Fernandez v. Great Western Insurance — 26 N.Y. Super. Ct. 457

Majority

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Antonio R. Fernandez, et al. plaintiffs, vs. The Great Western Insurance Company, defendants.

Headnote

1. A mere change of ownership of the subject insured, will not avoid a policy of insurance, provided there be an insurable interest at the time of loss; unless there be a clause in it, making it void upon any change of ownership. And even a clause of that kind will not prevent the application of that rule, if the change of interest is merely from absolute owner to mortgagee.

2. By the terms of a policy of insurance upon a vessel, it was expressly provided that the policy covered only the original interest subsisting when negotiated, and that any change of interest, in whole or in part, should cancel the policy. After the issuing of the policy, the insured sold the vessel, and two days after-wards, according to previous agreement, took back from the purchaser a

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mortgage upon the vessel, to secure the payment of a part of the purchase money, accompanied by a power of attorney, placing the vessel under the entire control of the mortgagees. Held that this transfer did not terminate the interest of the insured, SO as to release the underwriters. (Barbour, J. dissented.)

3. A- voluntary departure from the course of a voyage, without any excuse rendered therefor, although slight and unimportant, will discharge the underwriter. It is otherwise, if the departure is excused by a justifying cause.

4. There cannot be a deviation from the usual course of the voyage, before it has commenced.

6. And although underwriters are discharged, if a loss occur under a policy, “ at and from ” a port of departure, while the vessel is absent from such port, for any unexpected purpose, before her voyage has commenced; yet they will not be absolved if the vessel returns in safety from such temporary absence, and is afterwards lost upon her voyage, after it has formally commenced.

6. It being the duty of the assured to put his ship in complete condition for her voyage, to avoid the consequences of a breach of the implied warranty of sea worthiness, he has a right to adopt all suitable and usual means to put her in such condition, and determine by proper tests in advance of her sailing, if she is seaworthy.

7. Accordingly held, that under a policy of insurance on a steam vessel “ at and from New York to Havana,” the making a trip with her to Elizabethport, before starting upon her voyage, for the purpose of trying the engine, and ascertaining 'the draught of the vessel, with coal on board, neither of which objects’ could have been attained otherwise than by such actual trip, if a

. deviation at all, was sufficiently excused by the necessity of trying the engine, and ascertaining the draught of the vessel when loaded. (Barbour, J. dissented.)

(Before Barbour, Monell, and McCunn, JJ.)

Heard November 16, 1865;

decided December 30, 1865.

Exceptions ordered to be heard at the general term in the first instance.

The facts are as follows : In March, 1863, the plaintiffs made an application in writing to the defendants, for an insurance of $7.500 upon the propellor J. F. Barnard, at and from New York to Havana, which application stated that the vessel was “in perfect order,” and, also, contained the words “ warranted to sail in a few days ; ” and, thereupon, on the 18th of March, the defendants issued a policy to the plaintiffs, “for the benefit of whom it might concern,” in accordance with such application. The policy contained this express provision: “And it is also agreed that this policy covers

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only the original interest Subsisting when negotiated, and that any change of interest, in whole or in part, shall cancel the policy in the same ratio ; ” and, also, “ and it is further agreed that this policy shall be void in case of its being assigned, transferred, or pledged, without the previous consent in writing of this company.”

At the time the policy was effected, the vessel was undergoing repairs, to fit her for sea going service, such as overhauling the engine, and putting in a mast and sails, and such reparation was continued until the 6th of April. On the latter date, she went to Elizabethport in New Jersey, sixteen or twenty miles from New York, upon a trial trip, where she took in some seventy tons of coal' for her voyage to Havana ; . returning to New York the next day, or the day after that. Upon her trip up from Elizabethport, it was found that her escape pipe was too much submerged, and her coal proving unfit, that was discharged, and she went into dock, and had the defect in regard to her pipe remedied. After that was done, she went across the river to Jersey city, and took in other coal for her voyage. In going across, her smoke stack and her upper houses, as well as a part of her steering apparatus, were carried away, and those damages were repaired at Jersey city. She finally left, on her voyage to Havana, on the 2d of May, forty-five days after the date of her insurance ; the delay, after her return from Elizabethport, being caused by getting her in a condition to go to sea ; and she was lost by fire soon after sailing. The usual period for loading such a steamer for Havana is four or five days.

Some time before the loss, and on the 4th of April, the plaintiff, by a full bill of sale, under their hands and seals, sold and assigned the propeller 'J. F. Barnard, with her tackle, apparel, and furniture, to Clement Kane, a British resident, in consideration of $35,000, the receipt of which was therein admitted ; and such bill of sale was, on the same day, recorded at the British consulate at New York; and the vessel was then registered there as a British ship, under the name of “ Morro,” and a certificate of registry issued by the consul to

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Kane, as owner. The policy of insurance does not appear to have been assigned.

On the 6th of April, Kane executed to the plaintiffs a paper, under seal, in which ho declared that he thereby mortgaged the vessel, (described therein under the name of “ Morro,” as well as that of “ J. F. Barnard,”) to them, to secure the payment of $30,000 lent to him by them ; and, on the same day, also executed to them his power of attorney, irrevocable, whereby he empowered them, for him, and in his name, to manage, control, mortgage, or sell, &c. such vessel.

On the trial, before Justice Monell and a jury, the jury, by direction of the court, rendered their verdict for the plaintiffs for $7,990.20, being the amount claimed by the plaintiffs, less the premium note which had not been paid. The defendants’ counsel excepted to the direction of the court, and the court ordered the exceptions to be heard, in the first instance, at general term, and the judgment in the meantime suspended.

