Silloway v. Neptune Insurance

78 Mass. 73

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

Opinion

Bigelow, J.

The claim of the plaintiffs is founded on an alleged total loss of the vessel and of the cargo and freight covered by the policy declared on.

First, as to the vessel. The defendants do not deny that the facts proved at the trial are sufficient to show a total loss of the subject of insurance. They rest their defence to this part of the plaintiffs’ claim on two other distinct grounds.

1. The first is that there was such misrepresentation and concealment of material facts concerning the condition and situation of the vessel at the time of effecting insurance as to avoid the policy. So far as this part of the defence is founded on a supposed suppression of facts, it is \ try clear that it cannot "avail the defendants. The assured weie not bound to make any statements whatever concerning the condition of the vessel. This was embraced by the warranty of seaworthiness. The doctrinéis well settled and familiar, that the assured are not required to state any fact which is included in those matters concerning which the law implies an agreement or warranty.

As to the other branch of this ground of defence, we are not satisfied that any misrepresentation of the actual condition of the vessel was made by the assured. No doubt they were bound to answer all inquiries truly respecting the soundness of the vessel and her fitness to undertake a voyage, although these were embraced in the implied warranty of seaworthiness. The law, while it does not require the assured to make any statements or representations on such matters in the first instance, does exact that he shall answer all inquiries concerning them truly. On looking carefully at the evidence adduced at the trial, bearing on the question of the stanchness and soundness of the vessel at the time the policies were effected, we find it to be. exceedingly conflicting and quite irreconcilable. But the burden of proof to establish the alleged misrepresentation is on the defendants. The jury have found that the vessel was seaworthy at the inception of the risk, which they could not have done if the witnesses who testified in behalf of the defendants concerning the condition of the vessel at Portsmouth when the policies attached were worthy of credit. In this state of the case, we cannot say that the defendants have shown that the alleged representation by the assured that the vessel was stanch and strong was untrue.

2. The other ground of defence to the claim for a total loss of the vessel is that the underwriters were discharged from theii liability under the policies by an alleged deviation of the vessel. The material facts bearing on this point are these: The vessel sailed from Portsmouth in the forenoon of the 5th of March, bound on a voyage to Guayama. On the evening of the same day she encountered strong gales and heavy seas. About midnight she sprung a leak, and thereupon the master tacked ship; and put into Gloucester in distress, arriving there early in the morning of the 6th of March. On receiving orders from the owners (who resided at Newburyport) and in compliance therewith, he sailed from Gloucester on the next day and arrived at Newburyport early in the afternoon of the day after, where the needful repairs in the vessel were made. It is the sailing from Gloucester to Newburyport under these circumstances, which constitutes the alleged deviation. "We doubt very much whether these facts do constitute even a technical deviation sufficient to discharge the policy. The master was fully justified in seeking a port in consequence of sea damage, but he was not absolutely obliged to remain there and make the needful repairs. If, in the exercise, of good judgment and sound discretion, and acting in good faith, he deemed it expedient for the interest of all concerned to go to an adjoining port, the home of the owners, where the vessel could be refitted with greater convenience and less expense, and without incurring any actual increase of risk, we are strongly inclined to the opinion that he might do so without discharging the underwriters on the ground of an unlawful or unjustifiable variance from the course of the voyage ; and under similar circumstances that the owners might direct the master to take the vessel into her home port.

But however this may be, we are clearly of opinion that the defendants are estopped in the present case from alleging the supposed deviation as a ground of defence to this policy. It appears by the evidence, that the fact of her having put into Gloucester before she went into Newburyport was fully known to the defendants’ agent, who went to the latter place for the purpose of examining the vessel and adjusting the loss which had then happened ; and that subsequently to this they not only paid the amount of the loss, but also gave liberty to the owners, by an indorsement in writing on the policy, to proceed to sea with the vessel on a single bottom. The defendants thus recognized the validity of the policy as a subsisting contract, with a full knowledge of the alleged deviation, and they allowed the plaintiffs to send the vessel to sea, not only without any suggestion that they had forfeited their right to bold the insurers liable, but in the belief that she was covered by a policy the validity of which was not denied or doubted by the defendants by reason of any preexisting fact. The plaintiffs, under these circum stances, had a right to regard any objection on the ground of the supposed technical deviation to have been waived. Certainly it cannot be allowed as a defence to this action, without operating as in the nature of *a fraud on the plaintiffs, who have acted on the belief that the policy was in force during the prose eution of the residue of the voyage.

3. It was suggested that there was no sufficient evidence ot abandonment. But it appears that the papers relating to the vessel, including the survey upon which she was condemned and sold at Guayama, were delivered to the underwriters within a few days after the news of the loss was received, and a total loss was then claimed by the plaintiffs. An abandonment need not be in writing. All that is needful is that a total loss by perils insured against should be distinctly indicated to the underwriters. Thwing v. Washington Ins. Co. 10 Gray, 451.

It follows that the defendants have failed to establish either of the points of defence on which they rely to the claim of the plaintiffs for total loss of the vessel.

