Turner v. Burrows , 8 Wend. 144 ( 1831 )

The following opinions were delivered:

By the Chancellor.

The plaintiff on the trial of1 this cause offered to prove that it was a common usage for insurance companies to underwrite policies in Hank, similar to the one given in evidence by him, and that the usual understanding of the companies and of the mercantile community was, that such a policy was tantamount to a policy containing the words, for account of whom it may concern. I am in-dined' to think this wastan offer to prove what the law is, by the opinions of commercial men, Which certainly is not admissible.

Previous, however, to the statute 25 Geo. 3, ch. 44, which required the name of the insured or that of his agent to be inserted in the policy, it was unquestionably the practice of the English underwriters to sign their policies with the name of the assured in blank, which authorized his agent to fill it up in such manner as he thought proper. If such a custom prevails in the insurance offices in this country, I see no objection which could arise to the filling the blank in this policy with the names of any persons who are legally entitled to the benefit thereof, and if the words, for whom it may concern, were in- . serted in the blank, they could not have extended its legal effect any further. Even a contract within the statute of frauds, which is left in blank, under an express agreement that a contract ofguarantymay be written over thenameof the defendant, may be filled up at the trial according to that agreement. Nelson v. Dubois, 13 Johns. R. 175. Joselyn v. Ames, 13 Mass. R. 274. I shall, therefore, in considering this case, treat this policy as one in which the person who procured it to be underwritten had authority to insert the names of all or any of the owners of the brig who had any interest in the policy, or to fill up the blank with the words “ whom it may concern.”

The question then arises whether the plaintiff had any equitable right to a part of the insurance money as between him and the defendant. This is an action for money had and received, which is an equitable action; and if the plaintiff has no equitable right to the money as between him and the defendant, he cannot recover it from him, whatever may be his legal rights against the underwriters. It is admitted that the plaintiff never requested the defendant to insure his interest in the brig, but it is said he was the 'ship’s husband, and therefore was bound to insure the interest of both. The duties of a ship’s husband are to see to the proper out-fit of the vessel, that she is properly repaired, prepared for the voyage, and furnished with provisions and sea-stores ; to provide a proper master, mate and crew; to see that she has a proper register and documents on board, and is duly cleared from the custom house; to engage and settle for freight, and adjust averages ; to enter into charter parties for the employment of the ship; and to settle and pay, and keep a regular account of all contracts, payments and receipts in the course of such employment. In relation to all these matters, he is the general agent of the owners, and may charge them jointly; but as relates to the ship itself, each owner has a distinct and separate interest as a tenant in common, which such owner may or may not insure at his pleasure, and the ship’s husband has no authority to insure, either the whole or any part of the vessel, without the express direction of the owner thereof. In French v. Backhouse, 5 Burrows’ R. 2727, the plaintiff was appointed by two joint owners of a vessel the ship’s husband, with the usual powers. He insured the ship and brought an action for the amount of premiums he had paid, and it was decided by Lord Mansfield and the whole court that he had no authority as ship’s husband to insure. So, in Bell v. Humphries and others, 2 Starkie’s R. 345, where there were five owners of a ship, an(j two 0f ^em, who were the managing owners, or ship’s husbands, procured the whole vessel to be insured, Lord Ellenborough decided that they had no authority to insure the interest of the other three owners in the vessel, and that the latter were not liable for the premiums of insurance. The case of Lawrence v. Sebor, 2 Caines’ R. 203; was not an insurance on the ship, but an insurance by one of two joint owners of the cargo, upon their joint interest; and the majority of the court held that the acting partner was bound to insure for both, but two of the judges, even in that case, considered the insurance as on his part of the cargo only. In the case under consideration it is therefore evident that Burrows had no authority to insure Turner’s share in the brig, and that the latter was not liable to him for any part of the premiums of insurance which had been paid to the underwriters.

