Dow v. Whetten

The following opinions were delivered: By the Chancellor. The memorandum or slip offered in evidence by the plaintiff for the purpose of showing the intention of the parties to the policy was properly rejected. The policy itself is the only legal evidence of the agreement between the parties. If that is not in fact filled up according to the intention of the parties, through inadvertence or mistake, a court of equity may, upon clear and positive evidence of such inadvertence or mistake, correct the policy. In such a case the slip may be used in the court of equity, in connection with the evidence, for the purpose of showing the mistake and reforming the policy ; but in a court of law it can be used for no other purpose than that of showing a misrepresentation on — 167 — the part of the assured. Pawson v. Barnevelt, Doug. R. 12, note 4. Higginson v. Dall, 13 Mass. R. 96. Phoenix Fire Ins. Co. v. Gurnee, 1 Paige’s R. 278. This very case shows the danger of resorting to the label or slip to control the written policy, which contains the agreement of the parties at length. The latter is, in this case, a valued policy upon the goods out, and an open policy upon the proceeds home; and such was the contract of insurance between the parties, as stated in both counts of the plaintiff’s declaration. But the written application, which was offered in evidence at the trial, was for “ a valued policy for $4000, out and home.” It is evident from this fact, that if the written memorandum is to control the construction of the policy, it will make the contract different from what even the plaintiff’s counsel supposed it to be when he drew his declaration in this suit. I think" the judge was also right in declining to charge the jury that the word proceeds had received such a judicial construction as to include the same goods upon the return voyage. In the cases of Havens v. Gray, 12 Mass. R. 71, and Whitney v. The American Ins. Co., 3 Cowen’s R. 210, the return cargo was in fact the proceeds or returns of the outward shipments, according to the ordinary understanding of these terms ; or, in other words, the returns or proceeds of the outward cargo were all included in the home cargo; and although the personal credit of the assured had been added, to complete the shipments for the return voyages, yet, as both were cases of valued policies, the plaintiffs were entitled to recover the amount of such valuation, although goods of a greater value than the amount of the proceeds were included in the return cargo. The result would have been the same if they had purchased a part of the return cargo with money, provided the whole proceeds or returns of the outward cargo were shipped upon the homeward voyage. But the proceeds of a cargo, in the ordinary understanding of the term, does not mean the specific■ article of which the original cargo was composed. A policy of insurance,like any other contract, is to be construed by the popular understanding, or the plain and ordinary sense of the terms employed, unless those terms have received a legal construction, or have acquired a technical — 168 — meaning in reference to the subject matter of the contract. If the terms employed have received a settled legal construction, that must govern, and no .evidence of a particular custom or usage ¡n opposition to such legal construction can be received. In this case, however, the plaintiff “ offered to prove that the word proceeds, as a mercantile word in usage, was so -understood among merchants as to include the same goods on a return voyage.” There are many cases in which parties have been allowed to prove that particular terms made use of in policies, and which have received no settled legal construction, have, among merchants and underwriters, a different meaning from that in which those terms 'are used in the ordinary transactions of life. Thus, the term corn in the memoran- • dum articles has been held to include peas, beans and malt; but to exclude rice, on the evidence of commercial usage. Parke on Ins. 112. 5 Bos. & Pul. 213. So in the case of Coit v. The Commercial Ins. Co., 7 Johns. R. 385. Although it was admitted that sarsaparilla was a root, within the general meaning of the term, yet the supreme court decided that parol evidence might be given to show that it was not understood by underwriters and commercial men as a root, within the meaning of the memorandum ; and in the case of Astor v. The Union Ins. Co., 7 Cowen’s R. 202, where the policy was on a cargo of 'fur, evidence was received to show that among dealers in such articles the word fur included bear skins, dear skins, &c. and that they were not included in the terms hides and skins, in the memorandum articles. Upon the .principle of these cases, if the plaintiff could have shown a settled usage among commercial men to consider the same specific articles, when brought back upon the return voyage, to be the proceeds of the' outward cargo, and to be included in that term, he should have been permitted to give evidence to the jury., It is doubtful whether a settled usage of that kind could have been established by proof; but we cannot judicially say such • a usage does not exist, and as the evidence was offered and rejected, I think that decision was erroneous, and that the judgment should be reversed. In that case a venire de novo must be issued, to enable the plaintiff to establish the fact, if -he can, upon a new trial. There would be no justice, how — 169 — ever, in compelling the defendants in error to pay a heavy bill of costs to the plaintiff for a mistake of the judge, if the offer was merely formal, and the plaintiff had no reasonable, expectation of establishing the usage as contended for. If, therefore, the court should concur in this opinion, I think the costs of the plaintiff in error, as well as the costs of the application to the court below for a new trial, should abide the event of the suit. Since this opinion was prepared, I have seen the first ten pages of the report of a case on this same policy in the superi- or court of the city of New-York, including the opinion of the chief Justice of that court, 1 Hall’s R. 166; and I entirely concur in