Insurance. To affirm that "in policies for whom it may concern,
there
can be no undue concealment as to the parties
interested in the property to be insured" is obviously going much
too far, since the underwriter has an unquestionable right to be
informed
if he makes the inquiry. The assured may be
silent, it is true, if he will, and let the premium be charged
accordingly, but if the inquiry, when made, should be responded to
by information contrary to the verity of the case, this obviously,
gives a conventional signification to the terms of the, policy
which may differ from the known and received signification in
ordinary cases.
A policy "for whom it may concern" will, in ordinary cases,
cover belligerent property.
A knowledge of the state of the world -- of the allegiance of
particular countries -- of the risks and embarrassments affecting
their commerce, of the course and incidents of the trade on which
they insure, and of the established import of the terms used in
their contracts, "must necessarily be imputed to underwriters."
The term "interest," as used in application to the right to
insure, does not necessarily imply property, in: the subject of
insurance.
The master of a vessel to whom property shipped on board the
vessel under his command is to be consigned, in the absence of
proof that the owner of the property had not given authority to
order insurance, has an insurable interest in the property on board
his vessel, and this interest is sufficient to authorize the
recovery of a loss on the policy.
As to the effect of certain instructions in a letter relative to
insurance and circumstances connected with the same constituting a
representation to vitiate a policy made under the authority and
directions of the letter.
This case came before the Court, upon a division of opinion of
the judges of the Circuit Court of the United States for the
District of Maryland. The action was brought upon two policies of
insurance, upon a cargo of sugar on board the brig
Columbia in the name of the plaintiffs for the use of
Daniel Fitch, who was an American citizen, a sea captain, sailing
out of the port of Baltimore, and the owner and commander of the
Columbia, and of Gregorio Medina, of Ponce, in the Island
of Porto Rico.
The plaintiffs were the agents of Daniel Fitch, and, by two
distinct orders under different dates, had policies effected upon
their application by the Chesapeake Insurance Company.
The amount of the separate interests of captain Fitch and G.
Medina was shown by the following statement, which was admitted to
be correct:
Page 26 U. S. 152
The entire cargo embraced in the two policies,
was . . . . . . . . . . . . . . . . . . . . . . . . .
$8,413.75
All marked F. in the bill of lading, belonging to
captain Fitch,
viz., thirteen hogsheads, five
tierces, and ninety-two barrels of sugar, amounting to
2,076.75
Add charges -- 198.50
---------
Amount of the absolute and legal or equitable
property of captain Fitch $2,275.25
The residue belonged to G. Medina, the legal title
to which, was in captain Fitch, amounting to -- $5,610.65
Add charges -- 527.55
---------
$8,413.75
Amount of the two policies -- 8,000.00
---------
Not covered -- $ 413.75
The
Columbia, with her cargo, sailed from Porto Rico
for Baltimore, the cargo consigned to captain Fitch and documented
as such, G. Medina being on board of the vessel on a visit to the
United States. Both vessel and cargo were totally lost near Norfolk
by the perils of the sea.
The circumstances attending the insurance and the facts out of
which the controversy arose were as follows:
On 6 May, 1822, the plaintiff presented to the office the
following order:
"Insurance is wanted against all risks for account of whom it
may concern, $3,000 on the brig
Columbia, Daniel Fitch
master, and on cargo, $6,000 as interest may appear at and from
Ponce, Porto Rico, to Baltimore, by a letter from captain Fitch
dated 19 April; he says he expects to sail about 5 to 10 May, that
the brig is in good order, perfectly tight and seaworthy -- what
premium?"
"1 1/4 percent (written on the order by the office)."
"Accepted, BUCK & HEDRICK"
A policy was executed on the same day on cargo, $6,000, insuring
Buck & Hedrick, "for whom it may concern." The perils insured
against are
"of the seas, men of war, fire, enemies, pirates, rovers,
thieves, letters of marque, arrests, taking at sea, restraints of
princes, and all other perils, losses, and misfortunes for which
assurers are legally accountable."
No inquiry was made by the office for the letter of 19 April,
alluded to in the above order, nor was any warranty or
representation of any kind made or asked for in regard to said
cargo, but the office executed said policy on said order.
