Delaware State Fire & Marine Insurance v. Shaw

Bartol, C. J., delivered the opinion of the Court. It appears by the record that five prayers were offered by the appellant, the defendant below. The fifth was granted; all the others were refused. Two instructions were given by the Court to the jury. “The defendant then withdrew its second, third and fourth prayers, saying by its attorney, that the instructions of the Court covered the same points, and were satisfactory to him; but he reserved an exception to the rejection of his first prayer.” The first prayer denies' the right of the plaintiff to recover upon the writteu paper declared on as the cause of action. No exception was taken by the appellant to the two instructions given to the jury. Consequently, they are not ¡subject to review on this appeal. They directed the jury, that the plaintiff was entitled to recover upon the finding of certain facts therein stated, and the appellee contends that these instructions constitute the law of the case, binding on the appellant which acquiesced therein, and that it cannot be heard to insist upon its first prayer, which was entirely inconsistent with the instructions •granted. We do not understand the statement contained in the bill of exceptions, above recited, as importing that the •appellant acquiesced in the instructions of the Court, as ■constituting the toholedaio of the case ; but only as covering — 550 — the same points presented by its second, third and fourth-prayers. These are not set out in the record. It must be-understood, however, that the appellant’s counsel intended to accept the instructions granted in lieu of those prayers which were withdrawn, and not to waive or-abandon the position asserted in its first prayer. Especially when in terms, an exception was reserved to the rejection of that prayer. It is, therefore, properly before-us for consideration. It asserts that “the paper for insurance declared on by the plaintiff in this action is not such a contract in law as. entitles him to sue upon it in this case, and that the verdict must be for the defendant.” The plaintiff was owner of one-eighth of the bark “ Palestina,” which was about to proceed on a foreign-voyage, and wishing to obtain an insurance thereon for $1200, his agents, Loud, Olaridge & Co., employed Forrest, an insurance broker, who obtained from Watkins, agent of' the defendant in Baltimore, the following paper : “No. 1002. $1200. Delaware State Eire and Marine Insurance Co., Wilmington, Del. This certifies that we have this day entered in the name of Loud, Olaridge & Co., for whom it may concern, on our open policy No. 1002, with the Delaware State E. & M. Insurance Company, a risk of twelve hundred dollars-on bark Palestina, at and from June 20th 1878, to June-20th 1879, loss if any, payable in current funds to Mess-Loud, Olaridge & Co., or order, according to the terms, and conditions of the policy. “ James S. Watkins “ Agent. “Valued $10,000. “Baltimore, June 20th 1878. “$1200 at 12 (00) per cent. $144.” — 551 — This paper was delivered by the broker to Loud, 01a-ridge & Co., and by them assigned in writing to the plaintiff. The bark being lost, the plaintiff called on the defendant and demanded payment; but the defendant refused to pay the loss, alleging that it had never insured the bark. Ho policy was ever prepared or issued by the Company. The paper signed by Watkins is declared on as the cause of action, or contract of insurance, and the question raised by the first prayer, is whether it constitutes a valid and binding contract of insurance, assuming that Watkins was the general agent of the Company, authorized to enter into contracts of insurance in its name and on its behalf. This depends upon the construction of the written paper, the Court below, having very properly excluded the evidence of the opinions of Forrest and Watkins upon the validity of the paper, to bind the defendant. Before considering the terms and effect of the paper declared on in this case, it may not be out of place to refer to what has been said in decided cases and by text writers on the subject of what are known in marine insurance as “Slips.” Mr. Arnold in his excellent work on Marine Insurance, page 246, (4th Eng. Edition,) says: “ The broker when requested to effect an insurance, prepares a brief memorandum of the leading particulars of the proposed risk, such as to convey at a glance to those who are skilled in the business, a sufficient notion of the intended policy, to enable them to say whether and at •what premium they will underwrite it. This memoran-’ dum, called the Slip, is presented, if at Lloyd’s, successively to the underwriters there, who if they think well of the risk, and the premium at which it is either offered, or has already in part been taken, initial the slip, each for the sum he thinks proper to underwrite, and so on until the whole amount is subscribed. — 552 — “ If the application be to the companies, a fresh slip is presented to each, and thé secretary or underwriter, in ■case the risk be taken, initiálá it for so much. The only purpose that such a slip can now serve, is that it shows the broker how far and at what premium he can provide for the insurance required. It enables him to draw up the policy on the proper stamp for signature at Lloyd’s, and each company to frame their own policy on the terms proposed. “As to whether there be an engagement by initialing the slip, that ought to be considered binding in honor, is not a question suitable to these pages. All those questions which have, from time to time, been mooted at the bar, and even on the bench, as to the effect of this initialed memorandum, either at law or in equity, have at length been quieted by the statute so often referred to in the course of the last few pages. (30th & 31st Victoria.) It is enacted that every contract or agreement