Augusta Insurance & Banking Co. v. Abbott

Bartol, J., delivered the opinion of this court. This action was instituted by the appellee, on a policy of insurance made by the appellant, upon a cargo of lumber per brig Orb, at and from Baltimore to Boston. The policy was issued in the name of ££Parker Fall, for whom it concerns;” and the first question presented for our consideration is, whether the appellee has such an interest in the policy as to give him a right of action upon it? The evidence shows that the brig was lying at the port of Baltimore, and that Frisbie, the captain and part owner, employed Parker Fall, as his agent at Boston, to obtain insurance on a cargo of lumber, in order to enable him to procure freight for the vessel; that the appellee had told Frisbie he would freight the brig with lumber if an insurance could be obtained upon it, but did not expressly authorize either Frisbie or Fail to obtain the policy in question, nor had he any knowledge of it until after it was issued, when he adopted it,, and, upon the faith of it, placed his cargo on board. The assignment of the policy by Frisbie to Abbott, made on the 18th day of November 1852, not being made “-with the — 373 — previous consent inwriting of the insurers,” as required Ity its terms, conferred no right upon the assignee, and his interest in the contract must be determined as if that assignment, had not been made. The law is Well settled, that a policy of insurance is not a negotiable security. The Court of Appeals have said, that “A policy in the name of one, with the general clause for whom it may concern, will cover and protect the interest of any person for whose benefit it was intended, and who authorized it to be effected; and if, in the absence of any express order or authority from the owner, or any previous communication with him on the subject, such policy is effected in his behalf, the intention at the time of the party effecting it to cover his particular interest, will so connect him with the policy as that his adoption of it afterwards, will cause it to inure to his benefit. The subsequent adoption of a policy by a party interested, and for Whose benefit it was intended, being deemed equivalent to his prior order for insurance. But no one can, by subsequent adoption, avail himself of such a poliejr who was not at the time in the contemplation of the party procuring the insurance, and for whose benefit it was not intended, notwithstanding any interest he may have in the thing insured.” Newson’s Admr. vs. Douglass, 7 H. & J., 451, 452. In this case it is contended, on the part of the appellant, that the pol^ on which the action was brought, was not, intended to cover the particular cargo of Abbott; but that it was procured at the instance of Captain Frisbie, for the purpose of enabling him to obtain freight, and was designed to cover any cargo of lumber which he might obtain for the vessel, no matter from whom. If that be so, then upon the authority cited, the appellee cannot maintain his action upon it. But it is properly a question for the jury to determine, from the evidence, whether the policy in question was or was not designed, when obtained, to cover the particular cargo of the appellee, and the Superior Court erred in taking that question from the jury. The second prayer of the plaintiff, which was granted by the court, treated the policy as if it had been issued to Abbott himself, or in his own name. — 374 — The next question presented by the record, is whether, in obtaining the policy, there was misrepresentation or concealment of material facts connected with the condition of the vessel? This depends upon the particular facts and circumstances which attended the obtaining of the policy; but before proceeding to an examination of them, it is proper to say that we do not concur in the view taken by the appellee’s counsel in the argument, “that a difference exists between such a case as this and the case where a party desiring insurance applies for it by himself or his agent.” So far as the question of good faith in obtaining the insurance is concerned, the case where the policy is issued “for whom, it may concern,” stands upon the same ground as if the name of the assured were inserted. “Every such policy supposes an agency;” (7 H. & J., 450;) no one can avail himself of it, but he for whom it is intended, and although obtained without his knowledge, and without any previous authority to the agent, its adoption by him after-wards, binds him to the acts and representations of the parties or agents connected with the business of procuring it, to the same extent as if they had acted under his authority previously given. See Park on Insurance, 208. In this case, therefore, the appellee is responsible for the acts of both Frisbie and Fall, in their dealings with the company, and if any misrepresentation or concealment of facts material to the risk, be shown on the part of either of them, the policy would be void, no matter how innocent the appellee might be in the transaction; and no matter whether such misrepresentation or concealment be fraudulent, or result from negligence or inadvertence on the part of the agents connected with the business of procuring the insurance. 12 Wheaton, 412. 4 Mason’s Rep., 74. 1 Term, 12. 