A policy of insurance in the name of one joint owner "as
property may appear" does not cover the interest of the other
owner, there being no clause in the policy stating the insurance to
be for the benefit of all concerned.
The interest of a co-partnership cannot be given in evidence on
an averment of individual interest, nor an averment of the interest
of a company be supported by a special contract relating to the
interest of an individual.
Evidence of the knowledge of the underwriters of the intention
of the insured at the time of making the policy ought to be very
clear to justify a court of equity in conforming the policy to the
alleged intention.
It is a good general principle that written agreements ought to
be expounded by themselves.
Page 6 U. S. 420
Appeal from the Circuit Court for the District of Massachusetts
in which was dismissed a bill filed by the appellants seeking to
charge the appellees upon a policy of insurance effected by them
and to obtain relief against an alleged mistake by omitting to
insert the name of Barnewall in the policy, the interest and
property insured being that of Graves & Barnewall, and so
intended to be insured.
Graves & Barnewall were equally and jointly interested in
the ship
Northern Liberties and her cargo, and they had
various insurances effected in different places upon the ship and
cargo from New York to Teneriffe as well as from thence to La Vera
Cruz, always for their joint and equal benefit.
On 24 April, 1800, Graves wrote to Elisha Sigourney & Sons
of Boston, inquiring the rate of insurance on the risk and
describing himself as "one of the parties interested in the
property to be insured." On receiving a reply, he wrote, 5 May,
1800:
"Your office asks too high a premium for the risk I was
inquiring after; the vessel cannot be out of time as she sailed
from hence for Teneriffe in February, where we have not learned
that she had arrived; less so that she had sailed; but as it is my
principle to run no risks where I can help it, I have prevailed
upon my co-partner to anticipate her arrival and sailing again to
Vera Cruz. To give you a perfect idea of the nature of the risk to
be insured, you will find a copy on the other side of the
application to our offices, who took a good deal at seventeen and a
half percent; we may be induced to give one or two percent more to
complete the business, and wish you to say whether it could not be
effected with you at seventeen and a half percent or near that; if
so, and we have not insured elsewhere before a return of your
answer, I may likely give you an order to effect $20,000 to
$25,000.420"
The copy of the application annexed to the letter stated
that
"On 20 February last, the ship
Northern Liberties
sailed from this for Teneriffe commanded by Frederick King, a man
of courage and good conduct; she mounted sixteen six-pounders, and
had a crew of thirty in number. No vessel could have been more
completely fitted, is copper sheathed, and by the report of the
pilot who carried her out to sea, sails remarkably fast. Upon this
vessel's cargo we want insurance at and from Teneriffe to La Vera
Cruz. The ship and cargo really and truly belong to American
citizens."
This communication was laid before the appellees, and offer was
made by them to insure the property, which was communicated to
Graves by Sigourney & Sons, and on 15 May, 1800, he directed
the insurance to be made upon the cargo to the amount of $16,000,
upon the best terms and within certain limits. Upon these orders,
they made insurance with the Boston Marine Insurance Company, the
appellees, in the sum of $10,000 upon the cargo of the ship, for
the voyage mentioned in the letter of 5 May, 1800.
The printed forms of policies used by the appellees did not
contain the ordinary clause importing the insurance to be made as
well for the benefit of the persons named in the policy as for the
benefit of all concerned. Of this fact Graves and Sigourney &
Sons were ignorant.
The complainants alleged in their bill that the letter of Graves
of 5 May, 1800, and the copy of the application were shown to the
president and directors of the company as the order for the
insurance, and were received and acted upon by them as the basis
upon which such insurance was made and that it was well
understood.
Page 6 U. S. 421
The answer of the company its by their president under the
corporate seal admitted the execution of the policy and that Graves
had some interest in the property insured, but it did not know to
what amount -- that upon due proof of loss, it was bound and are
ready to pay him the amount of loss which he had sustained. It
admits that E. Sigourney, in the beginning of May, applied for
insurance, but denies that either of the letters of 24 April or 5
May was shown to him or left with the president or secretary of the
company or any other person for their use. It admits that the copy
of the application to the New York offices was left with the
president, but avers that the premium required was higher than E.
