Lewis v. Eagle Insurance

76 Mass. 508

• Court: Massachusetts Supreme Judicial Court
• Decided: March 15, 1858
• Status: Published

Opinion

By the Court.

The questions of law seem to have been rightly decided by the judge who presided at the trial.

1. The evidence of Gunnison was competent, though subject to great doubt as to its credibility. All the testimony that the witness could give was before the court. It is not like a case where the testimony of the witness is left incomplete, as where a witness dies before his examination is finished, as in Kissam v. Forrest, 25 Wend. 651, and 7 Hill, 463.

2. The plaintiffs had charge of the vessel, sold what was sold, and were bound to render an account. In the account which they rendered, they gave credit for the salvage. If the defendants were not satisfied, they could interrogate the plaintiffs and demand their accounts, and have an account taken before an auditor. But if they went to trial, it was incumbent on the defendants to show that more salvage had been earned by the plaintiffs than they had accounted for.

3. The evidence of Davis as to what he had heard was properly rejected, as mere hearsay, not verified by oath, nor coming from one who knew the prices at or about the same time by actual dealings.

But upon an examination of all the evidence given at the trial, we are of opinion that there was no competent and sufficient evidence to prove a constructive total loss, so as to warrant an abandonment, and that the verdict therefore, being against evidence, must be set aside, and a

New trial granted.

A second trial was had at November term 1857, before Thomas, J., who, after a verdict for the plaintiffs, made a report to the full court, so much of which as is material to the understanding of their decision was as follows :

The defendants in their answer alleged that “ the said vessel was valued by the plaintiffs to them at the time when said policy was made,' and represented by the plaintiffs to the defendants to be of the value of six thousand dollars, and upon the faith of such valuing and representations the defendants executed the said policy wherein said vessel is valued at six thousand dollars ; and the defendants say that the same was a gross and fraudulent overvaluation of said vessel by the said plaintiffs; ” and further alleged that “ they were induced to make the policy declared upon by the fraudulent representations of the plaintiff W. G. Lewis, who represented to the defendants, in order to obtain said insurance of six thousand dollars, that he had paid five thousand dollars for the said vessel, or she cost five thousand dollars, and that he had laid out one thousand dollars on her, whereas the said vessel was bought by him for two thousand one hundred and fifty dollars.”

The defendants offered evidence tending to prove the allegations in the answer. And the presiding judge instructed the jury as follows:

“ If, upon the evidence, the jury find an overvaluation,-fraudulently made on the part of the assured or his agent, with the intent of destroying the property, and of recovering from the insurers the amount for which it is so valued, such a fraudulent purpose would render the contract void.

“ The law requires of the parties to a policy of insurance the exercise of good faith. A misrepresentation is a false representation of a material fact by one of the parties, tending directly to induce the other to enter into the contract. This principle, applicable to all contracts, is peculiarly applicable to a policy of insurance, which is ordinarily made upon the statements and representations of the assured. A representation of what a vessel cost, or what was paid for it, is a representation as to a material fact; and if the plaintiffs, in effecting this policy, fraudulently, and in order to obtain the insurance, represented that the vessel cost $5000 and $1000 for coppering, when, in point of fact, the entire cost was $3150, it was a misrepresentation upon a material point, which, if false, would avoid the policy.

“ But this question is to be tried upon the exact answer filed by the defendants; and that answer, as made, requires proof that the representation was fraudulent, as well as false, and, in point of fact, induced the defendants to make the contract; that the defendants had taken this burden on themselves; and that the burden in this matter was on the defendants.”

Sohier & C. W. Loring, for the defendants. Choate & Richardson, for the plaintiffs.

Merrick, J.

The representation made by the plaintiffs, upon obtaining insurance upon their vessel, that it cost them five thousand dollars and one thousand more for coppering, was of and concerning facts material to be known by the underwriters ; and, if false, avoided the policy which they had issued, and relieved them from all liability thereon. Upon this point the instructions given to the jury were correct. But the instructions went further than this; and it was ruled that, upon the exact answer filed by the defendants, they must prove, in order to avoid the policy, not only that the representation made by the plaintiffs was false, but that it was also fraudulent. This, we think, would necessarily have been understood by the jury as importing that the alleged fraud was a distinct subject of inquiry, not to be deduced from the mere proof of the false representation relative to the cost of the vessel; and that unless this fraud was established by other evidence, they would not be warranted in finding a verdict for the defendants. There is nothing in their answer, which imposes upon the defendants the burden of proving this fact, in addition to the fact of a false representation, in order to maintain their defence. It is true that they allege in general terms that the representation of which they complain was falsely and fraudulently made. But whether this representation was designedly and intentionally erroneous, and made with the corrupt purpose of gaining an undue advantage or not, is immaterial in relation to the question at issue between the parties ; for if it was false, it clearly exonerated the defendants from the performance of the contract on their part, and wholly avoided the policy. It is unnecessary to multiply citations in support of this position, because, as is remarked by Mr. Phillips in his treatise on insurance, the doctrine is con stantly assumed, and runs through the whole jurisprudence on the subject, that material representations having reference to past or existing circumstances discharge the underwriters from all liability in respect of the risks to which they relate. 1 Phil. Ins. §§ 537, 677. Elton v. Larkins, 5 Car. & P. 385. The ruling of the court therefore, which required the defendants to produce proof of the fraudulent character, as well as of the falsity, of the plaintiffs’ representations concerning the cost of their vessel, in order to sustain their defence, must be held to have been erroneous ; and for this cause only, as the instructions which were given to the jury appear in all other particulars to have been unexceptionable, the verdict for the plaintiffs must be set aside, and a

A third trial was had at November term 1858 and resulted in a verdict for the plaintiffs for a partial loss.