Alliance Marine Assurance Co. v. Louisiana State Insurance

Mathews, J. delivered the opinion of the Court. This suit is brought to recover from the defendants, eight thousand eight hundred, and eighty-eight dollars, eighty-eight cents, which the plaintiffs allege tobe owing to them on account of having paid that amount to certain persons styled Joseph Smith & Son, in consequence of a marine policy of assurance, by them subscribed, in favor of said Smith & Son, on the 24th day of August, 1830, in the city of London, &c. They obtained judgment in the court below, from which the defendants appealed. The facts of the case are the following: Insurance was effected by Smith & Son, on merchandise to be shipped from New-Orleans to Liverpool, (to be laden on the ship Aurora, which was to sail from the former port, on or before the 1st of August, 1830) to the amount of two thousand pounds sterling. Cotton belonging to the assured, was put on board, of this vessel, by their factors and agents, Tayleur, Grimshaw & Sloane, to the value of eleven thousand dollars, and up-wards. The ship left the port a quo on the 3d of July, but met with an accident before she reached the Gulf of Mexico, which caused so serious an injury as to compel her to return and unload, for the purpose of being repaired. Her cargo, which consisted of cotton, was taken out, by order of the shippers, and placed in stores or ware-houses ; that belonging to Smith & Son, together with a-larger quantity, was put into the ware-house or cotton-press of James Freret, jr., where it was insured against fire, by a policy obtained from the defendants at the instance of the consignees of the ship, on the 14th of July, 1830, to continue in force until the 16th of August following. During this [10] period, viz: on the 1st of August, the cotton of Smith' & Son, thus insured, was destroyed by fire, and a claim for indemnity in behalf of the insured was made on the insurers; payment was, however, delayed until the latter discovered that, against the greatest portion of the loss suffered by the owners of the cotton, they were secured by a marine policy obtained from the plaintiffs, having effect from the 25th of June, 1830; in pursuance of which, they paid the sum of two thousand pounds sterling, equal to eight thousand eight hundred and eighty-eight dollars eighty-eight cents, to the assured, and now, claim this amount from the defendants. Where property shipped from New-Orleans to Liverpool is insured by the owners in London, about the time of the shipment, and is soon after re-landed and stored, and insured by the factors in New-Orleans againstfire, “for all whom it may concern,}? is destroyed by fire, and the London office pays on the firstpolicyrifeZJ, that the latter cannot claim indemnity of the Ncw-Orlean s office, unless it be a re-insurance, because the claimants have no insurable interest in the property destroyed. Their interest only extended to the risks insured against. The record contains bills of exceptions to the manner in which commissions to take the testimony of witnesses in England were executed ; also objections to the preliminary proof offered by the plaintiffs, necessary to entitle them to support their action, &c. But, in consequence of our conclusions drawn from the entire facts of the case, we deem it unnecessary to examine these matters. In the argument of this cause, there was much disputation as to the character of the contract sued on; whether it is a re-insurance or a double insurance, or whether it is neither, and only simply aleatory; not subjected to the rules which govern in either of the former. We consider it important to settle these questions, as the rights of the parties must be influenced by the nature of the contract under which the plaintiffs claim. It cannot be considered as sole and simple, for two policies existed, subscribed by distinct insurers, and both, according to their terms, covering risks on the property insured, at the time of its destruction and loss ; that made by the plaintiffs, having effect from ’the 25th of June, 1830; and the one executed by the defendants, from the 14th of July, of the same year. The latter can, therefore, be viewed in no other light than as a double insurance, or re-insurance, according to the interest which the plaintiffs had in the things insured, at the time when the defendants assumed the risk for the former. It is not pretended that they were owners, either absolute or sub modo; consequently, as such, they had no insurable [11] interest. They were concerned and interested only as having assumed the risks to which the property was exposed by the owners. From these premises, one of two conclusions necessarily follows; either that no insurance was effected for them, or that the policy subscribed by the Louisiana State Insurance Company, was a re-insurance, intended to shift the risk from the Alliance Assurance Company, and place it on the last insurers, to the amount of property covered by the policy of the first; for they had no interest or concern in its safety, except as insurers. According to the first of these hypotheses, the plaintiffs are without a semblance of claim against the defendants. We have, therefore, only to inquire into the truth of the second, viz: whether a contract of re-assurance was validly made. The contract of assurance, although aleatory in its nature, is nevertheless synallagmatic and consensual in its inception and form,as containing the evidence ofrecipi’ocal obligations. To render a contract of insurance valid, the mutual consent of the parties is necessary. To support it requires proof of interest in the person acting and claiming, or those for wliom he claims, or their sanction and ratification of his acts, and proof of the loss of the