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Sharp v. Whipple

14 N.Y. Super. Ct. 557 1 Bosw. 557 Court N.Y. Super. Ct. Decision date 1857-06-11 English

Contents

Majority

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William Sharp v. Augustus W. Whipple.

Headnote

An insurance broker has a lien for the premiums paid by him and bis commissions upon the policies which he effects, even when it is known to him that the person who employs him is merely an agent for the party assured; and when it is not known to him that his employer is merely an agent, he has probably a similar lien as against such employer, for the general balance of his account.
But the lien of the broker, whether special or general, is extinguished, when he parts with the possession of the policies, by their delivery to the assured or his agent.
The lien, however, again attaches, or, in the language of the books, is revived, if the policies come again into his possession from the person against whom the right in its origin existed. It is not revived, if they come into his hands from a person not known to him as his employer, or the assured, when the insurance was effected.
If there is no lien when the insurance is effected, no subsequent transaction between the broker and the agent who employed him can create such a Hen as against the owner assured.
An insurance “for whom it may concern" does not necessarily embrace all who may at the time have an insurable interest in the property insured, but the general words are restricted to those for whose benefit the insurance was in fact made, whose rights and interests were then meant to be protected.
Hence, when an insurance by general words is made for the exclusive benefit of one
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partner, or part-owner, he is entitled, in the event of a loss, to recover the whole sum insured, when it does not exceed the value of his interest. Hence, also, as the policy belongs to him exclusively, he is entitled to demand its possession from the broker who effected it, and, when necessary, to maintain an action in his own name against such broker for its wrongful conversion.
In order to maintain such an action, a demand and refusal are not necessary to be proved, when it appears that before the action was commenced the broker, in violation of his duty, had surrendered to the insurers, or otherwise parted with the possession of the policy.
A broker who has compromised with insurers liable for a total loss, for a less sum than the amount then recoverable, and has given up the policy, is answerable to the owner assured for the whole sum insured, and not merely for that which he received, when it does not appear that he had any authority, express or implied, to make the compromise.
So an insurance broker is also guilty of a wrongful conversion, who, having obtained a judgment upon a policy in his own name, uses the judgment for his own benefit, or deprives the assured, by any means, of the power of enforcing its collection. Judgment for plaintiff, with costs.
(Before Duer, Slosson, and Woodruff, J.J.)
Heard, April 7;
decided, June 11, 1857.
Case upon a general verdict for the plaintiff, subject to the opinion of the Court on the questions of law arising at the trial, and there ordered to be heard, in the first instance, at the General Term.
The following is a statement of the pleadings, and of the proceedings had, and facts proved upon the trial.
The complaint is of a somewhat equivocal character. In part it would appear to proceed upon a claim that the defendant had received money upon a policy of insurance belonging to the plaintiff, which he refuses to pay over, and in part it proceeds upon allegations that the defendant has converted a policy of insurance, belonging to the plaintiff, to his own use, appropriating it to the satisfaction of his own debts. It however states the plaintiff’s ola.im and the defendant’s refusal in terms sufficiently comprehem sive to embrace the facts developed on the trial, and raise the general questions whether, and to what amount, the plaintiff is entitled to recover.
The defendant’s answer denies the facts alleged by the plaintiff, and sets up a lien upon the policies of insurance, as insurance broker, for the payment of a balance of account due to him from the party by whose request he effected the insurance.
It appeared on the trial that, prior to April, 1853, the plaintiffi
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was the owner of $fths of a vessel called the Jenny Lind, and was sole owner of another vessel called the Joseph Porter.
That the plaintiff had dealings with James De W. Spurr, in which the latter made advances to the plaintiff upon cargoes or freight, and as the agent of the plaintiff, but in order to protect Spurr for his advances, the latter employed the defendant, an insurance broker, to procure insurance.
Under that employment, the defendant, in April, 1853, effected an insurance for $5,000, upon the vessel called the “ Jenny Lind,” by a valued policy, with the Merchants’ Insurance Company, of Louisville; and for $2,000 upon the freight of the “Joseph Porter,” by a valued policy, with the General Mutual Insurance Company, of New York.
The Companies, by the terms of their policies, insured “ A. W. Whipple, on account of whom it may concern (loss, if any, payable to J. De W. Spurr).”
The defendant, having effected the insurance, sent the policies to Mr. Spurr, in Liverpool, Eng., by whom they were retained until after the loss of the two vessels, when the policies were respectively returned to the defendant, by Mr. Spurr, for collection.
One of the policies, with various papers accompanying the same, was received for this purpose by the defendant on the 10th of January, 1854, and the other, with similar papers, was so received by the defendant February 20th, 1854. These accompanying papers showed that the plaintiff was the owner of the vessels, i. e. ffths of the Jenny Lind, and the whole of the Joseph Porter. One of those papers states, in terms, that the insurance was effected at the plaintiff’s request, by the defendant, through and in the name of Spurr, &c. Although the date of this statement appears in the printed case as of a later date, there is an admission that it was received by the defendant on the 20th of February, 1854, and we therefore conclude that the date has been erroneously printed.
It does not appear that, when the insurance was effected by the defendant, he was aware of the plaintiff’s ownership; but the papers accompanying the policies, on their being returned to him, fully disclose it.
