Bell v. Western Marine & Fire Insurance

Garland, J. This case was before us in January last, and remanded for a new trial, for the purpose of enabling the plaintiff to show that the defendants knew, at the time of making the insurance, that there was an agreement to sell the boat insured to Norlham, and that a contingent interest was really intended to be insured, although Bell’s legal title was not technically divested. 3 Robinson, 428. To establish this fact of knowledge, the plain — 441 — tiff .offered the deposition of Northam, the purchaser of the boat. He testified, that the plaintiff and he went together to the office of the defendants, where, he saw only one person, whom the plaintiff addressed as Mr. Matthews ; (that being the name of the President of the Company,) that plaintiff stated to him that he had sold the steamboat Bayou Sara, and wished to get her insured. Some other words passed, but what they were the witness does not recollect. The person addressed, said — “ make out your application —which was done in writing, in the terms expressed in the policy. From the office of The Western Marine and Fire Insurance Company, the witness says, that he and the plaintiff went to the Firemens Insurance office, where two or three persons were present, with whom the plaintiff was acquainted, but who they were, the witness does not know. There, he says that plaintiff made a similar statement to that he had made at the first office. He further says, that his object in accompanying the plaintiff, was to see that an insurance was effected on the boat, he having agreed to pay the premium, and also promised his endorsers that the boat should be insured, and kept so until she was paid for. He says, “ Bell stated his interest as described in his conversations with the officers of the two insurance offices.” The deposition of this witness, was objected to, by the counsel for the defendants, on the ground of his being interested, and rejected by the court; but judgmentwas given in favor of the plaintiff, as the Judge below thought that the sale was made on or before the 1st of September, 1839, although the notarial act (which the Judge considered only as higher evidence of the previous agreement,) was not passed until the 6th of the same month, and that the affidavit of the plaintiff in the libel suit, in the United States Court, was not a contradiction of the parol agreement'for a sale made on the 1st September. The Judge further said, that when a party insures in his own name, he is presumed to insure as owner, unless he gives notice, and that a change of interest avoids the policy. He then proceeds to say, that when Bell made an insurance in his name, for account of whom it may concern, it was a notice that he was not insuring entirely on his own account, and that, if the Company desired further information, it was their duty to call for it. For these, and other reasons stated in his opinion, the Judge below, gave a judg — 442 — ment for the plaintiff, upon precisely the same testimony as was before him in the first instance, from which, the defendants have again appealed. The first question which arises in the case, is on the bill of exceptions taken by the plaintiff, to the rejection of the deposition of Northam, on the ground of his being interested. In this, we think the Judge erred on the ground taken, as we are unable to see what interest he has in this suit. Let the decision be either way, he is riot benefitted by it. Tf the plaintiff fails in the suit, Northam is bound for his notes to him; if he succeed, it appears to be conceded that those notes will, under the abandonment, pass to the defendants ; and so well do the parties seem to understand this, that an agreement exists between them, that the plaintiff shall prosecute their collection, without its prejudicing the rights of either party to this controversy;-. If the plaintiff does not succeed, Northam is not bound for the premium; if he should succeed, he will be bound, and then his interest is adverse to that of the plaintiff, by whom he is called to testify. But taking this testimony for all it is worth, the question recurs, does it entitle the plaintiff to recover? The contract of insurance must always be made in writing, (1 Phillips on Insurance, 7 ;) and must contain the terms of the contract sufficiently expressed. Ibid. 9. When made with a corporation, the reason for the contract being made in writing is stronger. It is, therefore, proper that every necessary stipulation should be expressed, lb. 8, and authorities. The policy is the contract between the parties, and, as a general rule, all proposals made, or conversations had prior to the subroription, are considered as waived, if not inserted in the policy, or contained in a memorandum annexed to it. 1 Phillips, 24 ; 13 Mass. Rep. 96, 172. The correspondence of the parties, or any other communications, cannot be referred to, unless for the purpose of explaining some doubtful clause, or ambiguity, or sustaining an allegation of error or fraud, or the like, (3 La. 548,) or something that would have affected the risk. Whether a representation were true or -false, may be shown by parol. So may evidence be received to show who is included in the policy, when the assurance is made for the benefit of whom it may concern, and the like. But when a party is expressly named, and his interest — 443 — specified, or legally understood or presumed, the policy cannot be changed or altered in any manner, by parol evidence, unless on an allegation of fraud, error, or some other legal cause. The principles of construction in regard to policies of insurance, are the same as in all other contracts in writing, in which the intention of the parties is to be sought for, in the instrument itself. Emerigon says, it “ is a law from which it is not^llbwable to depart under the pretext of pretended equity.” Yol 1, p. 633, chap. 12, sec. 45. In the English and American tribunals, the doctrine is well settled, that contracts of this kind are to be construed fairly, and according to the words in which the parties have contracted. Plain mistakes in writing, as well as frauds, can be corrected ; and, if officers of insurance companies, by their skill and experience, entrap the unwary, or violate the confidence reposed in them, in consequence of their positions, a remedy will be afforded, upon proper allegations and proof. Reliance is often placed in the assurers, or their agents, in consequence of the confidence reposed in them ; and if they abuse it they are liable. . As to the losses or risks that may be insured( against, it seems to be well settled, that they may be against all losses, except “ such as may be repugnant to public policy, or positive prohibition, or occasioned by his own misconduct or fraud.” 