Page 26 U. S. 153
On the 24 May, Buck and Hedrick made application for further
insurance on cargo, and the following letter from Captain Fitch,
dated 27 April, was presented to the office with an order written
on the back of said letter, and a like policy was executed for
"whom it may concern," without any inquiry for the said letter, of
19 April and for the same premium.
"Ponce, April 27, 1822"
"Messrs. BUCK & HEDRICK:"
"Gentlemen -- I wrote you a few days ago, by the brig
Ospray, Captain Perkins, direct for Baltimore, requesting
you to have insurance done for me on the brig
Columbia and
her cargo, owned and commanded by me, to sail from this for
Baltimore, about 5 to 10 May with a cargo of sugar. When I wrote to
you by the
Ospray, I could not say what amount of cargo to
have insured for me; I now think I shall have on board about
130,000 lbs. valued at $8,000, which amount I wish you to have
insured for me at as low a premium as you can. I wish you to
understand that the above sum of $8,000 is not in addition to that
mentioned in my last. The whole amount I want insured is $8,000 on
cargo and $3,000 on the vessel and freight. She is in perfect good
order, tight in every part, built in New Jersey in 1814, and well
found."
"Your attention to the above will oblige"
"Your obedient servant,"
"DANIEL FITCH"
On the back of this letter was written the following:
"What will $2,000 be insured at, agreeable to within letter, on
cargo, of which you have $6,000 insured some time since."
"BUCK & HEDRICK"
"1 1/4 percent (agreed as interest may appear)."
"BUCK & HEDRICK"
Buck and Hedrick applied to the defendant for payment on said
policies, and all the papers to prove the distinct interests of
Medina and Fitch were shown, but the office declined to pay either
on the ground that said policy covered no one but Fitch, and that
the letter of 27th April was a representation that the whole cargo
was Captain Fitch's, and therefore affected both policies.
The plaintiff, on the trial, prayed the court to charge the
jury:
"1st. That as the policies of insurance in this case purport to
insure the plaintiff 'for whom it might concern,' they are not
bound to prove that at the time of effecting said insurance or any
other time, they disclosed to the defendants that Spanish
Page 26 U. S. 154
property was intended to be covered by said insurance, and that
in policies of such description, there can be no undue concealment
as to the parties interested in the property to the insured."
"2d. That if the jury believed the policy of 6 May, 1822, was
founded on the order of the same date, the policy being 'for whom
it may concern,' does cover belligerent as well as neutral
property."
"3d. That if the jury believed that the policy dated 24 May,
1822, was founded on the letter of 27 April, 1822, and the order
written therein, the policy being 'for whom it may concern' does
cover belligerent as well as neutral property."
"4th. That if the said Daniel Fitch, at the date of said
policies, was legal and equitable owner of a part of the cargo
insured and the legal, though not equitable owner of the residue,
the policies 'for whom it may concern' do cover the entire cargo,
and said Daniel Fitch is competent in law to recover the whole in
his own name, though the belligerent character of a part of the
said cargo was not disclosed at the time of effecting said policies
of insurance."
"5th. That the court instruct the jury that the letter of 27
April, 1822, with the order written thereon, do not in law amount
to a representation that the property to be insured was the sole
property of Daniel Fitch or that the whole or any part thereof was
not belligerent."
Upon these several prayers, numbered in the record, 1, 2, 3, 5
and 6, the Judges of the circuit court differed in opinion and
certified the same to this Court.
Page 26 U. S. 158
MR. JUSTICE JOHNSON delivered the opinion of the Court.
The suit below was instituted on two policies of insurance, the
one for $6,000, the other for $2,000, upon the brig
Columbia, Daniel Fitch master, at and from the Spanish
Island of Porto Rico to Baltimore, for whom it may concern. Buck
& Hedrick were the agents of Fitch, and the policies were made
in their name. The first policy was executed on 6 May, 1822, and
stands unimpeached by any circumstances occurring at the time of
its execution. But when application was made for the second policy,
which was on 24 May, the agents laid before the underwriters a
letter dated Ponce, April 27, 1822, to this effect:
"Messrs. BUCK & HEDRICK:"
"I wrote you a few days ago by the brig
Ospray, Captain
Perkins, direct for Baltimore, requesting you to have insurance
done for m on the brig
Columbia and her cargo,
owned and commanded by me, to sail from this for Baltimore, about 5
to 10 May with a cargo of sugar. When I wrote you by the
Ospray, I could not say what amount of cargo to have
insured for me. I now think I shall have on board about
130,000 pounds, valued at $8,000, which amount I wish you to have
insured for me,"
&c.