Sigourney & Sons would give, and that no bargain or contract
was at that time made, but the application was withdrawn. That no
insurance was made by it in pursuance of the letter of 15 May or
any other letter from Graves, and no further application was made
until 14 June, when Andrew Sigourney applied for the insurance of
$10,000 on the cargo of the ship
Northern Liberties,
whereupon the policy was made for and on account of John Boonen
Graves and for account of no other person whatsoever. It denies
that before or at the time of making and subscribing the policy, it
was mentioned by the said Sigourney & Sons or either of them or
known or understood or suspected by the defendant that the
property
Page 6 U. S. 422
proposed to be insured was the joint property of Graves &
Barnewall or of any company or co-partnership of which Graves was a
member, or that it was the object and intent of the said insurance
to cover the interest of the concerned therein in general, but only
the separate and particular interest of Graves.
It denies all mistake or misunderstanding in inserting the name
of Graves alone, but insists that his name alone was inserted,
because the interest of no other person was intended to be
insured.
It avers that after the policy was prepared and filled up, it
was delivered to Andrew Sigourney, of the house of E. Sigourney
& Sons, and by him read and approved, and that he thereupon
gave his promissory note for the premium.
It denies that any alteration or omission in the form of
policies had been made or adopted by the president and directors
subsequent to the form first adopted and agreed upon by them after
their incorporation, and avers that the form in the present case is
the same which was then adopted, and which was settled by the
president and directors upon mature advice and deliberation and
with the express intent that the president and directors might know
the nature, character, quality, and condition of every person whose
interest they might insure, and to protect themselves from all
responsibility and hazard on account of the interest of any person
or persons not named in the policy, and that the said printed form
had been openly and continually used by the company, of which all
persons procuring insurance to be done at their office had notice,
and that a like form had been used at the other offices in Boston
for more than a year before 14 June, 1800.
Elisha Sigourney stated in evidence that about 12 May, 1800, he
showed Graves' letter of 5 May to a person writing as clerk in the
office of the defendants, and left it with him till the next
morning, when the clerk informed him the terms on which the
president and directors would insure.
That at the time of effecting the insurance, he did not know
that the form adopted by that insurance company
Page 6 U. S. 423
differed from the usual form, but supposed the interest of all
concerned was insured.
The deposition of Andrew Sigourney stated that on 14 June, when
he made application for insurance, he showed to Mr. May, the
secretary of the company, only the instructions on the back of the
letter of 15 May and a memorandum to insert the words "as property
may appear." That he did not read any but the written part of the
policy before he took it from the office. That at the time of
making the application, he did not mention the name of any person
as interested in that insurance except the name of John Boonen
Graves. He only showed the instructions.
That he knew by the letter of Graves that he had partners, but
he did not know the name of any of them; he supposed that the
policy covered the interest of all concerned, and had no notice of
any variation from the customary form of policies.
The deposition of Mr. May, the secretary of the company, stated
that the only paper which A. Sigourney showed him on 14 June, when
he applied for insurance, was a copy of a proposal made to some
other offices for insurance on the same risk, and that he did not
leave it, but only showed it to the deponent. That he, the
secretary, filled the policy, and understood the insurance was for
Graves and for no one else, as the policy purports. That he is not
sensible of any error in the filling it; that he filled it as he
understood the intention of the parties in the contract. That A.
Sigourney read it over deliberately before he gave the premium
note, and after reading, it went away. He afterwards returned and
requested the secretary to add to it the words "as property may
appear," which by permission of the president were interlined.
The first policy written by the company was dated 3 April, 1799.
The president and directors had made no alteration in the printed
form of policies from their first commencing business until 14
June, 1800.
On 9 May, E. Sigourney & Sons, in answer to Graves' letter
of the 5th, say that the gentlemen will not insure under 20 percent
premium.
Page 6 U. S. 424
On 15 May, Graves requested insurance to be made
"for $21,000 on the ship valued at that sum, and $16,000 on the
cargo as interest shall appear. The latter completes the sum
intended to insure on the cargo. Your policy therefore being the
last dated, it is understood that short interest (if any should
appear) is to be settled with your underwriters."
On 3 June, E. Sigourney & Sons wrote to Graves that "$5,900
is done on your policy on the cargo. It goes on very heavily."
