Columbian Insurance v. Black

Spences, Ch. J. delivered the opinion of the Court. This suit is on a premium note on a policy, underwritten by the plaintiffs, on the schooner Fanny, on the 11th of February, 1613. The insurance was effected by the defendant, for the owners of the Fanny, and the voyage ended safely. The first objection to the plaintiffs’ recovery is, that there was a failure of consideration for the note. It has been urged, that the company was insolvent when they underwrote the policy, and that, therefore, had a loss taken place, the'assured would have had no indemnity, and that under these circumstances, it was a fraud and imposition on the assured, to assume the risks. It appears that the company was much involved when this policy was effected, but the better conclusion is, that according to their ideas of their concerns they were then solvent. Their solvency depended on the event of the risks they had assumed ; if they turned out fayourably, they would be solvent. The evidence will not authorise the conclusion that the company was then insolvent, or that their conduct in making the insurance was fraudulent. The defendant offered to set off the amount of a’loss on a valued policy, under-written by the plaintiffs, on the 11th •of February, 1813, on the freight of the schooner Dick; and it was proved, that the plaintiff’s, at the time last stated, had insured for the defendant, on account of the owners of the Schooner Dick, $11,428, valuing the freight at $20,000, ,at a premium of 30 per cent. It was proved, that the Dick sailed oh the voyage insured, two days after the date of the policy, with a full cargo, and that on the 17th of March after, she was captured and sent into Plymouth as a prize, --war then existing between the United States and Great Bri-ttain. The Dick was owned by the defendant, and William *and John Minugh. The defendant made an abandonment, • and exhibited the usual proofs of interest and loss. [155] The case of Gordon v. Bowne, (2 Johns. Rep. 150.) has been relied on as an authority against the sel-oflf. That was an attempt to set off a loss on an open policy, and Kent. Ch. Justice, observed, that the extent of the loss and the extent of the interest, must always be matter of great uncertainly, until the proofs have been exhibited and passed upon by a jury. He said it was a contract of indemnity, and nothing could be more unliquidated than the amount of such indemnity. The facts in the present case are simple 'and few, and are not calculated to produce a perplexed inquiry,. The liquidation of damages depends on the sailing of the vessel with a cargo, and her loss by a peni insured against. A set-off here promotes justice and prevents litigation ; and no case can come before the Court, in which the injustice of denying the set-off would be more glaring. It cannot be seriously doubted that the defendant alone could su.-tain a suit for the loss. It was an insurance for him, on account of the owners of the schooner. The contract is between these parties ; and although all the-owners might unite in a suit, the defendant is competent to sue alone. Wt re it neccessary for the defendant to prove the extent of his interest, he could not alone maintain the suit, but this not being necessary in a valued policy, he can sue alone; and then, the principle applies, that if the legal or equitable claims or liabilities become vested in one pefsón, they may be set off against separate demands, and so vice versa. The ca«e of Parker and others v. Beasely & Bell. (2 Maul. & Sel. 423.) is a strong authority for the defendant, on bath points. The defendants were sued for premiums of insurance, and at the trial, offered to set off the losses on two policies of insurance underwritten by the bankrupt, whose assignees the plaintiffs were. The defendants effected the policies in their own names; but persons resident in this country were proprietors, in different proportions, of the cargo. Lord Ellenborough (and the other Judges concurred) decided, that the policies being effected in the name of the brokers, on account of other persons, the brokers could maintain an action in their own names, if they had any lien on the policies; and by subscribing to policies in their own [156] names, the underwriters had consented, that they might stand in the character and situation of principals. Here, the defendant has a lien on the policy, independent of his interest; he gáve his note for the premium. In the case last cited, it was not objected, that'the loss on the policy could not be set off; but it was agreed on all hands, that it could be done, if the defendants had a right to avail themselves of the policy. We are of opinion, therefore, that there must be judgment for the defendant, for the excess of the loss over the amount of the note on which this action ig brought. Woodworth, J. wag not on the bench when the cause was argued. Judgment for the defendant.(a) Footnotes [(a)] In Bamford v. Harris, tried before Lord Ellenborough, (t Starkie’s N. P. Rep. 343.) it was decided, that where, by the custom of thehat trade, the amount of the injury ..sustained by the hats in the process of dying-, is deducted from the charge for dying, the defendants might, in an action against him by the dyer, set off his claim for the damage in the dying, though there was no notice of the set-off, and though the amount of the damage had not been previously ascertained or adjusted. In Barker v. Langham, (6 Taunt. 519.) though Gibbs, Ch. J. seemed inclined not to allow an insurance broker to set off a loss on a policy of insurance, effected in his own name, as agent merely, against an action brought by the assignees of the insurer, a bankrupt, for premiums ; yet he appears to have entertained no doubt, that if the suit had been against the assured, or the original debtor himself, the claim of a -total loss on a policy of insurance underwritten by the plaintiff, might be made. Though Kent, Ch. J. in Gordon v. Bowne, says, that the words mutual debts in the English statute, (2 Geo. II. ch. 22. s. 13.) and the words of the act of the 30th of March, 1801, (sess. 24. ch. 90.) “ dealing together.,” and being “ indebted to each other,” are of the same import, and that the English decisions, upon the construction of their statute, are, therefore, tobe applied to the construction of our act; yet, in the late revised act, passed the 5th of April, 1813, (1 N. R. L. 515. sess. 36. ch. 56.) where the words are, “ if two or more persons dealing together, be indebted to each other, or have demands arising on contract or credits against each other,” &c. the legislature must have intended, by these additional words introduced, to have given a greater extension to the hf of set-off; or, at least, to remove any doubts which may have existed as tocases being within the meaning of the formér act, or of the English [157] statute, according to the settled construction of it. (Duncan v. Lyon, 3 Johns Ch. Rep. 351. 360. 573. 575.) They have a broader meaning than the words mutual credit, used in the statute of 5 Geo. II. ch. 30. s. 28. in regard to bankrupts, and in our insolvent act. (seas. 36 ch. 98. s. 20. 1 N. R. L. 469.)