The rest has no material bearing upon the cause. On the back of
this letter was written the following inquiry:
Page 26 U. S. 159
"What will $2,000 be insured at, agreeable to within letter, on
cargo, of which you have $6,000 insured some time since?"
"BUCK & HEDRICK"
The vessel and cargo were totally lost by the perils of the sea,
and the interest proved at the trial consisted of above $2,000, the
property of Fitch, and above $6,000 the property of G. Medina, a
Spanish subject, of Porto Rico, at that time affected with the
character of a belligerent.
The whole cargo was consigned to Daniel Fitch and documented as
his -- Medina himself being on board on the voyage.
The order for insurance, on which the policy of 6 May was
effected, was in the following words:
"Insurance is wanted against all risks,
for account of whom
it may concern, $3,000 on the brig
Columbia, Daniel
Fitch master, and on cargo, $6,000, as interest may appear, at and
from Ponce, Porto Rico, to Baltimore; a letter from Captain Fitch,
dated 19 April, says he expects to sail about 5 to 10 May -- that
the brig is in good order, perfectly tight and seaworthy. What
premium?"
Both policies, it appears, were done at a premium of 1 1/4, and
on neither occasion was the letter of 19 April called for by the
office, nor was any warranty or representation of any kind made or
asked for respecting the cargo; beyond what was voluntarily made,
and has been stated.
The first instruction on which the court below divided was
prayed for by the plaintiffs in these words:
"That as the policies of insurance in this case purport to
insure the plaintiffs
'for whom it might concern,' they
are not bound to prove that at the time of effecting the insurance
or any other time they disclosed to the defendants that Spanish
property was intended to be covered by the insurance, and that in
policies of such description, there can be no undue concealment as
to the parties interested in the property to be insured."
Dangerous as it always is in a court of justice to generalize in
the propositions which it decides, it is peculiarly so in questions
arising on policies of insurance.
The present proposition is obviously couched in terms too
general to admit of an answer in the affirmative without
restriction or modification. And as courts of justice are not bound
to modify or fashion the instructions moved for by counsel so as to
bring them within the rules of law, if this cause had come up on a
writ of error to the judgment of the court below for refusing the
instruction as prayed, it would be difficult to say that in the
terms in which it is presented, the court was bound to give this
instruction.
To affirm "That in policies of such description, there can be no
undue concealment as to the parties interested in the
Page 26 U. S. 160
property to be insured" is obviously going much too far, since
the underwriter has an unquestionable right to be informed if he
makes inquiry -- the assured may be silent, it is true, if he will,
and let the premium be charged accordingly -- but if the inquiry
then made should be responded to with information contrary to the
verity of the case, this obviously gives a conventional
signification to the terms of the policy, which may differ
materially from the known and received signification in ordinary
cases. He, for instance, who should insure
"for whom it may
concern" under an express assurance that there is no
belligerent interest in the cargo could not upon any principle be
held to have made assurance upon belligerent interest.
This is no more than the application of the general principle
that insurance is a contract of good faith, and is void whenever
imposition is practiced.
That a policy
"for whom it may concern" will in
ordinary cases cover belligerent property has been fully conceded
in argument. Nor is it contested that previous representation will
be sunk or absorbed or put out of the contract where the policy is
executed in obvious inconsistency with those representations. But
the ground here insisted on for defendants is that the letter of
April 27 was a representation that the whole cargo was Captain
Fitch's, and that it thereby operated as an imposition upon the
underwriters, and as such avoids both policies, or that it affixes
a conventional meaning to the phrase in these policies which limits
its ordinary import.
Is there anything in the case sufficient to except these
policies from the ordinary import and effect of the phrase "for
whom it may concern?"
We are of opinion there is not.
Whatever turn of expression may be given to the question or in
whatever aspect it may be presented, it is obviously, at last, no
more than the simple question have these underwriters been
entrapped or imposed upon or seduced into a contract of the force,
extent, or incidents of which a competent understanding cannot be
imputed to them?