thing insured. The factors have the power to insure for the principal owner, without special authority given; but wlxere factors insure property consigned to them, ilfor account of -whom it may concern,” and which has been already insured by the owners in another country, the first insurers cannot claim indemnity from the last, when there was no special authority given, or subsequentratification. of the insurance by the first insurers, before the loss happened. [11] A contract of assurance, although aleatory in its nature, is, nevertheless, synallagmatic and consensual, as containing evidence of reciprocal obligations. To render it valid, the mutual consent of the contracting parties is necessary, given either by themselves or persons authorised by them to give such consent. In this respect it differs not materially from all other kinds of consensual contracts. The terms in which a contract of insurance is frequently made, in favor of the applicant and all other persons concerned or interested in the property insured, to support it requires proof of interest in the person acting or his authority to act for others who may be interested, previously given, or their sanction and ratification of his acts, subsequently made, and prior to the loss of the things insured. See Baldasseroni’s Treatise on Insurance, vol. 1 p. 193, el seq. 1 Phillips, 58 and 59. The authority of factors, consignees, and other general agents in relation to property committed to their care, and over which they exercise a qualified ownership, having power to buy, sell, or ship, on account of the real owners, to insure for the latter need not be inquired into in the present case; because, according to the principles already assumed, the plaintiffs cannot be considered as owners, in any shape. Admitting, then, the right and authority of Tayleur, Grimshaw & Sloane, to act for Smith & Son, in effecting the [12] insurance which they did with the defendants, as legally consequent and resulting from their power as factors and shippers, without special authorisation from the owners to this effect, it does not follow that they had any power or authority to act for the insurers in England, whom it cannot be pretended they represented, as factors or general agents. They could, therefore, proceed to obtain a re-insurance only under special authority given for that purpose. Any conclusion different from this would lead to the most absurd improbabilities. It would sanction a belief of extraordinary capriciousness on the part of the foreign assurers. That company appears to be composed of wealthy persons who formed their association fox the sole purpose of taking risks in consideration of premiums; and the more they take, the better for the interests of the institution; what can be imagined more improbable than the taking an ordinary and fair risk on one day, and without any apparent cause, desiring on the next to shift it from themselves on to others, by paying a premium to the latter % Underwriters claiming the benefit of re-insuremee, must show a special authority given to an agent for that purpose, an express contract to that effect, or an express sanction of the acts of an agent, effecting a subsequent insurance on the same risk, before loss. The persons, who acted in obtaining the policy from the defendants, had no authority to represent the plaintiffs, previously granted; nor was their agency subsequently sanctioned by ratifying and confirming their acts in relation thereto, before the loss of the property insured. We, therefore, consider the contract, so far as the plaintiffs claim any benefit in it directly, to be wholly null and void. It is readily seen that our opinion in the present case differs to to calo from that of the learned gentlemen of Lloyd’s coffee-house, as disclosed in the testimony of the witness Secretan. The opinions, however, entertained at Lloyd’s, in relation to legal questions, are not, in themselves, entitled to any great consideration; they certainly ought to weigh very light in comparison with such as might be pronounced in Westminster Hall. Hitherto we have considered the case only in relation to rights claimed • by the plaintiffs, resulting directly from the contract entered into by the defendants, as having been made for the' benefit of the former. But it was contended for them [13] in argument, that, although they may not be entitled to sue directly on the policy, yet, having paid more than a rateable portion of the loss occasioned by the destruction of the property insured, (in a risque taken both by themselves and the defendants) they are, of right, subrogated to the actions and claims of the owners, and should have refunded to them a rateable portion of the sum which they have paid in consequence of the loss. This would be to consider the contract sued on, in the nature of a double insurance, which the pleadings do not authorise. But if they did, it would not benefit the plaintiffs, for the sixth article of the general conditions of insurances, as established by the Louisiana State Insurance Company, was not complied with, at the time the policy was subscribed; consequently the owners themselves could not have recovered from the last insurers, more than the amount of loss not covered by the assurers in London. The plaintiffs certainly cannot justly pretend or claim to be subrogated to rights and claims which the owners had not themselves acquired. This proposition is so self-evident that the notice of it might well have been omitted. It is, therefore, ordered, adjudged and decreed, that the judgment of the District Court cannot be avoided, reversed and annulled: and it is further ordered, adjudged and decreed, that judgment be here entered for the defendants and appellants, with costs in both courts.