Brewer v. American Insurance

Lord, J. In this case it is agreed that the insured sustained a loss by the perils insured against, which was the subject of general average; and that a general average adjustment was made in Hamburg. To this loss, the vessel, the cargo, and freight must contribute according to their respective values. The insurance which is the subject of controversy here is insurance upon freight. The policy insures $3000 on her freight valued at $15,000. In the adjustment of the general average in Hamburg, the freight earned and received was found to be $20,564.34, and the real question between these parties is, [84] whether the plaintiff shall be deemed to be an insurer or owner of the excess of the freight above the valued freight in the policy, and so contribute toward the loss to the extent of his interest, or whether, for the purposes of this case, the sum of $15,000 is to be deemed to be the true valuation of the whole freight, thereby rendering the defendant liable to contribution upon that basis. In Clark v. United Ins. Co. 7 Mass. 365, this question was first considered in this Commonwealth. It happened in that case that the vessel insured was valued in the policy at $6000, and, as stated in the opinion, the cargo was valued at $2000, its true value when shipped, upon which insurance was effected to the amount of $1500 on the ship and $500 on the cargo. A loss occurred which was the subject of general average. The general average adjustment was made at Dublin, where the value of the ship was found to be $8000, and the true value of the cargo at that port was $5510; and the same question arose in that case as to the ship and the cargo, as in this case arises as to freight. The opinion in that case was delivered by Mr. Justice Sewall, and it is quite apparent that he understood that the result at which he arrived was in accordance with established usage in this Commonwealth. The increased value of the ship, he says, must have arisen either in consequence of an under-valuation at the home port, or “ by means of some addition and repairs of an extraordinary nature made in the course of the voyage.” The additional value of the cargo was that increased value which is expected as profits at the termination of the voyage. Such increased value, as expected profits, he says, it is not unusual to have insurance upon, “ eo nomine, made at the same time, as upon an interest which may be distinctly valued and estimated.” As to each of these increased values, he held that the assured would be his own underwriter. This ease has been referred to approvingly, and its authority has not been denied, in this Commonwealth; and, although different ruléis may have been applied by some other courts, so that perhaps this may not be deemed to be the universal rule of insurance in cases of this kind, we suppose it has been the accepted rule among underwriters and those insured within this Commonwealth. We are confirmed in this view by finding [85] among the conditions upon which this policy is issued, as printed in the policy, this provision : “In case of general average this company is not liable to contribute on a sum greater than the amount herein insured.” We can attach no other meaning to this provision than that the parties understood that, in case of general average, the contribution was to be made by the respective interests at the true value thereof, and that the sum insured was to contribute in the same proportion that that sum bore to the actual value, and that, as to the difference between the freight as valued in the policy, $15,000, and its real value, $20,564.34, the plaintiff is to be regarded as his own underwriter and to contribute on that sum. In any other view the provision would seem to be without meaning ; and so the plaintiffs contend that it provides against a contingency which can never happen. Upon this construction of the contract, it would seem that, without regard to the general principles of law, the parties have themselves by their contract agreed upon the mode of contribution. It therefore becomes unnecessary to consider whether, without any stipulation by the parties, the same result would be reached by the general principles of law applicable to the subject within this Commonwealth. The judgment of the Superior Court for the smaller sum must, therefore, be Affirmed.