A knowledge of the state of the world, of the allegiance of
particular countries, of the risks and embarrassments affecting
their commerce, of the course and incidents of the trade on which
they insure, and the established import of the terms used in their
contract must necessarily be imputed to underwriters. According to
a distinguished English jurist Lord Mansfield, in
Pelly v. The
Royal Exchange, &c., 1 Bur. 341,
"the insurer, at the time of underwriting, has under his
consideration the nature of the voyage and the usual manner of
conducting it. And what is usually done by such a ship with such a
cargo in such a voyage is
Page 26 U. S. 161
understood to be referred to by every policy. Hence, when a
neutral, carrying on a trade from a belligerent to a neutral
country, asks for insurance 'for whom it may concern,' it is an
awakening circumstance. No underwriter can be ignorant of the
practice of neutrals to cover belligerent property under neutral
names, or of the precautions ordinarily resorted to that the cover
may escape detection. The cloak must be thrown over the whole
transaction, and in no part is it more necessary than in the
correspondence by other vessels, so often overhauled by an enemy,
for the very purpose of detecting covers on other cargoes. Letters
thus intercepted have often been the groundwork of condemnation in
admiralty courts, and underwriters to whom the extension of trade
is always beneficial must and do connive at the practice in
silence. They ask no questions, propose their premiums, and the
contract is as well understood as the most thorough explanation can
make it."
There is nothing in the letter in evidence, calculated to
mislead an insurer of ordinary vigilance but what was fully
explained away by concomitant circumstances. It is true that in the
letter Fitch writes to have insurance done
for him on "the
brig
Columbia and her cargo" that he cannot say what
amount of cargo to have insured
for him. Yet when the
offer was submitted, it was endorsed on the back of this letter,
and expressly declared to be upon the same cargo, of "which you
have $6,000 insured some time since."
The insurance alluded to, was made "for whom it may concern,"
and this second policy is expressed in the same terms.
Here, then, was a neutral professing himself to be owner of a
cargo consisting of produce of the hostile island on a voyage
having for its object, to find a market for that produce -- most
unnecessarily if himself the real owner or if there were no owners
but neutrals -- most unwisely subjecting himself or them to an
increase of premium which could not but result from such an
offer.
This was a circumstance calculated to induce inquiry. The
defendants had a right to make what inquiries they pleased as to
the real character of the cargo, and if they did not make those
inquiries, the law imputes to them the use of the phrase "for whom
it may concern" in its ordinary effect and signification. We are
therefore of opinion
that this instruction, if so modified as
to be confined to the case before the Court, ought to have
been given.
The
second prayer, amounting only to an affirmance of
the general proposition as relates to the policy of 6 May, we are
of opinion ought to have been given.
The
third prayer, having the same bearing upon the
policy
Page 26 U. S. 162
of the 24th May, we are of opinion, for the reasons expressed in
the first prayer, ought also to have been given.
By the
fifth prayer, the plaintiffs ask of the court to
instruct the jury
"That if the said Daniel Fitch, at the time of said policies,
was legal and equitable owner of part of the cargo insured, and the
legal, though not equitable owner of the residue, policies, 'for
whom it may concern' do cover the entire cargo, and said Fitch is
competent in law, to recover the whole in his own name -- though
the belligerent character of a part of said cargo was not disclosed
at the time of effecting said policies."
The language in which this prayer is couched obviously imports
two propositions: 1st, that a policy, "for whom it may concern,"
will cover the whole cargo -- though the assured had only the
legal, without the
equitable interest in part,
and a legal and equitable interest in the residue; and 2d, that
Daniel Fitch is competent in law to recover the whole in his own
name -- though the belligerent character of part was not disclosed
when the policies were executed.
It is a very great objection to this prayer that the language
used is too general and abstracted, and not adapted to the case
with that studied precision which the law requires -- thereby
rendering it scarcely possible for the court to meet it with a
simple, positive, or affirmative answer.
To the
first of the two propositions, it may be further
objected that it is difficult to perceive how it came to be
introduced into the cause. Abstracted from the effect of
belligerent interest in the cargo, the defense admits that the
policy covers all other interests, whether legal or equitable.
And with regard to the second, it is not easy to perceive why
the court should be called upon to charge the jury that
Daniel
Fitch was competent in law to recover the whole in his own
name when the suit is in fact prosecuted in the name of the agents
and they count upon the interests of both Medina and Fitch.
But the cause has been argued upon the assumption that this
prayer brings up the question of
insurable interest in
Fitch, by whose instructions Buck & Hedrick effected this
insurance, and as it is better to follow out the concessions of
counsel than to let the cause come up here again upon this point,
we will consider that question as being raised by this in
connection with the other prayers.