4. We next come to a consideration of that part of the case which relates to an alleged loss of the cargo. It is first objected chat no recovery can be had under the contract for any loss on this subject of insurance, because there was an implied representation or warranty that the cargo was taken on board at Portsmouth; and that it having been in fact previously laden at Newburyport, there was such a breach of the warranty or misstatement as to avoid the policy on the cargo. This ground of defence is based on the words of the policy which describe the voyage assured as being “ at and from Portsmouth; ” and it is contended that these words, as applied to the cargo, import that it was laden at that port and does not cover goods or merchandise previously taken on board. But it seems to us that this position is wholly untenable. The voyage insured was accurately described. The cargo was at Portsmouth on board the vessel at the time the insurance was effected, and was then safe and a fit subject in all respects for insurance. The words of the policy imported nothing further. The authorities, on which the defendants rely in support of the position that the words of the policy import a representation or warranty as to the place of loading the cargo, do not sustain it. They are wholly unlike the case at bar. One class of them is where the policy contained an express stipulation that the risk was to begin on the taking in of cargo at a specified port. Within this class fall Hodgson v. Richardson, 1 W. Bl. 463, and 3 Bur. 1477; Robertson v. French, 4 East, 130; Graves v. Marine Ins. Co. 2 Caines, 339. Another more numerous class is where the voyage was described as at and from a designated place, but the cargo was never at the place named, but was taken in at some other town or city. Such was the point decided in Payne v. Hutchinson, 2 Taunt. 405, note; Constable v. Noble, 2 Taunt. 403; Murray v. Columbian Ins. Co. 4 Johns. 443. It is obvious that these cases have no resemblance to the present. In the policy declared on, there is no stipulation that the risk was to begin on taking in the cargo, nor were the goods laden on board subsequently to the departure of the vessel from the designated port. The cargo was in the vessel, and the risk commenced, at the place named in the policy.

5. The claim of the plaintiffs for a total loss of cargo may be properly considered under two separate and distinct heads. The first relates to the memorandum articles, fruit and vegetables, composing a part of the cargo, and which are excepted from particular average unless it amounts to seven per cent, and happens by stranding. To this it is objected, in the first place, that the evidence does not show that any of them were so far destroyed on their arrival at the port of discharge as to come within the rule of law which authorizes the assured to recover for a total loss on such articles. But the testimony on this point shows that the fruit and vegetables were absolutely decayed and rotten on the arrival of the vessel, so that they were not only valueless, but had ceased to exist in specie, and had become a mere nuisance. Such being the fact, there can be no doubt that these articles were totally lost, within the meaning of the rule of law applicable to articles of a perishable nature and included in the memorandum clause. Williams v. Cole, 16 Maine, 207. Hugg v. Augusta Ins. Banking Co. 7 How. 604-608. Robinson v. Commonwealth Ins. Co. 3 Sumner, 220. Poole v. Protection Ins. Co. 14 Conn. 52. 2 Phil. Ins. § 1767.

6. But it is further objected that the plaintiffs are not entitled to recover for the articles thus actually lost, because a portion of the cargo included within the memorandum clause was not totally destroyed, but arrived at the port of destination in specie and only partially injured. In other words, the position of the defendants is that the assured cannot recover for one species of memorandum articles, specifically named in the policy, which has been lost, if there are other articles of wholly different species, included in the memorandum, which have not been totally lost. But this is not a correct interpretation of the contract as applied to the subject matter. No doubt the rule would be as contended for, if the memorandum articles included in the cargo consisted of one species only, a part of which was lost. When an insurance is made free from average indiscriminately on an article, the assured cannot recover for a total loss on account of the destruction of a part of such article, although it may have been contained in different packages or bales. But the rule is otherwise when the articles embraced in the exception from partial loss are specifically named and are of different kinds or species. The true office of the memorandum is to exempt the underwriters from all partial losses of the thing insured. But when the cargo consists of several distinct species or kinds of articles, all of which are embraced within- the memorandum, each forms a separate thing or class, and the exception is to be applied to each separately, considered as an independent subject of insurance. The chief object of inserting an exception of certain kinds of merchandise from particular average is to exempt the insurer from liability for the partial decay or loss of parts of the cargo which have an inherent tendency to deteriorate and waste away, and in regard to which it is difficult to ascertain whether the injury to them has been caused by sea damage or by intrinsic defects. This object is fully attained by regarding such species of merchandise separately designated in the memorandum, as a distinct subject of insurance. To illustrate; if salt, grain, fish and fruit are specifically excepted from partial loss, the tendency to decay in any one of them has no natural or necessary connection with a similar tendency in the others. The same causes which might operate to injure one article might wholly destroy another and leave a third wholly unaffected. The language of the exception, as inserted in the policy, is founded on this view of the intention of the parties. It is that the insurers shall not be liable for any partial loss on salt, grain, fish, fruit, hides, skins or other goods that are esteemed perishable ; that is, that the insurers shall not be liable for partial loss on salt or grain, or fish or fruit; clearly regarding each enumerated article as separate and distinct from all the others, and implying that the insurers shall be liable for a total loss on each. The construction of the policy is the same as if there were a special exception of each article by itself from partial loss, instead of grouping them together in one clause. This might not be the true interpretation if the exception were in general terms of all perishable goods; but it certainly is the only reasonable one where the articles are specifically named, as in the policy declared on. Such we understand to be the received rule in construing policies where different articles are at risk subject to the same exception. The exception is applied to each article separately. Thus, for example, if sugar and hides are excepted from all losses under a certain per cent, in adjusting a loss, if it amounts on either to the specified percentage, the underwriters are liable. 2 Phil. Ins. § 1785. By parity of reasoning we do not see why, in construing the exception of certain articles from any claim for partial loss, each article enumerated is not to be regarded as the subject of a special exception, and if any one is totally lost 'why the insurers should not be held liable therefor. No case has been cited by the counsel for the defendants in support of an opposite doctrine. The adjudged cases seem to proceed on a view of the construction of the memorandum clause, similar to that which we have now stated. Wadsworth v. Pacific Ins. Co. 4 Wend. 40, 41. Humphreys v. Union Ins. Co. 3 Mason, 429. Biays v. Chesapeake Ins. Co. 7 Cranch, 415. Louisville Marine & Fire Ins. Co. v. Boland, 9 Dana, 156.