By letter of May 31st, 1854, received by the defendant June
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15th, 1854, the plaintiff farther and distinctly notified the defendant that the ships were his, and that, although the policies are in the name of Mr. Spurr, the interest is altogether the plaintiff’s.
Other letters show that the defendant did not give the plaintiff the information he desired, and even that he declined corresponding with him on the subject; and on the 16th November, 1854, the plaintiff caused a formal notice to be served on the defendant, apprising him that the insurances were effected for his account and benefit, and that he was solely interested, &c.
In April, 1855, the plaintiff procured from Mr. Spurr a formal order upon the defendant for these policies, requesting him to deliver them to the plaintiff, or to his agent, and the plaintiff drew an order requiring the defendant to deliver the policies to his agents, DeWolf, Starr, & Co., of New York. The order was given to the defendant in April or May, 1855, and Mr. Starr, of the firm of DeWolf, Starr, & Co., who had also a power of attorney from the plaintiff, saw the defendant on the subject, and he testifies thus: “I could get no information from him; he would make no explanations or admissions; I demanded the policies, and he refused to give them to me; he said that Spurr owed him, and that he held them for his indebtedness; he would not give me the account between himself and Spurr; he would give me none of the items and none of the particulars of that account.” On cross-examination, the witness repeats his statement of his demand of these two policies, and the defendant’s refusal. To this evidence there is no contradiction.
After the 15th of July, 1855 (but at what precise date the printed case before us does not show), this action was brought ; and on the trial it further appeared, that on or about the first of June, 1855, and after the demand made of him, as above stated, the defendant surrendered the policy for $5,000 upon the Jenny Lind to the agent of the Merchants’ Insurance Company, and received therefor $2,500; but that he, at the same time, took from the agent a writing in the words following, viz:
“ The Merchants’ Louisville Insurance Company, having this day paid to Mr. A. W. Whipple, a settlement by compromise, of fifty per cent, on policy No. 2,022, issued on the first day of March, 1858, on ship ‘Jenny Lind,’ for five thousand dollars, payable in case of loss to J, De W- Spurr, and by the said J, De
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W. Spurr assigned, on the tenth day of February, 1854, to the said A. W. Whipple, the said compromise this day paid amounting to the sum of twenty-five hundred dollars; now, in considerar tion of the said settlement by compromise, and of the possible contingency that it may be wished by the said A. W. Whipple at a future time to pay back to the said Company the said sum of twenty-five hundred dollars, and receive in lieu thereof the said policy No 2,022, The Merchants’ Louisville Insurance Company hereby promises and agrees with the said A. W. Whipple, upon receiving from him the said sum of twenty-five hundred dollars, together with interest thereon from this day, to return to him the said policy uncancelled, and also uncancelled all papers pertaining to the loss under said policy that have been received by the said Company from him, the said A. W. Whipple.
Merchants’ Louisville Insurance Company,
By Wm. Peathey, Agent.”
It further appeared, that on or about the 10th of August, 1854, the defendant had recovered a judgment upon the policy on the Joseph Porter, against the General Mutual Insurance Company for $2,046.25. That said Company had afterwards been dissolved and a receiver of its property appointed. That a stipulation had been made by the attorney for the defendant, in the suit in which he had recovered judgment, by which it was agreed, that no process, execution, or other action should be had on such judgment, but that it should be adjusted with other claims by the receiver. That in 1856, the receiver brought an action against this defendant upon notes, held by him as such receiver, made by the defendant, and delivered by him to the Company, amounting to over $4,000, and in such action the defendant by way of defence among other things, set up the judgment above mentioned, and claimed the right to have the same set off against the claim of the plaintiff therein.
The Judge at the trial having charged the jury, they rendered a general verdict for the plaintiff, for $6,075.66 (being ffths of the amount of the policy which the defendant had surrendered, with interest, from the 1st June, 1855, $3,704.10 and the amount of the judgment recovered by the defendant against the General Mutual Insurance Company, (exclusive of costs) and the interest
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thereon $2,371.56), which verdict was taken subject to the opinion of the Court at General Term, on the questions of law arising in the case!
The jury also found specially—
That the plaintiff owned ffth parts of the Jenny Lind, and that ffth parts of the $2,500 received by the defendant on the 1st of June, 1855, on the compromise of the policy on that vessel, with interest, is $1,852.5.
That ffth parts of the $5,000 insured by that policy and interest thereon is $3,704.10.
That the plaintiff was sole owner of the Joseph Porter, and the amount of the judgment recovered by the defendant on that policy against the Company issuing it, with interest, (excluding that part of the judgment consisting of costs) is $2,371.56.
That said Spurr was indebted to the defendant on the 17th of November, 1854, in the sum of $1,782.15 on account of the previous dealings between them, and that no part of that sum is paid.
The parties consented that the Court may modify the verdict as shall be just, and according to the rights of the parties, and with power to deduct from the amount the plaintiff would otherwise be entitled to recover, the said $1,782.15, and interest thereon, if of opinion that the defendant is entitled to have such deduction made—and the Court thereupon ordered that the case be heard in the first instance at the General Term, and that the judgment be there first applied for,’'and that the entry of judgment in the mean time be suspended.
Edwards Pierrepont, for the plaintiff,
cited, 1 East. 335; 2 Caines, 299; 5 Hill. 421 ; 6 Paige, 583; 3 John. Cases, 130.
Jno. Graham, for the defendant,
cited 4 Comst. 497; Story on Agency, §§ 352, 368, 379, 389, 386, 390, 370; 3 Seld. 288; 2 Kern. 313; 1 Comst. 522; 10 John. 172 .