Graves, in answer, on 10 June, said,
"With much reluctance do I learn the little progress you have
made in insuring the cargo. I hope by offering two and a half
percent more you may induce the companies or solid individuals to
fill up the remainder. At any rate, it will not answer my purpose
to have the risk uncovered; you therefore, on receiving these
presents, will please to ascertain whether there is a prospect of
succeeding. If not, give me immediate notice in order to propose it
elsewhere."
The material words of the policy are
"This policy of assurance witnesseth that the president and
directors of the Boston Marine Insurance Company do by these
presents cause John Boonen Graves to be assured, lost or not lost,
$10,000 on property on board the ship
Northern Liberties,
as property may appear, at and from Teneriffe to Vera Cruz."
"And it is hereby agreed that if the assured shall have made any
other assurance upon the property aforesaid prior in date to this
policy, then the said insurance company shall be answerable only
for so much as the amount of such prior assurance may be deficient
towards fully covering the property at risk. And the said insurance
company shall receive the premium (excepting half percent) upon so
much of the sum by them assured as they shall be exonerated from by
such prior assurance. And in case of any assurance upon said
property subsequent in date to this policy, the said insurance
company shall nevertheless be answerable to the full extent of the
sum by them herein assured, without right to claim contribution
from such subsequent
Page 6 U. S. 425
assurers, and shall accordingly be entitled to retain the
premium by them received in the same manner as if no such
subsequent assurance had been made."
It was fully proved that Graves & Barnewall were jointly and
equally interested in the ship and cargo, and the representation to
the New York offices stated that fact. Four other policies upon the
same ship and cargo and for the same voyage were exhibited by the
complainants, all of which had the usual clause,
"as well in his own name, as for and in the name and names of
every other person or persons to whom the same doth, may, or shall
appertain in part or in whole."
Three of them were in the name of Graves, and one in the name of
Barnewall.
There was full proof of a total loss of ship and cargo.
A suit at law had been brought by Graves & Barnewall upon
the present policy in which judgment was rendered against them,
which judgment was affirmed in this Court at December term,
1801.
Page 6 U. S. 438
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the
Court.
The points made by the plaintiffs in this case are
1. That the policy does really insure their joint property on
board the ship
Northern Liberties so far as the same was
at the time uncovered by prior assurances.
2. That if the property be not insured at law, yet it was
intended to be insured, and this Court will relieve against the
mistake in the agreement.
1. That the policy does really insure the joint property of
Graves & Barnewall.
The words are
"The president and directors of the Boston Marine Insurance
Company, do by these presents cause John Boonen Graves to be
assured $10,000 on property on board the ship
Northern
Liberties as property may appear."
These words, it is contended by the counsel for the plaintiffs,
insure the joint property of Graves & Barnewall so as to cover
the interest of each.
The operation of the words themselves, taken in their ordinary
sense, would certainly not extend beyond the interest held by
Graves in the cargo. The words "as property
Page 6 U. S. 439
may appear" seem to restrict the general terms of the policy to
the interest of the person named in it. Admitting this to be true,
it is still contended that the interest of each partner in the
whole partnership stock, is an insurable interest, and as it was
obviously the intention of Graves to insure for his partner as well
as for himself, the policy ought to receive a construction which
will effect this intent. The reasoning in support of the power of
each partner to insure the joint property is certainly strong and
well founded. But the doubt in this case is not whether Graves
could have insured the interest of his partner, but whether he has
insured it.
It is true that Barnewall need not have been named in the
policy, but the contract ought to have been so expressed (since it
is an open policy) as to show that the interest of some other
person than Graves was secured if such was to be the effect of the
instrument.
It is a good general principle that written agreements ought to
be expounded by themselves. But if the same words are to be
considered as insuring the interest of Graves only or the interest
of Graves & Barnewall, according to extrinsic circumstances,
the certainty expected from a written agreement will be very much
impaired.
The interest of Barnewall therefore cannot be considered as
insured by this policy under the power of one partner to insure the
share of his co-partner. If it is insured, it must be as the
interest of Graves.
Several cases have been stated in which Graves might sustain a
loss by the loss of Barnewall's part of the cargo, and therefore it
has been contended that he may be indemnified against that risk, in
a policy professing to cover only his own interest.
