Marittima v. Phœnix Insurance — 36 N.Y. St. Rep. 242

Majority

p. 242

Cassa Marittima, Resp’t, v. The Phœnix Ins. Co., App’lt.

(Supreme Court, General Term, First Department,

Filed January 13, 1891.)

Headnote

Insurance (marine)—Insurable interests—Loans.

The master of a vessel hypothecated it and its freight to plaintiff for a

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loan. Plaintiff’s regulations regarding such loans stipulated that neither owner nor master should take any further advances upon the same freight, or in such case must hold themselves bound to return the loan made, even though the vessel were lost. Subsequently, without the knowledge or consent of plaintiff, the captain obtained a further loan on the freight. Later the defendant insured the vessel for plaintiff "on advances against captain's draft upon the freight, etc.” A loss occurred. Held, that plaintiff's insurable interest under the policy was not affected by the subsequent loan procured by the captain in violation of the regulation; that plaintiff had two remedies : one against defendant upon the policy, the other against the captain or owner under the stipulation above stated.

Appeal from a judgment entered upon the decision of the court without a jury. -

Edward P. Lyon, for app’lt; Edward E. Jones, for resp’t.

The recovery herein is for the amount of a loan made by the plaintiff, a corporation existing and doing business in the city of Naples, in the kingdom of Italy, to the master of the vessel Buoni Amici, for the payment of which her freight was hypothecated, as well as the vessel herself. The loan was made at Pensacola, in Florida, where the vessel was then lying, that, being a foreign port, and she being an Italian craft

When the loan was made the agent of the^ plaintiff took from her master the following instrument:

£400. Pensacola, Fla., August 31, 1886.

Fifteen days after arrival at the port of destination, River Plata, or other intermediate port at which shall end the voyage of my vessel, denominated Buoni Amici, I promise to pay "to the order of the Oassa Marittima of Naples the sum of four hundred pounds sterling, value received in cash as a loan on freight for the last expenses necessary to the undertaking of the voyage from Pensacola to River Plata, and I hereby assign therefor, to the said Oassa Marittima, enough of the present freight to cover the sum of the above loan with power to collect when due, and I hereby hypothecate ship and freight for repayment of said loan with priority over every other credit, and in case of total loss the amount received as loan shall not be paid back and I accept all the conditions set down in the regulations of the Oassa Marittima relating to loans on freight of which I received a copy. B. Quartino.

Among the stipulations or regulations, accompanying and made a part of it, that numbered fifteen is the only one important to be specially considered in the determination of this appeal. By that regulation it was declared that the owner or captain shall not take any other advances upon the same freight at’ the port of loading or in such case hold themselves bound to return the present loan, even though the vessel be lost.

The master did in fact violate this regulation by obtaining & further loan before the commencement of the voyage, upon a similar hypothecation, amounting to the sum of $1,100. But that loan was made without the knowledge, privity or consent of the plaintiff.

After these loans had been made the .defendant made and delivered to F. Dassoir, for account of whom it might concern, its

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policy of insurance “ on advances against captain’s draft upon the freight of all kinds of lawful goods and merchandise laden or to be laden on board the good bark Buoni Amici.” The vessel subsequently proceeded upon her voyage, but before reaching its termination she was so much damaged by perils of the sea as to render it -necessary to make the nearest port, and she was taken to Port Eads in the state of Louisiana, where by a survey it was found that she had been so badly damaged as to be unfit to continue her voyage. It was thereupon ended, the cargo discharged and the vessel sold. Notice thereof, and proof of loss, was served upon the defendant, which refused to pay on account of the violation of this fifteenth regulation by the making of the second loan, while the vessel laid at Pensacola, and before the commencement of her voyage.

It "is, without doubt, essential to the right of the plaintiff to recover on the policy, that it should be authorized to resort to the freight for the reimbursement of the loan and that this authority should continue unimpaired. For without that there would be no insurable interest in the plaintiff, and that right depended upon the fact that payment could alone be secured by the earning of the freight through the delivery of the cargo at its port of destination. But as the making of the second loan was without the plaintiff’s knowledge or consent, this right or interest was not defeated by it. The lien or right was created by the loan and the instrument subscribed by the master. It thereby became vested in the plaintiff and the master was incapable of divesting it by any act or wrong on his part short of satisfaction of the debt. The fifteenth regulation did not of itself defeat the interest or lien of the plaintiff’s in the event of a subsequent loan. It did no more than to entitle the lender to proceed" against the owner and master for the recovery of the loan in case it elected so to do. It was in no sense made obligatory that it should abandon its lien upon, or interest in, the freight if a violation of this regulation should take place by the act alone of the master. The most that was done was to provide another remedy, which the plaintiff was at liberty to follow or not as it elected. It did not elect to accept that remedy, and in its effort to secure it for the defendant’s benefit by a suit in Italy against the owners, it was, in fact, defeated. But, to indemnify itself, the plaintiff has asserted and relied upon the continuance of an insurable interest in itself, arising out of the terms upon which the loan was made. And that it was entitled to do, for this right could only be avoided by its own consent or surrender, or a release or satisfaction having the same effect McKnight v. Dunlop, 1 Seld., 537, 544. The wrong of the master, unsanctioned and unapproved by the plaintiff, it is clear on principle, as well as authority, could not be attended with that result. Conrad v. Atlantic Ins. Co., 1 Peters, 386, 437; Ship Virgin, 8 id., 538, 553.

In the cases of Stainbank v. Fenning, 11 Com. B., 51, and Stainbank v. Shepard, 18 id., 418, no maritime, lien, or interest, whatever, was at any time created, and no hypothecation of the ship or freight took place. • And for that reason they maintain no princi

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pie which would turn the plaintiff over to the master and owner personally for indemnity, while in this instance that lien or interest was regularly and legally secured. The Brig Draco, 2 Sumner, 157. And it was.not, and could not be, displaced, or contravened, by the wrong of the master, who in no manner represented, or acted for the plaintiff. If it be admitted that it gave the plaintiff another ground of action, it was not bound to -resort to it, but it could insist still upon the security which in good faith had been created and provided for it The Brig Hunter, 1 Ware, 251 .

There was no concealment or misrepresentation on the part of " the plaintiff, or its agent, affecting its right to resort to the policy for indemnity after the loss of the vessel, neither was there any breach of warranty established. That is not claimed to have arisen, unless it was created by the final, and second loan. But no assurance was given that it should not be made, neither did the policy contain anything prohibiting it, as long as it was without the knowledge or assent of the plaintiff. The most that was done by the fifteenth regulation was, that if such a loan were made, the plaintiff might then resort to the master and owner personally to recover its money. It was a privilege secured to it, not a remedy which it was obliged to adopt. Mo warranty whatever to this effect appears by the policy. And that fact seems fatal to its existence. For it has been held that a warranty, whose breach produces a loss of the insurance, should appear on the face of the policy. It must be evident in terms, or from necessary construction. Jefferson Ins. Co. v. Cotheal, 7 Wend., 72 , 80. And neither has here been established Owens v. Holland Purchase Ins. Co., 56 N. Y., 565 , 572-3; Vilas v. N. Y. Central Ins. Co., 72 id., 590 .

Upon no other ground was any defense presented to the plaintiff’s action. But its right to recover was legally maintained, and the judgment should be affirmed, with costs.

Van Brunt, P. J., and Brady, J., concur.