for sea insurance is invalid unless expressed in a policy, and that such policy, if not duly stamped before being underwritten, shall not be pleaded or given in evidence in any Court, or admitted in any Court to be good or available in law or in equity. “ In the United States where the restrictions of the revenue law do not interfere, and the great bulk of sea insurance business is carried on by companies, it is very generally the case that a memorandum of the contract, or an agreement to insure is made out and subscribed before executing the policy. In such case, the usual practice,” says Mr. Phillips, “ is to enter the agreement on the books of the insurance company, subscribed b3r some officer authorized to bind the company. Such a memorandum is binding on the company to make out a policy, if the premium is paid in due time.” 1 Phil. on Ins., 10, (sec. 13.) In Mackenzie vs. Coulson, L. R., 8 Eq. Cases, 368, a policy of insurance had been executed and delivered, — 553 — a,nd suit brought thereon by the assured, a bill in equity was filed by the underwriters for the purpose of restraining the action at law, and to have the policy reformed, so as to make it conform to the terms of the slip initialed b3r the underwriter. The Vice-Ohancellor referring to the slip, and its legal effect said: “ In point of law, and in fact, it amounted to no more than a statement by the underwriters of their willingness to effect a policy on these terms. To treat it in any other light would be a violation both of common ■and statute law. Repeated authorities have decided that I am not at liberty even to look at that slip, as evidence ■of a contract. I am bound b3r law to hold that it did not •amount to a contract of an3r kind.” That case arose in 1869 after the Statutes of 30 and 31 Vic. were in force. By the Statutes of 35 Geo. 3, ch. 63, sec. 11, and 54 Geo. 3, ch. 144, secs. 3, 4 and 5, contracts of marine insurance were required to be in writing and stamped. In 1863, the case of Xenos vs. Wickham, came up before the Court of Exchequer, (14 J. Scott, N. S.,) 108 Eng. C. L. R., 435, and on appeal in the House of Lords, (Id., 859.) There the policy had been executed, and remained in the possession of the company, and the main question was whether it had been delivered, so as to entitle the assured to sue upon it. The question of the effect of the slip was •considered, and in the very able opinion of Blackburn, J., who with Mellor, J., dissented from the opinion of the majorit}T in the Exchequer, and whose opinion on the main •question was affirmed in the House of Lords, he says -(page 452,) “The plaintiff’s company had authorized Mr. Lascandi to obtain for them insurance to the extent •of £5000, on the Steamer Leonidas between England and the Baltic, from the 25th of April 1861, to the •end of the season at eight guineas per cent. Mr. L. in the usual way prepared a slip containing these terms, and it was initialed by different private underwriters for sums — 554 — in the who-le-amounting to £3000, and hy the authorized clerk of the defendant’s company for £2000. This, as is. well-known, amounts to an agreement between the broker and the different underwriters who have initialed, that they shall bear the risk to the extent to which they have-initialed the slip, and shall receive the premiums accordingly, and this agreement is perfectly binding in mercantile honor, and but for the operation of the stamp laws would also be enforceable at law.” So in Parry vs. The Great Ship Co., in the Queen’s. Bench in 1863, (4 Best & S., 556,) it was said by Cock-burn, Ch. J., that the contract, evidenced by the slip, “could not be enforced at law or in equity, because the-Stamp Act intervenes,” (referring to the Statutes of Geo. III.) It may be inferred from these cases that the Vice-Chancellor went too far in Mackenzie vs. Coulson, in saying that the slip in that case, did not constitute a good contract at the common law. As stated by Justice Blackburn in Xenos vs. Wickham, the only difficulty in enforcing the contract evidenced by the “ slip ” in that case, was the want of a stamp-required by the Statutes of Geo. III. In comparing the memorandum which forms the cause of action in this, case, with the slip in Xenos vs. Wickham of which Mr. Justice Blackburn was speaking, there is a great and striking difference in their language and terms. The slip, expressed upon its face a present contract of insurance, while the paper here sued on, is a certificate that an insurance has been entered on an open policy No. 1002, and that the loss if any is to be paid according to the terms-of the policy. Manifestly the written paper does not purport to be a contract of insurance, but refers to a. policy which contains the contract and specifies its terms. It cannot therefore be construed to be the contract of insurance; nor can an action be maintained thereon as. — 555 — such contract. Whatever remedy the plaintiff might be-entitled to in another form of action, or in another fcrrum, we are clearly of opinion that he cannot maintain the present action upon the written paper declared on as a contract of insurance. (Decided 28th July, 1880.) We have heen referred by the appellee to the Relief Insurance Co. of N. York vs. Shaw, 94 U. S., (4 Otto, 574,) in which it was held that “ unless prohibited by statute or other positive regulations, a valid contract of insurance can be made by parol.” Here a contract of insurance by parol is not alleged, the only contract relied on is that evidenced by the written paper set out in the declaration ; which as we have said does not in its terms or by any reasonable construction constitute a contract of insurance, enforceable as such in an action at law. Being of opinion that the defendant’s first prayer ought to have been granted, it is unnecessary to refer to the-motion in arrest. Judgment reversed.