3 Kent, 286. This results from the nature of the contract: “The utmost good faith and fair dealing are of its very essence, and every fact and circumstance which can possibly influence the mind of any prudent and intelligent insurer, in determining whether he will underwrite the policy at all, or at what premium he will underwrite it, ought to be communicated to him.” 2 G. & J., 162. — 375 — In this case, the representations of Parker Fall to the agent of the appellant, were made in answer to the question, “ Where is the Orb, and what is her condition as to seaworthiness?” The reply was, “She is at Baltimore, about ready to sail, (or she will sail soon.) She is a good old vessel; on the voyage before, she brought a freight of coal from Philadelphia to Charlestown, and the cargo was not insured; that the man for whom she brought the coal, never had his cargoes insured, as I understood.” The policy was dated the 28th day of October 1852; the vessel did not sail till the 22nd day of December 1852. The objection of the appellant, that the statement made as to the time of sailing, was a promissory representation which bound the assured, and that the breach of it vitiates the policy, is conclusively answered by the decision of the Court of Appeals, in the case of Allegre's Admr. vs. The Maryland Ins. Co., 2 G. & J., 159, and was abandoned by the counsel in the argument. The time of sailing is not, therefore, material in the consideration of this branch of the case. As to the statement that she was “a good old vessel,” according to our construction of those words, they import no more than that she was seaworthy, a fact the truth of which it was proper to submit to the jury upon all the evidence; but that is embraced in the implied warranty, and does not stand upon representation, which is always matter outside of the policy. It has been argued that the statement made by Fall, “that the Orb had carried a cargo of coal on her previous voyage from Philadelphia to Charlestown for a man who did not insure,” &c., was equivalent to a representation that she was then capable of transporting such a cargo, and that there was evidence tending to show the same was not true. In support of this construction the counsel cited 1 Phillips on Insurance, sec. 567, where the principle is staled, “that, a representation imports not only what is expressed, but also all the natural and obvious inferences from it.” Without impugning the principle, it is sufficient to say, we do not consider that it sustains the view contended for here. It is not pretended the particular fact, stated was untrue; besides, the statement was — 376 — made merely on information, and in such case the assured “is not answerable for the truth of the facts stated,- but only for the truth with which he has stated the information received.” 1 Arnould, sec. 193. Nor did that statement, in our opinion, operate to change the contract. The policy issued was on a cargo of lumber;, the implied warranty was that the Orb was seaworthy for the transportation of such a cargo, and the statement made to the agent of the underwriter did not enlarge that warranty so as to require the assured to prove that the brig was seaworthy for the transportation of coal at the time of the contract. The difference between a representation and a warranty,-is,-that while the latter must be literally fulfilled, it is sufficient if the former be substantially complied with. In the language of Lord Mansfield, in 1 Term Rep., 345, “A representation may be equitably and substantially answered; but a warranty must be strictly complied with.” Having disposed of the question of allegatio falsi, we have next to consider whether there was suppressio veri in obtaining the policy? It is undoubtedly true that a concealment of facts material to the risk, which the assured is bound to communicate, stands upon the same ground and has the same effect as a statement of material facts which are untrue, and will avoid the policy, whether such concealment be through design or from inadvertence. This brings us to the inquiry, what facts is the assured bound to communicate? In this case the alleged concealment has reference entirely to matters touching the seaworthiness of the vessel, or going to show that the risk had been declined by others. The authorities all agree, that “if the subject on which disclosures would otherwise be requisite, be covered by a warranty either express or implied, in that case it need not be matter of representation.” (3 Kent, 286.) “And as in every contract of insurance there is an implied warranty of seaworthiness, the assured need not, in the first instance, disclose any fact, however material to the risk, which tends to show that the ship was unseaworthy when she sailed.” Haywood vs. Rodgers, 4 East, 597. 1 Arnould, 56. — 377 — It is true this rule is changed when inquiries are made as to matters embraced in an implied warranty. Such inquiries may render it necessary for the insured, or his agent, to disclose facts respecting which he might otherwise be silent. (See 1 Phillips, sec. 601. 1 Arnould, 518. And i-t has been argued that the inquiry addressed to Fall, in this case, “What is the •condition of the Orb as to seaworthiness?” imposed upon him the obligation -of disclosing— 1st. The contents of Frisbie’s letter of the 20th of October. 2nd. The facts and circumstances which had occurred in the port of Baltimore, tending to show the insufficiency of the brig t.o carry coal. 3rd. The fact that the marine reports in Baltimore had discredited her as unseaworthy. It is clear that there was no obligation upon the assured, or his agents, to disclose any of these things, unless particularly interrogated with regard to them. The insurer had an undoubted right to ask for information upon such matters, and if he had done so, the assured would be bound to make true answers to such inquiries; but in this case no such inquiry was made. The question was general and indefinite, not pointing to any particular fact; it imported no more than an inquiry as to whether the Orb was seaworthy, ajad imposed no more obligation upon the assured to disclose the matters alleged to have been concealed, than if no question had been asked. The rule is well settled, that the assured is not. bound to disclose the fact that the risk has been declined by others, or the estimate they put upon it, unless information on the subject be particularly called for. See Ruggles vs. The General Interest Co., 4 Mason, 83. 