Holmes v. United Insurance

Kent, J. delivered the opinion of the court. There is no doubt but that if property be insured to a larger amount than the real value, the overplus premium is recoverable by the assured, because the insurer shall not receive the price of a risk which he has not run.(a) On the other hand, if the risk has once commenced or existed, there shall not be any return of premium, as the consideration for it has then been given.(b) (Park, 367.) The recovery in the present case, therefore, depends on the solution of the question, whether the other persons interested in the cargo, could, in case of loss, have covered any part of their interest under this policy. 'Tf they could not, then the defend ants.} have run no risk beyond the amount of the plaintiff’s interest on board; and I think, from the facts before me, that such must be the conclusion of law. To constitute a partnership, by which the act of one will bind or enure to the benefit of the rest, there must be a reciprocal choice and agreement of the parties to unite their stock, and to share in all risks of profit and loss. (Watson, 1, 5. 1 Doug. 371. 2 Bl. Rep. 998.) They must not only be jointly concerned in the purchase, but jointly concerned in the future sale. (1 H. Bl. 48.)(c) In the case of Hoare v. Dawes, (1 Doug. 371,) a broker was employed by a number of persons to purchase a lot of tea, of which each was to have his separate share ; and he purchased the lot of tea for [331] the benefit of his employers; and it was held that they were not partners in the tea, because there was no undertaking by one to advance money for another, nor any agreement to share with one another in the profit or loss. And Lord Mansfield observed that it would be most dangerous if the credit of a person who engages for a fortieth part, for instance, should be considered as bound for all the other parts. And in the case of Coope and others v. Eyre and others, (1 H. Bl. 37,) several persons entered into an agreement to purchase a quantity of oil in the name of A. only, and to take aliquot shares of the purchase; but as it did not appear that they were jointly to resell the goods, they were held not to be partners. There was no communication between the buyers as to the proSt or loss. Each party was to have a distinct share, and to manage it as he judged best; and of consequence, the profit or loss of the one might be more or less than that of the other. In the present case, there is no evidence of any agreement or communication between the parties as to profit or loss, but what arises as a matter of intendment, from the fact, that the cargo of the ship belonged to the ^plaintiff and four oiher persons, and was purchased with the proceeds of the outward cargo, which also belonged to the same persons. To repel this inference, we have the other fact found, that the plaintiff carried on business for himself unconnected in trade with the other persons; and that the present insurance was made for himself, and that the other persons had no direction or concern therein. It is a strong and decisive fact in this case, that there was no agreement between the parties to share in the future sale of the return cargo; and the presumption is directly otherwise since the parties were unconnected in trade. This brings the case within the decision in Coope and others v. Eyre and others. The parties were not, in fact, partners, as amongst themselves, nor did they professedly act or appear as such. The plaintiff appears to have acted with candor, and to have directed an insurance on his own account, as interest should appear. The over valuation must have [332] originated in mistake, in too high an estimate of the result of the outward cargo, and in the expectation of an additional cargo to be procured on credit at Calcutta. We are, therefore, of opinion that the plaintiff was not a partner, and that he is consequently entitled to the return of premium, as liquidated in the case. Judgment for the plaintiff.(d) Footnotes [a] (a) See 2 Phillips on Insurance, 529,530 ; Loccenius, 1.2, c. 5, § 8 ; Amery v. Rodgers, 1 Esp. 207 ; Pollock v. Donaldson, 3 Dallas, 510. [b] (b) See supra, vol. 1, p. 313, n. (a) to Delavigne v. The United Insurance Co. [c] (c) See Story on Part. ed. 1841, p. 47 ; 3 Kent’s Comm. 25, 26; Collyer on Partn. by Perkins, 14-19 ; Post v. Kimberly, 9 Johnson, 470; Harding v. Foxcraft, 6 Greenleaf, 76. [d] (d) As a general proposition, an insurance made by one partner for the benefit of his firm, will be valid to cover the interest of the firm. (Story on Parta, ed. 1841, p. 150, and references in n. (1.) 2 Duer on Ins. 98, 99. 3 Kent’s Comm. p. 41. 1 Phillips on Ins. 161. Collyer on Partn., Perkins ed* 438.) But the rule is otherwise where an insurance is made on account of persons who are merely tenants in common or joint owners. In that case, the right of a part owner to insure is limited to his own individual share. (1 Phillips on Insur. 161, et seq. 2 Duer on Insur. 99, 157. Abbott on Shipp. 77, n. Turner v. Burrows, 5 Wend. 541. S. C. 8 id. 144. French v. Backhouse, 5 Burr. 2727. Bell v. Humphries, 2 Stark. 345. Hooper v. Lusby, 4 Campb. 67. Foster v. U. S. Ins. Co. 11 Pickering, 85. Consult Mr. Duer’s review of these cases, 2 Ins. 157-160.) Mr. Duer remarks, (2 Ins. 99,) “ This distinction between the rights of a partner and of a part owner, is a necessary result of the essential difference in the nature of their respective interests. The interest of a partner is in the entirety of the joint property, and his rights of disposition and control are co-extensive ; but the share of a part owner, although undivided, is his distinct property, and consequently, he has the sole power to make or authorize any contract in relation to its disposition or use. The several owners of a ship are generally part owners; but the ship may be in whole or in part partnership property, and when it is so, the right of each partner to make an insurance on the vessel or freight, co-extensive with the interest of the firm, is undoubted. But a part owner has no such right even when he is the managing owner, that is, when ihe fitting out and employment of the ship are confided to his direction. A ship’s husband has no such authority, and it cannot spring from the union in the same per» son of tttfo characters, to neither of which it separately belongs.”