Ocean Ins. v. Sun Mut. Ins.

18 F. Cas. 547, 15 Blatchf. 249, 1878 U.S. App. LEXIS 1951

• Court: U.S. Circuit Court for the District of Southern New York
• Decided: September 13, 1878
• Status: Published

Opinion

WAITE, Circuit Justice.

The important Question, which presents itself at the outset of this case, is, whether the Sun Company’s policy covers the Rotterdam charter. The language is, “$6,550 on charter, $2,650 on pri-mage, and $1,500 on property on board ship C. S. Pennell, at and from New York to San Francisco.” This is to be construed in the light of the circumstances which surrounded the parties when the contract was made. These were: 1. That the Ocean Company did insure that charter and did not insure any other; 2. That the only interest which that company had in that charter was as insurer; 3. That it had no insurable interest whatever in the San Francisco charter; 4. That the Sun Company, when it took the risk, had full knowledge of the San Francisco charter, and of its general provisions; 5. That the arrangement between the two companies contemplated principally, if not altogether, the reinsurance, by the Sun Company, of risks taken by the Ocean; 6. When the risk was taken by the Sun Company, both parties supposed it covered that taken by the Ocean; 7. There was no actual fraud on the part of the Ocean Company, and there was no intentional concealment or misrepresentation.

. The Maine court decided, that the words, “at and from New York to San Francisco,” were not used to describe the charter insured, but the locality and duration of the risk. In that I fully concur. The opinion of Judge Walton is entirely satisfactory to my mind, and I shall not attempt to add to what he has said. In fact, I do not understand it to be contended now, that, if, in reality, the minds of the two companies met upon a contract for the insurance of the Rotterdam charter, it may not be proved. The real controversy is, as to whether or nor that was the contract, and not as to the admissibility of extrinsic evidence to prove it.

It is quite true, that the burden of showing that the risk was taken upon the Rotterdam charter is upon the Ocean Company. There were two charters at risk during the voyage. The language of the policy is equally applicable to both, and it is, therefore, incumbent on the insured to prove to which it actually does relate. It is not contended that, when the risk was taken, the letter of Heleher to Sawyer, or the explanations of Sawyer •to the Ocean Company, were communicated to the Sun. If there is not enough to charge the Sun Company without this, there can be no recovery.

Every contract is, if possible, under the settled rules of construction, to be so interpreted as to give it some effect. If this policy is confined to the San Francisco charter, it can have no effect, as the Ocean Company had no insurable interest in that charter. There was nothing illegal in the arrangement by which the ship became bound to fill the two charters, after leaving New York and before her return. Neither did one of the charters interfere with the other. That to San Francisco did not prevent the ship from going to Callao and the Chinchas, after discharging her cargo at San Francisco; and that to Rotterdam did not forbid the taking on cargo in New York to be delivered in San Francisco, while on the way to the Chinchas for the guano to be carried to Rotterdam. The Rotterdam charter was satisfied in this particular, if the ship left New York by June 1st, and was ready to sail from Callao for the Chinchas within a reasonable time after December 15th.

It is clear, from the evidence, that, when the risk was taken by the Sun, it knew of the two charter's. Knowledge of that to San Francisco is conceded. In fact, this knowledge is made one of the elements of the de-fence in this action. To my mind, also, knowledge of that to Rotterdam, or, .what is equivalent, of some charter to be in existence after the ship left San Francisco, and before she returned from the voyage on which she was about to sail, is equally well established. The same letter from the Ocean Company, which tendered this risk, tendered another upon a charter expected to be in jeopardy after the ship left San Francisco. Otherwise, a premium for insurance “at and from New York, to, at and from San Francisco and Callao to Chinchas,” would not have been paid. This could not have been the San Francisco charter, for all freight under that would have been earned upon the delivery of the cargo at San Francisco. The risk thus tendered was accepted, and the loss, when it occurred, paid. When the proofs of loss were presented, and the payments made, both the president of the Ocean Company, who tendered the risk, and the vice-president of the Sun, who accepted it, were living, and -no doubt seems to have been entertained by them that the policy under which the claim was made covered the Rotterdam charter. When the Ocean Company tendered the Sun the risk which is now under consideration, it must have had in mind the Rotterdam charter only, because it had no interest whatever in that to San Francisco. It was seeking indemnity against the liability it had incurred, and that was on account of the Rotterdam charter alone. There cannot be reinsurance, if there is not insurance to be insured against.

