Perry v. Cobb , 88 Me. 435 ( 1896 )

Haskell, J.

The plaintiffs and the defendants, lime burners in the county of Knox, formed a business company to continue one year for the purpose of insuring each other upon cargoes of lime shipped by them coastwise. The business was to be conducted by a committee of members, who, in case of damage to any cargo underwritten, were to "determine the amount due and pay the same at their first regular meeting after the claim for loss is presented, unless the association has insufficient funds, in which ease thirty days’ time for payment shall be granted. An appeal may be made to a majority of two-thirds of the votes of the association whose decision shall be final.” Each kiln was entitled to one vote. All suits at law between members wrere prohibited, except on demand notes.

No action at law could be maintained upon any policy, because the promise was to be joint, and not several as in the Lloyd’s method, and the assured would become both plaintiff and defendant ; so the prohibition against suits at law on policies was but declaratory of the law itself and, therefore, has no significance.

The stipulation iu the articles that the association shall finally determine the amount due on any loss, is not strictly an arbitration clause, because it is an agreement inter sese, between' associates, and does not purport to submit controversies to disinterested persons. An arbitrator is said to be "a private extraordinary judge, chosen by the parties, who have a matter in dispute, invested with power to decide the same.” Gordon v. United States, 7 Wallace, 194. He should be disinterested, "for no man can lawfully sit as a judge in his own case.” State v. Delesdernier, 2 Fairf. 473; Friend, appellant, 53 Maine, 387. "An interest that disqualifies from judicial action may be small, but it must be an interest, direct, definite, and capable of demonstration; not remote, uncertain, contingent or unsubstantial, or merely speculative or theoretic.” Andover v. County Commissioners, 86 Maine, 185; Fletcher v. Railroad, 74 Maine, 434; Jones v. Larrabee, 47 Maine, 474; Warren v. Baxter, 48 Maine, 193. The duties of an arbitrator are judicial; and while many cases hold that interest, known to the parties, is waived by the submission, it would be going very far to say that the interest of a debtor, who was.to determine his own liability, finally, should have been waived by it. But, however that may be, it has been settled law in this State for more than a quarter of a century that an arbitration clause in a contract, ousting the courts of jurisdiction over the liability, is ineffectual for the purpose. Stephenson v. Piscataqua F. & M. Ins. Co. 54 Maine, 55. That case, like this, was upon a policy of marine insurance, and it was cited with approval in Buck v. Rich, 78 Maine, 437.

The stipulation in question differs from an arbitration clause in that it is an agreed method of procedure between associates, partners, joint promisors, where the claimant is himself one of them. Viewing it thus, what good reason can be given why they should not be held to their agreed methods of procedure ? It is very like the by-laws of a benefit corporation that bind the members to their observance, as a prerequisite to a forum in the courts. Jeane v. Grand Lodge, &c., 86 Maine, 434. It is certainly a reasonable requirement, consistent with the purposes of the association, to mutually indemnify each other in the specific transit to market of their manufactured goods, upon equitable conditions. Equity alone has jurisdiction over their matters, because of mixed interests in all controversies that may arise.

No point is made but that the terms of the .stipulation have been complied with. The associates considered the plaintiff’s claim, after investigation by the committee and a full hearing and decided that he had none. In this proceeding, the decision was in the nature of an award ; each associate was an insurer. All participated and determined the whole matter, not effectually’, either as" to liability or damages, so as to preclude all judicial investigation; but they did pass upon the whole matter as the very terms of their existence provided they might do ; and the question arises, what effect, if any, shall be given to their decision. No suit at law can be maintained. Relief in equity, suited to the conditions of the controversy, is the only remedy, That is never given when equities are balanced, or when a sound judgment may not be moved to interfere. The decision was by all the .associates, standing together for a common purpose, men well versed in shipping lime and familiar with precautions necessary for its safe carriage and discharge, and with matters that do or do not injure its quality or value and affect its price in the market. Why, then, should not this method, agreed to by the associates, have such force and effect upon a court of equity as the fairness of the investigation and deliberation of the decision indicate would be safe, work justice and save expensive litigation to the parties, as it was originally intended that it should do? No good reason suggests itself, and some of the rules touching awards may safely apply. The opinion of the court in Burchell v. Marsh, 17 How. 349, upon a bill in equity to set aside an award of arbitrators is very instructive. It holds that an honest decision upon a fair hearing should stand, although the court feels that it could have arrived at a better result, for otherwise, it would be the "commencement, not the end of litigation.” A judgment of Lord Thurlow is cited in confirmation of the doctrine. Knox v. Symmonds, 1 Ves. Jr. 369.