The charge of the Judge given to the jury on the trial, does not appear in the case submitted, and no exceptions were taken by the defendant to such charge. It must therefore be assumed that correct instructions

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were given to the jury, in respect to all questions of law which were material as a guide to their deliberations, and as to the legal effect of the facts which they might find to be established by the evidence.

The jury having rendered a general verdict for the plaintiff, must be deemed to have found in his favor under those instructions every material fact in issue, so that if there is upon the evidence, any matter of doubt or conflict, it must be deemed settled by the general verdict. The verdict being taken subject to the opinion of the Court on the questions of law only, we are not called upon to consider on this hearing any other questions, than such as were raised on the trial, and such as arise upon the special finding which so far as it is inconsistent with the general verdict, must control the latter. (Code, § 262.) The issues therefore made by these parties by their pleadings, must be taken to have been found under proper directions "in favor of the plaintiff, except so far as the facts specially found should control that result.

The only questions of law appearing to have been formally raised and submitted to the Judge on the trial, were those suggested by the defendant’s motion for a nonsuit, which being denied, he excepted to the ruling. No other exception appears in the case. And the questions of law, subject to which the verdict was taken, are those presented by the motion for a non-suit, and those which arise upon the special findings of .the jury which accompanied their verdict.

The grounds upon which a nonsuit was urged were, that at the time the insurances were effected the defendant had no notice that the plaintiff had any interest in the policies, and that the evidence showed that the defendant had a lien upon them for his general balance against Spurr, the person by whose employment the defendant as insurance broker effected the insurance.

The special finding of the jury establishes the interest of the plaintiff in the subject of the insurance. The insurance was in terms for account of whom it might concern, the agent Spurr being only interested in the policies as a protection to him for his advances.

The finding also determines that Spurr, on whose employment

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the defendant acted,. was on the 17th of November, 1854, indebted to the defendant in the sum.of $1,782 15 on account of the previous dealings between them, and'that no part of that sum is paid.

¡ We do not, therefore, perceive that there is regularly before us any question of law, except the single one whether upon the evidence the nonsuit should have been ordered on the ground upon which.it was moved by the defendant’s counsel, and whether the amount of the debt due to him by Spurr should be deducted Rom the verdict.

These were the questions of law raised at the trial. Where a defendant moves for a nonsuit, and takes his ground at the trial, he ought not to .be permitted on the review to assign other reasons, .if they are in their nature such as, had they been then called to the attention of the plaintiff and the Court, might have been obviated by other or further proofs.

I repeat, that this question, whether the defendant had such a lien as defeats the plaintiff’s claim to the policies in question, or if not, whether upon the special finding the sum due to. him by Spurr should be deducted from the verdict, appear to. be the only questions now regularly before us, for the reason above stated, and' because also, there is obviously no inconsistency between the general verdict and the special findings, except so far as the latter exhibit a claim to such deduction from the general verdict.

