Head & Amory v. Providence Insurance Company
6 U.S. 127

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U.S. Supreme Court

Head & Amory v. Providence Insurance Company, 6 U.S. 2 Cranch 127 127 (1804)

Head & Amory v. Providence Insurance Company

6 U.S. (2 Cranch) 127

Syllabus

If the insured make a proposition to the underwriters to cancel the policy, which proposition is rejected, and afterwards the underwriters assent thereto, but before the assured are informed thereof, they have notice of the loss of the vessel insured, the policy is not cancelled.

A corporation can act only in the manner prescribed by the act of incorporation which created it. When its agents do not clothe their proceedings with those solemnities which are required by the incorporating act to enable them to bind the company, the informality of the transaction is itself conducive to the opinion that such act was rather considered as manifesting the terms on which they were willing to bind the company, as negotiations preparatory to a conclusive agreement, than as a contract obligatory on both parties.

In its corporate capacity, a corporation is a mere creature of the act to which it awes its existence; it may correctly be said to be precisely what the incorporating act has made it, to derive all its powers from that act, and to be capable of exerting its faculties only in the manner that act authorizes.

Page 6 U. S. 128

This was a writ of error to the Circuit Court of the First Circuit, held at Providence, Rhode Island, under the Act of Congress of 13 February, 1801. In that court the plaintiffs in error brought their action on two policies of insurance, one policy being for $10,000 upon merchandise on board the Spanish brig Nueva Empressa, the other policy being upon the vessel the Nueva Empressa.

The vessel was chased into Havana by British cruisers, and after remaining there some time she sailed for her port of destination, on which voyage she was captured by a British cruiser and sent into St. John, Newfoundland, where both ship and cargo were condemned as prize.

The jury under the charge of the court found a verdict for the defendants, the underwriters, on the count claiming a loss on the policy on the cargo and for the plaintiffs on the count claiming a loss on the policy on the ship. A bill of exceptions was tendered to the charge of the court by the plaintiffs, and they brought this writ of error. The facts of the case are fully stated in the opinion of the Court.

Page 6 U. S. 131

"We have your favor under the 2d instant, handing us a copy of a note received from the president of the Providence Insurance Company. When we consented to their proposition of settling the policy by paying twenty-five percent, it was not because it was most agreeable to us. We wished to make it conditional, as has been done in this town, and we had a right to suppose when we consented to their terms, the business was settled. If we can succeed with the Spanish government, the policies

Page 6 U. S. 132

on vessel and freight will be withdrawn of course at the usual custom; but we do not think it right to make one the condition of the other. If we make this settlement, we shall make every effort by money and interest to have the adventure terminate at Havana, and the sooner we know, the better. By the last accounts, the vessel was very much eaten by the worms and wanted very great repairs. This, we hope, will induce them to grant us the permission. The terms we acceded to were very favorable to the company, as it was paying them at the rate of thirty-five percent for the outward premium."

September 6, 1800.

"As there appears to have been a misunderstanding in the business as it respects the first propositions of the company, the directors are willing to accede to Messrs. Head & Amory's proposition, viz., to settle the policy on the merchandise at twenty-five percent, although it was their intention and expectation to have both policies included in the settlement. Messrs. Head & Amory will please to forward the policy and have it cancelled immediately. Premium note due 12-15 September."

"You will please to govern yourself accordingly, and we will attend to your wishes. "

Page 6 U. S. 163

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