In this cause, the decision of the associates is not an award in the strict sense, but a procedure in an equitable controversy, between joint associates, that determines their rights inter sese, and it should bind them, except for cause shown to the contrary. They were all interested parties, and that fact and the evidence adduced may show a denial of equitable relief that should be given, and it may show the reverse. At any rate, the whole cause may be heard anew to see if any such error or mistake intervenes as should change the result. The relief prayed for is equitable relief, and will be granted or withheld as sound discretion may demand.

The plaintiffs contracted with the association for insurance to the amount of $2548, on a cargo of lime on board ship, under, deck, at Rockland for New York. There were no conditions in the contract except that five per cent particular average on the whole value of the cargo was exempted from insurance. The vessel was thirty-six days at sea, an unusually long time for the vogage, occasioned by rough weather, head winds and successive gales. She sailed the fourteenth of February, and arrived the twenty-first of March. She labored heavily and strained somewhat, but arrived tight and with no special damage in the hull, save the loss of a skylight, some sails and a compass box. On the twenty-seventh of March, she was given a berth and broke cargo. Some seventy-five barrels of lime were discharged. About the fourteenth of April, she was moved and began the further discharge of cargo that was all out on the twenty-eighth. A few of the casks may have been stove. A few more showed signs of fire, and a few were bursting from swollen contents. The balance of the cargo was in bad condition in that staves had shrunken and hoops loosened, allowing the lime to sift out and fall through the tiers of barrels to the deck or floor of the hold. No sea water reached the cargo, unless in a few instances when a hatch had been taken off, or when the cabin was flooded once. The damage from sea water must have been very slight, and did not affect the cargo beyond the few barrels that it touched.

The insurance was against perils of the sea for a particular voyage. A voyage policy does not attach unless the vessel be sea-worthy at the inception of the voyage, which is presumed, but may be rebutted. Dodge v. Ins. Co. 85 Maine, 215; Hutchins v. Ford, 82 Maine, 370. It is so whether the insurance be upon the ship, or upon the cargo, or upon freight. Van Wickle v. Mechanics Ins. Co. 97 N. Y. 350; Higgie v. American Lloyds, 14 Fed. Rep. 143; Higgie v. National Lloyds, 11 Biss. 395; Daniels v. Harris, L. R. 10 C. P. 1. " She must not be overloaded and the cargo must not be badly stowed.” Arnould, 649.

In this cause, the insurance was " at and from Rockland to New York,” meaning until safely landed in New York, or for a reasonable time to land there under the usages of that port. The sea risk continued until the goods might be put on shore by reasonable dispatch. On the sixth day after arrival the vessel was given a berth at the wharf and the hatches were opened. No damage to the cargo is claimed after that time, and no point is made that the insurance ended before. During the voyage the decks had been awash, and the cabin once flooded. Some sea water found its way to the cargo and-may have caused the bursting of a few casks, and the scorching of a few more, but this damage was far below the particular average, or in this instance partial loss, that had been excepted from the insurance, so that the remaining loss or damage was from the shrinking of the staves of the barrels, and slacking up of the cooperage, allowing their contents to sift out and fall through the tiers of barrels to the deck or floor of the hold, and leaving the barrels so tender that they could not easily be hoisted out of the hatch without danger of falling to pieces. This condition is claimed to have resulted from the rolling and pitching of the vessel caused by the storms and bad weather of an unusually protracted voyage ; and the question is, was it caused by a peril of the sea ?

