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JOURNAL OF MERCANTILE LAW.
ACTIONS OF ASSUMPSIT ON POLICIES OF INSURANCE.
In the Supreme Judicial Court of Massachusetts, (Suffolk county,) March term, 1852, Chief Justice Shaw presiding. George V. Jordan vs. Tremont Insurance Company, Philip Greely, Jr., ET AL., vs. same.
These cases were submitted to the Court upon the following agreed statement of facts: They were actions of assumpsit on policies of insurance made by the defendants, the policy in the latter case being dated Nov. 7, 1845, whereby they insured the plaintiffs in the sum of $2,250 on one-half of the brig Napoleon for one year. In October, 1846, the brig sailed from Boston for Havana, and from thence for Cardenas, in ballast, without any charter party of affreightment, or any rate of freight agreed upon, on the assurance contained in a letter from Matthews and Safford, that a freight could be given her on her arrival at Cardenas.
On her passage she encountered a severe gale, in which she lost her main topsail and was thrown nearly on her beam ends, and her ballast shifted (there being no cargo on board) in consequence of which it became necessary to cut away her masts, which, with sails and rigging, were thereby lost; and her stern boat was carried away, her rails and bulwarks and a part of her deck were damaged by the falling of the masts, and some of her sheathing at the water's edge injured by them. She was carried by the gale and currents upon the coast of Florida, and finally put into Key West, (being assisted by a wrecking vessel,) and was there sold by the master, after a survey, in which a sale was recommended.
It was conceded that if all the expenses of repairing the vessel were to be continued (including those occasioned by the cutting away of the masts, and the consequent loss of sails and rigging, and other expenses which the defendants say should be estimated as in nature of general average contribution) the total amount, after deducting one-third new for old, would be sufficient to constitute a constructive total loss; and that, unless such expenses are included, the cost of the other repairs would not suffice to constitute one.
Chief Justice Shaw delivered the opinion of the Court. The first question in this case is, whether the cutting away of the masts, &c., is to be considered a charge forming part of the amount which shall sustain a claim for a constructive total loss. It is contended by the plaintiffs that as there was no cargo on board, the cutting away of the masts, under the circumstances, was not a general average charge; no contract for freight was therefore to be included in making up a constructive total loss. But the Court thinks this makes no difference; neither does the imminency of the danger make any difference. If it was a voluntary act at the time it was done, and was done with a view to the general safety, then it is a general average loss, whether there were any contributary interests or not. Reynolds vs. Ocean Ins. Co., 22 Pick., 191. By the law of insurance, a general average loss is to be paid in full without reference to the fact whether or not the vessel can be repaired. A general average loss is different in its nature from a partial loss.
In Potter vs. Prov. Wash. Ins. Co., 4 Mason 298, it was held that in adjusting loss, the cutting away of mast and rigging was a general average to be borne by ship and cargo, in the same manner as if they belonged to different owners. If the owners of the ship and cargo are different persons, the owner of the ship may recover the whole amount of his loss without deduction of general average due on cargo. But when the ship owner is also owner of the cargo, the amount due from the cargo may be deducted from the total loss on the ship by the underwriter. The only distinction, therefore, seems to be where the owner of the ship and the cargo are one and the same person. Where a general average loss has occurred to a party, he looks to the underwriters, and it is their duty to see whether such shares are duly assessed, and they take that risk. The loss is a
peril insured against, and he may recover therefor of the insurer. McGrath vs. Church, 1 Caines 215, 2 Johns. 62. But the same rule does not apply to cases where the owners of the ship and cargo are different.
Assuming that the loss was incurred by the voluntary act of the party, we are of opinion that such loss is not to be added in making up the amount of constructive total loss. The same rule was not originally adopted in England, though the recent decisions are in favor of it. Chancellor Kent says the rule was derived from the French law. 3 Kent's Com. 369, 5th ed. It has been thought that when the vessel is so far damaged as to become unmanageable, the assured may abandon. But the Boston policies contain this restrictive clause: “ The insured shall not have the right to abandon the vessel for the amount of damage merely, unless the amount which the insurers would be liable to pay under an adjustment as a partial loss, shall exceed half the amount insured.”
