Gauntlett v. Sea Insurance

Grant, J. (after stating the facts). If any contract was made between these parties, it must be found in the telegrams which passed between Chamberlin and C. A. Macdonald & Co. on the 31st of March. The letter of the same date is only confirmatory of the last telegram sent by Macdonald & Co., and does not change or modify it. The telegram of Chamberlin to Macdonald & Co. of April 3d, asking for names of companies which covered the insurance, and Macdonald & Co.’s reply, cannot be considered, because Chamberlin knew at the time that the vessel was lost, and consequently .there was no vessel in existence to be the subject of insurance. If insurance was not at that time effected, these telegrams could neither create a new contract nor supply an element essential to complete one partially negotiated. Vessels and cargoes upon the seas may be insured where both parties are in ignorance of the condition of the property. Mr. Joyce thus states the rule: “ In marine insurance a policy can be lawfully effected upon property ‘lost or not lost;’ but this phrase, so used, has reference to cases where the property has started upon its voyage, and the parties to the insurance have no knowledge whether it. has been lost or not. In such cases the insurance is against an unknown event, and the underwriter takes the risk of the arrival of the property at its destination, and thus there is something to insure.” 1 Joyce, Ins. § 105. See Insurance Co. v. Lyman, 15 Wall. 664. Referring to the telegrams, we find Mr. Chamberlin asking for insurance according to “ Lloyds’ class value, to attach noon.” Mr. Chamberlin did not mean “Lloyds’ class ” as it was in 1893, but as it would be under the [512] inspection and classification of 1894. He knew the vessel, without repairs, could not be classed as she had been, “A2,” because McLeod had so advised him. He therefore must be held to have intended the classification and value according to Lloyds’ Register as it would be in 1894. Macdonald & Co. so understood it, and replied that they had wired for class of Barnum, thus clearly saying, “Before we insure, we must know her class.” On receipt of McLeod’s telegram, dated the 31st, that “W. H. Barnum has no class or value until repaired,” they wired Chamberlin that McLeod had so wired to them. To this Chamberlin replied that McLeod was in Detroit, and still asked for an answer to his proposition for insurance.. To this Macdonald &£ Co. replied, “Will cover Barnum if McLeod says she is in condition to 'mahie voyage.” Under the custom as shown by the record, a contract for insurance would have been complete but for the condition in Macdonald & Co.’s last telegram. That introduced a new element into the negotiations. McLeod evidently was not in Detroit on that day, as was shown by his telegram to Macdonald & Co. He had been there the day before. According to Chamberlin’s own testimony, he relied upon the conversation he had had with McLeod on that day, March 30th, in which he testified that McLeod told him that he considered the Barnum “ entirely seaworthy, and fit to come to Port Huron, and that he would fix for her a class of A2£.” McLeod was not a witness, evidently being too ill to attend court, for it was stipulated upon the hearing that certain letters of McLeod to Chamberlin and to Macdonald & Co. should be read in evidence to guard against the possible loss of Mr. McLeod’s testimony by death. These letters flatly contradict the testimony of Mr. Chamberlin. In one of these letters to Macdonald & Co., McLeod writes: ‘ ‘ I was not consulted in regard to Barnum’s class last spring, further than that Mr. Chamberlin requested me not to cut class until he got her to Port Huron and repair to an A2 class. I could not class her better than Bl on [513] inspector’s report; consequently she was not classed at all until after the disaster. If my opinion had been asked, I could only approve of Bl class.” We draw the conclusion from all the evidence that McLeod had not made such statement. Possibly Macdonald & Co. inferred (if they stopped to consider that on that very day they had a telegram from McLeod in Cleveland) that he was going to Detroit so as to be there in the evening or the next morning, and that Chamberlin would then see him,' and obtain the statement from him, if he would give it. Be that as it may, the telegram imposed a condition upon Chamberlin, compliance with which was essential in order to complete the contract. The telegram meant that McLeod should make a statement in his official capacity with knowledge of the situation, and the reason for making it. It did not contemplate a statement made in