Murray v. United Insurance

Radcliff, J. This vessel was insured as the American brig Mary. This has already been considered as equivalent to a representation of neutral property. It is stronger than a representation, for being contained in the policy itself, it amounts to an implied warranty of that fact.(a) Considering it either as a representation, or an implied warranty,(b) the plaintiffs, according to the cases al [170] ready decided, are precluded from a recovery, by the operation of the sentence in the French court of prizes, which among other causes, proceeds on the ground that the property was English. But I also think the plaintiffs are precluded on the merits. 1. A representation or warranty of neutrality, requires the property to be wholly neutral. If one of the belligerents had an interest, whether partial or entire, the risk was thereby increased, and the warranty not complied with. In the present case, Bazing, the original owner, made a bill of sale on the 20th of April, to the plaintiffs, in trust for one Bayley, who was a British subject. The insurance was made on the 15th of May thereafter. By an article executed at the same time with the bill of sale, it was. agreed to reconvey the brig to Bazing, within a limited time, if he should enter good bail in a suit then depending against him, in favor of Bayley; or if the money due to Bayley should be paid, either by the earnings of the vessel or otherwise ; and it was particularly agreed, that the freight of the brig, on the voyage in question, should be applied to the debt due to Bayley; and if the freight should prove insufficient, the vessel was to ' be sold for the payment of the debt, and the surplus money' only returned to Bazing, By virtue of the bill of sale and this agreement, Bayley had an interest in the vessel, and in her freight; and he might finally sell and dispose of her as he saw fit, for the payment of his debt. Whether this interest was, according to the distinction of our law, a legal or equitable interest is not material to the question. That distinction, I believe, is not known in any other country, except the one from which we derive our jurisprudence. It is peculiar to England and the United States. It is sufficient, therefore, that Bayley had a vested interest, which he might enforce in some of the courts of any country. His interest being such, and he being one of the belligerents, the property was not wholly neutral, and the implied warranty is, therefore, not supported. 2. It appears by the verdict that the circumstances relative to the interest of Bayley were not disclosed to the underwriters. If they were material to the risk, which I think they undoubtedly were, they ought to have been disclosed; [171] and the defendants would then have had an opportunity to act as they, saw fit.(a) It is true, that it is, also found that the defendant afterwards admitted, that had they known the agreement, its contents would not have induced them to demand a higher premium, under an idea, that it did not vest any interest in Bay ley. But if the light in which I have viewed it be just, this idea was incorrect, and founded in mistake, and, therefore, cannot affect the merits of the question. Although the terms of the agreement w&re not fully known to the French admiralty; yet it appeared by a letter from William Hart to Bayley, that the vessel was conveyed by a bill of sale in trust, as above mentioned, and that the court [172] went on this ground, among others, in condemning the vessel, and I think the evidence was sufficient to justify the sentence. For these reasons, I am of opinion, that the plaintiffs cannot recover ; that the policy was void ab initio, and the risk never commenced. But as no actual fraud has appeared, the plaintiffs are entitled to a return of the premium; and for this they ought to have judgment. The right to a return of the premium has been already decided in this *court, under similar circumstances; and the reasons in support of that decision need not be repeated. Kent, J. Two questions arise in this cause: 1. Was the vessel warranted American ? If so ; 2. Do not the condemnation at Cape Franpois, and the fact that Bayley, the cestuy que trust of the profits of the vessel, was a British subject, furnish sufficient evidence of a breach of the warranty. 1. The first question has already been decided in this court, in the case of Goix v. Low, (1 Johns. Cas. 141.) It was there determined, that if a vessel be described as an American vessel, it amounts to a warranty that she is American. 