Fire Ins. Ass'n, Ltd. v. Wickham
141 U.S. 564 (1891)

Annotate this Case

U.S. Supreme Court

Fire Ins. Ass'n, Ltd. v. Wickham, 141 U.S. 564 (1891)

Fire Insurance Association Ltd. v. Wickham

No. 59

Argued October 28, 1891

Decided November 16, 1891

141 U.S. 564


Parol testimony is admissible to show the circumstances under which a written instrument was executed, or that it was in fact without consideration.

Where the facts clearly show that a certain sum is due from one person to another, a release of the entire sum upon payment of part is without

Page 141 U. S. 565

consideration, and the creditor may still sue for and recover the residue; but if there be a bona fide dispute as to the amount due, that dispute may be the subject of a compromise.

When a claim not yet due is prepaid in part by the debtor, such prepayment may operate as a discharge of the whole claim if both parties intended it to be a consideration for such discharge, and whether both parties so intended is a question for the jury.

Circumstances attending the execution of a receipt in full of all demands may be given in evidence to show that by mistake it was made to express more than was intended, and that the creditor had in fact claims that were not included.

The plaintiff took out fire insurance policies upon a vessel in 10 companies to the amount of $40,000 in all. The vessel took fire, and, in order to save it, it was scuttled and sunk, and the fire thus extinguished. It was

then raised, taken to port, and repaired. The loss by fire, exclusive of the expense of raising the vessel, etc., was $15,364.78. The owner made claim upon the insurers for this amount for "loss and damage by fire and water as per agreement," stating that he would make further claims "for expenses of raising the propeller," and was "preparing the statement of such expenses to submit with his subsequent claim." The companies declined to pay such subsequent claim, but paid in advance the amount of the loss by fire so stated, taking receipts, expressed to be in full of all claims for loss or damage by fire, and in which it was further stated that the policies were cancelled and surrendered. The parties further signed a paper in which "the loss and damage by fire" was certified at that aggregate amount, "payable without discount upon presentation," and the amount was apportioned among the several companies. In an action brought by the owner to recover from the companies the amount of the claim for raising and saving the vessel, some $15,000, it was


(1) That parol evidence was admissible to explain the receipts, and to show that they were not intended to cover the claim for raising, etc.

(2) That the paper so signed by the parties was not in the nature of a contract on the part of the owner.

The Court stated the case as follows:

This case was brought before the Court upon a certificate of division of opinion between the circuit and district judges. The action was begun in November, 1884, upon two policies of fire insurance written by the Fire Insurance Association, defendant, upon the propeller St. Paul, of which defendants in error were owners, one of such policies being for $3,500, and the other for $1,500. On the same day, actions

Page 141 U. S. 566

were begun against six other insurance companies upon their policies on the same vessel, and an order was subsequently made that all the actions so commenced should abide the event and final determination of the one which the plaintiffs should elect to try. The following facts appeared upon the trial: in 1883, the plaintiffs, who were the owners of the propeller St. Paul, engaged in navigating the Great Lakes, obtained upon her fire insurance policies in ten companies to the amount of $40,000. Plaintiffs also had $45,000 of insurance by marine policies on the same vessel at the same time. In all of these policies save one, it was provided that in case of loss by fire, the loss should be payable in sixty days after proofs of loss had been filed with the company. On November 10, 1883, while on a voyage from the lower lakes to Lake Superior, a fire broke out in the hold of the vessel, and to save her and her cargo she was scuttled and sunk, and the fire thus extinguished. She was subsequently raised and brought to Detroit for repairs, where she arrived on the 19th of November, and immediately began to discharge her cargo. A few days thereafter, and while her cargo was being unloaded, another fire broke out in her hold, and she was again sunk for the purpose of saving her, and was afterwards raised at considerable expense. On the 15th of December, a written agreement was entered into between the plaintiffs and the adjusting agents of the several insurance companies for the purpose of appraising the amount of loss caused by these fires, with a stipulation that the agreement should be "of binding effect only as far as regards the actual cash value of or damage to such property covered by policies of said companies issued at their various agencies." It was further added that

