Melcher v. Ocean Insurance

Appleton, C. J. On Jan. 30, 1864, the plaintiff, as master of the ship ‘ C. S. Pennell,’ of which he was part owner, and as agent for the other owners, chartered her to Messrs. Schon & Co., and to Mutzenbecher Sons, merchants, and as agents of Messrs. Witte & Schutte, Lima, for the purpose of taking a guano cargo from the Chincha Islands, to Hamburg or Rotterdam. It was provided by the charter-party, the ‘ C. S. Pennell’ being then at New York, that ‘the said vessel shall sail on or before June 1, 1864, to San Francisco, and thence proceed with all convenient dispatch to the port of Callao, Peru, where the captain shall immediately report his arrival to Messrs. Henry Witte & Schutte of Lima.’ The vessel was then to proceed to the Chincha Islands, there load with guano, and after completing her loading to proceed to Hamburg or to Rotterdam, etc. The charter-party is an unit. It is one contract. It is, as between the parties to it, but one continuous voyage. Its terms are such as the parties choose to enter into. They are as binding, during its continuance, as to one portion of -the chartered voyage as to another. On March 23, 1864, the defendants issued to the plaintiff the policy in suit, in and by which they caused him ‘ to be insured, lost or not lost, sixty-five hundred dollars on charter, twenty-six hundred dollars on primage, and also fifteen hundred dollars as property on board ship “ Chas. S. Pennell,” at and from New York to San Francisco.’ The evidence satisfactorily shows that this policy was intended to cover the charter-party of Jan. 30, 1S64. [81] On. April 1,1861, the plaintiff sailed for San Francisco, in accordance with the charter. On the voyage, in May following, the vessel was stranded on a coral reef, in longitude 38° 42' west, latitude 17° 18' south. After laying there some thirteen hours, she came off on a flood tide and was taken by the master to Rio Janeiro, when it being found, upon examination, impossible to repair her, she was, in accordance with the recommendation of the surveyors, sold at public auction. Proof of loss was duly made, but the defendants declined adjusting it, on the ground that the policy did not cover the guano charter. The parties to the policy in suit had a right to make their own contracts. The policy might cover the whole, or a part only of the chartered voyage. The civil war then raging, the plaintiff perhaps deeming the danger from the rebel cruisers to be greatest from New York to San Francisco, effected an insurance on that portion of the voyage described in the charter-party. By this charter-party, no freight was to be earned between New York and San Francisco, nor between San Francisco and 'the Chincha Islands. To give any effect to the policy, it must be regarded as upon the freight which would have been earned during the whole voyage, if the loss occurred during a portion of the voyage which was insured, otherwise that part of the policy which insures ‘ sixty-five hundred dollars on charter ’ would practically be stricken out, and would be of no avail. In Davidson v. Willasey, 1 M. & S., 313, a ship was chartered from Liverpool to Jamaica, there to take on board a full cargo for Liverpool, at the current rate of freight, to be paid one month from the discharge of her cargo at Liverpool; and the ship-owners effected a valued policy on the freight at and from Jamaica to her port of discharge in the United Kingdom; and the ship arrived at Jamaica, and, after taking on board one-half of her cargo, was lost by storm, the remainder of her cargo being on shore and ready to be shipped; held, that the assured was entitled to recover as for a total loss. ‘ The interest intended to be insured,’ remarks Lord Ellenborough, C. J., ‘ was the freight which the assured would [82] have earned under the terms of the charter-party, if the voyage had not been stopped by the perils insured against, which has been held for upwards of twenty years past to be an insurable interest as freight.’ In Barber v. Fleming, 5 Law Rep. Q. B. 59, which resembled the case at bar in all its essential particulars, Cockburn, C. J., says: ‘ It is a fallacy to say the freight is earned simply by bringing the cargo from the port of loading to the port of discharge; the freight is earned by the whole voyage, which it is necessary to make to fetch the cargo and bring it home.’ But if the vessel is chartered for a circuitous voyage, and a policy is effected upon the chartered freight, the completion of the voyage is required to earn the freight; but if the voyage fails by reason of the perils insured ' against, the insured is entitled to recover, otherwise his policy would do him no good. The law on this subject is very accurately stated by Mr. Justice Blackburn in Barber v. Fleming. 'I think,’ he observed, ‘ as soon as the case is understood, it is very clear. It appears there is a policy of insurance made upon a voyage “ from Bombay to How-land’s Island and from thence to England ; ” that is the description of the voyage. The nature of the thing insured is “ freight chartered or otherwise.” So that upon the face of the policy there is a bargain between the insured and the underwriters which if, during that voyage, by one of the perils insured against, freight is lost, the underwriters should pay. . . . When a ship-owner has got a contract with another person under which he will earn freight, and has taken steps and incurred expense upon the voyage toward earning it, then his interest ceases to be a contingent thing, but became an inchoate interest, and is an interest which if afterwards destroyed by one of the perils insured against is lost and ought to be paid for by the underwriters.’ Here the vessel had started upon the voyage as chartered, and a part of which was insured, with acargo provided on its arrival at the Chincha Islands. The plaintiff’s interest in the chartered freight had therefore commenced. The loss occurred during the portion of the voyage on which the insurance was effected. The fact that there was a charter-party between the plaintiff [83] and others for a voyage from New York to San Francisco and an insurance thereon by another company, constitutes no defense, unless the liability of the defendants was thereby increased or injuriously affected. That there was to be freight from New York to San Francisco and the same was insured, was well known to the underwriters. The charter-party between the plaintiff and Sclion and others, upon which the insurance in suit was effected, was binding in all its parts. It mattered not what liabilities the plaintiff might have incurred to others, he was bound by his contract with them to its full arid entire performance. The underwriters cannot avail themselves of any contracts made by the plaintiff with others, when with 'a full knowledge of their existence they insured a specific charter and a specific risk. They assumed the risk for a portion of the chartered voyage for a consideration full and satisfactory. The plaintiff’s interest attached the moment the vessel left New York on the chartered voyage, which the defendants insured. It is nothing to them that the vessel was earning freight, unless the risk was thereby increased, and that is not alleged. Most assuredly they cannot complain, when they well knew such was to be the case, and the policy was issued with such knowledge. Indeed, if the policy does not cover the risk as claimed, it covers nothing. The conclusion is irresistible that the defendants, with a full knowledge of all the facts relied upon in the way of defense, issued their policy in suit to protect the plaintiff from the very risk which has occurred. The vessel being condemned and sold and the voyage abandoned, the defendants are liable for the insurance on the charter and on primage for $9,200. Satisfactory proof of loss was made on 27th February, 1865, and the defendants’ liability to pay, accrued according to the terms of the policy in sixty days thereafter. Judgment for plaintiff for $9,200, with interest from April 28, 1865. Cutting, Walton, Dickerson, Danforth, and Tapley, JJ., concurred.