Tempests and rough weather are common incidents in sea transit. How long a voyage may continue is beyond the power of prophecy to foretell at the inception of it. Fair winds may serve or head winds may drive the vessel off her course. The voyage policy continues until the port of discharge shall have been reached, and, if upon goods, until they may have been safely landed. If the goods be of a perishable nature, and decay from a protracted voyage before they can be landed, the loss would not be from a peril of the sea. If the cargo be shaken and stove from the inherent weakness of the packages unsuited to withstand the roughness of sea transit, or caused by the effect of their contents during the voyage, it -would not be from a sea peril, but from natural causes produced either by the fault of the shipper or by the inherent nature of the goods. The condition of the cargo when landed does not raise the inference that its injury resulted from a sea peril, but the burden rests upon the plaintiff'to prove the fact.

No case lias been cited at the bar that brings this loss within the hazard underwritten. Insurance Co. v. Boon, 95 U. S. 117, is a suit upon a fire policy on goods ashore. So is Insurance Co. v. Tweed, 7 Wall. 44. So is Railway Co. v. Kellogg, 94 U. S. 469. Montoya v. London Assurance Co. 6 Excheq. 451, is upon a marine policy on tobacco shipped with hides. Sea water caused the hides to putrify and injure the tobacco, and it was held a sea peril; but the damage by sea water in the cause at bar did no mischief to the bulk of the cargo, and none resulted from the small part injured. In Cory v. Boylston Ins. Co. 107 Mass. 140, it is held that undenvriters "do not assume the risk of ordinary perils incident to the course of the voyage, nor of damage arising from intrinsic qualities or defects of the thing insured,” nor of "ordinary dampness of the hold, though aggravated by the length of the voyage and the variety of climate through which the vessel has passed in consequence of perils of the sea,” because the result is attributable to the goods themselves and not to sea perils as the proximate cause. In Neidlinger v. Ins. Co. of North America, 11 Fed. Rep. 514, the policy was upon barley with a clause excepting damage from must or mold, unless from actual contact with sea water, and the hazard was limited to that part of the barley actually wetted. Taylor v. Dunbar, L. R. 4 C. P. 206, holds that the decay of meat during a voyage protracted by tempestuous weather is not within the terms of a marine policy. In Boyd v. Dubois, 3 Camp. 133, Lord Ellenborough said: "If the hemp was put on board in a state liable to effervesce, and did effervesce and generate the tire which consumed it, upon the common principles of insurance law, the assured cannot recover for a loss which he, himself, has occasioned.” Crofts v. Marshall, 7 C. & P. 646, is an insurance of thirty-six casks of oil, and the cargo not having shifted, a part of them were found empty and others had lost a part of their contents. The jury disagreed as to whether the leakage a vas from perils of the sea, and the court gave judgment for defendant by consent. These are all the cases cited by the plaintiffs.

The general rule is that everything which happens through the inherent vice of the thing, or by the act of the owners, master or merchant shipper, shall not be reputed a peril, if not otherwise borne on the policy. Emerigon, 290; Providence Washington Ins. Co. v. Adler, 65 Md. 162; Baldwin v. London C. & D. Railway Co. L. R. 9 Q. B. 582; Baker v. Insurance Co. 12 Gray, 603; Cory v. Boylston Ins. Co. 107 Mass. 140; Boyd v. Dubois, 3 Camp. 133. If the inherent vice be stimulated by a protracted voyage, it is still ho loss from a peril of the sea. Cory v. Boylston Ins. Co. supra; Taylor v. Dunbar, L. R. 4 C. P. 206. So it is if the loss be from some other intervening cause, as where slaves die from starvation from the failui’e of provisions during an unusually long voyage, occasioned by bad weather. Tatham v. Hodgson, 6 D. & E. 307.