3 Kent’s Com. 228, Lecture 48. It is essential that there should be an interest at risk ;but it is not requisite, that the thing to which the insuance relates, or the thing to be assured, should be such, as to have what is properly called a value, or price, or be capable of being assigned. 1 Phillips’ Insurance, 67. The life arid liberty of a freeman may be insured. So may the life of a debt^j, or a per•son drafted to serve in the militia. 1 Campb. 401 ; 2 Taunton, 214 ; 1 Phillips’ Insurance, 67. Policies may be made in refeence to a future interest, and upon the right of stopping the goods in transitu upon the consignee becoming insolvent. The interest of the assured must be subsisting at the time of the loss, in order to give a claim for indemnity. But let us see if the interest. must be identical. In 4 Mass. Rep. 330, it was held, that the sale and conveyance in fee of a house insured, which the purchaser at the same time mortgaged back to the vendor, did not divest the assured of his interest under the policy ; for, though he — 444 — changes his title by the transaction from an absolute to a conditional one, yet he does not part with his insurable interest, since he continues, as mortgagee, to have an insurable interest in the property to its full value. 1 Phillips’ Insurance, 72;-3 Burrows, 3512. In the policy before us, there is no clause forbidding the sale of the boat without the assent of the assurers, and they appeared to have been indifferent as to who should have the control of her, as no one is'named as master. On the contrary, they undertake to insure whoever may he master. The question as to who would be master, does not seem to have had any weight in estimating the risk ; and, we do not see that it would be diminished, or increased, by the interest being that of mortgagee to the full value, or owner. That a mortgagee has an insurable'interest is, in our opinion, unquestionable, and is supported by the best authorities. 1 Phillips’ Insurance, 107; 9 Wendell, 404. So has any creditor having a lien on the pipperty. Ibjd. 108; 9 Serg, & Rawle, 103; and it makes no difference, if there be a superior lien in favor of another, if something remains for the assured. A lien which is invalid in itself, will not-^ive an insurable interest; but, if it can be enforced between the contracting parlies, it is sufficient. For instance,^ an interest arising |om a mortgage not recorded, might be insured, although the mortgage would have no effect against third parties. Jf the property is held as a security, it gives an insurable interest, and upon this principle rests the right of agents, consignees, and factors, to insure the goods of their principals. ■ We are of opinion that, at the time of making the insurance, Bell had an interest susceptible of being insured, and also at the time of the loss, although .the interest was not of the precise character, We think this case rests upon the same principle as that in 4 Mass, Rep. 330. The policy not prohibiting Bell from selling, we think he could do'so, if he did not thereby put the defendants in a worse situation than they were in before; and that having, when he sold, retained a mortgage, or having the privilege of the vendor, he had an interest at the time of the loss, The counsel for the defendants contend, that a ship, or steamboat, cannot be mortgaged, according to the provisions of the Code, except for special purposes, and in a particular manner, and that — 445 — there is no interest in Bell, as his mortgage is not one of those authorized by law. Admitting this to be true, then the privilege of the vendor remains, which creates an interest that can be insured. If the mortgage is invalid, it does not affect the privilege, which we think the vendor of a ship or steamboat has, in the same manner as a vendor of other property. We do not think that they are a class of vendors excluded by the -Code ; on the contrary, we think their rights are specially recognized by art. 3204, No. 8. But, say the defendants, if the plaintiff had an insurable interest, he did not properly represent it to us at the time, and the policy is, consequently, void. The defendants have not given any evidence as to the character of the representation that was made, which will enable us to judge of its truth or falsity. The case, therefore, rests upon the policy. Phillips, p. 167, 168, says, “ a general description of goods, freight, a ship, a house, or other thing insured,” will be sufficient. If one own a half, or other portion of a ship or quantity of goods, he may insure generally, and recover for such interest as he has. 3 Mass. Rep. 133. A mortgagee may insure the thing mortgaged generally, without specifying his interest to consist in a moitgage. 4 Dallas, 421 ; 2 B. & Aid. 193 ; 2 Caines’ Rep. 19 ; 13 Mass. Rep. 101. The defendants have not objected to the deposition of Northam on the ground of its going to explain what took place at the time of applying for the policy ; and, as the verity of the representation is denied, which raises a question of fraud, we will consider it. It would appear from it, that the parties understood each other at the time; at least, enough was said, to put the defendants upon inquiring further, if other information was desired. The fact of asking for an insurance for whoever it might concern, was calculated to excite attention, and put the underwriters on their guard. Another ground of defence is, thatthére was a deviation. This is said to result from the boat having been taken possession of by the Marshal of the United States, when the libels were filed, and carried across the river opposite to the city, and there kept in charge of his deputy and another person, Northam being frequently on board. A deviation is the increasing or varying of the risks insured against, without necessity or reasonable cause. There is no evidence in the record that shows, that the risk was at all in — 446 — creased by the boat being taken across the river. On the contrary i he evidence is, that boats, when laid up on that side, are in Jess danger than when in the port, or on a voyage, and the premium for insurance is considerably less. The person who had the boat in charge, is shown to have been one accustomed to the business. We are not prepared to say, that every seizure of a ship or steamer, is to be considered a deviation and forfeiture of the policy. The defendants further insist, lhat the boat was not seaworthy at the lime of the loss, as she had not a captain and crew on board to protect her. When engaged on a voyage, or lying in port receiving or discharging cargo, it is proper that a boat should be properly officered and manned ; but, when laid up, it is not shown to be necessary, or usual. . Judgment affirmed.