"the property on which loss or damage is to be estimated and appraised is the hull of the propeller St. Paul, including the tackle, awnings, furniture, engine, and boiler connections, and appurtenances thereto belonging,"

with a further memorandum, following the signature of Wickham, but preceding those of the insurance companies, that "this agreement does not apply to or cover any question that may arise for saving boat and cargo." The adjustment under this agreement of the

Page 141 U. S. 567

direct loss by fire was completed December 26, and formal proofs of loss were also sent to the several insurance companies in New York, and were received in due course of mail. The amount of the loss, according to the report of the appraisers, exclusive of the expense of raising and saving the vessel and cargo thus adjusted, aggregated $15,364.78, and the amount proportioned to the plaintiffs in error was $1,920.60. The adjusting agent, in sending proof of loss to the companies, accompanied the same with the following letter to each of such companies:

"Buffalo, January 12, 1884"

"Gentlemen: I enclose herewith proofs, John W. Wickham, Jr., managing owner, for loss and damage prop. St. Paul, which I trust will be found satisfactory:"

The claim as made covers only the loss

and damage by fire and water, as per

agreement, on the tackle, awnings

apparel, furniture, etc., of . . . . . . . . $ 1,735.08

And the appraisers' award on hull,

engines, mach'y, etc., of . . . . . . . . . . 13,629.70


Aggregating in all . . . . . . . . . . . . $15,364.78

"The assured will make further claims for expenses of raising the propeller, and is now preparing the statement of such expenses to submit with his subsequent claim."

"Yours truly,"

"W. D. ALLEN, Adjuster"

At the trial it was admitted that the cost of raising and saving the vessel was also upwards of $15,000. The plaintiffs admitted that they had been paid the cost of repairing the vessel, as set forth in the proofs of loss prepared and forwarded to the companies, but claimed that they had not been paid any part of the cost of raising and saving the vessel; that before the commencement of this suit, they demanded payment thereof, which was refused, the insurers denying liability therefor, and that the same remained unpaid.

Page 141 U. S. 568

The defendant claimed that the payment of the cost of repairs was made by way of accord and satisfaction of the plaintiffs' entire claim, and offered in evidence the following receipts:

"$1,344.42 January 19, 1884"

"Received from the Fire Insurance Association of London, England, thirteen hundred and forty-four 40-100 dollars, it being in full of all claims and demands for loss or damage by fire which occurred on the 10th and 24th days of November, 1883, to property insured by policy No. 180,617. Buffalo, New York, agency, and in consideration of said payment said policy is hereby cancelled and surrendered to said company, and all further claims by virtue of said policy forever waived."

"[Signed] JOHN W. WICKHAM, Jr."

"Managing Owner"


"Per WICKHAM, Jr."

There was also a receipt endorsed upon the policy No. 180,617, as follows:

"January 19, 1884"

"In consideration of four 47-100 dollars return premium, the receipt of which is hereby acknowledged, this policy is cancelled and surrendered to the Fire Insurance Association, Limited, of England."

"[Signed] JOHN W. WICKHAM, Jr."

"Managing Owner"


"Per WICKHAM, Jr."

A similar receipt for $576.18 was given by the plaintiffs to the defendant, in form precisely like the first, except as to the number of the policy and the amount, on account of the second policy issued by the association. Similar receipts, all of the same date except two, which were a few days later, were given to the other companies concerned, all of which

Page 141 U. S. 569

were put in evidence by the defendant. The receipt to the Mechanics' Fire Insurance Company was expressed to be "in full satisfaction of all claims and demands upon said company for loss and damage by fire," etc., and

"in consideration thereof said company is hereby discharged forever from all further claims by reason of said fire, loss, and damage, and said policy of insurance is hereby assigned, with all claim thereunder, to said company, and said policy is hereby cancelled in full, and surrendered to said company."