Practically the question is single. Had the defendant at the time this action was brought a hen upon the policies as against the plaintiff? H not, then he clearly is not, entitled either to defeat the action by insisting on a right to detain them, nor to deduct his account from the verdict.

It undoubtedly appeared that the defendant, as insurance broker, had dealings with Spurr, by whose direction he effected the insurance; and it did not affirmatively appear that when these insurances were effected he was apprised that the plaintiff was interested therein. Some of the testimony of the witness Spurr might indicate that the defendant knew that the plaintiff was the owner of the subject of the insurance. He says that he wrote to the defendant that the plaintiff was the owner, but his cross-examination leaves the matter in so great doubt, at least, whether

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that communication was made at or before the insurance was effected, that we ought to assume that he had at that time no such knowledge.

It also appeared that the dealings between Spurr and the defendant were in the defendant’s capacity of insurance broker, and related to insurance transactions.

It is entirely clear, as matter of law, that if the defendant paid the premiums on effecting these two insurances now in question, he had a lien upon the policies as security for his reimbursement and his commissions. And it is probably not less clear that he had also a lien for the general balance of his insurance account against Spurr, who, at that time, was the only principal known to him in the transaction.

This general doctrine, declared by Lord Hardwicke, in equity, in Kruger v. Wlcox, (Ambler 252) in 1755, and since then well settled at law, we do not understand to be controverted by the plaintiff’s counsel. (Man v. Shiffner, 2 East. 523; Mann v. Forrester, 4 Camp. 60; Westwood v. Bell, ib. 352; Story on Agency, p. 354; and cases cited in notes. Cross on Lien, 277, and onward. 2 Kent Com. 634, &c.; 2 Duer on Ins. 280, &c., § 1, 2.)

It does not, however, appear in the case, that down to the time when these policies were sent to Liverpool, any sum whatever was due to the defendant from Spurr. The insurance was effected in or about April, 1853. Prior to December in that year, the defendant sent the policies to Spurr in Liverpool. The proof and the finding of the jury is, that in November, 1854, there was a balance due to the defendant, but when it arose does not appear. Spurr testifies that he and the defendant in their dealings kept their accounts as nearly square as possible. That the defendant was always authorized to draw for anything he might be called upon to pay on Spurr’s account here. And also, that he thinks nothing was due to the defendant for the premiums on these policies.

So that it does not appear that when the defendant sent the policies to Spurr, he had any lien thereon.

But however that may have been, when the defendant parted with the possession of the policies, and they came into the hands of Spurr, they were not subject to any lien in favor of the

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defendant; if any had existed it was gone. (See the authorities above cited, and Story on Agency, § 367.)

.After the loss occurred, the policies were returned to the defendant for collection. It may be conceded that the general rule is, that where an insurance broker, having a lien, parts with the possession of the policies and so loses his lien, his lien will, in the language of the books, be revived, if the policies come again to his possession.—Amb. 254; Cross, p. 280; and cases above and below cited Levy v. Barnard, 8 Taunt. 149.

But in regard to this revival of the lien it is to be observed, that it is not, in strictness, a revival of a pre-existing lien. The doctrine is this: when the policies come again into the broker’s possession, a lien attaches, as it would upon new policies coming into his hands. Hot, therefore, because he once had a lien, which was temporarily suspended, but because, by the general rule, he has a lien upon the securities in his possession for advances made upon account thereof, or as the case may be, for his general balance. This distinction is important, because from it results this qualification—that his lien will not attach if, when they are so returned to him, circumstances have so occurred that no lien for his general balance would attach if they then for the first time came to his hands. In the language of Mr. Justice Story, in substance, his lien will not re-attach to the property, unless when it comes again into his possession, it comes as the property of the same owner against whom his right exists, and no new intermediate equities have affected it.—§ 470, and cases referred to.

If, therefore, the defendant received the policies for collection, and was then apprised that the present plaintiff was the owner, no lien in favor of the defendant would attach for a prior balance against Spurr, if any existed at that time, which, as before observed, does not appear. And it is equally, if not more clearly true, ‘that he could acquire no lien, as against the plaintiff, for a general balance subsequently arising between him and Spurr. This principle will be found stated in the elementary works above referred to, and in Paley on Agency, 145, and note 15, p. 148; Law Library edition, pp. 63-4; Houghton v. Matthews, 3 Bos. and Pul. 485; Mann v. Shiffner, 2 East. 523; Jarvis v. Rogers, 15 Mass. 396 ; Foster v. Hoyt, 2 Johns. Ca. 327; 2 Duer on Ins. 282, § 3.

