Reed v. Insurance Company,
95 U.S. 23 (1877)

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U.S. Supreme Court

Reed v. Insurance Company, 95 U.S. 23 (1877)

Reed v. Insurance Company

95 U.S. 23


1. A policy of insurance on a vessel at and from Honolulu, via Baker's Island, to a port of discharge in the United States, contained a clause, "the risk to be suspended while vessel is at Baker's Island loading." Held, in view of the circumstances which must be supposed to have appeared to the parties at the time of making the contract, that the meaning of the clause is that the risk was to be suspended while the vessel was at Baker's Island for the purpose of loading, whether actually engaged in the process of loading or not.

2. Although a written agreement cannot be varied by proof of the circumstances out of which it grew and which surrounded its adoption, they may be resorted to for the purpose of ascertaining its subject matter, and the standpoint of the parties in relation thereto.

3. Quaere, can a demand arising out of contract be enforced by a libel in personam in admiralty when a suit to recover it, if brought in a state court of concurrent jurisdiction, would be barred by the statute of limitations?

The circumstances of this case, as gathered from the pleadings and evidence, particularly the agreed statement made by the parties themselves, are substantially as follows:

In November, 1867, the libellant, Samuel G. Reed, of Boston, was owner of the ship Minnehaha, then lying at Honolulu, in the Sandwich Islands, and about to sail from that place in ballast via Baker's Island, with the intention of there taking in a cargo of guano, to a port of discharge in the United states. Baker's Island is a small rocky island in mid-ocean, nearly under the equator, and about two thousand miles southwesterly from the Sandwich Islands, having no harbor or anchorage, and only frequented for its guano. When ships arrive there, they are moored in the open sea, in an exposed and perilous position. The mooring is effected by means of a heavy stationary anchor, weighing five thousand six hundred pounds, fastened to a coral reef in about one hundred fathoms of water, to which anchor a large buoy is attached by a heavy pendant chain. This chain is braced by two other chains, each over a thousand feet long, attached to anchors fastened to another coral reef nearer to the island. By still another chain the ship is moored to the first-mentioned pendant chain as long as she remains at the island, and her cargo is sent aboard from the

Page 95 U. S. 24

island in small boats. The place is subject to strong currents and heavy gales, and vessels are, in consequence of the weather, frequently obliged to put to sea while loading.

On the 6th of January, 1868, the libellant, through a firm of insurance brokers in New York, made application by mail to the Merchants' Mutual Insurance Company of Baltimore for insurance on the said ship Minnehaha, in the following terms:

"Application for insurance is hereby made by Johnson & Higgins, as agents, in the name of Samuel G. Reed, account of whom it may concern. Loss, if any, payable to them or order. For [$5,000, at seven percent net] on ship Minnehaha, valued at $60,000, at and from Honolulu, via Baker's Island, to a port of discharge in the United states not east of Boston, with liberty to use Hampton Roads for order; the risk to be suspended while vessel is at Baker's Island loading."

This application was enclosed in the following letter:


"87 Wall Street, New York"

"Jan. 6, 1868"

"GEORGE R. COALE, Esq., Secretary:"

"DEAR SIR -- Enclosed please find two applications for Samuel G. Reed: viz., one on the Minnehaha (our companies here are averse to Baker's Island risks, and for that reason the owners suspend the risk while at Baker's Island loading. The Atlantic have taken a large line on vessel and freight at seven percent, with scrip); also, one on the Guiding Star, now loading under inspection of Captains Ellis and Story, for underwriters. Please let us know how much your companies will take on each, and the lowest respective rates. Should like to hear by telegraph."

"Yours respectfully,"



In pursuance of this application, the company issued the policy on which the present suit is brought, the operative clause of which is in these words:

"The Merchants' Mutual Insurance Company of Baltimore have insured, and do hereby insure, agreeably to order, Samuel G. Reed, for account of whom it may concern, lost or not lost, at and from Honolulu, via Baker's Island, to a port of discharge in the United

Page 95 U. S. 25

States not east of Boston, with liberty to use Hampton Roads for orders, the risk to be suspended while vessel is at Baker's Island loading, $5,000, upon the body, tackle, &c., of the good ship Minnehaha."

The ship sailed in ballast from Honolulu the 7th of November, 1867, and arrived near Baker's Island on the afternoon of the twentieth day of that month. She came to her mooring near the island in safety, shortly after which a heavy gale and heavy surf arose, and continued with violence until the 3d of December, when the ship parted her moorings, and was totally wrecked and lost. At no time after her arrival at that island was it possible to discharge ballast or receive cargo or commence the process of loading or even the preparation for loading.

Proof of loss and of interest and adjustment was duly presented to the company, and payment demanded therefor and refused.

On May 20, 1872, Reed exhibited his libel in the District Court of the United states for the District of Maryland against said company. That court upon hearing dismissed the cause, and the circuit court having affirmed the decree, the libellant brought the case here.

The statute of limitations in force in Maryland provides as follows:

"All actions of account, actions of assumpsit or on the case, actions of debt on simple contract, or for rent in arrears, detinue, and replevin, all actions for trespass for injuries to real or personal property, shall be commenced or sued within three years from time the cause of action accrues. "

Page 95 U. S. 29

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