the decision as made in that case upon the questions there presented to the court. It is in accordance with the view I had taken of the language of this policy, that the term proceeds, in its natural and ordinary sense, would not include the outward cargo sent back in the same state upon the return voyage : and that this term in policies of insurance had not yet received such a judicial construction, founded upon known commercial usage, as to authorize the court to say it was not used in its natural sense in this policy. But so far as I can judge from the facts stated in the report, and, in the opinion of the chief justice of the superior court, there was no attempt in that case to shew a commercial usage which had given a peculiar meaning to this term in policies of insurance? or among commercial men, in accordance with the plaintiff’s claim. In the case now before us, the offer to prove such usage was distinctly made, and the evidence rejected. It is on this ground alone that I think the circuit judge was wrong. I do not see how we can get over this objection, without overturning the principle upon which several of the cases before referred to have been decided. By Mr. Senator Allen. The policy in this case was upon three packages of goods, valued at $4000, insured by the Hope Insurance Company of New-York, on board the ship Braganza from New-York to Batavia, and other ports in the Island of Java; and at and from thence back to New-York, — 170 — upon the aforesaid goods out, and upon the proceeds thereof home. ( ■ It was contended by the plaintiff that the policy covered the same goods on the return voyage, and that the word proceeds, as a mercantile word in usage, was so understood as to include the same goods on a return voyage ; and by the defendant it was insisted that the goods home being the same as the goods out, they were not within the description of goods insured by the policy from Batavia to New-York as the goods covered from Batavia to New-York were proceeds, and nothing but proceeds of the goods laden out. The question, therefore, is as to the proper and’appropriate construction of the word proceeds. The definition of the word proceeds is rendered by Webster ais issue, rent, produce, as the proceeds of an estate; in commerce, the sum, amount of value of goods sold and converted into tnoney, as the consignee was directed to sell the cargo and vest the proceeds in coffee; by Rees, proceeds among merchants is that which arises from a thing, in which sense' they say the net produce; by Walker, produce, as the promeeds on an estate—a law term ; by Crabb, "that which arises from any thing, as' the net proceeds of any sale, &e. The word proceeds, therefore has been considered by these lexicographers as a mercantile term, and they accordingly distinguish it from the same word, when used in another sense, as to proceed on a journey, or in any other undertaking. The counsel for the plaintiff referred to Parke on Ins. p. 30, and 1 Burrows, 348 and 341, as authority for the principles for which he contended. Parke says: “ In the construction of policies' no rule has more frequently been followed than the usage of trade, with respect to the particular voyages or risks to which the policy relates.” He then proceeds to state different cases in illustration of the prinples.laid down, and observes that the point upon which they were decided is nearly the same in all. Several of the cases alluded to, in which the strict letter of the policy is departed from, are such as where vessels were warranted by the assured to depart with convoy, who left the river Thames without convoy, but took it at the Downs; in which cases the court held, that as the custom was for vessels to receive their convoy at the Downs, the poli — 171 — cy must be construed according to the usage among merchants, that is, from such place where convoys are to be had. So in the cases cited from 1 Burrows, 341 and 348. The first was goods insured from Malaga to England and Holland, and there safely landed. It was agreed by this policy that on arrival at Gibraltar, the goods might be unloaded and re-shipped in a good English ship for England or Holland; but there being no British ship at Gibraltar, the goods were unloaded and put in a store ship, and two days after were lost. The question was whe ther this was a loss within the meaning of the policy. The court held that it was, and that it was the same as if they had been lost in unshipping the goods from one ship to another; it being also the known course of trade at that place, it must have been intended by the parties. The second case was an insurance at and from London to any ports beyond the Cape of Good Hope, and back to London; and among other risks, the ship, her tackle, apparel and furniture were insured against fire. The vessel arrived at the river Canton, where she was to repair, and in accordance with á well known custom in like circumstances, the sails, yards and other furniture were landed and placed in a store house built for the purpose, in order to be repaired, when they took fire and were destroyed. The question was whether the insurers were liable for the loss, if having happened on shore, and not on ship board. Lord Mansfield held, that they were, as the words of, the policy make no distinction between the loss, whether on land or sea. If the ship had been driven on shore by a hurricane and there burnt, or if she had taken fire in a dry dock, the insurers would most assuredly have been liable, and so also in the present case. I am unable to perceive, however, the least analogy between the foregoing cases and the one under consideration. They were decided in accordance with a well known custom, and therefore precedents in abundance are to be found on record; but in the present no custom could have existed to sanction the principle contended for, or we should have been presented with decided cases on the point in controversy; none have been shewn. If our decision, however, is to be governed by the intention of the parties and the usage of trade, it may be well to see — 172 — how the facts in the case agree with intention and usage. That either of the parties to the policy intended