Lord Ellenborough in Cullen v. Butler, 5 M. & Sel. 461, distinguishes between perils on the seas and perils of the seas. Lord Herschell says the latter phrase "does not cover every accident or casualty which may happen to the subject matter of the insurance on the sea. It must be a peril of the sea.” . . . "There must be some casualty, something that Could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against accidents which must happen.” The Xantho, L. R. 12 App. 503.

It is not always easy to mark the line between the ordinary operation of the elements and their perilous action. The latter must be the proximate cause of the loss. Lord Bacon’s reason is : "It were infinite for the law to consider the causes of causes, and their impulsions one on another; therefore it contenteth itself with the immediate cause.” Gow on Insurance, §§ 92, 137.

In applying this rule to the cause at bar, the only direct damage to the cargo clearly shown is that resulting from the.contact with sea water, amounting to less than the particular average excepted. The remaining damage to the cargo is not shown to have resulted but from the unexpectedly long voyage, that may have excited the internal qualities of the goods, causing the packages to shrink and scatter their contents so as to need cooperage before they could be safely raised through the hatch. All authorities agree that a protracted voyage is not a sea peril within a marine policy, because it is not an unusual event, but one of the natural incidents to sea transit. Insurance is not on the voyage but for the voyage. Pole v. Fitzgerald, Willes, 644. If damage to the cargo resulted from its inherent vice that worked the mischief under natural conditions, it was not a sea peril. Had the voyage been performed in a week, such results would not have been expected. The evidence is conflicting as to the proximate cause for the condition of the cargo upon its arrival. The associates, to whom it was agreed to submit the question of liability, are men of large experience in burning and shipping lime. They are all fair men and appear to have heard the controversy with patience, and, after full investigation, all but the plaintiff agreed that he had no claim, and so decided. Their decision must have great weight upon the fact as to whether the condition of- the cargo, upon its arrival in New York, was other than what might have been expected from ordinary sea weather at that time of year, February and March, during a voyage of thirty-six days, without any unusual sea peril. The cargo arrived all in position. It had not shifted or been knocked to pieces by the vessel having been thrown on her beam-ends, or wrecked or stranded.

But it may be said that the damage within the particular average clause, gave the cargo a bad reputation and thereby lessened its market value ; this result might be, and yet not bo within the terms of the policy. Benneke, 438. No case is cited that holds such doctrine; on the contrary, Cator v. The Great Western Ins. Co. of New York, L. R. 8 C. P. 552, holds the reverse. That was insurance upon packages of tea. Some were damaged and others were -not, but the damage was restricted to the former, although there was a clause in the policy excepting damage other than by contact with sea water. The court held the rule would be the same without the clause, for insurance covers actual damage, and not suspicion of damage. Montoya v. Royal Exchange Ins. Co. 6 Ex. 451, supra, comes the nearest to an authority for the contention ; but there the tobacco was actually injured from the fumes of the putrefying hides. So in Lawrence v. Aberdein, 5 B. & A. 107, approved in Gabay v. Lloyd, 3 B. & C. 793.

The plaintiffs were compelled to pay damages for delay in discharging cargo, and claim that as an element of damages. But, if all the damage to cargo was less than the particular average excepted, so that no liability on account of cargo attached to the underwriters, it would be singular to hold them for the plaintiffs’ fault in delaying to seasonably unlade their cargo.

The decision of the association weighs heavily in determining this cause, especially as the evidencé warrants the result arrived at upon the application of the law of the case. There is conflict of testimony and the association heard and considered it all, and all its members were practical men in the handling of lime and knew its peculiar qualities and dangers, and they must have considered that the principal damage to the cargo came from its own inherent qualities, excited by the long continued transit.

Bill dismissed icith costs.