Hazard's Administrator v. New England Marine Ins. Co., 33 U.S. 557 (1834)
U.S. Supreme CourtHazard's Administrator v. New England Marine Ins. Co., 33 U.S. 8 Pet. 557 557 (1834)
Hazard's Administrator v. New England Marine Insurance Company
33 U.S. (8 Pet.) 557
Insurance was effected in Boston, Massachusetts, on the ship Dawn, from New York to the Pacific Ocean on a whaling voyage and until her return. The letter ordering insurance was written in New York by the owner of the ship, who resided there, and the ship was represented to be a "coppered ship." The ship, on the outward passage struck upon a rock at the Cape de Verd Islands, and knocked off a part of her false keel, but proceeded on her voyage and continued cruising, and encountered some heavy weather, until she was finally compelled to return to the Sandwich Islands, where she arrived in a leaky condition, and upon examination by competent surveyors she was found to be so entirely perforated by worms in her keel, stem, and stern post and some of her planks as to be wholly innavigable, and being incapable of repair at that place, she was
condemned and sold. The vessel, on her outward voyage, had put into St. Salvador, and both at the Cape de Verds and at St. Salvador her bottom was examined by swimmers. It was in evidence that the terms "a coppered ship" had a different meaning, and were differently understood in Boston and in New
York. Held that the assured, in making the representation in the letter, was bound by the usage and meaning of the terms contained therein in New York, where the letter was written and his ship was moored, and not by those of Boston, where the insurance was effected.
Insurance. A representation to obtain an insurance, whether it be made in writing or by parol, is collateral to the policy, and as it must always influence the judgment of underwriters in regard to the risk, it must be substantially correct. It differs from an express warranty, as that always makes a part of the policy and must be strictly and literally performed.
The underwriters are presumed to know the usages of foreign ports to which insured vessels are destined; also the usages of trade and the political condition of foreign nations. Men who engage in this business are seldom ignorant of the risks they incur; and it is their interest to make themselves acquainted with the usages of the different ports of their own country and also those of foreign countries. This knowledge is essentially connected with their ordinary business, and by acting on the presumption that they possess it no violence or injustice is done to their interests.
It is upon the representation that the underwriters are enabled to calculate the risk and fix the amount of the premium, and if any fact material to the risk be misrepresented, either through fraud, mistake, or negligence, the policy is avoided. It is therefore immaterial in what way the loss may arise where there has been such a misrepresentation as to avoid the policy.
The judge of the circuit court, on the trial of the case, charged the jury, that if it should find that in the Pacific Ocean worms ordinarily assail and enter the bottom of vessels, then the loss of a vessel destroyed by worms would not be a loss within the policy.
By the court:
"In the form in which this instruction was given, there was no error.
The circuit court instructed the jury that if there was no misrepresentation in regard to the ship, and she substantially corresponded with the representation, still if the injury which occurred to the vessel at the Cape de Verds were reparable and could have been repaired there or at St. Salvador, or at any other port at which the vessel stopped in the course of the voyage, the master was bound to have caused such repairs to be made if they were material to prevent any loss. And if he omitted to make such repairs because he did not deem them necessary, and if by such neglect alone the subsequent loss of the ship by worms was occasioned, the underwriters are not liable for any such loss."
By the court:
"If the loss by worms is not within the policy, as has been decided, the"
court did not err in giving this instruction. The negligence or vigilance of the master would be of no importance under the circumstances in regard to the liability of the underwriters.
In the circuit court, an action of assumpsit was instituted by the plaintiff in error as the administrator of Thomas Hazard, deceased, on a policy of insurance dated 26 December, 1827, whereby the defendants caused to be assured Josiah Bradlee & Co., for Thomas Hazard, Jr., of New York, $15,000 on the ship Dawn, and outfits at and from New York to the Pacific Ocean and elsewhere on a whaling voyage, during her stay and fishing and until her return to New York or port of discharge in the United States, with liberty, &c.
The declaration contained various counts, stating a total loss of the vessel and a partial loss of the cargo, and also a partial damage to the vessel by perils of the seas.
It appeared in evidence that the vessel sailed on 29 December, 1827, and on her outward passage struck upon a rock at the Cape de Verd Islands, and knocked off a portion of her false keel, but proceeded on her voyage, and continued cruising, and encountered some heavy weather, until she was finally compelled to return to the Sandwich Islands, where she arrived in December, 1829, in a very leaky condition, and upon an examination by competent surveyors, she was found to be so entirely perforated by worms in her keel, stem, and stern post, and some of her planks, as to be wholly innavigable, and being incapable of repair at that place, she was condemned and sold.
It also appeared in evidence that after the vessel sustained
the injury at the Cape de Verds, she put into St. Salvador, and that both at the Cape de Verds and at St. Salvador, the bottom of the ship was examined by swimmers.