that the same goods sent out should be returned, is, to say the least of it, ve*7 imPr°bable. No man'in his senses, I should suppose, would send goods to a distant market with the intention or even the expectation that they would be returned again. That such cases may occur is quite likely, but it is presumed the occurrence is so rare that there are few, if any instances, where it has been thought necessary to provide against the event. The provision in the policy is, that “ the said goods hereby insured are valued at the sum insured out, the policy to be open on the proceeds home’’ The only inference which can be drawn from this part of the policy is, that as the value of the goods to be sent back being the proceeds of those sent out, could not be ascertained, the" amount to be insured was to be governed by the invoice designating such value when that should be received, evidently showing that the intention of the par-ti^ was, that the goods home were not to be the goods out. The outward bill of lading consigns the three packages of merchandize to Abraham Kentzeng, jun. and an endorsement on the bill states, that “ said goods are to be sold at Batavia, and' the proceeds returned in said ship.” Nothing, I should •suppose, could indicate the intention of the parties plainer than these instructions from the plaintiff to his consignee; and I conclude, therefore, that it was not the intention of the parties, at the mating of the policy, that' the same goods •should be returned. As to the usage of trade, “ that the word proceeds, as a mercantile word in usage, was so understood among merchants, as to include the same goods on a return voyage,” I can only refer to the different lexicographers, who have united in opinion that it is a mercantile word, and means that which arises from any thing sold, bartered or exchanged, or any thing proceeding from or produced by another thing. Phillips, in his Treatise on Insurance, refers to a number of cases, where mercantile custom and usage was resorted to, in order to explain the meaning of words in a policy; none of them, however, are more applicable to the case before us than those referred to by the counsel for the plaintiff in error, except the — 173 — question whether sarsaparilla was a root, included in articles perishable in their own nature, and whether rice was comprehended in the term corn, may be considered as applicable. Now, sarsaparilla is a root, although not perishable in its own nature, and rice is corn, though not usually designated as such ; and a rational doubt might arise, therefore, whether either of them was included in the memorandum articles; but how can any doubt exist on the question whether the same goods are the proceeds of the same goods ? The usage alluded to by Parke is, “ with respect to the particular voyages or risks to which the policy relates.” Now, the difference in this case does not arise from any thing peculiar in the voyage ; but, the risk was on a particular description of goods out, and their proceeds home, and there was no occurrence on the voyage that could alter the plain and obvious meaning of the policy. The supreme court refers to two cases, viz. Havens v. Gray, 12 Mass.R. 76, and Whitney v. The American Ins. Co., 3 Cowen, 210, where the insurance was on certain goods out, and their proceeds home. It appears the goods came to a bad market, and the consignees not being able to sell, except at a great loss, they advanced money for the return cargo, on the pledge of the goods consigned to them, and then in their possession ; on the voyage home the goods were lost. In these cases, it seems, the insurers contended for a strict construction of the word proceeds ; that nothing purchased, except with the money actually received for the cargo out, could be its proceeds. It was held, however, that it made no difference as to' the liability of the insurers, whether the return cargo was procured by the sale or exchange of the outward cargo, or by a deposit of the outward cargo, and a credit raised upon it. There is certainly a wide difference between these cases and the one under consideration. In those cases the return cargoes were, in effect, the proceeds of those sent out, for it was upon the credit and pledge of the goods sent out that the return cargo was furnished; but, in the present case, we are asked to decide that the same goods are the proceeds of the same goods, which is too preposterous for a moment’s consideration. On the trial of the cause the counsel for the plaintiff offered . to produce the slip, or application for insurance, which the — 174 — judge held to be inadmissible. These applications are always in general terms, and intended, in the first instance, by those offering them, to ascertain the amount óf premium charged by the company applied to; and they only state, therefore, the amount to be insured, the description of goods, and the place to which they are to be sent; no particulars are stated, those being left to be arranged when the policy is executed. I think, therefore, that the judge was warranted in rejecting this testimony, and that upon good authority, as it has been held that the contract itself is conclusive proof of the intention of the parties, and though a usage should be proved, that the slip waste be a part of the contract, it could not operate to set aside or control the policy ; and whatever may be the proposals between the parties prior to the execution of the policy, they are to be considered as waived, if not inserted in the contract, or contained in a memorandum annexed to it. Pawson v. Barnevilt, Dougl. 12. Higgison v. Dall, 13 Mass. R. 96. I am of opinion that the judgment of the supreme court ought to be affirmed. On the question being put, Shall this judgment he reversed T seventeen members expressed their opinions in the affirmative, and jive in the negative. The members who expressed their opinions in the negative were Senators Allen, Cary, Conklin, Deitz and Todd. Whereupon the judgment of the supreme court was reversed:, and a venire de novo directed to issue ; the costs of the writ of error and of the motion for a new trial in the supreme court to abide the final event of the cause.