And here, we think, the facts make up a
clear case of
insurable interest. The only doubt probably arises from one of the
most prolific grounds of uncertainty on many subjects,
viz., the use of terms, originally unaptly selected, but
now rendered legitimate by use. It is only necessary to inspect a
few cases
Page 26 U. S. 163
on this doctrine to be satisfied that the term "interest," as
used in application to the right to insure, does not necessarily
imply
property in the subject of insurance.
In the case of
Crawford v. Hunter, 8 D. & E. 13,
the plaintiffs were commissioners appointed by the Crown under an
act of Parliament to superintend the transportation, &c., of
Dutch vessels seized in time of peace without any present
designation for whom -- whether to be held in trust for the
original owners, the Crown, or the captor. The vessel had been
carried into St. Helena, and the policy was effected with a view to
her safe transportation from that island to England, and after much
consideration it was adjudged that this was a good insurable
interest, and the plaintiffs recovered.
The same point was afterwards decided in
Lucena v.
Crawford, 3 Bos. & Pul. 75, on a writ of error to the
Exchequer after three arguments and great deliberation -- yet the
seizures were made before declaration of war, and the interest of
the plaintiffs amounted to nothing but a power over the subject
with a claim by
quantum meruit for their services.
Putting down the present case, therefore, to its lowest grade of
insurable interest, it is equal to that of the plaintiffs in the
two cases alluded to -- for Daniel Fitch was at least the agent or
trustee of Medina to transport his goods from Porto Rico to a
market and to secure them from the chances of capture and loss.
But this case is stronger than the English cases cited, for by
the act of Medina himself, Fitch was exhibited to the world,
clothed with all the national documents which evidence an absolute
property, and for many purposes the real owner would have been
estopped to deny it.
We will instance the payment of duties, for which, either as
owner or consignee our laws held Fitch absolutely liable. We have
therefore no doubt of the sufficiency of the insurable interest in
this case.
The
last prayer, on which the court below divided, is
in these terms:
"That the court instruct the jury that the letter of 27 April,
1822, with the order written thereon, does not in law amount to a
representation that the property to be insured was the sole
property of Daniel Fitch or that the whole or any part thereof was
not belligerent."
We have already expressed our opinion on the proposition here
presented. It is to be regretted that this prayer also is so
defective in precision. But, it was obviously intended, and so
argued, to be confined to a representation,
which would vitiate
the policy. With relation to the
first policy, we are
all of opinion that it was unaffected by the letter specified,
and
Page 26 U. S. 164
with regard to the
second policy, whatever might have
been the effect of this
letter, had it stood
alone -- yet, taken in connection with the concomitant
circumstances, it was not fatal to the contract.
On
this point, a majority of the Court would be
understood to express the opinion that this letter,
connected
with the order endorsed upon it, the previous insurance
referred to, and considered in relation to the state of the world
and the nature, character, and ordinary conduct of the voyage
insured, was not such a representation as,
per se,
vitiated the policy.
And this opinion will be certified to the court below.
This cause came on, &c., on consideration whereof, this
Court is of opinion
1. That as the policies of insurance in this cause purport to
insure the plaintiffs "for whom it may concern," they are not bound
to prove that at the time of effecting the said insurance or any
other time, they disclosed to the defendant that Spanish property
was intended to be covered by the said insurance unless inquiries
on the subject were propounded by the insurer prior to the
insurance.
2. That if the jury believes the policy of 6 May, 1822, was
founded on the order of the same date, the said policy being "for
whom it may concern," does cover belligerent as well as neutral
interest.
3. That if the jury believes that the policy dated 24 May, 1822,
was founded on the letter of 27 April, 1822, and the order written
thereon, the policy, being "for whom it may concern," does cover
neutral as well as belligerent property.
4. That if the said Daniel Fitch, at the time of the date of the
said policies, was legal and equitable owner of part of the cargo
insured and legal, though not equitable owner of the residue, the
policies, being "for whom it may concern," do cover the entire
cargo, and that the said Fitch had a good insurable interest in the
whole cargo, and the plaintiffs, as his agents, are competent to
recover the whole sum insured thereon on proof of such legal and
equitable interest in the said Fitch.
5. That the letter of 27 April, 1824, whatever might be its
effect if taken alone, yet taken in connection with the endorsement
thereon, with the previous policy to which it refers, the actual
state of the world, &c., and the nature of such transactions,
is not such a representation as vitiates the policy. All which is
ordered and adjudged by this Court to be certified to the said
circuit court.