But it is urged that the memorandum clause in the policies declared on, which is the same, we believe, as is now inserted in all policies issued in Boston offices, differs in an essential particular from such clause as it is usually found in policies issued in New York and elsewhere, and that it is not susceptible of the construction for which the plaintiffs contend. This argument is founded on the language of the proviso excepting a liability from partial loss on the specified articles, “unless it amount to seven per cent, on the whole aggregate value of such articles and happen by stranding.” It is contended that this clearly stipulates that the articles enumerated in the clause are to be regarded as an entirety. Certainly they are to be so regarded, when the claim is for a partial loss, in computing the seven per cent. Such was the manifest purpose of the proviso. But this was the sole purpose, and it is fully answered and accomplished by applying it in cases of adjustment of partial losses on the memorandum articles which happen by stranding. It defines and limits tjie insurer’s liability in such cases. But it has no application to the case of a total loss of such articles. It does not follow, because the parties have stipulated for a certain mode of calculating a partial loss, that the same mode is to be adopted in ascertaining whether there has been a total loss. On the contrary, the implication is strongly the other way. The insertion of the proviso recognizes the existence of a rule that the insurers would be liable for a partial loss on one or more different species of articles enumerated in the memorandum, if it amounted to the required per centage on each, although it might fall short of that amount, if calculated on the aggregate value of all the articles. The proviso was intended to prevent the operation of this rule in case of a partial loss. But a similar rule operated to make the insurer liable for the total loss of a separate species or kind of article enumerated in the memorandum, although others included in the same clause might escape damage or be only partially injured or lost. If the parties intended to avoid the operation of this rule, it is reasonable to suppose that they would have inserted an express stipulation applicable to cases of a total loss of memorandum articles at the time when they were modifying their contract in its application to partial losses on the same articles. It certainly seems to be a case where the maxim expressio unius exclusio alterius is quite decisive.

It results from this view of the principles of law applicable to this part of the case, that the plaintiffs are entitled to recover for a total loss of the fruit and vegetables which did not arrive in specie at the port of destination.

The claim of the plaintiffs for a constructive total loss of the articles not included in the memorandum cannot be supported. This part of the cargo arrived at its port of destination. The goods were shipped, as appears by the invoice, for Guayama, consigned for sale to a mercantile house there. There is noth ing in the case to show that the voyage was intended to be a trading voyage to successive ports of destination for discharging the cargo and reinvesting the proceeds. It is the ordinary case of insurance on a cargo which arrived at its place of destination injured by perils of the sea. No constructive loss can exist where any considerable part of the goods, though less than half in value, is landed at the port for which they were shipped. 2 Phil. Ins. §§ 1611, 1612. Forbes v. Manufacturers’ Ins. Co. 1 Gray, 371.

7. The only remaining question is as to the right of the plaintiffs to recover in this action for a total loss of freight. On this

point we can entertain no doubt. By the charter party under which the plaintiffs hired the vessel, it appears that they were to pay the owners for the round voyage to Guayama and back again to a port in the United States the sum of seven hundred dollars, and they also thereby stipulated to insure the freight for the said sum of seven hundred dollars. Under this provision it was the right and duty of the plaintiffs to procure insurance on the freight or charter money for the use and benefit of the owner. They were his agents to procure insurance on the freight, and can well maintain the action in their own names. 2 Phil. Ins. §§ 1958, 1965. Munson v. New England Marine Ins. Co. 4 Mass. 88. This was the clear intent of the parties. The plaintiffs had no insurable interest in their own right in the freight. As the vessel was lost by perils insured against during the performance of the voyage specified in the charter and before any freight was due, there was a total loss of this subject of insurance.

Unless the parties agree on the sum due under the policies, the case must be sent to an assessor to determine the amount according to the rules and principles hereinbefore stated.

Judgment on the verdict.