The receipt to the London and Liverpool and Globe Insurance Company was for a sight draft, "which, when paid, will be in full compromise and payment of all claims and demands upon said company for loss and damage by fire," etc. The receipts to the other companies did not differ materially from those given to the defendant company.

The defendant also put in evidence the following paper, signed by the plaintiffs, marked "Exhibit QQ;"

"New York, January 19, 1884"

"This is to certify that the loss and damage by fire which occurred on the 23rd day of November, 1883, to the steamer St. Paul, is this day adjusted for the sum of fifteen thousand three hundred and sixty-four and 78/100 dollars, ($15,364.78), payable without discount upon presentation of the policies to the several companies interested by the assured, and apportioned among the several companies as follows, viz.:"

Insures Pays

Continental of New York . . . . . $7,500.00 $2,880.90

London and Liverpool and Globe. . 6,000.00 2,304.70 -- Paid

Fire Insurance Association. . . . 3,500.00 1,344.42 -- Paid

Queen's, of England . . . . . . . 7,000.00 2,668.84 -- Paid

Fire Ins. Ass'n, 2d policy. . . . 1,500.00 576.18 -- Paid

Security, of New Haven. . . . . . 2,500.00 900.30 -- Will remit

Exchange, of New York . . . . . . 2,500.00 960.30 -- Paid 1, 19, '84

Mechanics', of New York . . . . . 2,500.00 960.30 -- Paid 1, 19, '84

German, of Pa. . . . . . . . . . 2,500.00 960.30 -- Will remit

Page 141 U. S. 570

Prescott Insurance Co. . . . . . 2,500.00 960.30 -- Remitted

Greenwich, of New York. . . . . . 2,000.00 768.24 -- Paid 1, 19, '84

---------- ----------

$40,000.00 $15,364 78

"[Signed] JOHN W. WICKHAM, Jr.,"

"Managing Owner"


"per JOHN W. WICKHAM, Jr."




The defendant having rested, the plaintiffs, in rebuttal, offered evidence tending to show that in January, 1884, Wickham went to New York, and that on the 18th of January, a meeting of the companies interested in the loss was held at the board rooms in New York at which meeting Messrs. Wellman and Oakley were appointed a committee to confer with the plaintiffs in regard to such loss. Of this meeting Wickham had no notice, and was not present. That on the following day, Wickham met Wellman and Oakley and was notified by them that they were appointed as such committee, and that the companies were ready and willing to pay the expenses of making the repairs occasioned by the fire, as set forth in proofs of loss hereinbefore mentioned.

That Wickham called attention to the claim for raising and saving the vessel, stating that he expected to get a contribution to such expense from the owners of the cargo of the vessel upon a general average, and for the sake of settlement offered to share the balance of such expense with the fire insurers in the proportion that the uninsured interest in the steamer bore to the amount insured. That the committee replied that the companies were not liable for such expense, and that they had no authority whatever to consider the claim for raising and saving the steamer, and thereupon gave to Wickham the following paper, marked "Exhibit PP," stating to him that the same was a record of the proceedings of the meeting at which they were appointed such committee, and that their

Page 141 U. S. 571

authority was limited by the terms of the resolution adopted at such meeting and set forth in said exhibit, and that they could not go beyond it, or consider this claim for raising and saving the vessel, even if they were disposed to do so.

"Exhibit PP"

"Board Rooms, January 18, 1884"

"Meeting of the companies interested in loss of propeller St. Paul "


Continental . . . . . . . . . . . $ 7,500.00

Fire Insurance Association. . . . 5,000.00

Queen's . . . . . . . . . . . . . 7,000.00

Exchange. . . . . . . . . . . . . 2,500.00

Mechanic's, New York. . . . . . . 2,500.00

Greenwich . . . . . . . . . . . . 2,500.00



"Organized by Mr. Wellman, chairman."

"Communication from John M. Murray, adjuster at Detroit, in relation to expenses incurred in saving propeller St. Paul."