It remains only to consider, whether the Sun Company did, in fact, accept the risk, supposing, and having the right to-.suppose, it related to the San Francisco charter, and not to the Rotterdam. The application was for reinsurance upon a charter — that is to say, freight to be earned under a charter — to be fulfilled during the voyage upon which the ship was to enter when she sailed from New York. As there were two charters, both known to the Sun, that company ought to have understood .that the application related to the charter which had already been issued by the Ocean. A policy issued under such circumstances will be presumed to refer to that charter, unless a contrary intention is clearly manifested. Certainly, no intention to exclude the Rotterdam charter was manifested in this case. The correspondence, which contains all the evidence there is upon the subject previous to the acceptance of the risks, makes no mention, directly or indirectly, of any other charter. Each of the other applications which accompanied this, indicates, in the most unmistakable terms, that the voyage upon which the ship was to sail would not end at San Francisco, and that she contemplated other service than that required by her San Francisco charter. Under one of these applications, a risk upon the Rotterdam charter was confessedly taken, and, in the letter which preceded the acceptance of that risk, and upon which it was largely predicated, allusion is made to the present application in terms which indicate very strongly that both referred to the same charter, but to different interests. The language is: “I think really, considering you have the risk on the charter, primage and property to San Francisco, at full rates, you should take the war and marine to San Francisco And Chinchas * * * at six per cent., as there is, or will be, but little risk in the Pacific, after leaving San Francisco.” Equally significant was the form of the present application itself. It was added, by way of postscript, to the letter which transmitted the other, and which, as has just been said, embraced the Rotterdam charter. The words are: “I also enclose an additional return for insurance on charter, primage and property to San Francisco only.” There cannot be a doubt, if another charter was intended, it would have been so said.

Another' important consideration is, that the charter to be insured was one upon which the primage was to be $2,650. No San Francisco charter alone could have been expected to furnish such an amount of primage, and, taken in connection with the Chinchas, as it must be, as a point in the voyage, a guano contract of some kind is clearly indicated.

This much for the evidence of what occurred before the risk was taken. That which happened afterwards is no less significant. When the loss occurred, and the first proofs were made, the officers of the two companies,- active in taking the risks, were alive. No intimation was then given by either that the risk did not cover the loss that was claimed. The only ground of defence put forth by the Sun Company was, that there had been over-insurance and fraud. To establish this, an agent was sent to Rio Janeiro for testimony. Certainly, if it had not then been supposed, by these officers, that the policy covered the loss, no such trouble would have been taken, and no such expense incurred. It is to be borne in mind, also, that this suggestion of defence came from the Sun Company, and no other seems to have been thought of until after both the president of the Ocean and the vice-president of the Sun were dead, and it was apparent that the evidence was not sufficient to relieve the companies from their responsibility on that ground. Then, for the first time, the counsel suggested that the policies did not cover the Rotterdam charter,, and that point was put forward “to defeat the swindling claim.” It was not until long after this, when, by the extrinsic evidence, the .parties were driven to their original defen-ces, that the Sun Company claimed to occupy a different position, in respect to the case, from the Ocean. The risk was taken March 23d, 1864. The loss occurred in June following. The parties commenced their correspondence within a proper time thereafter. The loss to Pennell, the owner, was paid in 1865 and 1866. The suit was commenced against the Ocean in September or October, 1866. No other defence than over-insurance and fraudulent loss was suggested by any one until November, 1869, and then by the counsel in the cause, and not the parties. In October, 1870, the Sun Company was fully advised in respect to the extrinsic evidence upon which It was expected the Ocean would be held, and it was not until this evidence was admitted;_more than a-year afterwards, that it. was even hinted by the Sun Company that this altered its own position. Under all these circumstances, I cannot come to any other conclusion than that the policy of the Sun Company covers the Rotterdam charter.