conversation the day before, when no reference was made to insurance by Macdonald & Co. The telegram said to Chamberlin: “You say McLeod is in Detroit. Get his opinion in his official capacity, as inspector and manager of the Lloyds, that the Barnum is in condition to make the voyage, and we will insure your boat.” It is unreasonable to hold that Macdonald & Co. intended to be bound by a statement made without any knowledge that defendants were to base a contract for insurance upon it, and made the day before, resting entirely in parol. Good business men would not do business in this manner. It was Mr. Chamberlin’s duty, if he desired to perfect the insurance contract, to obtain that statement or certificate from McLeod. This he failed to do, and, so far as the record shows, made no effort to get it. It was not the duty of defendants to obtain this statement, and it is immaterial that the defendant companies were members of Lloyds’ Register Association. There could be no binding contract for insurance until such statement was furnished, and Macdonald & Co. notified by Chamberlin that he had complied with the condition, unless compliance with the condition was waived. Until notified of compliance with [514] the condition, Macdonald & Co. could have withdrawn their offer. There is no evidence of waiver. The confirmatory letter following the telegram of March 31st, -and the telegram of April 3d, by Macdonald & Co., stating in what companies the insurance was placed, cannot be held to have waived the condition, because Macdonald & Co. had no information or knowledge that Chamberlin had not complied with it. They were legally justified in believing that Chamberlin had obtained the statement, and would forward it with his application for insurance. A waiver is “ the intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it.” 2 Bouv. Law Diet. Another obligation resting upon Chamberlin was not complied with, viz., his failure to send applications. These were not sent until a month afterwards. Macdonald & Co. telegraphed, “Send applications.” If they did not consider it necessary to have the applications forwarded at once, why the telegram ? The necessity of these applications is shown in Mr. Macdonald’s testimony. That others sometimes did not send them immediately is of no significance in this case. The defendants had a legal right to them, at least within a reasonable time. They could have been forwarded on the night of the 31st, and reached Macdonald & Co. on the following morning,—the very day the boat sailed. The purpose of these applications is to more fully and specifically inform the insurer of the extent of the risks asked to be assumed, the amount, etc. If the written application does not comply with the terms of the telegrams or letters, the insurer then has two courses open to him,-—either to accept the risk, and issue the insurance upon the terms of the application, thus making a new contract for insurance, or to reject the application as not in compliance with the telegrams or letters. This is manifest from the application made by Chamberlin, which is as follows: “ Insurance is wanted for C. A-. Chamberlin and others; loss, if any, payable to C. A. Chamberlin, managing [515] owner. Amount wanted, $3,500 on the hull of the steamer ’ William H. Barnum. Class, -. Registered value, ■-. Port of hail, Detroit. When built, 1873. From noon of April 1st, 1894, to noon of April 1st, 1895. Yessel to be valued at $25,666. Limit on this vessel,- $22,000. Rate of premium, $7.75. Amount of premium, $271.25. Free from particular average under 5f per cent.; each passage from port to port subject to its own average. To be employed in general freightage. Privilege to extend, etc. Proposed premium note due October 4, 1894, signed C. A. Chamberlin, M. O., Detroit, indorsed by ——, of -, payable at the office of McLellan & Anderson Savings Bank. This application to be considered binding when approved by C. A. Macdonald & Co., general agents, Chicago, III., and the contract perfected by the issue of the policy or policies. “Dated at Detroit, April 1st, 1894. ■ “C. A. Chamberlin, M. O.”' Mr. Macdonald testified that it was usual for these applications to be forwarded at once, and this certainly seems reasonable. Good business men would not leave these important contracts “hanging in the air” on the brief wording of telegrams. Whether the failure to forward these applications would alone work a forfeiture of a contract for insurance but for the condition we need not determine. Decree reversed and bill dismissed, with the costs of both courts. Hooker, Moore, and Long, JJ., concurred. Montgomery, C. J., did not sit. •