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We are therefore of opinion that in this case no lien in favor of the defendant attached to these policies when they were returned to him for collection, not only because it was not shown that anything was then due to him, but also because that when so returned, the ownership of the plaintiff was disclosed. And for that reason, also, no subsequent transactions with Spurr, creating a balance, would create a lien on the policies to the prejudice of the plaintiff.

So, also, on the 15th June, 1854, by letter of May 31st, the defendant was distinctly notified by the plaintiff that he was owner, and that although the policies were in the name of Spurr, the interest is altogether in the plaintiff. It is not shown that at this time anything was due by Spurr to the defendant, and of course the above observations apply to this date, and to the notice then given.

The defendant, therefore, had no lien upon these policies for the balance of his account with Spurr on the 17th of November, 1854, and is therefore not entitled to have that balance deducted from the verdict.

As before observed, this seems to dispose of the only questions of law which appear by the case to have been raised on the trial, and the questions subject to which the verdict was taken.

The case was argued before us as if every question of fact and ■ law which can now be raised upon the case, as made up for argument, might be considered; and notwithstanding we think that in strictness the case is to be disposed of, as above intimated, we have considered the other points and arguments, ingeniously and ably urged upon our attention.

At the time of the demand made upon the defendant, the plaintiff was entitled to the policies. The fact that he owned only ffths of the Jenny Lind did not affect his title to the policy. The policy protected his interest. The case does not show that his co-owner was in any wise protected. The insurance was for account of whom it may concern, but those terms are always controlled by proof of the parties for whose benefit the insurance was in fact intended, and it in no wise appears that the co-owner was interested in the policy, or was in any wise intended to be protected by it Indeed, we do not fully understand upon what

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principle it is that the recovery here was claimed by the complaint, and so on the trial taken to be limited to ff-ths of the amount of the policy. If the interest of the plaintiff and his loss amounted to the whole sum insured, the reason for supposing that he could not have recovered the whole amount of the policy in his own name is not apparent. In The Pacific Insurance Co. v. Catlett ( 1 Wend. 561 , and S. C. in Error, 4 Wend. 75 ), where an insurance was expressed to be “on account of the owners,” the plaintiff, by whose orders and for whose benefit the insurance was effected, was held entitled to recover the full sum insured, although it appeared that, in truth, he only owned five-sixths of the vessel. (See S. C. 1 Paine’s U. S. Dist. Ct. Rep.) At all events, the plaintiff had a clear right to demand possession of the policy. But as to this particular policy, there is a conclusive answer to the alleged defect in the demand. ‘ The defendant, before this suit was brought, had wrongfully surrendered the policy, and no demand was necessary. He had violated his duty as agent, or broker. He had done what the plaintiff had a right to regard as an actual conversion of the policy. And this meets another suggestion, viz. that the plaintiff was only entitled to recover the amount at which the defendant compromised' with the Company. He had no authority, either express or implied, to make the compromise. The act was not only without authority, but was a tortious act, done in defiance of the plaintiff and with knowledge of his claims.

And as to the other policy, which appeared on the trial to have been sued upon and judgment recovered, it may be that if on the demand being made the defendant had disclosed the fact, the form of the present action would have required amendment.. But we think that the evidence shows an actual conversion of this policy to the defendant’s use. He sued it in his own name. He refused to give any account of it to the agent of the plaintiff—would give no explanations—concealed the fact that he had recovered a judgment—and finally treats that judgment as his own, and after a stipulation by his attorney not to enforce it, save by adjusting it with other claims by the receiver, sets it up as a set-off against such claims. Under such circumstances we think the demand sufficient, and the conversion proved. We could not, we think, hold that the

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plaintiff, under the circumstances stated, had npt done all which he was bound to do to sustain the action.

It is true that the answer setting up this judgment as a set-off against claims upon the defendant personally, was put in after this action was commenced, but it was read without objection, and it showed how fully the defendant was exercising acts of ownership over the claim, in defiance of the plaintiff, and gives character to the acts, concealments, and refusals of the defendant, which were prior to the bringing of this action.

To this suggestion may be further added, on the subject of the defendant’s claim to a lien, and that its amount should have been tendered—that his refusal to furnish any account, or give any information, may well be taken to have rendered a tender impossible, and so to have waived any tender.

And we have no doubt that the amount of the policies being upon the evidence prima facie due, that amount is, in the absence of countervailing testimony, to be taken as the measure of damages. They had bec'ome, in substance, securities for the payment of a definite sum of money, and were presumptively of that value. The defendant had no right, by unauthorized compromise, or by setting off against what he himself owed, to deprive the plaintiff of his whole opportunity to collect them.

Our conclusion is, that judgment should be ordered for the plaintiff upon the verdict.

Cases cited