had received from liis captain the day before he effected the insurance, stating “that the ship had arrived at- Madeira, but was very leaky; and that the pipes of wine oh board of her had been half covered with water.” But it was proved at the trial, that the leak had been completely stopped before she sailed from Madeira. Lord Mansfield decided, that it was enough that the ship actually sailed in good condition when the risk commenced, and that the assured wrere not bound to disclose the information contained in the letters.

The case of Haywood v. Rodgers, (4 East, 590. 1 Marsh. 476 .) was an insurance upon a ship from Trinidad to London. The assured had received a letter from his captain, informing him, “ that he had been obliged to have a survey on the ship at Trinidad, on account of her bad character.” But the survey which accompanied the letter gave the ship a good character; and it was held, that the non-disclosure of the letter and survey to the underwriters, did not vacate the policy, although it appeared in evidence, that such circumstance, if known, would have enhanced the premium. -■ •

In all the numerous cases cited by the counsel for the defendants, to exemplify the rule that the assured is bound to disclose

p. 136

every material fact within his knowledge, the risks to which the concealments related, were directly assumed, by the underWriters. ’

If the. letters charged to have been concealed in this case relatednierely to .the risk of uñseawórthiness, it is a sufficient. answer, that , the assured never- sought indemnity' against that risk; on'the contrary, it was an essential part of this contract, ¿hat the assured should, warrant every ingredient of sea wort hi-íiéss. . ' .

The- rule applicable to this subject is. expressed with great precision and accuracy by Washington, J. in the case of Kohne v. Insurance Company of North America, ( 1 Marsh. 473 . note 75. by Condy,) viz. “ Thé underwriter takes upon himself the risk- which the assured^ is not willing to bear, always under . the implied condition, that he shall, as to all facts within the privote knowledge of the assured, be equally informed as himself” •

In this view of the case, therefore, If appears to me, that the judge very properly charged the jury that the assured were not bound to disclose the letters and other facts in , regard to the character and conduct of the captain.

I am: also satisfied, that upon the question of seaworthiness, embracing the character of the captain, the. verdict is not against the weight of evidence. - - ' • .

In examining this case, in the sebond point of view proposed ; that.is, as an insurance against barratry, it presents a contract of a complicated and extraordinary kind, “ making the underwriter-fas Lord Mansfield expresses it) become insurer of the, conduct of the, captain" whom he does not appoint, and cannot dismiss, to the owners who can do either,” It is hero worthy of remark, that the qualities and condition of the ship and her apparel may be certainly known by survey and inspection, but theffieart of man, and his moral structure, are in a great measure unsearchable by human discernment. "To seek indemnification, 'therefore, against'human frailties, by insurance-against barratry,; is, a legitimate object; and favourable to commerce..

I consider .the contract to be essentially this: that the assured shall, in good faith, employ, á captain - of competent nautical skill and general good character; and if he do so, then, and not otherwise, - the insurer is,liable for barratry;

p. 137

Here it is important to ascertain, with precision, the true definition of «barratry”

According to Valin, Pothier, Emerigon, and Le Guidon, st Barratry comprehends every fault of the master by which a loss is occasioned, whether arising from fraud, negligence, unskilfulness, or mere imprudence.” But in the English law, it has a more limited signification. No fault of the master amounts to barratry, unless it proceed from a fraudulent purpose; ( 2 Marsh. 518 .) or, in the language of Ch. J. Lee, (cited and recognised as law in Phin v. Royal Exchange Assurance Com pany, 7 Term Rep. 508.) “ Barratry must be some breacli of trust in the master, ex maleficio ,•” or, as defined by Lord Ellenborough, (Earl v. Rowcroft, 8 East, 126. Park, 121.) “ there must be fraud, or crime, to constitute barratry.”

According, then, to the established meaning of the term barratry, in the English law, the underwriters, in this case, insured against the acts of the captain which might he fraudulent or criminal, and his breaches of trust, ex maleficio. Now, the question properly occurs, did the assured conceal from the underwriters any information material to that risk ?

The facts here charged to have been unduly concealed, are,

First, that the captain, on his outward voyage, several months before this policy was signed, touched at the Havanna for water, and there drew a bill on his owners, the assured, for about 800 dollars, which they refused to pay ;> alleging, as a reason for such refusal, that the bill was not accompanied by a letter of advice from the captain.