The right to abandon as for a constructive total loss is founded on the principle that where the necessary repairs are great and disproportionate to the value of the vessel, the assured may then abandon
and claim for a total loss. So too in case of capture, when there is little or no chance of recapture. The propriety of this rule has been questioned; but it is founded upon the principle that the assured may, instead of the delay of repairing, immediately reserve the money, which he can reinvest, and continue his commercial pursuits. Formerly the general rule in England was, that the assured might abandon when the vessel was not worth repairing. For the sake of certainty, we have adopted the rule that he may abandon, when the costs of repairs exceed half the amount insured, for then the property is regarded as substantially gone. In estimating the expense of repairs, the Court are of opinion that a general average loss is not to be added to make up the amount of a constructive total loss. The case of Reynolds vs. Ocean Ins. Co., 11 Pick. 90, has been thought to establish a different doctrine, but it is not
It has been thought, because the vessel had first struck on a shoal and then dragged over and sunk in seven fathoms of water, and the expense of raising her was perhaps incautiously called a general average expense.
The vessel was new and just out of the port of Boston. But still, with the modern aids and inventions, it was very easy to raise her and get her into a suitable place for repairs. The question, then, was whether it would cost more than half to raise her and get her into the port of Boston. But it wanted the character of general average in this, that there was no voluntary loss for the general safety; the injury bad been actually done; the proper question was, what would it cost to get the vessel into Boston? The loss did not result from a general sacrifice; the expense was called general average because it was assessed on the vessel and cargo. The actual loss had been already incurred. The case must therefore be sent to an assessor, to ascertain the amount due from partial loss.
PARTNERSHIP-ACTION TO RECOVER AMOUNT OF PROMISSORY NOTE.
In the Supreme Court of Massachusetts, (Suffolk county,) March term, 1852. George D. Dutton, et al., vs. I. F. & E. W. Woodman,
This was assumpsit to recover the amount of a note for $480 97, signed by I. F. Woodman & Co., dated October 26, 1848, the plaintiff alleging the firm of 1. F. Woodman & Co. was composed of the above-named defendants.
No service was made on I. F. Woodman, but E. W. Woodman was arrested and held to bail. He denied in his specification of defense that he was partner of I. F. Woodman or a member of the firm of I. F. Woodman & Co.
The evidence chiefly relied upon by the plaintiff to prove a partnership, was as follows:
J. C. Thurston, who was employed in the store of I. F. Woodman & Co., testified among other things, that in October 12, 1848, he wrote the following letter to E. W. Woodman:
"DEAR SIR :- I learn from your brother, I. F., that you have formed a copartnership with him, and contemplate coming to this city to assume an active part in the concern. As there has been no public announcement to that effect, and as you are not here, I have written to ascertain if you consider yourself responsible as one of the partners for the payment of goods bought for this store.
“ This proceeding is rendered necessary from the fact that you will need, or at least, do now need a credit in order to carry on the business successfully. My position here as purchaser of goods is rather a delicate one when the company is
- ] knowing that you are not here, and have not taken an active part here to make yourself legally a partner. I write this with the knowledge of your brother, feeling that it is for the interest of this concern to know whether you wish to be considered a partner, and are willing to answer the responsibility as such. An early answer is most respectfully solicited.
Respectfully yours, “ Boston, October 12, 1848.
J. C. THURSTON." No answer was received to the above letter; but at an interview between the witness and defendant in January, 1849, the defendant told him that he received the letter, but that he was absent from Milton when it arrived, and that shortly after he did receive it, he saw his brother I. F., and that he did not consider it necessary to answer it, and that this was the reason why he did not answer it. The Court ruled the letter inadmissible, not having been written by the plaintiffs.
The plaintiffs then offered in evidence a judgment on a verdict rendered against this defendant and I. F. Woodman, as partners, in favor of the plaintiffs, at the October term of the C. C. P., 1849, upon a note of $85, dated December 2, 1848, but the Court ruled that it was incompetent for the plaintiffs to put this judg: ment and the records of said Court in evidence. To the above rulings, as well as others not material to be stated, the plaintiffs took exceptions.
