Gibson v. Philadelphia Insurance

1 Binn. 405

• Court: Supreme Court of Pennsylvania
• Decided: December 24, 1808
• Status: Published

Opinion

Tilghman C. J.

delivered the opinion of the court.

In this case exceptions have been filed to the award of referees.

The plaintiff borrowed of the defendants thirty thousand dollars on respondentia, on specie, goods, wares, and merchandises, laden onboard the ship Triton, bound on a voyage from Newcastle in the river Delaware to Canton in China, and from thence to Philadelphia. The bond, which is drawn in the usual form except a memorandum at the end of it, obliges the plaintiff, in case the voyage is performed, to pay the defendants the sum of thirty thousand dollars, and also the sum of five hun&red and eighty three dollars fifteen cents per month, for the whole time that the voyage should continue. The memoran-' dum on which the dispute has arisen, is as follows — “ It being “ first declared to be the mutual understanding and agreement “ of the parties to this contract, that the lenders shall be liable “ to average, and entitled to the benefit of salvage, in the same “ manner to all intents and purposes, as underwriters on a poli- “ cy of insurance according to the usages and practices of the “ city of Philadelphia.”

The ship arrived in safety at Canton, where she took in a cargo for Philadelphia; and on her homeward voyage the goods of the plaintiff were damaged to the amount of about one-fifth of their value. On the settlement of this loss, a difference arose between the plaintiff and the defendants, which was submitted to arbitrators. There was no dispute as to the fact of loss, but the question was on what amount the average should be calculated. The plaintiff first contended before the referees, that in consequence of some communications between him and the defendants prior to the execution of the bond, the average should be computed on the amount of the loan and interest. The referees were of opinion that there was no proof of any communication which could have that effect, or any other effect altering the contract expressed in the bond. The plaintiff next contended that the insurance must be considered as having been made on a valued policy, to the amount of thirty-eight thousand seven hundred and forty-seven dollars twenty-five cents, and that he was entitled to have the average of twenty per cent, calculated on that sum; and he contended in the last place, that even supposing the average to be calculated on an open policy, he was entitled to include a sum of money paid at Canton on account of freight, as part of the cost and charges of the goods. On both these points the rpferees decided against him. Their opinion was that the average should be computed on the prime • cost and charges of the goods and premium of insurance, excluding the freight.

This contract, partaking of the nature both of respondentia and insurance, appears to have been lately introduced into this city. It is to be regretted that it had not been expressed in such precise terms, as to leave no room for that great difference of opinion which the parties entertain concerning it. The court must decide upon the matter as it appears on the face of the bond; for the referees determined that there was no proof of any extraneous facts to alter the bond, and nothing has been shewn to us which could induce us to say that they were wrong in that determination. Then what says the bond? That the lender shall be liable to average in the same manner to all intents and purposes as underwriters on a policy of insurance, according to the usages and practices of the city of Philadelphia. What is the law, usage, and practice, in case of a loss of this kind? The plaintiff has laid before us the calculation of a loss on a valued policy by a very intelligent broker, Mr. Clement Biddle; but there is no occasion to examine the correctness of it, because there is nothing in the bond which authorizes us to consider this as a valued policy. All policies are considered as open unless the contrary is expressed. Then taking it as an open policy, the average is to be calculated on the cost and charges of the goods and the premium of insurance. There is no ground for taking into consideration the marine interest which the plaintiffs paid for the loan; as well might the assured, in common cases of insurance, charge the underwriters with usurious interest paid by him for the money with which he purchased the goods. This interest is not the cost of the goods, but the cost of the money with which the insurer has nothing to do.

The case then is narrowed to this point, whether the plaintiff had a right to include the freight, as part of the cost and charges of the cargo. Freight in its nature seems distinct from those costs and charges. It is the price paid for carriage of the goods; and in case of a total loss, it is not payable at all. This is not a new point. It received an express decision in Baillie v. Moudigliani, (Parke 53. 25 Geo. 3.) where it was the unanimous opinion of the court, that in an insurance on goods the underwriters are not liable for freight paid by the owner of the goods, because they have not engaged to indemnify the insured against it. That case is not an authority here; but it is entitled to that consideration which we pay to the respectable courts of all nations, when they found their decisions not on municipal regulations, but on the general principles of maritime law. It appears to me therefore that the referees were right in excluding the freight.

My opinion on the whole is that the exceptions are not good, and that the award be confirmed.

Smith J.

My opinion is that the report be confirmed, because I cannot discover in it any clear mistake either in fact or in law.

Award confirmed.