Secondly, the written correspondence between Harvey, Deaves & Harvey, of Cork, Cropper, Benson & Co. of Live r pool, and the assured, of New-York.

The inference attempted to be drawn from the transaction of the protested bill, seems to me so remote and equivocal as to deserve little consideration.

The letters of Harvey, Deaves & Harvey, and Cropper, Benson & Co., strongly imply a charge against Captain Cartwright of negligence and want of economy in the repairs of the ship, then at Cork. They say, “ we fear he is careless of his business, and that his amount of repairs and expenses will astonish us all.” « His detention has been very great, yet he seems very easy

p. 138

under it.” But there is no charge nor -surmise in these letters, which goes to impeach the honesty of the captain. They do not' «ven intimate that he was .addicted to any practices that would naturally, lead him to commit a breach of trust,, ex nialefcio ; although the assured, by their fetters, of the 10th and 13th ■•'May,,. 1311, seem to have yielded to the- suggestions against the captain, and directed their agents to discharge him, and to. era? ploy another ih.his stead, if their agents should think it.necessary for their interest; yet it.is fair to"conclude, that the assured were thus actuated, merely fro,ni the! considerations stated in the letters of Harvey, Deaves & Harvey, and Cropper, Benson & Co.

■. For aught'that appears, therefore,, the oply groúnd-of dissatisfaction in the minds of the assured Or .their agents, was the careless delay and want of economy in the captain, which are characteristic of seamen; and which are' so' frequently united with strict.honour and fidelity in that class of "men. . " , .

My Conclusion, therefore, is, that,1 although the .'contents of those fetters might seriously affect the interest of the owners, who were, solely responsible for the port-charges referred to iir those letters, yet’they did not relate to the risk of barratry as-' sumed by the'underwriters in this.-policy,; and that the opinion of .the judge-at the trial was correct, instating that theassured' were not bound, to communicate them.- ,

' The letters of the 10th andlSth'of 1811, were,written .by tlie assured in' New-York, to their agents, Cropper, Benson & Co. of Liverpool. The policy was signed, at New-York on the 12th .Of Avgust,'181.1, the ship Suffolk'being then at Belfast; and although, Captain Cartwright Was named as master in the policy, that could only have been intended to identify the ship. The-question here is the same as if the po.licy had been .blan/c as,to the master. •“ •

The absolute right of the owners to. change, the master at .any time, without the knowledge or consent of the underwriters, is unquestionable. ’ The instructions which the assured had given to their ágents in Liverpool, in regard to the master, were prudent and discreet". - ...

.' Considering- that the’ ship was in a foreign port ythat ,the assured were' under a'general" and Unqualified obligation- to provide' a- suitable master, and that neither the, law nor usage required that they 'should consult with the underwriters as to

p. 139

the selection of a master, it was sufficient, in this case, if the assured and their agents acted discreetly, and bona fide, in retaining Captain Cartwright.

It would be unreasonably severe, and would defeat almost every policy of insurance against barratry, if the assured, were held strictly bound to disclose every immoral act imputable to the master, and every unfavourable report respecting him, which had reached the ear of the assured previous to signing the policy. Such a rigorous application of the rule in the varied fortunes and vicissitudes of a seaman’s life, would be impolitic and unjust.

There must be some limits to this duty of making disclosures in such cases. It cannot be necessary that the assured should give to the underwriter a minute history of every thing which they have known or heard of, touching the moral character of the intended master.

If his general character be good, and the assured have no knowledge or information of any fapt impeaching the honesty of the master; the charge of undue concealment has no legal foundation.

In this case the unfavourable opinions expressed in the letters of Harvey, Deaves & Harvey, and of Cropper, Benson & Co., respecting Captain Cartwright, were repelled by the evidence of his good character as a sailing master in New-York, where he had been long known.

I cannot entertain a doubt of the propriety of allowing the plaintiffs to give in evidence their letter of the 13th of May, 1811, because it formed part of the contents of a paper, an extract of which had been read in evidence by the defendants. It was, altogether, one entire communication, though composed of an original letter, and a copy of another letter,; and neither party had a right to read part, without the whole.

It was fully proved, (and admitted on the argument,) that the captain did commit barratry.

Upon the whole case, therefore, 1 am of opinion, that the plaintiffs are entitled to judgment.

Judgment for the plaintiffs.