Polleys v. Ocean Insurance

The action was continued, for advisement, and the opinion of the Court afterwards drawn up and delivered by Shepley J. One of the questions presented by this bill of exceptions is, whether the contract declared on was under the circumstances a legal contract. To enable us to come to a right conclusion, it is desirable, that the principles by which we must be guided, should be, if possible, clearly stated. Neither the law nor the Court can degrade itself by becoming the minister of evil. The consideration of a contract, or the matter out of which it arises, must therefore be legal. The object to be accomplished, or the act required to be performed by it, must also be legal. And although by itself considered the objects or — 148 — acts required by it may be legal, yet if the design of the contract be to aid or assist in the accomplishment of an illegal purpose, it partakes of the character of the transaction, with which it thus connects' itself, and becomes tainted by it and illegal. ' To prove property in any thing, it must be shewn, that the law allows that thing to be the subject, of property in the character and under the circumstances in which the claim is asserted; otherwise one can establish no right of property in it. When a contract is formed Upon a consideration legal at the time, its validity will not be impaired, though the law should afterwards declare the matter forming the consideration to be illegal. So if the act required to be performed be at tire time legal, and the law afterward make the performance illegal, that does not render the contract illegal, though it prevents the performance of it. " These are principles alike valuable to the community, as they are necessary to maintain the character of the law and of judicial tribunals. But while they are by no means to be infringed, they must not be pushed to such extremes as to interrupt, or embarrass the complicated transactions of society. The principles do not, nor would it be consistent with the ordinary transactions of life that they should require all contracts to be considered illegal, which grow out of some matter, or property, in which there had been incorporated, or to which had before attached, some illegal act. The law may declare, that on account of such former illegal ingredient, the article shall no longer be considered the subject of property, and in such case, it cannot afterward form the basis of a-legal contract. But if, notwithstanding the illegal act or ingredient attaches to it, the law permits it to be the subject of property, either absolutely or conditionally, until forfeited by some act yet to be performed, it may form the basis of a legal contract. When contracts are formed upon new or collateral considerations, and when they partake of the original illegal act, was much considered, and the cases were collected, in Armstrong v. Toler, 11 Wheat. 258. The Chief Justice says, “ how far this principle [that of illegality] is to affect subsequent or collateral contracts, the direct and immediate consideration of which is not immoral or illegal, is a question of considerable intricacy, on which many controversies have arisen and many decisions have been made.” This re — 149 — mark must be understood rather as referring to the difficulty of applying the rule of law to the complicated transactions of business, than to any difficulty in comprehending the rule itself. In that case the consignee of goods, introduced contrary to law by collusive capture, and afterward decreed forfeit, was allowed to recover the money paid on a bond, given for their appraised value. And the rule is there stated to be, that “ if the promise be unconnected with the illegal act, and is founded on a new consideration, it is not tainted by the act, although it was known to the party to whom the promise was made.” That case may serve to illustrate the application of the rule where the new contract does not connect itself with the illegal act. And the case of Cannan v. Bryce, 3 Barn, & Ald. 179, as an illustration of the application of it, when the new contract is connected with the original act. The act of 7 Geo. 2, ch. 8, relating to stock jobbing, prohibits the payment of any money on account of not transferring stocks in such cases ; and it was decided, that one, who lent moneys for the purpose of enabling a person to make such unlawful payment with a full knowledge of the object to which they were to be applied, and for the express purpose of accomplishing that object, could not recover. Here the lending of the money, by itself considered, was an independent and legal act, but being for the very purpose of assisting to do an illegal act, it became connected with it and thereby illegal. In the law of insurance an exception to these rules has been established in the most commercial countries of modem times, by declaring those contracts to be legal, which are made with the intention to violate the laws of trade of a foreign country. Such an exception breaks in upon the morality and harmony of legal science; and since the reasonings of Pothier, and of Story, and of Kent, and of other eminent jurists, the exception can only be sustained by allowing private interest to overcome the sense of moral and legal right. Whether the question can be presented so as to enable a court to act upon it de novo, or whether it must remain a blot upon the law, may be doubtful. The policy, in this case, was not upon any particular voyage, but for the term of one year. There is nothing in the case, which shews, that any illegal voyage was contemplated by the contract, or that any such was in fact undertaken. The contract cannot — 150 — therefore be illegal by reason of any act required by it, nor by reason of any aid intended to be given by it, to the performance of an illegal adventure. The consideration was then, the payment of ■ the premium on the one hand for, and the assumption on the other of, the risk of the legal employment of the vessel for one year. There being nothing illegal in the consideration of the contract, or in the employment of the vessel to be aided by it; the contract can only be illegal by being in some way connected with the prior illegal act, which had by tire manner of building and by the use of the enrolment, attached to the vessel. Is there any such connection shewn ? By the act of Congress concerning the registering and recording of ships and vessels, ch. 146, sec. 14, it is provided, that when a vessel “ shall be altered in form or burthen by being lengthened or built upon,” she shall be registered anew by her former name; and that her former certificate of registry shall be delivered up, under a penalty of five hundred dollars. The twenty-seventh section of the same act provides, “ that if any certificate of registry or record shall be fraudulently or knowingly used for any ship or vessel not then actually entitled to the benefit thereof, according to the true intent of this act, such ship or vessel shall be forfeited to the United States.” By the act for enroling and licensing ships and vessels, ch. 153, sec. 2, vessels enrolled are put upon the same footing as to qualifications, and are subjected to the same requisites, as registered vessels. The jury found, that the enrolment by the new name was procured by the plaintiff, “ without any fraudulent intent to deceive or