There are some cases where it has been held that an insurance made by an agent of an owner, or other person having an interest, was good as against the underwriters, if the act was afterwards sanctioned by the principal, although the insurance was originally effected without authority. Lucena v. Crawford, 1 Taunt. 325. Roath, v. Thompson, 13 East’s R. 274. Hagedorn v. Oliverson, 2 Maule & Sel. S. 485. In all these cases, however, it will be seen that the contest was between the owner or his agent on the one hand, and the underwriters on the other ; and that they were decided upon the principle that a consent given to what has been done by one acting as an agent without authority, has as against a third party a retrospective operation. In this case, if the insurance was intended to be made for the benefit of both parties, although without authority on the part of Burrows, if the arrangement made by him had been sanctioned by Turner, there might have been a legal recovery against the underwriters for the benefit of both; but I apprehend the plaintiff had no right to consider Burrows as his agent as to one part of this business, and to disaffirm his acts as to the other. Although the brig was bought by the father, yet it is evident that Burrows considered Captain Turner, the son, as the person who was in fact to be benéfitted by the purchase and freighting óf the brig. One of the witnesses understood from the conversation between the parties that the plaintiff had bought one sixth of the vessel to oblige his son; and in the memorandum appended to the agreement of the 17th of January, the day of sale, the brig is referred to as belonging in fact to Captain Turner. It is therefore evident to my mind that Burrows treated the whole as a joint adventure between himself and the son, although the ownership of the one sixth of the brig was in the father nominally, and that he intended to insure the whole of their joint interest in the brig, freight and cargo, for the benefit of himself and Captain Turner. Under these circumstances, if the father chose to repudiate a part of the transaction as not legally binding on him, Burrows was justified in saying he had no equitable claim to any part of the fund arising out of that transaction.

If the plaintiff ever had any legal claim against the underwriters, he must look to them for payment; and if he seeks to recover this money from the hands of Burrows in this equitable form of action, he must first do equity by bearing his portion of the loss. I think the judgment of the supreme court should be affirmed.

By Mr. Senator Allen.

This was an action to recover a portion of the money received by the defendant in error, on a policy of insurance on the brig Burrows, and the main question to be considered is, does any part of the money received by the defendant in error from the Niagara Insurance Company belong to the plaintiff in error ? It is contended by the plaintiff that the policy was effected for the joint benefit of both parties, in proportion to their several interests in the vessel. The policy however, purports to insure the interest of Silas E. Burrows, and no other; and the question has been well settled, that unless a policy contain some general clause to the contrary, no other than those named as the assured, or on whose account it is expressed to be made, can avail themselves of it.

The written application of the defendant was in these words: “ Eight thousand dollars on brig Burrows, Turner master, valued at my interest, eight thousand dollars.” There is a blot on the word my, and a stroke over the word interest, which eireumstances were urged by the counsel for the plaintiff, as indicating an intent on the part of the defendant to strike out these words from the application, in order that other interests than that of the defendant might be covered ; but, as the president of the company testifies that he had no recollection of the blot or erasure alluded to, it could not have been noticed or considered by the insurers as altering the terms of the application; and I think that the incident was by mere accident, and without design of altering the terms of the application.. The intention of the parties, however, must be gathered from the contract in the policy, and not from the slip, which cannot, in any case control the plain language of the policy. The words of the policy are, “ Silas E. Burrows, on account of do make insurance, and cause to be insured, lost or not lost, at and from New-York to Carthagena, upon the body, tackle and apparel, and other furniture of the good American brig called the Burrows,” &c. The insurers it appears, were apprised of the claim made by the plaintiff as he notified the company that one sixth of the amount of insurance had been effected on his account; the defendant, however, claimed for a total loss under the policy, which claim was admitted by the company and they paid him the money.- Their understanding of the policy, therefore, is evident, and cannot be mistaken.

It was testified by the president of the company, that in a conversation between the plaintiff and defendant, the latter stated, that if the plaintiff would consider himself as interested in one sixth of the vessel, cargo and freight, as was originally intended, he would settle with him on that basis; the plaintiff objected, and insisted he was interested in one sixth of the vessel only. The plaintiff did not deny that this was the original intention. This witness also testified that the defendant asked the plaintiff if he éver gave him orders to make insurance, and the plaintiff replied that he had not. Hicks, another witness, testifies to the same declaration as to the original intention to cover the interest of the plaintiff; and thinks, when defendant made the insurance, he did it under the impression that the plaintiff was to take one sixth of the cargo. It appears from this testimony, that the defendant Understood the plaintiff to be interested in the cargo, as well as the vessel, and that this was the original intention of the parties, as the plaintiff did not deny the fact, when the offer alluded to by the president of the company was made ; and there appears to have been some reason for this conclusion, from the circumstance of the plaintiff’s having purchased a part of the vessel, and placed his son in her as master. I am unable to perceive, however, that there is any thing in this testimony which tends to strengthen the claim of the plaintiff to any portion of the insurance. The most that can be made of it is an offer by the defendant of an amicable adjustment of the differences between him and the plaintiff; that if he would consider himself liable for the loss on the cargo and freight, as well as the vessel, as was originally intended, a settlement should be made on that basis. This the plaintiff refused to accede to, and there was an end of the matter.