R. H. Huntley, for the plaintiffs.

As to any warranty created by the application: I. The policy in no way refers to the application, or any .conditions contained in it. There can therefore be no ground for the assertion that the policy adopts the application as a part of it. Under these circumstances the law excludes the condition of the application from the policy. ( Wall v. The Howard Ins. Co., 14 Barb. 383 . 2 Parsons’ Maritime Law, 50, and cases cited in note 2. Dow v. Whetten, 8 Wend. 160 , 166.)

II. The policy contains several warranties, but none as to time of sailing, and it is a legal inference that all intended warranties are included in the policy.

III. The time “a few days,” is too indefinite to constitute a warranty, which should be definite and certain, or be capable of being reduced to certainty. In this case only a probability of the time of sailing could be arrived at, and then only by a consideration of all the circumstances attending the date of sailing. These reasonably account for the delay. (1 Parsons’ Cont. 2d ed. 459.)

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As to the alleged deviation : I. This vessel was in port repairing at the time the insurance was effected, as the insurers well knew. The question therefore is, Did she, while in port, or prior to her sailing therefrom, do any act which changed the risk, or which was a technical deviation, all the circumstances of the case being considered ?

II. Her remaining in port forty-five days, is not such a deviation, if there was a necessity for the delay. (Coffin v. Newburyport Marine Ins. Co., 9 Mass. Rep. 436 and 449. Palmer v. Marshall, 8 Bing. 79. S. C. Id. 317. Langhorn v. Allnut, 4 Taunt. 511.) Thus where the insurance was from a port, it not appearing that the vessel was detained by fraud or any sinister design, nor that the risk was thereby enhanced, it was held that a delay of six months after the policy was made was not a deviation, the jury having found that it was not unreasonable. (Earl v. Shaw, 1 John. Cas. 313. See Grant v. King, 4 Esp. 175; 2 Pars. Mar. Law, 283, and cases cited in note 3; Gilfert v. Hallet, 2 John. Cas. 296.) In Phillips v. Irving, (7 Man. & G. 325,) where the ship was insured on a long trading voyage, seven months was held not to be an unreasonable delay. The first three months being taken up in getting the vessel repaired and the rest of the time in seeking for a cargo which could not be obtained. In Driscoll v. Passmore, (1 B. & P. 200,) it was held that a compulsory return of a vessel to her home port without finishing her destined voyage caused by threats of desertion of her crew at one port of such voyage, would not deprive her charterers of the right to require her to sail as from her home port to the last terminus of her intended outward voyage, and from thence return •home, and therefore would not invalidate a policy of insurance on freight from such outward terminus to her home port, although'such policy was given upon a representation of her being then at another outward port, and about to proceed immediately on her destined voyage.

III. A necessity existed for the delay in port, in this case, and the defendants did not seek to contradict or question it on the -trial. It could not by any possibility enhance the risk.

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IV. The trial trip to Elizabethport and back was not a deviation. The vessel was making repairs and not ready for sea when the insurance was effected. She was a small steamer, and when her repairs were completed it was necessary that her action and the working of her machinery should be tested. To do this it was thought proper that she should sail light down the bay, and return in about the trim she would be in when on her voyage. 1. This was nothing more than a necessary and proper precaution. Had this not been done, and the vessel been lost or injured by reason of the difficulty which this trial trip disclosed, the underwriters would have had just ground of complaint. 2. It cannot reasonably be said that the repairs were completed till this trial was made; it was a necessary part of the repairs, and the result demonstrated its necessity by showing the difficulty with the outboard delivery. 3. Even without authorities, the case is with the plaintiffs upon principle, but authorities to sustain the plaintiffs are abundant.

Parsons, (2 Mar. Law, §278,) says: “Nor are they (the insurers) discharged, if the change of risk is merely temporary, and when it ceases, all subsequent risks are precisely and certainly the same as they would have been had no deviation taken place.” In the note to the same page, he says : “ It is obvious that in some cases there may be a temporary deviation, which would exonerate the underwriters from loss during such deviation, but not for subsequent loss. Thus, if a steamboat, while making regular trips between two ports, is insured for one year, and if, after the trip for the day is ended, she should tow a vessel, or do any other similar act, the underwriters would clearly be liable if she were subsequently lost on a regular trip, or while lying in port, but not if she were lost while engaged in towing.”

Phillips, (1 vol. on Ins. § 1000,) defines deviation : “Unnecessarily or without sufficient reason, going off the usual course of the voyage, (if there be such,) or otherwise what the master deems the most direct or expeditious and convenient course.”

In Smith v. Surridge, (4 Esp. 25,) a ship insured at and from Pillau to London, was delayed, for the purpose of making

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repairs. After being ready for sea she was prevented from proceeding for some time, by the lowness of the water on the bar. Lord Kenyon instructed the jury, that it was “not necessary that the vessel should be seaworthy at the time ” when the risk commenced, from which he inferred that a sufficient time might be taken for making repairs. (1 Phillips’ Ins. § 1002.)

Y. It is not pretended that the delay in port, or the trial trip, were not bona fide made ; and being so, they cannot be admitted to avoid the insurance. (Col. Ins. v. Catlet, 12 Wheat. 383 , per Story, J. See also 1 Phil. Ins. § 982, et seq. as to deviation and change of risk.)

W. M. Evarts, for the defendants.

I. The. record contains no proper proof of interest in the plaintiffs or that the insurance was effected to cover any interest of theirs. The plaintiffs’ interest, at the time of the inception of the risk, is put in issue by the answer. The plaintiffs’ counsel gave no competent evidence on this issue, but having read, as preliminary proofs presented to the company, certain affidavits of one of the plaintiffs, stating an interest in them, after he rested his .case, the court, upon his application, ruled that all the affidavits and papers introduced by them, as preliminary proofs, were to be considered as evidence in chief •in the case ; thereby making an ex parte affidavit, which, if offered as evidence in chief, would have been wholly incompetent, (but to the reading of which, as part of the preliminary proofs, the defendants’ counsel had no right to object, and in regard to which they had no opportunity of cross-examination,) conclusive evidence against them on a material issue. It is submitted, that the defendants' exception to this ruling was well taken. (2 Phil. on Ins. § 2090, and cases cited.)