The defense to the action was rested on the following grounds.
1. That there was a misrepresentation of a fact material to the risk in the application made for the insurance, which was by letter, and in which the vessel was represented to be a coppered ship. It being alleged by the defendants that by the terms "coppered ship" applied to a vessel destined upon a whaling voyage in the Pacific Ocean, it would be understood, according to the usages of insurance in Boston, that the sides and bottom of her keel were covered with copper, and they adduced evidence to prove this position, and also that the keel of this vessel was not so covered.
And upon this point the plaintiff produced evidence to prove that the keel was so covered, or if not, that it was nevertheless covered with leather, and which was alleged to afford an equally permanent and effectual protection against worms.
The letter referred to was as follows:
"New York, Twelfth Month 22, 1827"
"JOSIAH BRADLEE & Co., BOSTON"
"Respected Friends: My ship, The Dawn, of New York, Henry Gardiner master, is now nearly ready for sea, and will probably sail in the course of next week on a whaling voyage to the Pacific Ocean and elsewhere. I wish you to have $25,000 insured for my account, on the ship and outfit, the ship valued at $15,000 and the outfit valued at $10,000, each subject to its own average -- the outfit to be transferred to my share of the oil, which will be about two-thirds of the oil, as fast as it shall be obtained; the oil valued at sixty cents a gallon. If any part of the oil should be sent home by any other vessel or vessels, that part of the oil not to be deducted from the sum insured on the outfit. Our ships sometimes take oil on their outward passage and wish to send it home; therefore you will please to have it stipulated in the policy for liberty to do it, and also for liberty to stop from time to time to procure refreshments, as is usual and customary on such voyages. This is the same ship that you had insured for me in Boston some years since. I will only
observe that I believe her to be one of the strongest and best ships in the whole fishery; she has been newly coppered to light water mark, above which she is sheathed with leather to the wales, and fitted in every respect in the best manner, and commanded by an experienced, capable, and prudent master, which entitles her to be insured at as low a premium as any ship in that business. You got her insured for me the last time on a similar voyage, against all risks, for six percent, although I understand that premiums have risen a little in Boston. I can but hope that you will be able to get this assurance effected at six and a half or seven percent -- indeed I should not be willing to give more than eight percent. Hoping to hear from you soon on the subject of this insurance, I remain, with great respect, your assured friend,"
"THOMAS HAZARD, JR."
The plaintiff also gave in evidence a letter from his intestate, of which the following is a copy.
"New York, Eighth Month 20, 1824"
"JOSIAH BRADLEE & CO."
"Esteemed Friend: My ship, the Dawn, of New York, John H. Butler master, sailed yesterday morning on a whaling voyage to the Pacific Ocean and elsewhere. I wish you to have $25,000 insured, provided you can get it effected at seven percent or under. This ship is about three hundred and twenty-seven tons, built in this city, of excellent materials; is between seven and eight years old, copper fastened, newly sheathed with wood, which was put on with composition nails, and then sheathed over the wooden sheathing with sole leather, which was also put on with composition nails. Ship valued at $15,000, and the outfit at $10,000, each subject to its own average; the latter to be transferred to the oil as fast as it may be obtained (say my proportion, which will be about two-thirds of all that may be obtained), the same to be valued at forty cents per gallon; if part should be sent home by any other vessel or vessels, that part not to be deducted from the amount insured on the outfit. Sometimes our ships take oil between here and the Cape de Verd Islands, and wish to send it home; therefore I wish you to stipulate in the policy for liberty to do it. Hoping
to hear from you soon on the subject of this letter, I remain, your assured and very respectful friend,"
"THOMAS HAZARD, JR."
"P.S. It must be stipulated in the policy that the ship have liberty to stop for refreshments, as is usual and customary on such voyages."
The evidence was submitted to the jury under the following charge, by the presiding judge of the circuit court.
"That, as to the objection taken to the plaintiff's right of recovery, upon the ground that there was no sufficient abandonment made out, whatever might be his opinion of the validity of the objection, he should, for the purposes of the trial, rule, and he accordingly did rule, that under all the circumstances of the case, the abandonment was sufficient in point of law."
"2. That the representation and facts stated in that letter (the letter of the plaintiff's intestate to his agents, left with the defendants at the time application was made for insurance), so far as they were material to the risk, must be substantially true; that if the ship was not coppered, as stated in that letter and the ship did not in that respect correspond with the representation, and the difference between the facts and the representation was material to the risk, then the plaintiff was not entitled to recover upon the policy, and he left the facts as to representation and the materiality, to the jury."