The plaintiff admitted that he never gave the defendant any orders to insure his part of the vessel, and the defendant had therefore no authority to effect such insurance. One part owner cannot, by ordering an insurance of the ship, without authority from the other, charge the other with any part of the premium. Abbot on Shipping, 112. Had defendant undertaken to insure the interest of the plaintiff, therefore, and had the vessel arrived in safety, he could not have recovered of him any part of the premium, had he refused to pay it.

It was further insisted by the counsel for the plaintiff) that as defendant was to complete the vessel for sea, and acted as ship’s husband, he was bound to have her fully insured, without specific orders from the other owner. But, to make a man an agent in such case, he must either have express directions from the principal to cause the insurance to be effected, or else it must be a duty arising from his correspondence with the principal; and no general authority which he may have in relation to the ship or goods will make him an agent for the purpose of insuring on behalf of the parties interested. Therefore a ship’s husband, regularly appointed by deed, executed by all the owners, with' power to advance, lend, &c. to make all payments, and to retain all claims, has no right to make insurance for all, or any of the part owners, without a general direction from all, or a particular direction from each. Marshall, 297.

It appears to have been decided also, that if the amount in the policy had been amply sufficient to cover the whole interest of the plaintiff as well as the defendant, and had, as now6 only contained the name of defendant, and without the clause 66 for whomsoever it may concern,” the insurers would not have been bound to pay an amount exceeding the interest proved in the person named in the policy. A policy in the name of one joint owner, as property may appear, withoutthe clause stating the insurance to be for the benefit of all concerned, does not cover the interest of another joint owner. 4 Mass. R. 647.

It was also contended that the testimony as to the understanding of the mercantile community on the construction of policies of insurance ought to have been received by the court. That there are many cases where parol evidence is admissible to prove the understanding of parties to an instrument in writing, is admitted; but, as I think, this is' not one of them. The purpose, as avowed, for which parol testimony was to be introduced, was to prove a common usage. Mr. Phillips, the author of a valuable treatise on insurance, has collected under "one head, all the law relating to usage, affecting the construction of policies, to be found in the books of reported cases; none of which, however, meets the object which the counsel of the plaintiff in the court below wished to prove, viz. that the universal understanding of the insurance companies and the mercantile community is, that a policy similar to the one given in evidence is tantamount to a policy containing the words “ for account of whom it may concern.” The instances cited by Mr. Phillips are all in cases where a difference existed between the insurers and the insured, not as in the present case, between the part owners of the vessel. One instance was, whether sarsaparilla was a root included in articles perishable in their own nature ; another, whether rice was comprehended in the term corn; another, whether Revel, in the Gulf of Finland, was included in the terms, any port in the Baltic; and another, whether a vessel loading at Tigre Island was the same as Amelia Island, it being customary for vessels bound to and from Amelia Island to discharge and load at Tigre Island, &e. There are several other instances cited by Mr. Phillips, in which custom will have an effect in the construction of certain words in a policy ; but, in exmry instance, the difference in opinion was either on the side of the assured or the insurer. See Phillips on Insurance, 15 to 18. In Higginson v. Dall, 13 Mass. R. 99, Chief Justice Parker observed, that the policy itself is in contract between the parties, and whatever proposals are made, or conversations had between the parties prior to the subscription, they are to be considered as waived, if not inserted in the policy, or contained in a memorandum annexed to it. Poli cies cannot be contradicted or varied by any antecedent written agreement of the parties, or by parol evidence of what passed at the time of effecting the policy. The usage of merchants, with reference to which the parties are supposed to contract, is frequently resorted to, for explaining or defining the terms of a policy; for the terms used in policies very commonly acquire, by the well known usage of trade, a peculiar sense, distinct from the popular sense of the words. However proof of usage is not admissible to contradict the plain unequivocal language of a policy. 2 Phillips’ Evidence, 46.