2. As to the second question, it is sufficient to refer to the bill of sale and agreement, without taking notice of the sentence at Cape Franpois, which is destitute of precision, and does not state with clearness the result of the deductions of the court. It appears that Murray and Hart took a bill of sale of the vessel, as trustees for Bayley, and that he was, in equity, the owner, or cestuy que trust, or entitled to the profits of the vessel during the voyage. This was sufficient under our own law to destroy her privilege as an American vessel. The act of Congress declares, that no vessel shall continue to enjoy such privilege any longer than she shall continue to .be wholly owned by American citizens ; nor shall an American register be obtained, without affidavit, that no foreigner is either directly or indirectly, by way of trust, confidence, or otherwise, interested in the vessel, or in the profits and issues thereof. The section in this act, prescribing the form of the oath, accordingly explains and illustrates the meaning of the other part, that the vessel must be' wholly owned by American citizens. This brig, therefore, sailed without being entitled to an American register, within the true intent and meaning of the act; and one of the enemies of France, being a cestuy que *trust of her profits, she was not, in reference to the powers at war, to be considered a neutral vessel entitled to the privileges of neutrality. It is easy to perceive, that if such arrangement' was to be permitted, foreigners resident abroad could trade with all the immunities of Americans, contrary to the policy of our statute, and contrary to the right of maritime capture, as it respected the belligerent powers. I am of opinion, therefore, that the interest of Bayley in the profits of the vessel, is evidence of a breach of the warranty, the same not being wholly true; and consequently, that the plaintiffs are not entitled to recover any thing, except the premium, to which they are of course entitled, there being no actual fraud in the case.(a) (1 Johns. Cas. 310.) Lansing, Ch. J. was of the same opinion, Lewis, J. was absent, Benson, J. referred to the opinion delivered by him, in the case of Vandenheuvel v. The United Insurance Company, as to the effect of foreign sentences, as conclusive in this case. Judgment for the plaintiffs, for a return of premium only.(b.) Footnotes [a] (a) See Goix v. Low, supra, vol. 1, p. 341, and n. (a.) [b] (b) Mr. Marshall, (1 Marshall, 450,) defines a representation, as “ a collateral statement, either by 'writing, not inserted in the policy, or by parol, of such facts or circumstances relative to the proposed adventure, as are necessary to be communicated to the underwriters, to enable them to form a just estimate of the risks.” Mr. Duer, in commenting upon this definition, ob [170] serves, that it “ has been generally followed, and in many judicial opinions, its acuracy seems to be fully admitted. It is, however, liable to many and grave objections. “ It is not essential to a representation that it should be made by parol, or by a writing not inserted in the policy ; it may be contained in the policy itself. It is true, that by the English law, and our own, every affirmation of a fact contained in the policy, in whatever terms expressed, is construed as a warranty; [in the case of De Hahn v. Hartley, 1 T. R. 343, these words, ‘ sailed from Liverpool, with 14 six pounders, swivels, small arms, and fifty hands or upwards, copper sheathed,’ written in the margin of the policy, were held to be a warranty. In Kenyon v. Berthon, the following words were written transversely in the margin of the policy: * in port on the 20th of July] 1776.’ Lord Mansfield was clear that they were a warranty, and as the vessel was proved to have sailed on the 18th of July, that the underwriter was not liable, although the difference of two days was not material to the risk. Doug 12, No. 4. See also Bean v. Stupart, Doug. 11. If the vessel is described in the policy as an American, British, Swedish ship, &c., it is a warranty of national character. Goix v. Low, 1 Johns. Cases, 341; Murray v. United Ins. Co. 2 Johns. Cases, 168 ; Barker v. Phoen. Ins. Co. 8 Johns. R. 237 ; Francis v. Ocean Ins. Co. 6 Cowen, 404;] but when the statement relates, not to facts, but to the information, expectation or belief of the party, it is plain that it cannot be thus construed, and it is equally clear that when the parties declare that the statement, although positive in its terms, shall be construed as a representation, and not as a warranty, the intention so declared, must supersede the general rule. [Hodgson v. Richardson, 1 Black. 