defraud;” but that finding does not extend to the after use of it; and the vessel may be regarded as having been liable to seizure and forfeiture. This liability was for a cause in no manner connected with the contract of insurance. It had ^existed and its influence had been as great upon the vessel, as it could at any time be, before this contract of insurance was made. The act was complete. It neither required, nor could it receive aid from the new contract. In this respect, it was more entirely free from all connection with the new contract, than the illegal act in the case of Armstrong v. Toler was. It would be very detrimental to the commerce of the country to hold, that a vessel was not the subject of a lawful insurance because she was liable to seizure and forfeiture for a cause not connected with the policy. The laws of the United States contem — 151 — plate; that vessels are thus liable for causes arising without wilful negligence or intention of fraud. Cases of that kind are not of unfrequent occurrence, and the Secretary of the Treasury is authorized by law to remit the forfeiture. It could never have been the design of the statute under such circumstances to destroy the legal title, or lawful right of employment, until die forfeiture was exacted. The risk is not increased, nor is the loss for such cause within the policy. The assurers cannot place themselves in the situation of the government, and claim to act for it. None can claim a forfeiture, but those authorized by law. Nor can this matter be properly tried collaterally, and by a Common Law Court. The jurisdiction belongs to another tribunal. It is a matter between others, in which the defendants are not interested, and with which they have no concern. There is another aspect in which the same transactions are presented. It is insisted, that the enrolment should not have been admitted in evidence in proof of property, because an unlawful document cannot be used as proof. In considering this question, it will be necessary to bear in mind, that it does not appear in the case, that the vessel was insured as a vessel of the United States. Her national character does not appear to have entered into the contract. If such had been the fact, the plaintiff could not recover, because the laws of the United States declare, that if not registered by the former name, in case she has been built upon, “ she shall cease to be deemed a ship or vessel of the United States.” As she was not insured as a vessel of the United, States, and as the laws do not for such cause destroy the title to the property, their effect being only to take from that title the particular character of being a vessel of the United States, the document was properly admitted. It is also contended, that not being properly and legally documented, she was not seaworthy ; and that she was not the proper subject of insurance. It is necessary here, again to notice a distinction. If, for the want of legal documents, the voyage is, by the laws of the country, rendered illegal, then the policy is void on account of the illegality of the voyage. Upon this principle alone, the case of Farmer v. Legg, 7 Term R. 186, could have been decided. But if, as in the present case, the laws do not declare — 152 — the voyage to be illegal on account of the want of the proper documents, then the consequences are left to be determined by the mercantile law. And by that law, where the national character of the vessel is not made a part of the contract, the want of such documents is not material, unless it appears, that the risk was enhanced, or that the loss happened in consequence of the want of them; in which case, the insured cannot recover. 7 East, 367, Dawson v. Atty; 14 East, 374, Bell v. Carstairs; 2 Johns. 157, Elting et al. v. Scott et al. Nothing appearing in this case to bring it within this rule, these objections cannot prevail. The next question presented, relates to the admission of the declarations of Benjamin Knight, a stockholder and one of the directors of the company. The declaration was not made while acting in the business of the company, but after the loss happened ; and it purports to state the knowledge of the company at the time the insurance was effected. Such declarations cannot be received as coming from an agent of the company, when he was not acting in that character. Haven v. Brown, 7 Greenl. 421. The rights of all corporate bodies would be wholly insecure, and at the mercy of each corporator, if the admission or declarations of one corpora-tor could charge the corporation. The principle cannot be admitted. And the testimony must be regarded as improperly received. 2 Stark. Ed. 580; 3 Day, 491, Hartford Bank v. Hart. But as these declarations related to a matter, as has already been determined, which did not affect the contract, they were immaterial to-the issue; and there is no sufficient cause for setting aside the verdict on that account. A question is also made respecting the exclusion of the declarations of Joseph Bean, and the depositions of Freeman, Parsons, and Weare. It appears in the case, that Bean, with another person, had agreed with the plaintiff to employ the vessel for a certain time, paying for her use a share of her earnings, and that during that period she was lost, he being on board at the time of the loss. The declarations were not made while he was on board, but after the loss had happened. By the contract, Bean was not acting as the agent of the plaintiff, but on his own account. He could not bind the plaintiff in any contract made with others in consequence of the agreement for the employment of the' vessel. No — 153 — declarations made by him could therefore be admissible, on the ground of agency. And even if he had been an agent, his declarations, made while he was not acting in that character, but after the loss happened, could not be admitted. The questions put by the plaintiff to Freeman, Parsons, and Weare, appear to have been put only by way of obtaining explanations of the testimony called out by the defendants ; and the answers cannot be evidence, when the testimony, which they were intended to explain is excluded. Nor can illegal testimony be admitted because it was not objected to before the magistrate taking the deposition. The proper rule upon this point can go no further, than to require, that any objection to the form of the question and to the manner of examination should be taken before the commission issues, when taken under a commission, or at the time of taking the testimony, when not so taken. The magistrate cannot judge of the legal character of testimony, which may, or may not, he rendered admissible by events which may take place during the course of the trial. There docs not appear to have been any error in excluding this testimony. Whether the copy of the deposition of Young was, under the circumstances properly admitted, may depend upon the right of the plaintiff to use the original deposition if it had been then on file. And a majority of the Court are of opinion, [in which 1 do not concur,] that the 31st rule, taken nuconnection with the 43d, by implication gave the plaintiff the right to use the deposition; and that such a construction of the rules does not contravene the provisions of the statute. This objection is therefore overruled ; and judgment is to be entered upon the verdict.