Bigelow, J., delivered the opinion of the Court. As to the judgments between the same parties to show a partnership, we think it was improperly rejected; for though in other States there may be conflict of opinions, yet it is well settled here. In order that it may be admitted as evidence, it is necessary to show that the matter to be proved was passed upon by the jury, it must be included in their finding. The party offering such judgment may show that the fact was found, and for this purpose he may introduce parole evidence. The doctrine was stated in Outram vs. Morewood, 3 East. 174. ^ If a verdict be found on a fact or title, distinctly put in issue in an action for such trespass, a verdict may be pleaded by way of estoppal in another action between the same parties or their privies, in respect of the same fact or title. So, in Standish vs. Parker, 2 Pick. 20; also in Parker vs. Standish, 3 Pick. 288. The case of Eastman vs. Cooper, 15 Pick. 276, is fully to the point. Applying these cases to the one at bar, it clearly falls within, and is settled by them. The circumstances of the present case are similar to those in the case on which the judgment was rendered. In that case the jury distinctly found that the defendants were partners. Both notes were dated about the same time; the fact to be found was the same in both cases, and the actions were between the same parties, and the judgment was clearly admissible.
But though the judgment is admissible as evidence, yet it is not conclusive evidence;-it stands upon the same ground as other evidence, and may be controlled.
As to the letter, taken in connection with the circumstances of the case, we think it admissible as evidence. No answer was received; but in January the defendant admitted its receipt, and refused to admit or deny that there was a partnership. This, with the defendant's silence, and the relation of the parties, may, perhaps, be taken as an acquiescence on the fact of partnership. Exceptions sustained, verdict set aside, and a new trial to be had in the Court of Common Pleas.
COMMON CARRIERS. A common carrier to take care of goods while on their transit, beyond the ordinary care of safe
stowage and prompt and regular transmission. Any limitation of the ordinary risk of a common carrier, must be shown to have been agreed to by the party employing him, otherwise it will be of no value to the carrier, even though it be inserted in the bill of lading on the receipt for the goods.
In the Supreme Court of Pennsylvania, April 1, 1852. Chief Justice Black presiding.
The plaintiffs were the owners and consignees of twenty-four packages of furs, which were delivered to the defendants' agents at Cincinnati, for transportation and delivery to plaintiffs at New York. A bill of lading was given, in which the word " Pittsburg” was printed, indicating, the defendants argued, that the risk was not to commence until the goods had arrived at Pittsburg. The goods were placed by the defendants' agents on board the steamer Defiance, which was snagged on her way up to Pittsburg, whereby the packages became wet. The de. fendants did nothing toward drying or preserving them, and they were rendered of but little value, the difference being agreed upon, and for this amount the verdict was rendered for plaintiffs.
Chouteaux vs. Leech. The evidence which the Court, in the 5th and 6th as. signments of error, is complained of for rejecting, was intended to prove that the defendants were not common carriers west of Pittsburg; in other words, that they were not accustomed to carry goods for hire for all who chose to employ them on the Ohio river. But the evidence was properly rejected, because the right of the plaintiff to recover depended on the obligation created by the particular contract on which the suit was founded. If they bound themselves on this occasion to the duty of common carriers, it is no defense to say that they had never done so before, or that it was not their direct or principal business. i W. & S. 285—7 Yeager, 240—4 N. H. 304.
In the seventh specification it is said the judge erred, because he refused to permit the defendants to ask the question: "What were the powers of Irwin and Foster, and what was the extent of their agency ? When an agent is appointed, a contract made with him about the business to which the agency relates, is a contract with the principal, and the validity of the contract is not affected by a limitation of the agent's authority, of which the other contracting party had no notice. This would have been enough to make the exclusion of the proposed evidence perfectly proper. But there was another reason. The defendants did not assert in the Nisi Prius, nor was it any part of their argument here, that the agents had not authority to do what they did. Now, if the acts done by them exposed their principals to the risks of common carriers on the Ohio, the principals cannot, of course, clear themselves from responsibility, by showing that though they authorized the act, they did not intend that its legal effect should follow.
