Livingston & Gilchrist v. Maryland Insurance

Marshall, Ch. J. delivered the opinion of the court as follows: In this case several questions have occurred, on which the court has not yet formed an opinion. The application of rules and principles, which have been framed for an action on the case, to an action of covenant, is an operation of some difficulty. The court has not decided with precision, on the extent of the plea, that the defendant has not broken his covenant, nor on the testimony which may be admitted under that plea. Some difficulty, also, arises from the circumstances, that the parties have gone to" trial under the expectation that the whole merits of the case were *278 open, under the issue, which was joined, and that sucfe expectation was authorized by, the invariable .usage o£ the courts of Maryland, and of the circuit court sit» ting in that state. Upon the inspection of the special verdict in this-Case, it is supposed that, however these points may be decided, a- venire facias de novo\ would' probably be awarded; and, as the delay of a term would be a great inconvenience to the parties, it is deemed advisable to award it now. There are, however, some points, which have been argued at great length, on which an opinion has been formed, which will now be delivered. It is essential, in this form of action especially, to. distinguish accurately between the warranty contained in. the- policy, and those extrinsic circumstances, such as misrepresentation or concealment, which have been deemed sufficient to discharge the underwriters. Although the effect of a breach of a warranty, and of a material misrepresentation may be the same on a policy, yet they cannot be confounded together, in deciding on pleadings or on a special verdict. The warranty, in this case, is in these words; “warranted, by the assured, to be American property, proof of which to be required in the United States only.” The interest insured is admitted to be American property, in the strictest sense of the term; but it is contended, that Baruro, a Spanish subject, had an interest in-the cargo, which falsifies the warranty. Whether Baruro' could be considered as having an interest in the cargo, or not, is a question of some intricacy, which the court has not decided; .and which, if. determined in the one way or the other, would not affect the warranty; because, the assured are not understood to warrant that the whole,cargo is neutral, but that the interest insured is neutral. *279 íf the assured represented the whole'cargo to be neutral, when it was not, of if {hey concealed the est of a belligerent, when it ought to have been discloseel, which facts this court neither affirm nor deny, the effect of the misrepresentation or concealment on the policy, depends on its materiality to the risk. This must be decided by a jury under the direction of á. court. In this case, it has not been decided. Consequently, were it even to be admitted that, under the peculiar circumstances ofthis case, these facts might' be taken into consideration, without being specially pleaded, a venire facias de novo would be necessary, in order to ascertain their materiality. ■ So, too, with respect to the Spanish papers found on board. It is said that the verdict finds their materiality, by finding that the fair premium on American property disguised as Spanish, on the voyage insured, was twenty-five per cent. whereas the premium, in this case, was only ten per cent. But, it does not appear to the court that this property was, by these papers, disguised as Spanish. It is found to have beén the constant' course of the trade to have them on board, and, consequently, they cannot be understood to disguise the property as Spanish, when there are other papers which prove it to be American. It is, too, as yet, undecided, that this matter could be given in evidence, on this issue. Although this verdict, and these pleadings, do not present the merits of the cause jn such form as to enable the court to decide them, there are some insulated points, from which the cause may be relieved. The reference to the letter of Church and Demmill, which was made by the assured, in their letter of the 26th of March, to Alexander Webster & Co., has *280 been treated both as a representation,, and asawarran tyt which is fálsifred by the sentence of condemnation.. • There- is ho colour for this opinion. Most clearly it is not a warranty, for it is not introduced into the policy; and if it were it representation, it only goés to the actual state of the ship, at the time, not to her future conduct. But it is not even a representation. Marshall, 336. is full and clear on this point. The letter of the assured, of the 5th of June, is understood to ask the permission of the underwriters to keep their right to abandon in a state of suspense, and the note made by the president and directors, on that letter, is Understood aá granting that permission. It is difficult to ascribe this letter to any other motive. - It has been asked, for how long a time is • this permission -given ? The answer is obvious. It is., at least, to continue while the ' property continued in its then situation, unless it should be sooner determined 15y one of the parties. The assured might abandon previous to the sentence, or immediately afterwards; and the underwriters might, at any time, require the assured to elect immediately, either to abandon or to waive-the right so to do. Since they have not made this communication, their original permission continued in force. But the jury have not found that the abandonment was or was not in due time. It is, also, the opinion of the court that, as the laws and regulation , by which this trade was regulated, are not proved to ’ have been in writing, as public edicts, but may have depended on instructions to the governor, they may be proved by parol. The judgment is to be- reversed, because the special verdict is defective; and the cause remanded, with directions to award a ventre facias de novo. *281 In the second case, it is ordered to be certified; that, if the jury should be of opinion that the Spanish pa-piers, mentioned in this case, were material to the risk, and that it was not the regular usage of the trade insured to take such papers on board, the non-disclosure of the fact that they would be on board, tfould vitiate the policy; but if. the jury should be of opinion that they were not material to the risk, or that it was the regular usage of the trade to take such papers on boarti, that they would not vitiate the policy.