1. The policy being “ for account of whom it might concern,” some proof was necessary that it was intended by the parties, who applied for- it for their own benefit; especially in the absence of any evidence of their interest at the time, it was not competent for the court to conclude that they were the parties

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intended to be insured. (Crosby v. The New York Mu. Ins. Co., 5 Bosw. 377 .)

II. After the making of the policy and the inception of the risk, and before the loss, “ the original interest subsisting when the policy was negotiated was wholly changed,” and the policy thereby canceled. By bill of sale, executed, delivered and recorded, on the 4th of April, the plaintiffs conveyed to Clement Kane the entire vessel, and all their interest therein. This fact, according to the express agreement of the parties, canceled the policy.

1. This case is perfectly distinguishable from that of Hitchcock v. The North Western Insurance Company, ( 26 N. Y. Rep. 68 .) There the language of the policy was, “ in case of transfer or termination of any interest of the assured in the property assured, by sale or otherwise, the policy • should be void.” The court construed this as meaning, that in order to avoid the policy under itj there must be a transfer or termination of the whole insurable interest of the assured in the property. Moreover, it was expressly proved, in that case, that the bill of sale, and the mortgage back, were simultaneous, and constituted but one act, the result of which was, not that the seller parted with any title, for any space of time, however short, but simply that his title, before absolute, was thereby made defeasible. Here, however, the proof is directly the other way, the only evidence in regard to the transaction being in the documents themselves, by which it appears, that on the 4th of April the plaintiffs parted with all their title, and received therefor $35,000, in money, which is in the bill of sale recited as paid to them by the vendee. The vendee, Kane, remained sole owner until the 6th of April, and, , in the meantime, made oath of his ownership before the British consul, changed the name of the steamer, and procured a British register. Having effected this, he mortgaged it back to the plaintiffs, to secure the sum of $30,000 lent him by them, and they took possession as his agents. Here, then, was clearly an actual and entire change of the original interest of the assured which subsisted at the inception of the risk. The plaintiffs parted with all

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interest, and remained divested of it two days. The acquisition of a new and different interest, at a subsequent date, could not revive the policy.

2. It was required, by the British law, that the party who received the British' register should be, at the time, actual owner. This shows the actual intent and meaning of the plaintiffs to have corresponded with the terms of the documents, namely, to divest themselves of all interest, and make Kane sole owner. They did not attempt to show that there was any thing feigned or colorable in the transaction, nor could they be permitted to show that, to contradict and falsify their solemn acts. (Carrol v. Boston Mar. Ins. Co., 8 Mass. Rep. 518 . Ohl v. The Eagle Ins. Co., 4 Mason, 172.)

3. The plaintiffs, in their complaint, count upon their interest as owners, and aver that they were sole owners at the time of the policy and of the loss. Under these allegations, they could not prove or avail themselves of a mortgagee’s title; and after the sale to Kane, they had no power to insure or collect insurance on any interest other than that of mortgagees, except in his name, and as his agents, under his power of attorney.

III. The voyage embraced by the policy being only “ at and from New York to Havana,” the intermediate voyage of the steamer from New York to Elizabethport and back, was a deviation which avoided the policy.- Arnould says, p. 354® : “ In the absence of any usage or stipulation to the contrary, the meaning of the parties to the policy is invariably understood to be that the ship should proceed from one terminus of the voyage insured to the other in a direct course, with all due expedition, and without touching at any interjacent port, or pursuing any intermediate adventure; if she do so, without leave for that purpose being expressly given in the policy, this, however trifling in extent or duration, is a fatal deviation, although the ship may afterwards return to her proper course without having sustained the slightest damage in consequence of having departed from it.” Parsons says, (2 Marit. Law, 281,) that “ if it be a deviation for a vessel to go designedly and unnecessarily an hour out of her course, or to lie by a ship

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that time only, to save endangered property, it is obvious that any actual and substantial change of risk is a deviation, although it be a very small one.”

1. The case of Brown v. Tayleur, (4 Ad. & Ellis, 241,) is directly in point. There the policy was, “ at and from her port of lading in North America to Liverpool.” The ship began to take in her cargo at Cocagne, in the province of New Brunswick, and continued to do so for three weeks ; she then sailed to Bucktouche, five to seven miles distant, to complete her loading; she arrived there in a few hours, Cocagne and Buktouche being situated on different creeks of the same bay. She took no cargo at Bucktouche, but returned to Cocagne in safety, and having sailed thence for Liverpool, was lost on the voyage. The deviation was held to be fatal.

2. Elizabethport is a distinct port from New York, in another district and state, and the extent of the deviation, both in time and space, far exceed what has frequently been regarded as fatal by the courts. The purpose of this deviation does not excuse it, or cure its effect, except it be a matter of absolute necessity, or to save life, which is not pretended here, the only plea being that it was to try engines and take in coal, which proved wholly unfit for the purposes intended. (Coffin v. Newburyport Ins. Co., 9 Mass. Rep. 449 . Beatson v. Haworth, 6 T. R. 531. Hartley v. Buggin, 3 Dougl. 39. Augusta Ins. and Banking Co. v. Abb., 12 Md. 348 . Fox v. Black, 2 Park. Ins. 488. Townsend v. Guyon, Id. 438 .)