The greatest pressure of the defendants' argument, was on the exception to that part of the charge which submits to the jury the question whether the words : * The responsibility of the line to commence upon the shipment of the goods from Pittsburg” were or were not inserted in, or rather left unerased from the bill of lading, by mistake. It is contended that there is no evidence of such mistake. But we think otherwise, for reasons which may be stated very briefly. A mistake like this one alleged here can be proved, as any other fact is proved, by circumstantial as well as by positive evidence. There are several facts from which it may be inferred. The printed bill of lading was manifestly intended to be used at Pittsburg. In order to make it answer for Cincinnati, it was obviously proper to strike out Pittsburg wherever the word occurred, and insert Cincinnati. It was so altered in the date, and the omission to do so at the other place certainly looks more like an accident than anything else. It is not certain, but it is probable, that the object of having the contested clause in a Pittsburg bill was to prevent the responsibility of the defendants from commencing when the goods were received at their warehouse, instead of attaching only from the time of their actual shipment. The dangers of the river navigation are ex. cepted, and this by plain construction makes them liable for the damages which are not excepted. They received the full freight from Cincinnati to New York, and this is wholly inconsistent with the notion that they were mere agents for the shipment of the furs and not carriers from Cincinnati to Pittsburg as well as on all other parts of the route. Other facts might be mentioned, but these are enough to show that there was some evidence of mistake, and the judge was right in submitting it to the jury.
It is of the utmost importance to the Commerce of the country that carriers should be held to strict accountability. Gross wrongs would be practiced every day if the laws on this subject were relaxed. Slight evidence ought to be sufficient to set aside any special provision in the bill of lading which is intended to relieve the carrier from his ordinary legal responsibility, and this not only be• cause public policy requires that carriers should have the strongest interest in the
performance of their duties, but also on account of the manner in which such stipulations are generally made. Goods are commonly sent by the owner to the carrier’s place of business, where they are received, and the bill of lading made out by the carrier or his clerk. It is often not seen by the owner until it is too late to insist on a change in the terms. It can hardly be called a contract at all, for a contract requires the assent of both parties. The better rule, perhaps, would be to treat all provisions of this kind as void, unless inserted by the express consent of the employer,
The charge that the defendants were bound to have the furs unpacked and dried, is said to be erroneous, but that is not our opinion. The decision of the judge on this point is well supported by clear and unanswerable reasoning; is sustained by a cuse directly analogous, (Bird vs. Crowell 1, Missouri 58,) and is opposed by no authority which we have been able to find.
ACTION ON A PROMISSORY NOTE.
In the Supreme Court of Louisiana, 1852. Mathews, Finley & Co. vs. C. M Rutherford.
This suit is brought upon a note dated in April 1851, at eight months, for $1,980, made by the defendant to the order of S. B. Conrey, and by him indorsed in blank. The answer contains a general denial, and also pleads that the plaintiffs are not the owners of the note, but merely hold it as collateral security for debts due them by the payee, that Conrey gave the defendant no value for it, that no legal transfer was ever made to plaintiff's, that they gave no value for it, &c. There was judgment in favor of defendant, and the plaintiffs appeal.
From the testimony of Conrey, a witness for defendant, it appears that defendant give Conrey this with other accommodation notes, amounting to between nine and ten thousand dollars. The arrangement between Conrey and Rutherford was, that Conrey could raise money on these accommodation notes. The agreement between them was that Conrey should take up the notes. In May or June 1851, Conrey applied to Mathews, Finley & Co. for a loan of $4,500 which they made upon his giving them the defendant's notes as collateral security for the payment of the money at the time stipulated, which was about twenty days. No act of pledge was made. It does not appear that the plaintiffs knew that the notes were accommodation notes ; and Conrey says he thinks they were not aware of it. He has repaid them $1,500 and a balance of $3,000 is still due.
A note taken as collateral security for a pre-existing debt, without any new consideration whatever, will be held subject to equities between the antecedent parties. But on the other hand the reports and commentators abound in authorities to the effect—that the bona fide holder will be protected against such equities where he has taken the note as security for advances made upon its credit. Such a case falls within the scope of that general principle of commercial law which protects the bona fide holder for a valuable consideration of negotiable papers, for the term value has a very large and liberal import. This principle rests upon the same basis as the doctrine of courts of equity in other cases, where the purchaser has obtained the legal title without notice of the equitable right of a third person to the property. The only difference in the commercial law, between tho absolute holder for value and the party who takes the note as collateral security for money advanced, so far as the right of recourse against the maker is concerned, seems to be this: that the former may recover in full, and the latter, if there be equities, is restricted to the extent of his advances. In other words, he is considered as a bona fide purchaser pro tanto. But if, under such circumstances,