Schaefer v. Baltimore Marine Insurance

Stewart, J., delivered the opinion of the Court. The policy in this case, with its accompaniment, the policy-book, constitutes the written contract between the parties. In the trial below, objection was made by the defendant to the admissibility of certain proposals of insurance made by the plaintiff to the defendant, for the purpose of shewing that the article “ bacon,” claimed by the plaintiff to have been insured, was not in fact valued, although it so appears in the endorsement in the policy-book; because the tendency of such parol testimony was to vary the written contract between the parties. This objection the Court overruled at that stage of the trial. The parties then agreed that all the evidence, whether conflicting with the written contract or not, should be admitted, subject to exceptions after the testimony was closed. Evidence was then introduced in relation to the controverted article “bacon,” and as to the course of dealing, or manner of transacting the business of insurance between the parties. When the evidence on both sides was closed, the Court, below, upon the application of the defendant, excluded from the consideration of the jury all the testimony tending to show that the valuation in the policy-book does not include the value of the “ bacon ” mentioned therein. This ruling occasioned the plaintiff’s first exception, and it is urged in his behalf, amongst other reasons, that this was error, because the [117] defendant itself had offered parol testimony which was excluded. By the agreement all the evidence was admitted, subject to exceptions. Both parties, under the agreement, having offered parol testimony, the defendant might ask to have it all excluded if really inadmissible, without being estoped under the circumstances from excluding that offered by itself. But it is not material whether the parol testimony was excluded or not, so far as the plaintiff is concerned. If the case is determined by the written contract, the policy and the policy-book, the plaintiff can only recover according to the provisions of the policy, and that expressly excludes all shipments, unless approved and endorsed on the policy, and the valuation to be fixed by the endorsement. If the parol testimony is admitted explanatory of the circumstances connected with the entry of the article of “ bacon,” and that it was not, in fact, valued in the endorsement made in the policy-book, and shewing the course of dealing between the parties, whilst it proved that the “ bacon ” was not in fact estimated in the value of the articles carried out, it shows at the same time that if it had not been included with the other articles, “ the soap in boxes, Ac.,” but had been written on a line to itself in the policy-book, it would not have had its value extended and endorsed in due time, because of the omission of the plaintiff to furnish the invoice of prices and values. According to the tenor of the policy, and the custom of dealing between the parties, the policy was designed not to be an open but a valued policy upon all articles insured, and though a running and continuing policy, leaving every specific shipment itself, to constitute a distinct subject of insurance. When the value of the interest at risk is not fixed in the policy by agreement between the parties, but is estimated by a certain standard to be made out in case of loss, it is an open policy. 1 Arnould on Insurance, p. 324, sec. 130. Under the open policy the prime cost must be proved. In a valued policy it is agreed. The effect of the valuation is to [118] settle conclusively the prime cost. Lewis vs. Ricker, 2 Burrows, 1196. This running but valued policy, as other policies, constitutes the contract - between the parties, and must be construed by the same rules as govern in the construction of other contracts, purely to accomplish the purposes, and carry into effect the meaning and intention of the parties. Being designed as a valued policy, it was not complete as to any specific shipment until the endorsement of the value; and it was, certainly, too late to ask for such endorsement when the shipment was in all probability lost. The contract of insurance requires the purest good faith and fairness on both sides. Indemnity is designed on the one side for possible loss, for which the insured must pay a reasonable price for the risk, and this is the premium for that risk incurred by the other, and which forms the consideration inducing the insurance— a quid pro quo. But where the loss is known tp have occurred, there is no foundation for the contract of insurance. Under such circumstances there is no hazard requiring to be guarded against. Under this running but valued policy each and every shipment, for the insurance of which application is made, when endorsed, becomes a distinct insurance, to be determined by the provisions of the policy and the endorsements in the policy-book. The proposal is made on tlie one side, and accepted on the other. The policy does not attach upon the mere application of the party desiring insurance upon a particular shipment, but it must be assented to by the other before the contract is perfected. According to the course of dealing between these parties when the application was made, the insurance was not considered consummated, but when the invoice was furnished, and the valuation endorsed in the policy-book, nothing further remained to constitute the contract complete. [119] The party might make the application simply, and after-wards decline to complete the insurance, but the application being made and the valuation furnished, and both endorsed and extended in the policy-book, there was a subsisting contract, and the running policy became a valued one, quoad hoc. It appears to have been the custom of the company, when application had been made for insurance, but no valuation endorsed, leaving the insurance on the subject matter inchoate and incomplete, to send down to have the invoice brought up, and the appropriate entry made in the policy-book; and which seems to have been done in this instance, but the plaintiff denies or has no recollection of this matter. The onus of furnishing the invoice was on the plaintiff; the affirmative testimony of the company, when contrasted with the negative on the other side, according to the rules of evidence is entitled to the preponderance. But however the fact may have been, it was certainly the duty of the insured if he desired, in good faith, to consummate the insurance to perfect the contract, by furnishing in proper time the evidence of the valuation, and the laches is on his part. There seems to have been a disposition on both sides to act with entire fairness, and the difficulty has grown out of inadvertence and human infirmity. lío doubt, the plaintiff intended to have the “ bacon” insured, but his mere application, without further evidence as to the quantity'and value, to be furnished by him to the company, did not cause the policy to attach, and could not, per se, constitute a binding and mutual contract between the parties under this policy, to charge the company with the loss of the bacon. The information as to the value ought to have been furnished in reasonable time. The neglect to do so until such a time had elapsed as to render the loss of the vessel with its contents highly probable, does not authorize the plaintiff to ask to have the valuation endorsed. [120] (Decided 30th June, 1870 ) If it could, after such an interval, be endorsed, it might as well be demanded after the loss was known and the risk determined. If it could be done, in either case, then the endorsement of the valuation was a useless ceremony, and the simple endorsement of the application for insurance would be sufficient to constitute a contract between the parties. We think such a construction is not warranted by the written contract between the parties, evidenced by the policy and policy-book, nor by the course of dealing between them, nor by any just principle of indemnity under contracts of insurance. The plaintiff’s prayer was properly refused, as it contained an erroneous view of the law applicable to the case. Whether the defendant’s first prayer was entirely correct or not it is unnecessary to decide, because we do not perceive that its sanction by the Court below has at all injured the plaintiff; and the same remark is applicable to its second prayer. See Donville vs. Sun Mutual Ins. Co., 12 Lawrence, 259; Edwards et. al. vs. St. Louis Ins. Co., 7 Missouri, 382. Judgment affirmed.