"That in ascertaining whether the vessel was coppered, it was for the jury to determine what constitutes a 'coppered ship,' and if the jury should find from the testimony that in order to constitute what is called a 'coppered ship,' the bottom of the keel, and the sides of the keel, as well as the sides of the vessel, must be coppered, and they should further find that this vessel was not so coppered, and the deficiency was material to the risk, then there was not a compliance with the terms of the letter left with the underwriters, and the underwriters were not liable upon the policy. Or if they should find that a ship coppered on her sides, and also on the sides of the keel, and not on the bottom of the keel or false keel would meet the representation of a coppered ship on other voyages, but that in whaling voyages in the Pacific Ocean, the usual and customary mode is to copper the bottom of the keel or false keel, and it is understood by underwriters when application is made for insurance
on such voyages that vessels are so coppered, unless the contrary is stated, then, inasmuch as the letter applying for insurance is an application for insurance of a vessel on a whaling voyage in the Pacific Ocean, the underwriters had a right to consider the representation in the letter as describing the vessel as coppered, in the manner in which vessels are usually coppered for such voyages, and if the ship was not so coppered, and that deficiency was material to the risk, the terms of the letter were not complied with, and the defendants were not bound by the policy."
1st. The court further charged that in ascertaining what is to be understood as a coppered ship in applications for insurance on a voyage of this nature, the terms of the application are to be understood according to the ordinary sense and usage of those terms in the place where the insurance is asked for and made, unless the underwriter knows that a different sense and usage prevail in the place in which the ship is then lying and in which the owner resides and from which he writes asking for the insurance, or unless the underwriter has some other knowledge that the owner uses the words in a different sense and usage from that which prevail in the place where the insurance is asked for and made.
2d. The court further charged the jury that although the terms of the letter applying for insurance were not to be considered a technical warranty, yet if the coppering of the ship as stated in the letter on which the insurance was made was substantially untrue and incorrect in a point material to the risk, such a misrepresentation would discharge the underwriters, although the ship was partially coppered and although the loss did not arise from any deficiency in the coppering.
3d. The court further charged the jury that if there was no misrepresentation in regard to the ship and she substantially corresponded with the representation, still if the injury which occurred at the Cape de Verds was reparable, and could have been repaired there or at St. Salvador or at any other port at which the vessel stopped in the course of the voyage, the master was bound to have caused such repairs to be made if they were material to prevent any loss. And if he omitted to make such repairs because he did not deem them necessary, and if, by such neglect alone, the subsequent loss of the ship by worms
was occasioned, the underwriters are not liable for any such loss so occasioned.
4th. The court further charged that if the jury should find that in the Pacific Ocean, worms ordinarily assail and enter the bottoms of vessels, then the loss of a vessel destroyed by worms would not be a loss within the policy.
5th. The court further charged that as the decisions of the courts in Massachusetts had established that damage arising from injury by worms was not a loss within the policy, the underwriters in Boston must be deemed as contracting in reference to those decisions, and not liable for losses from that cause.
The court further charged the jury that if in consequence of the injury sustained at Port au Praya, in the Cape de Verds, the false keel was torn off, whereby the vessel became exposed to the action of the worms, and that they thereby obtained entrance and destroyed the vessel, that the loss would not come within the policy, it being a consequential injury against which underwriters are not considered as taking the risk.
The counsel for the plaintiff called upon the court to charge upon the two following points: that if the jury believed that the underwriters would not have charged a higher rate or premium if the vessel had been correctly represented than they did charge, and that the insured had not intentionally misrepresented the facts, then the representation contained in the letter is not material and does not defeat the policy. Second, if it believed that the object of coppering the bottom of the keel is to protect it against worms, and if it also believed the leather an equal protection, and was put on, in that case the letter would not be considered a material misrepresentation.
1. The court refused to direct the jury in the terms stated, but upon this point did direct the jury that if the fact was not material to the risk and would not have varied the conduct of the underwriters either as to the premium of insurance or as to the underwriting at all if the fact had been correctly represented and the insured had not intentionally misrepresented the facts; then the misrepresentation will not prevent the insured from a recovery in this case or defeat the policy.
2. The court refused to give the directions in the terms stated, but upon this point directed the jury that if the object of coppering the bottom of the keel was to protect it against
worms, and if it believed that leather is an equal protection, still if the fact was that the letter of instructions did contain a representation which was, and must have been understood, as representing that the keel was coppered, and if that fact was material to the risk and might have induced the underwriters to ask a higher premium or not to have underwritten at all, then the misrepresentation of its being copper when it was leather would avoid the policy. But if it was not a fact material to the risk and would not have changed the conduct of the underwriters either as to underwriting at all or in asking a higher premium, then the misrepresentation would not avoid the policy.
The counsel for the plaintiff excepted to the charge of the court on the points above stated, and the jury having rendered a verdict in favor of the defendants, the court entered judgment thereon, and the plaintiff prosecuted this writ of error.