The case put is that Graves might have paid for the whole cargo
and have retained a lien upon it for his reimbursement. But in that
case his interest would not be the result of his character as a
partner, but would be in the nature of a mortgage. The question
would not be generally whether the interest of a co-partner may be
said to comprehend all the partnership effects, but whether a
mortgagee or other person having a lien upon property may be said
to have an interest in the whole of it. As a claim so
Page 6 U. S. 440
founded would rest not on the general principles of partnership,
but on the particular circumstances of the case, those
circumstances ought to be made out in order to entitle the
plaintiffs to avail themselves of the argument. Not being made out,
they do not belong to the case.
If a suit at law had been brought on this policy, it would only
have been brought in the name of Graves, and he must have averred
property on board the vessel. He could only have been entitled to
recover to the amount of property uninsured. Would it have been
sufficient under such an averment to have shown that the interest
of his partners and himself amounted to the sum he claimed, or if
he had averred property in himself and another to the amount of
$10,000, would such an averment have entitled him to a judgment for
the whole sum? In ordinary transactions the plaintiff would
certainly fail in an attempt founded on similar principles.
A policy, though construed liberally, is still a special
contract, and under no rule for proceedings on a special contract
could the interest of a co-partnership be given in evidence on an
averment of individual interest or an averment of the interest of a
company be supported by a special contract relating in its terms to
the interest of an individual.
But it is contended that an insurable interest is distinct from
interest in the ordinary acceptation of the word, and several cases
have been cited in support of this doctrine. Those cases generally
appear to be answered by a distinction taken by the defendants'
counsel between the interest and the power of a co-partner. But the
case of
Page v. Fry, reported in 2 Bos. & Pul. 240,
certainly countenances the doctrine maintained by the plaintiffs,
and ought to be particularly considered. But before that case is
adverted to it may be proper to mention what appeared to be the
opinion of Judge Buller in the case of
Perchard v.
Whitmore, reported in the same book in page 155. In that case
it appears to have been considered as a clear principle that if in
an action on a policy and on an averment of interest in the
plaintiffs, it should appear that the plaintiffs and another were
interested, the action would not be maintainable. That opinion
would apply to the case at bar, but as the question
Page 6 U. S. 441
was not directly decided, and was the opinion of a single judge,
it may be supposed to yield to the case of
Page v. Fry,
where it is said that question came directly before the court.
The case of
Page v. Fry was an action brought by an
agent on a policy signed by himself, and in the declaration he
averred an interest in the whole cargo insured in Messrs. Hyde
& Hobbs. It appeared in evidence that after the purchase of the
cargo and before the insurance was made, a house by the name of
Hacks had taken an interest in it, and for this variance between
the averment and the proof the defendants moved for a nonsuit.
It is worthy of remark that no doubt was entertained of the
right of the plaintiffs to recover the whole sum had the
declaration stated the truth of the case. And that the counsel in
support of the action did not allege that the interest of Hacks was
insured as the interest of Hyde & Hobbs, or that on an averment
of a particular interest a joint interest might be given in
evidence, but that the averment was immaterial under the acts of
Parliament, and being alleged under a
scilicet, would not
vitiate. The invoices having been made out in the name of Hyde
& Hobbs, who paid for the cargo, he also contended that the
prima facie right was in them, and that Hacks had only an
equitable interest.
The argument goes upon the admission that the variance under the
circumstances which attend the case at bar would be fatal.
The same remark applies to the argument in support of the
nonsuit.
This deserves consideration, since it certainly warrants an
opinion that previous to that case, the law was generally
understood to require that the averment of interest in an action on
a policy should be supported by testimony corresponding with that
interest according to the general acceptation of the term.