3. In like manner the trip to Jersey City and back, and the final sailing from Jersey City instead of New York, were deviations from the voyage insured. In Vos v. Robinson, ( 9 John. 192 ,) the insurance was “ at and from Port Plata to New York.” The vessel sailed from Port Plata to Susua, eighteen miles east, but in the same collection district, and it was held to be a fatal deviation. The court said, “ sailing from Port Plata to Susua was not sailing from Port Plata to New York, for Port Plata and the revenue district of Port Plata are very distinct objects. Nothing short of a most clear and well set-

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tied usage would be sufficient to include both objects in the simple name of Port Plata.”

IV. The printed and written application for insurance, which was the contract signed by both parties, and made a binding undertaking on both sides, contained several express warranties, one of which, viz. “ warranted to sail in a few days,” was broken by the lapse of forty-five days, from the 18 th of March to the 2d of May before sailing, and all benefit of the policy thereby forfeited by the plaintiffs. The courts have been exceedingly rigorous in requiring the most exact and literal fulfillment of this particular warranty, especially where, as in this case, the insurance is “ at and from,” which makes the underwriter liable for the safety of the. ship during the whole period of her stay in port. (1 Arnould, 589.*)

1. Forty-five days are not “ a few days,” when the subject of insurance is a vessel “ at and from New York to Havana,” for which the usual period in port is only four or five days. (Bowden v. Vaughan, 10 East, 415. Kernan v. Pierson, Law Journal, 1862, N. S. vol. 31.)

2. It has been held in the English cases where the policy itself is the only binding contract between the parties, that an express warranty, to be binding as such, must be written or printed on the face of the policy. This decision has always been placed upon the ground that the policy is the formal instrument containing the final agreement of the parties ; therefore, no instruction or collateral representation, parol or written, can be admitted to contradict it. (Pawson v. Watson, Cowp. 785. Bean v. Stupart, 1 Dougl. 11. 1 Arnould, pp. 577 to 579.) It is submitted, that these and subsequent decisions of like tenor, and the dicta to the same effect transferred therefrom into the text books, are wholly inapplicable to the system which prevails in New York, proved in .the present instance, by which the application itself is signed by both parties, to make the insurance binding, and contains in itself, and by reference to the printed policy, (now in use,) all the terms and details of the insurance, being made the vehicle for any special terms not included in the usual printed policy. The

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insurance was complete when the application was so signed. After that, no communication passed.' between the parties, but as a matter of form and routine, the usual printed form of policy was filled up by the company, and sent to the insured. The application itself then was the final agreement, to which the court must look for the understanding of the parties, and it was in no sense collateral, like letters of-instructions, verbal statements, and .the like.

3. Judge Nelson has, in a recent case, speaking of this system. of insurance by means of the application, signed by both parties, said: “ The making out of the application to the office for insurance, and the acceptance of that application by the company, operates as a contract between the parties, and if the company afterwards refuse to execute the policy or accept the' premium notes, or otherwise to go on with the exepution of the contract, a court of equity will compel them to do so. All that follows the signing of the application is a mere matter of fulfillment of contract, merely doing, that which the law would compel them to do—a sort of routine business.”. ( Vide MS. charge in Godfrey v. Sun Mut. Ins. Co., October Term, 1865.)

4. It never was decided, even in the English cases, that it was not competent for the underwriters and the insured to bind themselves to an express warranty inserted in an agreement signed by both for the purpose of binding themselves, upon a paper distinct from the policy. What the courts have always resisted, is the attempt to make a warranty out of some representation or statement not in its terms ah express agreement, and contained in some letter or paper distinct from -the policy. The same objection cannot lie to an actual warranty, in terms such, and so intended by the parties, inserted in a contract.

5. It has been frequently laid down, that if what would otherwise be a warranty in the policy is there expressly declared to be a representation, and not a warranty, it will not be held to be a warranty. (1 Arnould, 492.* 2 Duer on Ins. 645, § 2. 3 Kent’s Com. 5th. ed. p. 282.)

• So we insist, that if what might otherwise, by being in the

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application, be a mere representation, is there expressly declared to be a warranty, and not a representation, it should be held to be a warranty, because it is perfectly competent for the parties to make it so.

Y. But if the words in the application, warranted “ to sail in a few days,” are to have the effect only of a representation, still a substantial compliance with its terms is required, and of this the plaintiffs have wholly failed. Taken together, the representations contained in the application were, that the steamer which had been built in Poughkeepsie during the previous year, was just metalled, had been last inspected within the year 1863, (the application being dated 18th March, 1863,) and was at the time of the application in perfect order for sailing, and should sail in a few days. As to every particular this representation was positive, material, and of the last importance to a fair appreciation of the risk and premium by the underwriter., The insurance being “ at and from New York to Havana,” the actual condition of the vessel, and the length of time she would probably remain in port, were the main elements of the risk on which he would calculate his premium, and he fixed the, premium in reliance upon the representation that she was in perfect order and would sail in a few days. He measured his premium upon four or five days in port, the usual time, and upon the risks usual in the March season, and upon a vessel in perfect order for sea. Upon the proofs, it turned out that when the application was made, she was very far from being in perfect order. At the very time, she was undergoing repairs, an extensive overhauling, which occupied until the 27th of March. Then, upon trying her engines, the bearings of the grate bars of her 'boiler broke down, the repairing of which occupied until the sixth of April. Then, upon her trial trip, it was discovered that her exhaust pipe was too deeply submerged. To renew this, occupied until the 18th of April, at which time, while committing another deviation, sailing to Jersey City, she was damaged by a collision resulting in damages, to repair which took till the second of May. There was thus an entire failure to comply with the

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representations. She was, when insured, not in perfect order, nor in a condition to sail, nor did she sail in a few days.

