Bayard v. Massachusetts Fire & Marine Ins.

2 F. Cas. 1065, 4 Mason C.C. 256

• Court: U.S. Circuit Court for the District of Massachusetts
• Decided: October 15, 1826
• Status: Published

Opinion

STORY, Circuit Justice.

My opinion, upon full consideration of this case, is, that upon the true construction of the policy, the property, on which the profits and freight were to accrue was warranted to be American property during the whole voyage. I think this would have been the true construction of the words of the original policy, for which the present was substituted. The prior correspondence might, not be unimportant to ascertain the meaning of the parties, as to any words of doubtful interpretation used in the policy; and under this aspect of the case, that correspondence would show conclusively, that in the preliminary negotiations the insurance company contemplated a voyage exclusively on American and neutral account. But I found myself, upon the words of the policy, stripped of all aid from collateral sources. Let us examine the words. The insurance is “$10,000, viz. $2326 on the cargo, $1860 on the freight, and $5814 on the profits on board of the brig Dick, freight valued at $30,000, and profits at $25,000, premium included.” Now stopping here, the construction must be, that the word “cargo” here means, not the property on board exclusively belonging to the ship-owner, but all the property constituting the ship’s lading, all the property on which freight and profits were to accrue. The freight and profits were upon a valuation of them as growing out of the whole cargo, and not merely upon any small portion which might belong to the ship-owner. Then the policy proceeds, “at and from her port or ports of loading in Europe, to, at, and from any port or ports, place or places, the risk to continue for the term of eighteen months, and is to attach on merchandise or specie, both or either. Warranted American property.” It is very probable, that this •clause, so far as it speaks of merchandise and specie, was inserted to guard against a possible doubt, whether specie could be deemed “cargo,” within the words of the policy. But it is unnecessary to place any stress upon this suggestion made at the bar. Suppose, for the sake of argument, the words of warranty were to be deemed a part of the preceding sentence, instead of standing by itself (as it in fact does in the policy and after a period), in an independent sentence, what would be its true interpretation? “The risk is to continue for the term of eighteen months, and to attach on merchandise or specie, both or either.” On what merchandise and specie? Certainly on the merchandise and specie, which were on board of the ship, and constituted her cargo, and out of which the freight and profits were to grow; for these were at the risk of the underwriters. The term “risk,” as here used, necessarily refers to all the subjects insured, for the risk is to continue for eighteen months, and plainly the risk on the freight and profits was designated to be coextensive in duration with that on the cargo. Then, if the words, “warranted American property,” are to be connected with merchandise and specie, as the next antecedents, the warranty is equivalent to a warranty that the cargo, or all the merchandise and specie on board are American property. If, therefore, the warranty were construed in this limited sense, there would be a plain breach of it, for the Spanish property' on board constituted a part of the cargo, and the warranty covers the whole cargo. But, in fact, the warranty stands as an independent sentence. I do not say, that this would be decisive against any connected interpretation. Instruments, like the present, are to be construed, so as to give effect to all the words, and in such a manner as fulfils the obvious intention of the parties. But the circumstance of a separate period intervening, entitles the court to look to the subject matter, to which it is appropriated. If the words had occurred immediately after the words in the first clause, “premium included,” the natural interpretation would have been, that the warranty applied to all the subjects of the insurance, cargo, freight, and profits. The principal insurance was on the freight and profits, and to suppose that the warranty was intended to apply only to such goods on board as belonged to the ship-owner, would be to suppose, that the underwriters were solicitous to guard against belligerent risks as to what might ultimately be of very little value, and to expose himself, at a very moderate premium, to all the belligerent risks on freight and profits. For upon this supposition, the ship is not warranted American, and the ship-owner’s goods on board only are warranted American, and if the principal part or the whole of the cargo were belligerent, and either on freight or on half profits, the underwriters must run all the belligerent risks on both. A construction leading to such obvious results ought not to be adopted, unless it be the natural and fair import of the language. The words, “warranted American property,” may well be applied to all the subjects insured, for all of them are, in the common language of commercial life, “property.” The premium leads to no conjecture, that belligerent risks were included; and perhaps it would not be improper to hold, that the warranty was, t-hat freight, profits, and cargo are American property. It is sufficient, however, if the warranty extends only to the latter. And I cannot entertain a doubt, that the word, “property,” here means the same thing as cargo in the preceding sentence. If the other parts of the policy are critically examined, they fortify this conclusion. The succeeding words are, “It is understood, that the assured are owners of this cargo; but the valuation of freight and profits, hereby agreed to, shall be binding, whether the lading of the vessel is the property of the assured or not, or whether at the time of the loss there shall be any cargo on board or not.” Here the words cargo, lading, property, occur in the same sentence, and are applied to the same thing, as words equivalent and synonymous. It is the cargo, the lading, and the property, out of which the freight and profits are to arise. This cargo, lading, and property, are not such as may be on board belonging to the ship-owner only, but all on board, whether it belongs to him or to others. “It is understood that the assured are owners of this cargo,” but it may belong to others. Whether the one or the other be the fact, it must be deemed, that the warranty of American property extends to it. We must otherwise hold, that in a voyage to South America, then in a belligerent state, the underwriters, knowing that other property than the ship-owner’s might be on board, were content to take a warranty, which might be utterly nugatory as to the most material risks. The clause, as to the transhipment of the property in other vessels, leads to the same conclusion. But I forbear any further commentary. My judgment is, that the warranty has been broken, and that the plaintiffs are not entitled to recover.

There is another point of view, in which the cause may be considered, upon which, however, I do not dwell, because it has not been argued by counsel, but which appears to me equally decisive against the plaintiffs. I suggest it merely for consideration, if a superior tribunal should deem the other opinion erroneous. It is this. The assured in their correspondence, upon the faith of which the insurance was made, represented, that “the property, that will be shipped in her, is for American account; the object a trading voyage.” If the warranty does not cover the whole cargo, as there is no pretence to say, that this representation was ever varied by the parties, the legal effect is, that pro tanto the representation remains in force, and it has been falsified by the event.

Verdict for the defendants.