463. Reid v. Harvey, 4 Dow. 97. Thomson v. Buchanan, 4 Brown’s P. C., Tomlyn’s ed. 484. Stewart v. Morrison, Millar on Ins. 54. Rice v. N. Eng. Ins. Co. 4 Pick. 414. Baxter v. N. Eng. Ins. Co. 3 Mass. R. 96. Andrews v. Essex Ins. Co. 3 Mason, 61. Lothian v. Henderson, 3 B. & P. 499. 1 Phillips, 269; 1 Marshall, 315. 1 Emerigon, 182.] To illustrate this: If it be stated in the policy that the vessel to which the insurance relates, is provided with 10 guns and 20 men, this is a warranty ; and if she have one gun, or one man less than the stipulated number, the policy is void ; but if the statement be, that according to the last advices, the vessel will be furnished with the same armament,’ this is not a warranty of the fact, but a mere assertion that such advices had been received, and if this assertion be true, and the case is otherwise exempt from fraud, the policy is valid, even when the information proves to be wholly erroneous. If to the positive statement, these or equivalent words are added, ‘ It is, however, understood, that this statement is not to he construed as a warranty, hut as a representation merely,’ its literal fulfilment is no longer requisite, and unless the variation from its terms be such as plainly to enhance the risks, the insurer continues Hable.” 2 Duer on Insurance, 644-646. [a] (a) See note (a) to Seton v. Low, supra, vol. 1, p. 8 ; 1 Phillips on Ins. 213, et seq. In McLanahan v. The Universal Ins. Co. 1 Peters, 185, Mr. Justice Story observes: “ The contract of insurance has been said to be a contract uberrima jidei, and the principles which govern it are those of an enlightened moral policy. The underwriter must be presumed to act upon a belief that the party procuring insurance, is not at the time in possession of any facts material to the risk, which he does not disclose.” Mr. Duer in treating of concealment, (Duer on Ins. vol. 2, p. 380, § 2,) remarks that “ Marine insurance is, emphatically, a contract — to borrow an expressive phrase from the Roman law — uberrima jidei, of the most abounding good faith. It abhors deceit, dissimulation, evasion. It condemns alike, the suppression of truth, and the assertion of falsehood. It seeks to place the parties, as far as practicable, on the ground of an entire equality, and, therefore, exacts from both a frank and unreserved candor, an open and lucid integrity. The general rules are, that each is bound to communicate to the other, all facts within his personal knowledge, that tend to show the true character and value of the risks that are meant to be covered, and that each, in his own communications to the other, is bound to state the exact and the whole truth, in relation to the facts that he represents,'or upon inquiry, discloses. Carter v. Bochm, 3 Burr. 1905. Seaman v. Fonereau, 2 Strange, 1183. Oliver v. Greene, 3 Mass. R. 133. Kohne v. N. A. Ins. Co. 1 Wash. C. C. R. 156. Vale v. Phoenix Ins. Co. 1 Wash. C. C. R. 283. M'Lanahan v. Univer. Ins. Co. 1 Peters, 185. Park, 8th ed. 403. 3 Kent’s Comm. 283. Grotius de Jur. Bell. Lib. 2, ch. 12, § 23. Bynkershoek Quaes. Jur. Pri. Lib. 4, ch. 25, § 6. Pardessus, tom. 3, p. 330. Boulay Paty, tom. 3, p. 500. 3 Benecke, ch. 10, p. 292. 1 Emerig. ch. 1, §3, p. 18, 19. Pothier, n. 91.” Consult also Duer on Ins. vol. 2, p. 503, 506, where the ordinances of Hamburgh, Stockholm, Rotterdam, Amsterdam, Bilboa, and Prussia, and other proofs and illustrations are collected. [a] (a) As to return of premium see supra, vol. 1, p. 313, n. (a) to Delavigne v. The United Ins Co. [b] (b) [Old note.] Several other similar causes were also decided this term. In Haskin v. The New York Insurance Company, the vessel was captured by the British, and condemned as lawful prize ; no reason being assigned for the condemnation in the sentence. On the principles decided in Goix v. Low, and Vandenheuvel v. The United Insurance Company, the court (Lansing, Ch. J. and Lewis, J. being absent) considered the word American, as amounting to a warranty, and the sentence of the admiralty court, though general, as conclusive. In Vandenheuvel v. Church, there was no warranty contained in the policy ; but in the written instructions to the broker, the ship was represented to be American, and the property of a citizen of the United [174] states, residing in New York. The vessel was condemned as the property of Spanish subjects, enemies of Great Britain; and the court considered the representation as equivalent to a warranty; and the sentence of the admiralty court as conclusive evidence of the breach of warranty. But by the reversal of the judgment, in the case of Vandenheuvel v. The United Insurance Company, in the Court of Errors, foreign sentences are now no longer held to be conclusive.