3 Kent, 286. Upon these grounds we are of opinion, that even if the facts and circumstances to which we have referred were all proved, the agents of the assured were not bound to disclose them, and consequently the omission to do so, would not impair the policy. But the letter of Frisbie, and the other facts and circumstances detailed in the evidence, relating to the condition of the Orb, were all proper t.o be submitted to the jury, — 378 — and considered by them, in deciding the question of the seaworthiness of tiie vessel. The remaining question to be considered, is, whether the underwriters have been discharged by a deviation 9 The proof in the cause is, that the cargo was laden on board by the 19th of November, and that the vessel did not sail till the 22nd of December, and it is contended that this delay in the sailing of the vessel amounted to a deviation, which discharges the insurer. This being a policy on a voyage at and from Baltimore to Boston, the risk commenced from the time the lumber was laden on board, and a deviation thereafter will avoid the policy, whether it occurred before or after the vessel actually left the port of departure. The law on this subject is well slated by Arnould, Vol. 1, page 383, sec. 146. Me says: “As the sole ground upon which a deviation discharges the underwriter, is, that it varies the risk, and as it is evident that the risk may be as much varied by a delay in commencing or prosecuting the voyage, as by a divergence from its prescribed course, it follows that every such delay, if unreasonable or ine.vcused, will discharge the underwriter.” This principle is sustained by the authorities there cited, and recognized in every elementary treatise on insurance. In this case it is contended, that the insurance being on the cargo, and not on the vessel, and the appellee not being the owner of the brig, and having no control over her, is not responsible, even though the delay amounted to a deviation; and in support of this view the cases in 5 Mees. & Wells., 415, 8 Mees, & Wells., 896, and 2 Gill, 365, have been cited. But those cases did not involve the question of a deviation; they turned upon the familiar principle causa próxima non remota spectatur, and affirm the rule, that when the immediate cause of the loss is one of the perils insured against, the underwriter is bound, although a remote cause may be negligence or unskilfulness on the part of the captain and crew engaged in navigating the vessel. The cases in 3 Peters, 222, and in 11 Peters, 224, are to the same effect. — 379 — The law of deviation stands upon entirely different ground. The inquiry is not whether the loss resulted in any manner from the deviation. Park on Ins., 294. The reason why R is held to avoid the policy, is because it changes the risk, and substitutes a different voyage for the one insured against. It is as much an implied warranty in every insurance on a, voyage, that the ship shall not deviate, as it is that the ship is seaworthy; and each of these warranties is implied, whether the insurance be on the ship or on the cargo. After a careful examination of the numerous authorities cited in the argument, and many others, Ave have been unable to find any one sustaining the distinction so much insisted on at the bar, between the assured on the vessel and on the cargo, where the question of avoiding a policy by deviation has been involved, although in many of the cases such a distinction, if it existed, might have been properly recognized. The same observation was made by the learned judge who delivered the opinion of the High Court of Errors and Appeals of Mississippi, iu the case of The Natchez Ins. Co. vs. Stanton Buckner & Co., 2 Sm. & Mar. Rep., 340. In that case this question was elaborately considered and decided. An attempt has been made to impugn that decision on the ground that, in some respects, the law of implied warranty therein announced, is contrary to the ruling of the Court of Appeals of this State, in the case in 2 Gill, 365. Upon an examination of the cases, however, it will be found that so far as the principle we are now considering is concerned, the cases are not in conflict; and we think the law on this point is clearly and properly laid down in the case of The Natchez Ins. Co. vs. Stanton Buckner & Co., and sustained by the whole current of authorities applicable to the subject. We have no hesitation in saying, that the delay which occurred in the sailing of the Orb, would amount to a deviation which would discharge the underwriters, unless it proceeded from causes which justify or excuse it. 8 Bing., 317. What the actual causes of the delay were, is a question of fact for the jury. The legal sufficiency of such causes to justify or excuse it, must he decided by (he court. 7 H. & J., 291. — 380 — If, as the appellants insist, the delay was occasioned by the proceedings instituted in the Admiralty Court of Baltimore, for the recoveiy of debts due for repairs and supplies done and furnished to the vessel, (hen the delay was not legally justified; or, in other words, the risk of such detention is on the assured, not on the underwriter. It is laid down in La Guidon de la Mer, “that the under- • writer does not run the risk of obstructions occasioned by the debts, insufficient acquittance, or neglect to pay debts of the assured.” See 1 Phillips, 590. 3 Kent, 378. And upon a careful consideration of the question, we are of opinion that this rule applies, whether the policy be on the vessel or on the cargo. This follows from the principles regulating the extent of the risk assumed by the insurer, and inasmuch as the vessel and owners are responsible to the shipper, under the contract of affreightment, for any loss which he may suffer from such delay, it is not reasonable to hold the underwriter bound, without some stipulation in the contract to that effect. It is not covered by the terms-in the polic}!', “restraints and detainments of all kings, princes* or people;” for the construction of those Words, seé Park on Ins., 78, 79, 80, 81. On the other hand, if the delay resulted from the difficulty of obtaining k fcreW, and there is evidence in the record to go to the jury tending to prove that fact, then the delay would be excusable, anti the underwriters remain answerable. 