Hodgson v. Marine Ins. Co. of Alexandria

February 24. Cushing, J. {Marshall, Ch. f. not sitting in the cause) delivered the opinion of the court,* as follows : The insurance in this case being general, as well for the parties named ás “ for all and every other person or persons to whom the vessel did or might appertain,” and containing no warranty of neutrality, belligerent: as well as American property was covered by it., Some of .the párties being described as of Richmond, does not necessarily imply that they all resided there ; but if they did, mere.residence would not make them citizens; and even then, an express warranty was necessary, if it had been designed to run only a neutral risk. This is an-answer to the 7Íh as -well -as to the 4th /plea; because there can-lie no undue- concealment as to the parties interested, where the terms of the policy are so broad as to preclude the' necessity, either qf disclosing their names, or of inserting them in the instrument. Vreserit; Cushing', Washington, Livingston and Johnson, justices. *110 The eighth plea is also bad. The defendants acknowledge, under seal, to have received a consideration of lif 1-2 per cent, for the insurance they made, which it appears was secured by a note, the amount of which was to be deducted from the sum to be paid for a loss, if any happened. On the face of the instrument, then, a valid consideration, if that' be necessary, is stated, and if the note be never paid it cannot vacate the contract, or be relied on as a defence to an action on it. This Court knows not why a court of equity has been applied to . fbr an injunction. Its proceedings, therefore, can have no influence on the present suit, for notwithstanding its interposition in .the way mentioned in this plea, the defendants cannot be deprived of the right they have' reserved of deducting the amount of premium from whatever' sum they - may have to pay for the loss that has occurred. Without deciding whether a material misrepresentation, not fraudulent, can be pleaded in avoidance of a! sealed instrument, the court thinks there is no fact disclosed by either the fifth or sixth plea, which could vacate an insurance were it only a simple contract. In no part of the 5th plea is the misrepresentation alleged to be material. It is only to be. inferred that it had some influence (but to what degree does not appear) in prevailing on the defendants to agree to so high a valuation. It will hardly, however, be insisted, that every over-valuation, however inconsiderable, or however innocently produced, will annul a contract of this nature. It would seem more reasonable, to let mistakes of this kind (if they are to haye any operation at all) regulate the extent of recovery, and not deprive the party of his whole indemnity: for if an extravagant valuation be made, an underwriter cannot reasonably ask to be relieved be'yond the excess complained of. The .allegation that the vessel was worth, when insured, oply 3,000 dollars, is also very unimportant, it being nowhere stated that the plaintiff represented her to be worth more,. but only proposed that her' value in the policy should be agreed *111 at ten thousand dollars. Now although she might not in fact have been worth this sum, it.is itnpossible for the court to say that this difference was producéd entirely by the mistake which was made in her age and tonnage. This would be to say that a. difference of a year or two in the age, and of fifty or sixty tons in the burden of a vessel, must, in all cases, have the same effect on her value; a conclur sion which, on investigation, would be found very incbrrect. Nor, if it appeared on trial, that her actual worth were no more than 3,000 dollars, would it necessarily avoid tl>e. contract, or restrict the damages to that sum; for she may, notwithstanding, have-fairiy cost her owners the whole amount of her valuation; who, in,that case, would have honestly represented her as worth 10,000 dollars. But a more fatal objection to this plea is, that .die misrepresentation relied on is not stated to have been material to the risk of the Voyage; and yet the only cases in which policies have been avoided for innocent misrepresentations' kre those in which the matter [disclosed Or concealed has affected the risk, so ás to render it' different from' the one understood at the time, and On which the premium was ^calculated. Most of the,remarks on the 5th apply also to the 6th plea i for although it be here alleged that, the misrepresentation was material “in regard to the contract o.f insurance,” it should have been , stated in what particular, that it might appear whether . the risk run were at all affected, by it. Art objection is made to the declaration, but not much relied on, that no abandonment is averred to have been made; . In covenánt such averment, cannot be necessary^ . If it be proved on the trial, it ' will be sufficient. The judgment of the circuit court on the 4th, 5th, 7th and 8th pleas must be affirmed with costs; •and its judgmehtin favour of the defendants on the *112 6th plea reversed; and judgment on that plea be-also rendered for the plaintiff. Johnson, J. The difficulties in this case arise partly from the pleadings, and partly from the case presented by the pleadings.’ This policy, having been effected by a corpora-, tion under its, corporate seal, has been considered as imposing an obligation' on the insured to bring covenant instead of assumpsit, as is usual on such contracts. Thus the defendants haye been obliged to plead specially; and the cause comes up on demurrer, which, of course,’ admits the case as made upon the pleadings. Whether there, is sufficient matter well pleaded . why the plaintiff ought not to recover ? is therefore the question before us. I am of opinion that there, is. I cannot for a moment suffer the sealing of the policy, or the form of the action, to impose any restriction upon the latitude of defence applicable to The contract of insurance. Such a doctrine would be fatal to every incorporated insurance company. I therefore maintain, that, in the action of covenant’ on a policy of insurance, every defence may ,be taken advantage of, in pleading, that could be introduced, in-evidence, before a jury. It is an .exceedingly inconvenient .form of action fpr trying the merits of. questions arising out of this'.species of contract, and I feel disposed, if possible, to diminish the inevitable difficulties, arid the intricate and voluminous pleadings, which must grow out of this form of action, andi to admit every facility which the -rules of pleading will possibly sanction-. • Theré are eight pleas filed to the present, action. On the. three first there are issues in fact, and the court below has given judgment o'n- the remaining *113 five. I am disposed to concur in,their decisions on each of. these several .pleas, although, perhaps, on Some of them, for reasons not altogether the same • with those by which they were influenced; but Í shall confine my observations solely to the sixth plea, as that disposes, of the case finally, if decided for the defendants, and has been the principal subject of the . argument before' this court. ,The substance of this plea is-,' that the plaintiff misrepresented the age and tonnage -of the vessel, whereby the defendants were' induced to insure tp a higher amount than they otherwise should; and concludes with averring, that the difference between the true age and tonnage of the vessel,-and the repré- • sented age and tonnage, was material iñ regara to the contract of insurance. The plaintiff replies .that this misrepresentation was immaterial in regard to the seaworthiness .oí the vessel; her abihty to perform the. voyage, and the other risks insured against. • To me it appears that'the plea presents the true turning point of the case, and that tbe replication draws towards questions' very, different from that which ought to control 'our decisions. It is not on the doctrine, of seaworthiness that a misrépresentation is held to vitiate the policy, because the insured ! is always held to guaranty the sufficiency of his vessel to perform the voyage insured* Ñor is it an evident and necessary increase •of the risk; but it is presenting such false lights to the insurer, as induce him ¿to enter into a contract materially different from thaf which he supposes he is entering into. It is a rule of law introduced te protect underwriters from those innumerable frauds which are practised upon them in a contract which must of necessity be regula ted almost wholly by the-information derived from the insured. I do not lav so much stress ' upon the misrepre- ‘ *114 sentation with regard, to the age of the vessel; for that appertains much to her seaworthiness; but with regárd to her -size the misrepresentation was so enorme b as leaves no doubt upon , my mind that had tht case been .submitted to -a jury, the court would have been bound to charge them in favour of the. defendants. It had in its nature an immediate tendency to entrap the defendants into one of the most common and most successful snares, laid for the unwary underwriter, To make it the interest of the insured rather to sink than .to save.-his vessel. It can' very well be conceived ..that ap underwriter, maybe induced, to insure a certain sum upon a certain-vessel for a very moderate premium, when no premium would induce him to insure double . that amount upon the same bottom. I am aware of-a very considerable difficulty arising out of this case, viz. how we.are to estimate the degree of misrepresentation with regard to tonnage which shall vitiate . a policy ? but it. is a difficulty arising out of the mode in which, we are drawn into á decision on the case, rather .than, out of the case itself. If this question had been brought before a jury, the difficulty would have vanished; but. shall the party - lose the benefit of this 'defence because the pleadings have assumed such a shape as to force the court into a decision upon the point without a jury ? I am of opinion that he ought not, if it can be avoided; an extreme case may.be supposed in which the misrepresentation may • be very inconsiderable, as of a single ton for instance; but, on the other hand, we may suppose1 an extreme case of a misrepresentation to the highest possible number of tons burden, • say 1,000 tons; will it be said that,-in the latter case, the misrepresentation wo’uld not avoid the policy i From these considerations if seems to result that the epurt is driven to the necessity, of deciding this -case, upon its intrinsic merits, and reserving its opinion upon successive cases as they shall occur. This necessity is forced upon us by the alternative' either-to decide that no misrepresentation, however gross, *115 of the size of the vessel will avoid a policy, of that any misrepresentation, however' minute, will have that effect. It is to be hoped, in the mean time, that, some statutory provision may be made, which will relieve the court from a similar embarrassment. Judgment reversed. •