1. Where express and positive representations are made on points material to the risk, e. g. the condition of the vessel, the time of sailing, the policy is avoided if the representations, or any of them, are false, or are not substantially complied with. There is no such thing. as saving this effect, by any excuse for the falsity or the failure to comply. If false, or not complied with, even through ignorance, mistake or accident, the policy is avoided, wherever the falsity or the departure from the representation varies the risk. Here the risk was varied from an insurance of a steamer in perfect order, that would remain in port “ a few days,” (four or five days the usual time,) to a steamer out of repair, with the bearings of her grate bars so arranged that at the first turn of the engines they broke down, with her escape pipe at so low a point, that taking in coal, (without any cargo,) submerged it so as to make it of no service; the result of all of which was, that she remained in port at the risk of the underwriters about ten times as long as they anticipated.. (1 Arnould, 487, 489,* and cases there cited. Maryland Ins. Co. v. Leroy, 7 Cranch, 26 .)

2. With regard to the time of the ship’s sailing, the rule is, that representations must be complied with almost as literally as warranties to the same effect, for in that matter the smallest difference is often very material. (1 Arnould, 523*. Kirby v. Smith, 1 B & Ald. 672.)

3. It will be noticed that in this case the .representations of the insured as to the condition of .the vessel were made by them in reply to inquiries of the underwriter touching that material point. This being so, though they related to facts which the assured were not bound to disclose, the representations must be considered to have influenced the mind of the underwriter, and their 'falsity necessarily avoids the policy. (1 Arnould, 518,* and cases cited.)

VI. Irrespective of any warranty or representations, the delay in port for forty-five days was a deviation. It was an unreasonable length of time, which materially enlarged the

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risk, and. was not excused by the circumstances of the case. Due expedition in time of sailing is as vital to the risk as directness in the route pursued, and a divergence from it equally avoids the policy. (1 Arnould, 383. 1 Parsons’ Mar. Law. 281. Palmer v. Marshall, 8 Bing. 79. Mount v. Larkins, Id. 108 . Palmer v. Fenning, 9 id. 460.)

1. The excuses claimed are, first, material alterations in her style and structure; second, the necessity of repairs. The alterations are said to have been made at the suggestion of some underwriter’s inspector, but not at the suggestion of the defendants, or of any inspector appointed by them. Clearly, therefore, the insured had no right to make them, since they might enlarge or vary the risk, and as against this underwriter who did not assent, they cannot be pleaded as a reason for enlarging his risk by remaining in port. And as to a large portion of the delay involved in the repairs, it was incurred in consequence of the other deviations in going to Elizabethport and to Jersey City.

2. Whether this deviation by delay arose from any justifying causes, was a question of fact which should have been submitted to the jury.

VII. The vessel was unseaworthy. Immediately after leaving port the steamer took fire in the immediate vicinity of the boiler, without any adequate cause apparent. The law will intend unseaworthiness, when no rational cause other than a latent or inherent defect in the vessel can be assigned for the loss. The machinery or the woodwork connecting with it must have been defectively constructed, and thus occasioned the fire. It has long been settled as regards sailing vessels, that where the inability of a ship to perform its voyage becomes apparent soon after leaving port, and she founders without stress of weather or other adequate cause of injury, the presumption is that this inability existed before setting sail, and that it was due to some latent defect which rendered her unseaworthy; the same rule and principle are applicable to un seaworthiness arising from latent defects in the hull and machinery of a steamer. At any rate, if she was not by presumption of law

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unseawortby, it should have been left to the jury to say whether upon the proofs the plaintiffs had established her seaworthiness at the time of sailing.

"VIII. The changes of the name and nationality of the vessel pending the risk avoided the policy.

The principal questions raised by the exceptions in this case, are, first, whether the transfer, of the legal title to the vessel to Kane avoided the policy; and, second, whether the trial trip to Elizabethport was such a deviation from the voyage as amounted to an abandonment' of it and terminated the policy.

Having carefully examined the other exceptions taken by the defendants, I do not deem it necessary, in respect to them, to say any thing farther than that none of them, in my judgment, are well taken; >

By the policy it was agreed that it should cover only the original interest subsisting when negotiated,,, and that any change of interest, in whole or in part, should cancel the policy. It appeared on the trial that the policy was issued to the plaintiffs on the 18th of March, 1863, and that the vessel was destroyed on the 3d of May, of the same year. ' Intermediate the date of the policy and the loss, the plaintiffs, by a bill of sale, conveyed the vessel to one Kane. . Such bill of sale is dated the 4th day of April, 1863, and appears to have been recorded on the same day, at the British consulate. The consulate certificate, however, bears date the 6th day of April", 1863: " The consideration for the sale was #35,000;

On the 6th of April, 1863, Kane executed and" delivered to the1 plaintiffs a mortgage of the vessel, to secure the payment of thirty thousand dollars ; and also on the same day a power of attorney authorizing the plaintiffs to take possession and to have" the entire control of the vessel, with power to bargain, sell and convey the same. There was no evidence in regard to the delivery of these several papers, and it does not appear whether they were simultaneous acts. At most, two ¿ays

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only elapsed between the delivery of the bill of salé and the mortgage.

Independently of the clause in the policy respecting change" of ownership, no change whatever would avoid the policy, provided there was an insurable interest at the time of loss. (Arnould on Ins. 1333. Rhind v. Wilkinson, 2 Taunt. 237. Powles v. Innes, 11 Mees. & Wels. 10.) And the clause in question does not affect the rule, if the change is merely from owner to mortgagee. (Hitchcock v. North Western Ins. Co., 26 N. Y. Rep. 68 .) Judge Selden says in that case, (p. 70,) “No transfer of interest will work a forfeiture under that clause, which does not so entirely deprive the assignor of insurable interest as to prevent his recovering on the policy for his own benefit, if that clause was not contained in it. To take away the cause of action in one case, and to render void the policy in the other, equally requires a transfer or termina-" tion of the entire insurable interest. So long as the insured retains such an interest that he may be a sufferer by the loss, the policy remains valid to protect that interest.” In that case there was a sale of the vessel and a mortgage for the purchase money, and the acts were simultaneous, and it was held that the bill of sale and mortgage constituted one transaction, and that the transfer did not terminate the interest of the insured. It is supposed that this case is an authority only when the transfer and the mortgage were executed at the same time. But it will be seen that the principle decided goes much further, and, it seems to me to.cover this case, even assuming that the bill of sale and mortgage were not executed or delivered at the same time. The principle decided is, that the mere transfer of the vessel, without payment by the vendee, and the taking back of a mortgage as a security for the purchase money, is not a change of interest; and the whole transaction was examined with reference to such result. The fact that the security was given at the same instant the transfer was made, is of no importance in giving effect to the transaction; and only important, perhaps, as putting a construction upon it, or as establishing the nature of the change of interest. The only

