Ballard v. Merchants' Insurance

Bullard, J., delivered the opinion of the court. This is an action to recover of the defendants, as underwriters, the value of.seven bales of cotton, belonging to the plaintiff, which he avers were shipped by his agent, at Alexandria, on Red River, to John Linton,■ and were covered by an open policy of insurance, procured by Linton, for whom it might concern, of the defendants. The loss by perils of the river is not contested. In the policy it is declared, that this insurance is on cotton in bales, &c., &c., shipped, or to be shipped, to the consignment of John Linton. The defence consists, 1st. Of a denial that the plaintiff’s cotton was covered by the policy, and 2d. An allegation that if the policy ever attached, all claim for the loss alleged to [263] have been sustained by the plaintiff,_ has been waived and abandoned by John Linton, in whose name the policy was made; that property to the amount for which said policy was effected, has long since been declared to the defendants, by said Linton, as covered by the policy; that they have paid large sums of money for losses accruing under the policy to Linton, who has settled and liquidated all claims resulting from it. Where cotton is shipped by the agent of the plaintiff, and consigned to J. L., -who receives a bill of lading, and about the samo time is directed by the agent to turn over the cotton to R. B. & Co., the commission merchants of the plaintiff, and in the meantime the cotton is lost by the perils of the river: Held, that having been consigned to J. L. by the shipment, it was protected by his open policy taken out of the office of the defendants, for whom it might concern, making insurance on all cotton in bales shipped or to be shipped to the consignment of It is not of the essence of a consignment, that the consignee shall sell or dispose of the property. It is enough if he has aright to receive it, of which the bill of lading is the evidence, even if he is directed to deliver it over to another agent, to sell for the owner. The first question thus presented by the pleadings is, whether the cotton alleged to have been lost, was contemplated by the contract, and covered by the policy, or in other words, was it shipped to the consignment of John Linton. The bill of lading shows that the -captain of the steamboat Paul Clifford, took on board seven bales of cotton, shipped by James Norment, which he engages to deliver to John Linton, or his assigns, and the plaintiff, 'in his petition, alleges that Norment was his agent. This appears to the court, on the face of it, to be a consignment. It authorised Linton, on paying the freight, to receive the cotton, and he would have a lien on the cotton for advance of freight and other charges. Admitting that Linton had no authority to sell, or make any other disposition of the property, we do not consider it of the essence of a consignment that the consignee should have such authority. It is enough if he had a right to receive it, and of that the bill of lading is sufficient evidence. If the bill of lading had been accompanied by a letter, instructing Linton on receiving the cotton to deliver it over to another person, or to store it, or to forward it to another market, it would nevertheless have been a consignment. The letter from Norment to Linton, requesting him to turn over the cotton to another house, is not inconsistent with the original consignment. It is true, Norment may have been in error in supposing that Linton was the general factor of the plaintiff, and consequently wrote to him, not revoking the consignment, but- directing in what manner he was to dispose of the cotton. Norment, who made the shipment in the absence, and without any positive orders from the owner, testifies that he would not have shipped the [264] cotton, if he had not thought it would be protected by Linton’s policy; and that on discovering that he was not the commission merchant of Ballard, he wrote to Reynolds, Byrne & Co. to receive the cotton from Linton, supposing they would refund the freight and charges of insurance. The error consisted, therefore, not in the consignment, but in supposing that Linton was already authorised by the owner to sell his cotton. Norment’s letter and the bill of lading arrived at or about the same time, and not untill after the cotton had been lost. We are of opinion that the policy attached in favor of the plaintiff as soon as the shipment .was made, as evidenced by the bill of lading. When an open policy of insurance once attaches to property consigned, the consignee .becomes the agent of the shipper, and can do no act to deprive the latter of the right to sue in his own name, on the policy. The only remaining question is, whether Linton is shown to have done any act by which the defendants have been released from their obligation to Ballard. It appears that he presented the bill of lading of the plaintiff’s cotton to the president of the insurance company, but with an intimation that probably it was intended for Reynolds, Byrne & Co. Upon this suggestion, the president struck the name of the plaintiff out of the statement handed for settlement. Other lots of cotton, lost at the same time, and shipped in the same bill of lading, were paid for, and the policy was filled by Linton without reference to these seven bales. 'Mr. Thompson testifies at the same time, that Mr. Linton did not intend to abandon any rights which he might have acquired under the policy. It is not pretended that, at the time those seven bales were lost, the policy had been filled by other property to the value which the defendants engaged to cover, nor that losses have been paid to the full amount insured. Ballard having a right to sue, in his own name, under a policy procured by Linton for account of whom it may concern, Linton must be considered in relation to him as an agent. If he had can-celled the policy, he would have rendered himself liable for the loss, and the payment of the loss to him, would have been a good and valid discharge. It does not appear that the policy was cancelled, and even as relates to Linton himself, it is by no meaus clear that he would not still have a right to maintain an action on it. In the case of Russell [265] vs. Bangley, chief justice Abbott said, “the general rule of law is, that if a creditor employs an agent to receive money of a debtor, and the agent receives it, the debtor is discharged as against the principal; but if the agent, instead of receiving the money, writes off money due from him to the debtor, then the latter is not discharged. In cases of insurance, usage may possibly introduce a different rule, but at all events, an underwriter has never been considered as discharged as against the assured, until his name has been stricken off the policy.” 2 Philips on Insurance, 367. 4 Barn. and Ald., 395. Upon the whole, we think the plaintiff entitled to recover the value of the seven bales of cotton, deducting the amount , of premium at one half per centum; but as the value is not shown by any evidence in the record, the case must be remanded. ' - It is, therefore, ordered, adjudged and,decreed, that the judgment of the District Court be reversed -and annulled at the cost of the appellees, and it is further ordered that the case be remanded for a new trial.