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:
"OFFICE OF JOHNSON & HIGGINS, &c."
"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,"
"JOHNSON & HIGGINS"
"Per TOOKER"
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
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This is a cause of contract, civil and maritime, commenced by a
libel in personam by Samuel G. Reed, the appellant, against the
Merchants' Mutual Insurance Company of Baltimore, the appellee, to
recover $5,000, the amount insured by the latter on the ship
Minnehaha, belonging to the libellant. The policy was
dated the fourteenth day of January, 1868, and insured said ship in
the amount named, lost or not lost, 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 orders, "the
risk to be suspended while vessel is at Baker's Island loading."
The ship was lost at Baker's Island, where she had gone for the
purpose of loading, on the third day of December, 1868. The defense
was that
Page 95 U. S. 30
the loss occurred whilst the risk was suspended under the clause
above quoted; also laches by reason of the delay in commencing
suit, being more than four years after the cause of action
accrued.
This case, upon the merits, depends solely upon the construction
to be given to the clause in the policy before referred to, namely,
"the risk to be suspended while vessel is at Baker's Island
loading," and turns upon the point whether the clause means, while
the vessel is at Baker's Island
for the purpose of
loading, or while it is at said island
actually
loading. If it means the former, the company is not liable; if
the latter, it is liable.
A strictly literal construction would favor the latter meaning.
But a rigid adherence to the letter often leads to erroneous
results, and misinterprets the meaning of the parties. That such
was not the sense in which the parties in this case used the words
in question is manifest, we think, from all the circumstances of
the case. Although a written agreement cannot be varied (by
addition or subtraction) by proof of the circumstances out of which
it grew and which surrounded its adoption, yet such circumstances
are constantly resorted to for the purpose of ascertaining the
subject matter and the standpoint of the parties in relation
thereto. Without some knowledge derived from such evidence, it
would be impossible to comprehend the meaning of an instrument, or
the effect to be given to the words of which it is composed. This
preliminary knowledge is as indispensable as that of the language
in which the instrument is written. A reference to the actual
condition of things at the time, as they appeared to the parties
themselves, is often necessary to prevent the court, in construing
their language, from falling into mistakes and even absurdities. On
this subject Professor Greenleaf says:
"The writing, it is true, may be read by the light of
surrounding circumstances, in order more perfectly to understand
the intent and meaning of the parties; but, as they have
constituted the writing to be the only outward and visible
expression of their meaning, no other words are to be added to it,
or substituted in its stead. The duty of the courts in such cases
is to ascertain, not what the parties may have secretly intended,
as contradistinguished from what their words express, but what is
the meaning of the
Page 95 U. S. 31
words they have used."
1 Greenl. Evid., sec. 277. Mr. Taylor uses language of similar
purport. He says:
"Whatever be the nature of the document under review, the object
is to discover the intention of the writer as evidenced by the
words he has used, and in order to do this, the judge must put
himself in the writer's place, and then see how the terms of the
instrument affect the property or subject matter. With this view,
extrinsic evidence must be admissible of all the circumstances
surrounding the author of the instrument."
Taylor, Evid., sec. 1082. Again he says:
"It may and indeed it often does happen that, in consequence of
the surrounding circumstances being proved in evidence, the courts
give to the instrument, thus relatively considered, an
interpretation very different from what it would have received, had
it been considered in the abstract. But this is only just and
proper; since the effect of the evidence is not to vary the
language employed, but merely to explain the sense in which the
writer understood it."
Id., sec. 1085.
See Thorington v.
Smith, 8 Wall. 1, and remarks of MR. JUSTICE STRONG
in
Maryland v. Railroad
Company, 22 Wall. 105.
The principles announced in these quotations, with the
limitations and cautions with which they are accompanied, seem to
us indisputable, and, availing ourselves of the light of the
surrounding circumstances in this case, as they appeared, or must
be supposed to have appeared, to the parties at the time of making
the contract, we cannot doubt that the meaning of the words which
are presented for our consideration 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.
Taking this clause in absolute literality, the risk would only be
suspended when loading was actually going on. It would revive at
any time after the loading was commenced, if it had to be
discontinued by stress of weather, or any other cause. It would
even revive at night, when the men were not at work. This could not
have been the intent of the parties. It could not have been what
they meant by the words "while vessel is at Baker's Island
loading." It was the place, its exposure, its unfavorable moorage,
which the insurance companies had to fear, and the risk
Page 95 U. S. 32
of which they desired to avoid. The whole reason of the thing
and the object in view point to the intent of protecting themselves
whilst the vessel was in that exposed place for the purpose
referred to, not merely to protect themselves whilst loading was
actually going on. Her visit to the island was only for the purpose
of loading; as between the contracting parties, she had no right to
be there for any other purpose, and, supposing that they intended
that the risk should be suspended whilst she was there for that
purpose, it would not be an unnatural form of expression to say,
"the risk to be suspended while vessel is at Baker's Island
loading." And we think that no violence is done to the language
used, to give it the sense which all the circumstances of the case
indicate that it must have had in the minds of the parties.
If we are right in this construction of the contract, there can
be no uncertainty as to its effect upon the liability of the
underwriters. The loss clearly accrued at a time when, by the terms
of the policy, the risk was suspended. The ship sailed in ballast
from Honolulu on or about the 7th of November, 1867, and arrived at
Baker's Island on the afternoon of the twentieth day of November,
1867. She came to her mooring in safety, and her sails were furled,
shortly after which a heavy gale and heavy surf arose. The gale and
surf continued with violence until the 3d of December, 1867, when
the ship parted her moorings and was totally wrecked and lost. At
no time after her arrival at Baker's Island was it possible to
discharge ballast or receive cargo or to commence the progress of
loading. The violence of the winds, current, and waves, and their
adverse course and direction, prevented the ship from slipping her
cables and getting to sea, or otherwise escaping the perils that
surrounded her.
These facts are indisputable, and they show that when the loss
occurred, the vessel was at Baker's Island for the purpose of
loading. That the process of loading had not actually commenced is
of no consequence. The suspension of the risk commenced as soon as
the vessel arrived at the island and was safely moored in her
proper station for loading.
The appellee, as a further defense, set up laches in bringing
suit. The libel was not filed until more than four years had
Page 95 U. S. 33
elapsed after the cause of action had accrued. The statute of
limitations of Maryland requires actions of account, assumpsit, on
the case, &c., to be brought within three years, and the
counsel for the appellee insists that by analogy to this statute
the Admiralty Court, having concurrent jurisdiction with the state
courts in this case, should apply the same rule. We had occasion,
in the case of
The Key City,
14 Wall. 653, to explain the principles by which courts of
admiralty are governed when laches in bringing suit is urged as an
exception in cases cognizable therein. In view of the construction
which we have given to the contract in this case, it is not
necessary to pass upon the precise question now raised by the
appellee.
It is also unnecessary to examine other questions which were
mooted on the argument.
Decree affirmed.