It is, however, further contended, that, even if the policy does cover the risk, it is void, because the Ocean Company, when it applied for the insurance, concealed from the Sun the fact that no freight was to be carried under the charter, until after the arrival of the- ship at San Francisco. Such 1 do not understand to be the fact. As has already been seen, It was disclosed in the application, that insurance was wanted upon a charter to be operative and in force after the ship left San Francisco. The Sun Company knew that no freight, under such a charter, could be carried between New York and San Francisco, because the San Francisco charter, as to which it was fully advised, contemplated a full cargo between New York and San Francisco, and ended upon the discharge at the last named port. The particulars of the Rotterdam charter beyond San Francisco were unimportant, as the risk was to end there. It is not pretended now that the charter was not made, or that it was valued, for the purposes of the insurance, at more than it was worth. No such defence has been put upon the record here, or upon that of the suit in Maine. This objection, therefore, cannot be maintained.

It is next insisted, that sufficient proof of the loss has not been made. As has already been seen, the Sun Company was a reinsurer of the Ocean. In effect, the Sun Company guaranteed the Ocean against loss by reason of the risk it had taken upon the charter. When the claim for the loss was made upon the Ocean, it was at once referred to the Sun, and that company advised its disallowance. When, in consequence of the refusal of the Ocean Company to pay, suit was commenced, the Sun was promptly notified. The Sun at once took part in the defence, consulted with the counsel, and advised as to points to be taken. A judgment, under such circumstances, finding the loss, concludes the Sun Company. Proof of the judgment, therefore, is equivalent to proof of loss.

Again, it is said, that there was an utter want of an insurable interest in the freight to- be carried under the Rotterdam charter, before the arrival of the vessel at San Francisco, she being on the route from New York to that point, carrying full freight under the San Francisco charter, and the Rotterdam charterers having no interest or concern whatever in the performance of the voyage to San Francisco. This precise point was made in the Maine court. It was specially relied upon by the Sun Company, and, even after the counsel had made the objection to the admissibility of the extrinsic evidence, and the president of the 'Sun Company had seen and “perused carefully” the case as made upon that point, he (the president) wrote the counsel, pressing this defence, and saying that he thought it the “main cues-tión.” At the final hearing it was. urged upon the attention of the court, and-its discussion occupies the principal portio- of the opinion of Chief Justice Appleton, in disposing of the case. The Sun Company is bound by that judgment, and the question is not now an open one.

[On appeal to the supreme court, the decree •of this court was reversed, and the case remanded. with orders to enter a decree dismissing the libel. 107 U. S. 485, 1 Sup. Ct. 582.]

The clause in the original policy, which required the Ocean Company to insure on the same risk an amount equal to one half of that covered by the Sun, was waived, before this insurance was effected, by the letter of the Sun Company, under date of February 24th, 1864, which has been put in evidence since this appeal was taken. The acceptance of the full risk after that date binds the Sun Company.

There is no statute of limitations applicable to courts of admiralty, in this class of eases. Stale claims will not be entertained in that court, any more than in equity; and, to determine what is stale, resort is sometimes had to the limitation in common law actions, established by statute; but the statutes themselves are not binding. The court is emphatically a commercial court, and requires reasonable promptness on the part of its suitors. Here, there has been no unnecessary delay. The Ocean Company has been active all the time, and has always proceeded under the supervision, and in accordance with the suggestions, of the Sun. This suit was commenced in a little more than sixty •days after the liability of the Ocean Company was fixed in the very action which the Sun Company had promoted for that purpose, and which, until a short time before its termination, it had treated as substantially against itself. Under such circumstances, a court of admiralty cannot hold that the Ocean Company has lost its rights by delay.

The costs and expenses paid in the suit iu Maine are not unreasonable, and they were all incurred under the advice of the Sun. They are, therefore, recoverable, in this action against the Sun, as the reinsurer.

Let a decree be prepared in favor of the Ocean Company, for the payments of July 19th, 1873, $4,234 39; July 21st, 1873, $10,-086 55; July 23d, 1873, $1,164 70; in all, $15,485 64, with interest from July 21st, 1873, at seven per cent, per annum.