1 Akyns, 545, Motteux vs. London Assur. Co. Having thus determined the principles which, in our opinion, govern the decision of this case, we shall proceed, in a few words, to dispose of the several prayers presented in the cause, and found in the several bills of exceptions. The first bill of exceptions contains two prayers on the part of the plaintiff below, and seven on the part of the defendant. The court granted both those of the plaintiff, and rejected all Of those offered by the defendant, except the first. The first prayer on the part of the plaintiff and of the defendant, respectively, were granted without exception, and are hot before us for review on this appeal. The second prayer of the plaintiff ought not to have been — 381 — granted. This follows from what has already been said in (he opinion of this court, and it is unriecessary to repeat here tbo several particulars in which it is erroneous. It withdrew from the jury the consideration of several facts upon the decision of which, in our opinion, the right of the plaintiff to recover depends; and the judgment must therefore be reversed. The second prayer of the defendant ought to have been granted, the proposition of law therein contained is correct. With reference to the phraseology of all the other prayers of the defendant, both in the first and second bills of exceptions, we consider it proper to remark, that, in one respect, they are all objectionable. Each of them, after stating certain facts hypothetically as the basis of the legal proposition, contains the words, and if the jury shall find “all other facts assumed by this prayerSuch a clause is unusual in practice, and, we think, objectionable, as tending to mislead the jury. If there are any facts assumed, (he prayer would be erroneous; .if there arc none, then, in any view of them, the words are unnecessary. We are aware of the reason which led the counsel to insert the words, but think they do not accomplish the object designed; and as this is the first time this court has had its attention called to prayers in that form, we deem it proper to say, that in our opinion such a clause forms a substantial objection, and would vitiate a prayer, although in other respects unexceptionable. Prayers in this form were before the court in the case of Hopkins vs. Boyd, 11 Md. Rep., 107, but no point was made upon tlieir particular phraseology, and it would have had no effect upon the judgment of the court in that case. The facts upon which the court’s instruction is asked, ought, to be slated in the prayer, otherwise the legal proposition is vague and indefinite, and the jury ought not to be left to speculate and conjecture what facts are assumed by the prayer, and yet. are necessary to be found by them, as the ground of their verdict. Looking at the defendant’s prayers as if the objectionable clause to which we have referred were stricken out, we are of opinion, for the reasons already given in stating the general — 382 — principles governing the case, that the 5th- Gth and 8th prayers of the defendant were properly refused. They are based upon the defence set up on the ground of misrepresentation and concealment. The defendant’s fourth prayer was properly rejected, because it treats the statement made by Parker Fall, “that the brig would sail soon,” as a promissory representation binding upon the assured, which we have said is not its legal effect, or if that be not the true construction of the prayer, it is faulty, because it refers in general terms to the causes of delay “as given in evidence,'1'1 instead of being limited to those which we have said were not sufficient in law to excuse it. There are causes of delay mentioned in the evidence to which we have before referred, which, in the opinion of the court, would justify and excuse it, provided the jury should find they were the actual causes which detained the vessel, to wit, the difficulty of procuring hands at that time in Baltimore. The defendant’s 3rd and Tth prayers (without the objectionable clause spoken of) should be granted; they are in conformity with the principles which have been stated on the question of deviation. But in the expression of this opinion, we are not to be understood as deciding that the captain of the brig had the power of selling or hypothecating the cargo, or any part of it, for the purpose of paying the debts of the vessel previously existing and contracted without reference to the particular voyage, and unconnected therewith. Such sale or hypothecation, under the circumstances of this case, could only have been made by the master, with the consent and authority of the appellee, who was on the spot, and whom it was the duty of the captain to consult. See Abbott on Shipping, 243. But whether such efforts to sell or hypothecate the cargo were made or not, it is sufficient to say, that in the opinion of this court the detention of the vessel by the causes referred to in these prayers, if the jury should find they were the causes of her delay, was a risk of the assured, and not one assumed by the underwriters under the contract. The second bill of exceptions is taken from the refusal of the court below to grant the defendant’s 8th prayer, and we — 383 — have already said that such ruling was correct, for one of the reasons assigned by that court, to wit, “because it was not the iaw of the case;” and we deem it unnecessary to express any further opinion thereon. (Decided July 22nd, 1858.) With reference to the question presented by the third bill of exceptions, we deem it sufficient to say, that in conducting trials at nisi prim, many things necessarily depend upon the discretion of the court, and we think the ruling of the Superior Court, to which this exception was taken, was on a matter within its discretion, and that no appeal lies therefrom. Judgment reversed and procedendo awarded.