Mercantile Mutual Insurance Company v. . Calebs

Allen, J. If there had been no special agreement between the insured and the defendants, under the facts as found, the plaintiffs would undoubtedly have been entitled to recover, if the defendants were liable for the loss of the goods. The defendants received the goods to carry, as alleged in the complaint, and while in their possession they were so damaged, by a collision of the boat in which they were with another boat, that the goods were brought back to the city of New York. When they arrived there; they were found to be in such a state that they were abandoned by the owners to the plaintiffs. They were sold at auction, and the proceeds paid over to the plaintiffs by the consent of the defendants. The sales amounted to $2,403.19, which was less than that paid by plaintiffs on the policies, by $2,373.72, for which they brought their action. If *176 the ease stopped here, the plaintiffs would bring themselves within the decision in the case of The Atlantic Insurance Company v. Storrow (5 Paige, 285), where the Chancellor said: Upon an abandonment and payment, or upon a recovery as for a total loss, the underwriters are entitled to subrogation, at least in equity, to all the rights and remedies which the assured has to the property which is not actually destroyed, including the spes recuperando from any other source, unless the underwriters have relinquished that right by a stipulation in the policy.” The -same rule is reiterated in Rogers v. Hosack's Executors (18 Wend., 319), and also in Ætna Fire Insurance Company v. Tyler (16 id., 385). The abandonment has all the effect of an assignment by the insured, where the assignee would become possessed of all the rights against the carrier which the insured possessed, at the time of the assignment, and no more. The question then arises, was the special contract between the insured and the defendants a valid one, and if so what is its effect upon the plaintiffs’ right to recover. It has been frequently decided that a common carrier may by Special contract, limit, restrict or modify his common law liability as an insurer of the transportation of goods. In the case of Gould v. Hill (2 Hill, 623), a majority of the court held otherwise, but this court in Dorr v. The New Jersey Steam Navigation Company (1 Kern., 485), held the contrary, and overruled the case of Could v. Fill; and it had previously been repudiated in Parsons v. Monteath (13 Barb., 353), and in Moore v. Evans (14 id., 524). (See also 6 How. U. S. R., 344.) The court in all these cases say that they see no reason, why parties may not contract as they please in reference to the transportation of goods: that such an agreement neither changes nor interferes with any rule of law, and does not affect public morals or conflict with public interests. If the owner chooses to take upon himself part of the risk of transportation, and thereby induces the carrier to convey for a less rate of compensation, who has any right to complain ? It is a matter entirely between themselves, unless it is the result of a scheme to defraud third persons. It has long been determined. *177 both in England and in this country, that such an agreement is valid and binding, and in the absence of fraud can at all times be enforced. It is equally well settled, that common carriers have an insurable interest in the goods they transport, and can contract for the benefit of insurance effected by the owners. (Chase v. Washington Marine Ins. Co., 12 Barb., 595; Van Natta v. Security Ins. Mut. Co., 2 Sandf., 490.) In this case, the agreement was that in case of loss or damage for which the defendants might be liable, they should have the benefit of any insurance by or for account of the insured. This benefit was secured to them in consideration, in part, of the reduced rates of the price of transportation of the goods, of which the insured had the benefit. It is argued, that this clause in the contract did not exempt the carriers from liability to the plaintiffs, because it was made without their knowledge or consent and was an attempted fraud upon their rights. But this is not so in point of fact, so far as the defendants are concerned. The contract between them and the insured was made before any insurance was obtained, and though it sought to secure a right to the defendants in case policies were procured, yet on their part no fraud was contemplated on the plaintiffs: none is found by the court. It is true the case states that the plaintiffs did not know of the contract when they issued their policies: that that was a matter between them and the insured. If there was any fraudulent concealment of facts on the part of the latter, at the time they obtained their insurances, it would have avoided the policies and they would not have been bound to pay the loss. If they paid it voluntarily, they are not entitled to be subrogated. (Wilson v. Harper, 1 Comst., 586.) The contract, therefore, having been lawful, and tainted with no fraud, the plaintiffs could only take it from the insured, with such rights as they had against the carriers, and inasmuch as they may insure against the risk which they incur, though they may be liable to the owners, they may recover against the insurers. In this case it is not proved or found, that the goods were lost through the negligence of the defendants as averred *178 in the complaint. The only finding on that point is that the damage to the goods occurred in consequence of an injury to the boats in which the goods were, on the canal. It does not appear from this, that the defendants were primarily liable for the loss of the goods; and most clearly, unless they were, the plaintiff would not be entitled to recover. The whole of the plaintiff’s argument proceeds upon this assumption, and yet there is not enough in the case to show this liability. But it is enough that the plaintiffs took the rights of the owners of the goods subject to all agreements and equities between the insured and defendants; and that, the contract between them being valid, protects the latter against a recovery by the plaintiff. The judgment must be affirmed. The court expressed no opinion upon the question whether, in the absence of the special agreement, the insurers would have been subrogated to any right of action which the insured might otherwise have had against the carrier; all the judges (except Selden, J., who was absent) concurring, with this reservation. * Judgment affirmed.