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question is, did the interest of the assured in the subject insured, terminate by the transfer ? If the change from owner to mortgagee did not work such a result, it is not necessary that the acts should be simultaneous ; and the fact that there was no other or different change, is the only important one to be ascertained.

That the sale in this case was conditional is sufficiently established by the papers themselves. The consideration of the sale was $35,000, for thirty thousand of which sum the mortgage was given, together with a power of attorney, placing the vessel under the entire control of the mortgagees. Until the delivery of the mortgage, the plaintiffs had an equitable lien for the purchase money, which was of itself an insurable interest, and the subsequent execution of the mortgage continued such interest. It was, therefore, as was said in the case before referred to, (Hitchcock v. North Western Ins. Co.,) owing more to the conditional character of the purchase, than to its instantaneous character, that the interest of the assured was continued.

I am unable to distinguish this case from the one cited, and therefore hold that the interest of the plaintiffs was not terminated by the sale of the vessel to Kane.

Second. Was the trip to Elizabethport a deviation from the voyage ?

The evidence was, that on the sixth of April, the plaintiffs having completed repairs, sent the vessel on a trial trip, to test her engines ; to take in coal, and to test her light and also heavy, draught. She went to Elizabethport and returned in safety to New York, and subsequently left on her voyage and was burnt at sea. The trial trip disclosed, that upon taking on board the necessary quantity of coal for her intended voyage, her exhaust pipes were too deeply submerged.

It is not disputed, that if a loss occurs while the vessel is in the slightest degree deviating from her voyage, the underwriters are not liable. In other words, if during the deviation the loss occurs, the insurers are discharged. (2 Pars. on Mar. Law, 278. Coffin v. Newburyport, 9 Mass. Rep. 436 , 449.)

p. 475

Such was the case in Vos v. Robinson, ( 9 John. 166 ,) where the vessel was lost while deviating from her voyage. But it by no means follows that although a temporary deviation exonerates the underwriters for loss during such deviation, they are also relieved for a subsequent loss.

A voluntary and unexcused departure, although slight and unimportant, from the course of the voyage, will discharge the underwriters ; but it is otherwise if the departure is excused' by a justifying cause. (Arn. on Ins. 399.) Thus, making a port to refit; to recruit the crew ; stress of weather ; to avoid capture ; and, to succor ships in distress, are instances of justifiable deviation.

It therefore becomes important to inquire, if going to Elizabethport, under the circumstances and for the purposes disclosed, was a deviation, whether such deviation was justifiable.

If it was necessary to examine the first of these questions, it would, I think, be difficult to satisfy any one that there could be a deviation before a vessel started upon her .voyage from the home port. The elementary writers define a deviation to be, any unnecessary or unexcused departure from the usual course or general mode of carrying on the voyage. . Hence, until the voyage commences, there cannot be a deviation from the usual course of the voyage. And although the underwriters are discharged, if the loss occurs, upon a policy “ at and from” a port of departure, while the vessel is away from such port, for any unexcused purpose, yet they will not be absolved, if the vessel returns in safety, and is afterward lost upon her voyage. And one reason is, that the policy covers two risks ; one at the port of departure, and the other from such port upon the voyage to the port of destination. These risks are wholly independent, and distinct from each other. The former insures against the unenumerated perils while the vessel lies in port, and if she is taken from such port for any unjustifiable purpose, and is lost while absent from such port, the obligation of the insurer is at an end. The latter risk is limited to the voyage, and takes effect upon the departure of the vessel. If at that time no loss has occurred, the contract continues binding. It

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is true the case of Brown v. Taileur. (4 Ad. & Ell. 241,) is opposed to this view. . The policy in that case was “at and from her port of loading,” and it was held- to be a deviation, after having taken in a part of her cargo, for the vessel after-wards to go to another place in the same- bay to take in the rest. The case.draws nice distinctions, and holds, (per Patterson, J.) that if a ship were on a particular quay on a river, and merely removed to another quay, a mile or two off, that would not be a-deviation ; but it is a deviation if she removes to a different town, which might itself be a port of loading. The case, I believe, is not supported by any subsequent case ; for, as far ás I have been able to discover, no case has since arisen in which it became necessary to sustain or question a doctrine so.unique and apparently unjust.

,, It-is not, however, necessary for me to dispute the correctness of the rule laid down in that case. There are principles applicable to this case which relieve it from all difficulty.

In every policy of marine insurance there is an implied warranty that the ship shall be seaworthy for the voyage ; by which is meant, that she shall be in a fit state,, as to repairs, equipments, crew, and all other respects, to encounter the ordinary perils of the voyage. And the courts have held that such seaworthiness is a condition precedent to the underwriters' liability, for any loss incurred in the course of the voyage. (Arn. on Ins. 652. Draper v. Com. Ins. Co., 4 Duer, 234 . S. C. 21 N. Y. Rep. 378 .) It is the duty of the owner, therefore, to have the ship properly equipped, and sufficiently repaired for the intended voyage, and, as that is a condition precedent, it must, in an action by the. insured to recover a loss, be affirmatively established. Hence, he must show, that she had all necessary stores, (Fontaine v. Phœnix Ins. Co., 10 John. 58 ;) that she was duly manned with a competent crew, (Silva v. Low, 1 John. Cas. 184;) and that she is tight, sound and staunch in her hull, rigging and tackle. (Munroe v. Van Dam, Park. on Ins. 469.)