Of what avail, then, could it have been to the plaintiff, if the evidence he offered to produce bad been admitted ? It could not alter a single fact in the case, nor change the plain unequivocal language of the policy. The policy evidently covers only the interest of the 'defendant in error. The defendant was not requested to insure the interest of the plaintiff in error, and he had, therefore, no authority to insure it. If he had insured such interest, he would not have been able to recover the premium paid, had the plaintiff refused to pay it; and it seems, by the decision in Murray The Columbian Insurance Company, 11 Johns. R. 313, that if he had insured the whole ship, he would only have recovered the amount of his own interest. I am of opinion, therefore, that the judgment of the supreme court should be affirmed.

By Mr. Senator Westcott.

I have no doubt that an owner of any given portion of interest, may effect insurance on that interest alone, or on the whole property for the benefit of the concerned, at the option of the insured. Under the circumstances attending the negocjating and perfecting this insurance, as well as from subsequent occurrences in relation to it, connected with the doubtful appearance of the written application on its face, it appears to me a material question of fact was presented, on which the jury ought to have been called to decide.

The supreme court say “ the plaintiff had no interest in the policy of insurance effected bv the defendant.” Hicks, the witness, says that Burrows admitted the fact; but it is said that this admission was coupled with the condition that the plaintiff should be interested in the Cargo. I do not understand the testimony precisely in that way. The admission, that the plaintiff was originally interested in the insurance, came out upon the direct examination; but the evidence in relation to the impression that the plaintiff would be interested in the cargo, was drawn forth on the cross-examination, and that impression was more properly coupled with the declaration of the plaintiff that he was under no obligation to take such interest; but again, the idea of such an interest is wholly inconsistent with the defendant’s letter of instruction to the captain. The court also say that the amount insured in this case is precisely the value, or nearly so, of the defendant’s interest in the brig, at the same rate.at which he sold one sixth to the plaintiff. This proves nothing; for I understand it to be every days’s practice for merchants to become their own insurers in whole or in part; and it is immaterial whether a vessel be insured for a little more or a little less than sworn and competent judges might value her at, so that no intention of fraud appears. Again, it is said, “ the policy contains no words importing an interest in any other than the defendant but it is equally true that by the policy no interest is shewn in the defendant himself. It only appears that he procured the insurance to be made, but whether as an owner or agent, does not appear. To explain this ambiguity, testimony was offered, and as I suppose improperly rejected. The court also observe, “ the plaintiff had given the defendant no orders to insure.” Admitted he did not; neither does it appear that he gave him orders to register the vessel, appoint her captain, ship her crew, furnish, victual, freight, clear her or instruct thé commander. But he was the ship’s husband, and all or most of these duties, as well as the insurance, were incidental to his station, and for the faithful performance of which I consider him accountable to the owners, whether present or absent.

I admit the correctness and value of the rule, that written agreements ought to be expounded by themselves where it can be done; and with Chancellor Kent I agree that parol evidence should not be permitted to disannul or substantially vary or extend a written contract; but I do not perceive that this rule applies in the present case. The object of the parol testimony sought to be used in this instance, was not to explain the import of words capable in themselyes of being understood, and conveying a definite meaning, but to give utterance to a mute member of the policy. A blank of itself expresses nothing, and without explanation in this instance must render inoperative an instrument otherwise complete in all its parts. An interest strictly commercial is involved, and proof of commercial custom and understanding ought to have been permitted, not to annul, extend or substantially vary, but to explain where explanation could be had in no other way; not to annul, for it could not be the interest of the party offering the proof to make void the instrument; not to extend, for all parties agree that the policy was sufficiently definite in all particulars of which it does speak; not to substantially vary, for there is an utter silence upon the point proposed to be explained ; and yet for want of such explanation, a contract important and perfect in all its other provisions is to fall to the ground as useless and inoperative. The insurance company are willing to pay, but-only is authorized to receive. Maj it not be shewn who this blank is ? I think it may.

I believe the exceptions to the decisions of the circuit judge were well taken, and that the plaintiff is entitled to a new trial. I am therefore for reversing the decision of the supreme court.

On the question being put, Shall this judgment be reversed ? four members expressed their opinions in the affirmative, and sixteen in the negative. The members who expressed their opinions in the affirmative, were Senators Dodge, Rexford, Warren and Westcott;

Whereupon the judgment of the supreme court was affirmed.