Lord Eldon certainly states his opinion in favor of the action
to be founded on the interest of the plaintiffs in the entirety of
the cargo. But in examining that opinion,
Page 6 U. S. 442
it does not appear to be supported by the authorities he cites,
and the words he uses in the conclusion would seem to imply that,
contrary to his reasoning, he paid some respect to the
circumstances under which Hacks had become concerned. "I think,"
says his lordship, "the plaintiff had a sufficient interest in the
entirety of this cargo, notwithstanding other persons had a
beneficial interest in a part." The word "beneficial" seems to
imply something distinct from a legal interest, and to correspond
with the terms "equitable interest," which had been used by the
plaintiffs' counsel. The opinions of justices Heath and Chambre
seem to be founded on this being a valued policy and on the
plaintiff's having such an interest as would entitle him to insure
under the act of Parliament, and that the substance of the averment
was nothing more than that the plaintiffs had an interest in the
cargo which would satisfy the act. The opinion of judge Rooke is
accompanied with no explanation whatever.
This case, even were the decision an authority, is too
imperfectly reported to be permitted to overthrow a system which
was previously established.
It is the opinion of the Court that on the legal construction of
this policy, John Boonen Graves is insured to the extent of his own
interest in the cargo, but that the interest of his co-partner is
not insured.
Were it otherwise, the remedy would be complete at law, and of
consequence the plaintiffs could not maintain their bill in a court
of equity.
2. It remains to inquire whether, under the circumstances of the
case, a court of equity will relieve the plaintiffs against the
mistake alleged to exist in the contract and extend the insurance
to the whole partnership interest.
That Graves intended to insure the whole is proved in a manner
which is perfectly satisfactory.
That the company believed themselves to be insuring the property
of Graves only is probable. Certainly such is the evidence in the
cause. There is no ground for imputing to the company a knowledge
that the policy did not correspond with the intentions of the
insured.
Page 6 U. S. 443
If then the relief which they ask should be granted to the
plaintiffs, it must be on the principle that the information laid
before the insurance company was sufficient to apprise them of the
fact and to require that on the principles of good faith, they
should suggest to the agent of the plaintiffs the departure of
their policy from the ancient form.
This information is in writing, and is contained in the letter
of 5 May and in the representation of the risk which accompanied
it.
The letter must be considered as having been seen by the
officers of the company, but as it was shown not for the purpose of
commencing a contract, but of inquiring into the terms on which a
contract might probably be made, it is reasonable to suppose that
the nature of the risk was the only subject of consideration, and
that the question whether the property belonged to one or more
persons never occurred. A month elapsed before a second application
was made, and as the description of the risk was again laid before
the president, it could not be required from him to retain in his
mind a circumstance casually suggested in a letter seen so long
before, to which circumstance there was nothing to direct his
particular attention.
It is then on the representation of the risk, and on the verbal
communications of Andrew Sigourney, that the case must depend.
The representation contains an averment that "the ship and cargo
really and truly belong to citizens of the United States." But as
only a small part of the cargo was insured by the Boston company,
this averment contains no information that any other than John
Boonen Graves was interested in the particular policy then to be
entered into.
In the letter there is another expression which has been much
relied on. It is "on this vessel's cargo we want insurance." This
expression has been considered as sufficiently indicating that the
application was made in behalf of more than one person, and this
expression has produced the principal difficulty of the case,
Page 6 U. S. 444
but on reflection it has been thought too ambiguous to authorize
a change in the legal import of a written contract.
The description obviously relates to the whole cargo, but the
application for insurance was only for a part of it. If that
application was made in the name of Graves only, it was no
unreasonable supposition that the other parties concerned might be
separately insured, and that the policy then required was designed
to cover Graves only. That the application was so made must be
inferred from the circumstance that the policy was so framed at a
time when there could be no motive for varying it from the
insurance applied for, and that Sigourney does not allege himself
to have made any communications to the president indicating a wish
to insure others than Graves.
These grounds are too equivocal to warrant the Court in varying
a written contract in a case attended with the circumstances which
appear in the present.
The policy was in the possession of the agent for the
plaintiffs, and ought to have been understood by him before it was
executed; he retained it in his possession for several months
before a mistake was alleged. Under such circumstances, the
information given to the insurance company ought to be very clear
to justify a court of equity in conforming the policy to the
intention of one of the parties, which was not communicated to the
other till the loss had happened.
Under the circumstances of the case, a court of equity cannot
relieve against the mistake which has been committed, and as the
remedy of the plaintiff Graves on the policy, to the extent of his
interest, is complete at law, the decree of the circuit court
dismissing his bill must be affirmed.
Judgment affirmed.