- In vessels propelled by steam, the implied warranty of seaworthiness extends to,, and requires, that the boilers, engines

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and all other machinery, are sufficient and suitable ; that the engineer is competent, and that sufficient coal or other fuel is taken on board. Any defect in these particulars will discharge the underwriters.

It being the duty of the assured to put his ship in complete condition for her voyage to avoid the consequences of a breach of the implied warranty of seaworthiness, he has the right to adopt all suitable and usual means to put her in such condition, and to determine, in advance of her sailing, if she is seaworthy.

The trip to Elizabethport was for two purposes, namely, to test the engine, and to ascertain, with a supply of coal on board, the light and heavy draught of the vessel. Neither of such objects could have been obtained, otherwise than by a trial trip, and they were, in my opinion, both necessary and proper, as well for the assured as the underwriters. The result of the trial trip was that when the ship got her supply of coal on board, her exhaust pipes were found to be too deeply submerged, and had to be altered.

If therefore the going to Elizabethport could otherwise be regarded as a deviation, it was sufficiently excused by the necessity of testing the engine and ascertaining the draught of the vessel when loaded.

So far from increasing the risk, which is the theory discharging underwriters in cases of deviation, the risk was positively lessened by the trial trip.

Nor does it make any difference that the trial trip was to Elizabethport. It might have been up the Hudson river, or down to Sandy Hook. It could not be while lying at her wharf, and she had a right to go a sufficient distance in any direction to accomplish the object designed.

I am therefore of opinion that there was no deviation, and that all the exceptions of the defendants should be overruled, and judgment ordered for the plaintiff on the verdict.

McCunn, J. concurred.

The defendants claim, among other things, that by the bill of sale to Kane, the original interest, subsisting when the insurance was negotiated, was wholly changed, and the policy thereby became, by own its terms, canceled and void; that the failure of the vessel to sail upon her voyage within a reasonable time, and her going to Elizabethport, and to Jersey City, and each of those things, constituted a deviation, which avoided the policy; that the vessel was unseaworthy when she finally sailed upon her voyage, &c.

There are two degrees or conditions of sea-worthiness spoken of in the books, which are applicable to this case of insurance at, and from, one seaport to another; the one being that which is necessary to keep a vessel afloat and safe while lying in harbor, and the other, such a condition of the ship and her appointments as renders her fit to withstand the waves and tempests of the ocean, and to make her voyage, except for accidents or extraordinary contingencies. The statement of the plaintiffs, upon applying for an insurance, that the vessel was, “in perfect order,” was a representation of a fact in presentí—a fact existing at the time of such application, and at the inception of the risk; and not a representation as to what her condition would be when she should leave port and enter upon her voyage. If, therefore, the vessel was seaworthy for lying, in' harbor at that time, such representation was true, although she was not then in order for a sea voyage. It follows that the insurers had no right to believe, from the use of the words “ in perfect order,” in the representation, that the vessel was in in order to sail, or that the statement, “ warranted to sail in a few days,” was equivalent to the common representation or warranty “ to sail with ordinary dispatch,” or “ usual dispatch.” It is more reasonable to suppose that the relative, and therefore indefinite, phrase, “ a few days,” was understood by both parties to mean such reasonable time as should be necessary to put the vessel in sea-going order, and place her cargo on board; more particularly, as there is evidence in the case tending to prove that the inspectors of the company examined her at the time of the insurance,

p. 479

and must, probably, have known that she was then undergoing repairs.

The proofs show that all the time between the issuing of the policy and the day of sailing, except during her trip to Elizabethport, was necessarily employed in repairing the vessel. Considering the words “ warranted to sail in a few days,” as a mere representation, and not a warranty, the delay in sailing is excused ; (see Smith v. Surridge, 4 Esp. 25; 1 Phillips’ Ins. § 1002;) and I think they must be so considered, under the general rule that an express warranty, to be binding as such, must be written or printed on the face of the policy, or on some paper referred to therein, and made a part thereof, or annexed to and delivered with it. (Pawson v. Watson, Cowper, 785. Bean v. Stupart, 1 Doug. 11 . 1 Am. Ins. 577. Murdoch v. Chen. Co. Mu. Ins. Co., 2 N. Y. Rep. 210 . Delonguemare v. Tradesmen’s Ins. Co., 2 Hall, 589 .) If no policy had been issued, but the insurance had rested upon the application alone, there can be no doubt there would have been a warranty, upon the principle of the charge of Justice Nelson, in Godfrey v. Sun Mu. Ins. Co., (Oct. Term, 1865,) cited by the counsel for the defendants. It is clear, too, that the insurers were authorized by the terms of the application, to write the words in question upon the policy as a warranty ; but having omitted to do so, it appears'to me they thereby waived that right, and must now rely upon the declaration as a representation, merely. The delay in sailing, therefore, was not a deviation, except in so far as the same was occasioned by the trip to Elizabethport, of which I will speak hereafter.

Nor can the trip to Jersey City be considered a deviation. For even while lying at the docks there, the hull of the vessel rested in the waters of the harbor and city of New York ; and she was therefore at New York, within the letter as well as the spirit of the policy. She was not restricted to any particular position there, but had a perfect right to move from one part of the harbor to another, as business or convenience should require; and though damaged by a collision in her removal to Jersey City, that was one of the perils she was

p. 480

insured against, if the policy was then in force, and the necessity for repairing, because of such injury, furnished an excuse, pro tanto, for the delay in her sailing. (See- v. Westmore, 6 Esp. 109, and Bell v. Western Mar. & Fire Ins. Co., 5 Rob. La. R. 423.)