"On motion, duly seconded --"

"That the request of the assured to help him out is not granted, but the companies are recommended to pay the amount of claim as set forth in the proofs of loss, Carried."

"Meeting adjourned."

"[Signed] G. W. MONTGOMERY"

"On motion, the action of the meeting be referred to a committee of two for the purpose of conference with the owner, Carried."

"Chair appointed Mr. Oakley and Mr. Wellman."

A part of this paper was in the handwriting of Wellman.

Plaintiff offered evidence tending to show that the committee further stated that the companies were satisfied with the adjustment and proofs of loss, and were ready and willing to pay the cost of making the repairs to the steamer, necessitated directly

Page 141 U. S. 572

by the fire, without discount, and would waive any rights they might have under the policies making the loss payable in sixty days from the time the proofs were furnished. The plaintiffs were never requested to compromise or release their claim for the expense of raising and saving the vessel, nor was the release or compromise of such claim spoken of except by Wickham when he offered to settle, as hereinbefore stated, which offer was declined by the committee, as above stated, upon the ground that they had no authority to consider the matter.

Plaintiffs also offered evidence to show that at such interview, Mr. Oakley, in behalf of the Mechanics' Insurance Company, gave to Wickham a check for the amount of the loss adjusted as aforesaid against the company, being $960.30, and Wickham then signed the aforesaid receipt for that amount to the company, and, after the receipts were signed and delivered, the paper (Exhibit QQ) was prepared under the direction of Oakley, and given to Wickham to exhibit to the representatives of other companies to show the amount of the adjusted loss which had been apportioned against the companies respectively.

The defendant objected to the introduction of this parol testimony as tending to contradict the receipts and drafts given in evidence and the certificate of January 19th, Exhibit QQ, showing the apportionment of the loss to be paid by the several companies, upon the ground that such evidence was not admissible in the absence of fraud, misrepresentation, and mistake. These objections were overruled by the presiding judge, and the evidence was received and submitted to the jury.

Upon the question of the admissibility of this testimony, however, there was a difference of opinion between the circuit and the district judges, and the following question was certified for the opinion of this Court:

"On the facts stated in the foregoing record, was the parol testimony offered in evidence by the plaintiffs admissible to vary and contradict the certificate of January 19th, Exhibit QQ, and the receipts and drafts hereinbefore set forth?"

This testimony having been introduced, the defendant offered evidence tending to contradict the same, and to show that the

Page 141 U. S. 573

whole matter arising out of the loss was intended to be compromised and settled by what took place between the parties at the meeting in New York. There was no evidence that the agreement, Exhibit QQ, or the receipts and discharges executed by the plaintiffs were obtained by any fraud or misrepresentation of the defendants or their agents. The amount thus paid to the plaintiffs upon the settlement in New York was the exact amount claimed in the proofs of loss, but it was paid about 55 days before the same was due and payable, as by the terms of all the policies, save one, the amount of the loss was not payable until sixty days after the proofs of the loss were furnished to the insurance companies, and this was not earlier than January 1. In the charge to the jury, the court instructed them that this payment before the amount became due was a good consideration for the settlement and discharge of the whole claim, if such settlement were actually made, and if it was so understood and agreed by the parties. The defendant claimed that the certificate and apportionment of January 19, together with the receipts and drafts, as a matter of law, showed a full settlement of the entire claim, and an accord and satisfaction thereof. The plaintiffs claimed that the settlement related solely to the loss covered by the proofs of loss, and was not intended to, and did not, embrace the claim for raising the vessel and cargo, and saving the same. The question what the parties intended by said settlement was submitted to the jury under the charge of the court, and upon such parol testimony and papers a verdict was rendered for the plaintiffs for the sum of $2,297.65, and a judgment for this amount was accordingly entered. A second question was certified, as to whether the defendant was entitled to a verdict under the facts in said record therein set forth; but, upon a motion to dismiss, this Court held the question to have been improper. 128 U.S. 128 U. S. 426.

Page 141 U. S. 576

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