But I am of opinion that the trip to Elizabethport terminated the policy and discharged the insurers from liability,for subsequent- losses. It was a deviation not justified by necessity. If the vessel was in a condition to sail, it was her duty to depart upon the voyage mentioned in the policy; and if not, she should have remained “ at New York,” and completed her preparations. The owners had no right thus to add two or three days to, or even change, the period during which she was covered by the risk, previous to sailing, nor to postpone to that extent the time of her departure upon the voyage insured against.

The trip was, in fact, a complete voyage to another port, intermediate her lying “at New York” and her sailing for Havana. If the policy in this case had covered the risk of the voyage to Havana, only,, and this intermediate voyage had been .made, such policy never would have attached; for the voyage insured against would have been supplanted by another. ( Wooldridge v. Boydell, 1 Doug. 16 . Forbes v. Church, 3 John. Cas. 159.) Or if so insured for the voyage only, the vessel had, without imperative necessity, gone out' of her way, to Elizabethport, after commencing the same, it would certainly have been a deviation that would have discharged the underwriters from all risks, subsequent to her leaving the route to Havana. (Thellusson v. Ferguson, 1 Doug. 361 . Hare v. Travis, 7 B. & Cres. 14. Henshaw v. Marine Ins. Co., 2 Caines, 274. Marine Ins. Co. v. Tucker, 3 Cranch, 357 .) And I see no reason for holding that a ship insured at, as well as from, a port of departure, can make an intermediate voyage, when a vessel that is insured simply from one place to another, cannot.

In Brown v. Tayleur, (4 Ad. & Ellis, 241,) the policy was “ at and from her port of lading in North America to Liver

p. 481

pool.” The ship began to take in her cargo at Cocaigne, New Brunswick, and continued to do so for three weeks-; she then sailed to Bucktouche, five to seven miles distant, on the same bay, to complete her loading, arriving there in a few hours. She took no cargo at the latter place, but returned to Cocaigne in safety; and having sailed thence for Liverpool, was lost on the voyage. The sailing for Bucktouche was held to be a fatal deviation.

The case of Vos v. Robinson, ( 9 John. 192 ,) was remarkably like 'the one before us. There the insurance was “ at and from Port Plata to New York;” after which, the vessel sailed from the former place for Susua, eighteen miles distant, but within the collection district of Port Plata, for cargo, and was lost on that trip. It was held that the sailing from Port Plata to Susua, instead of to New York, was a deviation which discharged the insurers.

■ In both of the cases last cited, it will be seen, the insurance was “ at and from” a port of departure to a designated port of destination, and in each- it was decided that the sailing upon a very short intermediate voyage prior to entering upon that covered by the risk, was a fatal deviation. The facts are substantially the same here, and I see no reason why those decisions ought not to be followed. "

I think, too, that the Sale and transfer of the vessel' to Kane, on the 4th of April, terminated the risk, and released the insurers from all liability for subsequent losses. *

The- policy expressly declares that it covers “ only the original interest subsisting when negotiated, and that any change of interest, in whole or in part, shall cancel1 the policy in the same ratio.” The sale to Kane was of the entire vessel; and it was not only absolute upon its face, but was designed and intended to be so, as nothing short of an absolute sale would have enabled the owners to accomplish the object which they now declare they had in view. In order to change the nationality of the- vessel and place her under the protection of the British flag, it was necessary that the vendors should wholly divest themselves of all interest, as owners, and vest the entire

p. 482

ownership in a British subject, as they did. No mortgage or lien was taken or reserved at the time of the sale, nor even is there any evidence in the case tending to prove that an equitable lien was then created by an agreement tb execute a mortgage for the purchase money at a future period, or otherwise. Indeed, the mortgage, executed two days after the sale, was not given to secure the purchase money, but the return of money lent to Kane by the plaintiffs. For two entire days, therefore, subsequent to the sale, the plaintiffs were without any interest whatever in the vessel, either legal or equitable; and that deprivation of interest canceled the policy. ' It was then dead, as an obligation, by its own terms ; and it is not possible to suppose that the subsequent execution of a mortgage brought it again into life and action.

The decision in Hitchcock v. The North Westn. Ins. Co., ( 26 N. Y. Rep. 68 ,) which is somewhat relied upon by the plaintiffs, is directly against them. In that case, the assured in a policy containing a provision similar to this in regard to a transfer of interest, sold the insured property, and, simultaneously therewith, took a mortgage for part of the purchase money. ■ The court held that an insurable interest in the property continued ; and that, to avoid the policy, under the provision in question, it was necessary that there should be a transfer or termination of the whole insurable interest of the assured in the property ; thus, by strong implication, holding, as I understand it, that where the assured, under such a policy, parts with all his insurable interest, the provision in question attaches, and the policy is no longer operative.

It follows, frorii these conclusions, that the defendants were entitled to a judgment upon the evidence; and that the direction to the jury to render a verdict in favor of the plaintiffs was, consequently, erroneous.

Having arrived at this conclusion, it is not necessary to consider the further questions, raised by the defendants’ counsel, as to the effect of the change in the nationality of the vessel,.or in regard to her seaworthiness when she finally left New York upon her

p. 483

voyage to Havana, or touching the rulings of the court in the admission and exclusion of evidence.

The judgment should be reversed, with costs, .and a new trial granted. -

Judgment rendered for the plaintiff, according to the verdict.

Cases cited

Wall v. Howard Insurance 14 Barb. 383 N.Y. Sup. Ct. 1852-10-04 p. 460
Dow v Whetten 8 Wend. 160 N.Y. Ct. Err. at 166 p. 460
Columbian Insurance v. Catlett 12 Wheat. 383 SCOTUS 1827-03-09 p. 463