U.S. Supreme Court MURGATROYD v. CRAWFORD, 3 U.S. 491 (1799)
3 U.S. 491 (Dall.)
Supreme Court of Pennsylvania
March Term, 1799
This was an action against an Underwriter on a Policy of Insurance upon the ship Mount Vernon, warranted to be American property. The ship was captured by a French Privateer, carried into Porto Rico, and there condemned as prize. The cause was tried at the present Term; and Shippen, Justice, delivered the following charge, in which all the material facts and arguments were, substantially, set forth*.
On this Policy, the assured has engaged to prove in any Court of Pennsylvania, that the Mount Vernon was American property; and it is, also, incumbent on him to prove, that the ship sailed upon the voyage insured; that she has been captured, and condemned. On the question of property, the American Register was produced, which contains
the oath of the Plaintiff, an American Citizen, that he was the sole owner of the Mount Vernon; and on the other points, there is full proof of the sailing, capture, and condemnation of the ship. She is not, however, condemned by the final decree as British property; nor, indeed, are any of the five causes assigned in the proceedings, legitimate causes of condemnation.
The Plaintiff was disposed, on general principles, to leave his cause on this evidence; but, in order to repel the Defendant's allegation, that the property of the ship, though apparently American, was, in reality, British, a variety of facts have been adduced, to explain the nature of a transaction, which occured between him and Mr. Dunkerson, in relation to a sale and transfer of the Mount Vernon. The result seems, briefly, to be this: Mr. Dunkerson was an English gentleman, who came hither with a view to settle; and, in order to manifest his intention, took an oath of allegiance to the state of Pennsylvania, though he had not been long enough in the country to entitle himself to naturalization, under the act of Congress. Contemplating a circuitous voyage from America to England, and thence to the East Indies, he applied to Messrs. Willings & Francis to procure a ship for him; and those gentlemen agreed absolutely with the Plaintiff for the purchase of the Mount Vernon, the bill of sale being made out by him, and sent to them, upon terms of payment precisely ascertained. It then, however, occurred to Mr. Dunkerson, that as he had not yet acquired the rights of American citizenship, he could not enjoy the advantages, which he proposed to derive from his projected voyage. For, the trade from England to the East Indies is, by the law of that kingdom, a monopoly; no British subject can, individually, embark in it, without incurring a forfeiture of his vessel and cargoe; though it has recently been adjudged in England, that an American citizen is entitled to carry on the trade, by virtue of express stipulations in the treaty of amity and commerce between the United States and Great Britain. Hence, it was deemed necessary, to enter upon another operation; the bill of sale was sent back; and a new contract was formed between the parties upon these principles: that the Plaintiff should remain the owner of the ship, and as such retain the register, and make the insurance; that she should, however, be delivered to Mr. Dunkerson, or his agents, and that Messrs. Willings & Francis should procure a freight for her on Mr. Dunkerson's account; that the Plaintiff should empower Mr. Skirrow (a gentleman who failed as a passenger in her) to assign, and transfer the ship to Mr. Dunkerson in England, on the 1st of September ensuing, at which time Mr. Dunkerson would be duly naturalized as an American Citizen;
and that the consideration money should be secured by the notes of Messrs. Willing & Francis, payable, at all events, in certain instalments. The essential point in this agreement was, obviously, therefore, that the property should remain the Plaintiff's, until the day fixed for the transfer in Europe; and, accordingly, the Register was continued in his name, and the present insurance was effected by him, as owner of the ship.
On these facts some important questions arise. It is true, that the first bill of sale was cancelled and done away; but the Defendant urges, that there were many subsequent acts of the parties, which show an absolute change of property, under the second agreement; particularly, as the ship was delivered to Mr. Dunkerson, to be loaded for his use; and the consideration money was payable at all events. A fair and legal contract should, however, be carried into effect, according to its true intention; and, whether the form of proceeding is, or is not, strictly correct, there can be no doubt, that the true intention of this contract was, to continue the property of the ship in the Plaintiff for a specified period. If an immediate sale had been contemplated, the contract, payment of the price, and delivery of the ship, would, unquestionably, be sufficient to divest the property of the original owner, and vest it in the purchasor; but if the parties could legally contract, not for a present sale and transfer, but for a sale and transfer at a future day, under a Power of Attorney, to be given for the purpose; and if such is the nature of the present contract, then the payment and delivery must have relation to the terms and conditions on which they were made; and of which the most important was, that the Plaintiff should continue the owner of the ship, until the 1st of September.
The only objects for enquiry, then, are 1st. Whether the contract was a fair one; and 2nd. Whether it was a lawful one. That it was a fair contract has not been denied: But, it has been contended, to be an illegal contract, violating the positive provisions of an Act of Congress; as well as militating against the duties of a neutral nation, by affording a ready cover to the property of a belligerent power. The Registering Act is expressed in such strong terms, that when it was first read, we thought it decisive upon the case; for, it seemed generally to require, an oath, 'that there is no subject, or citizen, of any foreign prince of state, directly, or indirectly, by way of trust, confidence, or otherwise, interested in the ship, or vessel, or in the profits, or issued thereof.' 1 Vol. p. 134. s. 4. Swift's Edit. But, upon examining the Act, we found, that this oath was only exacted, 'where an owner resides in a foreign country, in the capacity of a consul of the United
States, or as an agent for, and a partner in, a house, or copartnership, consisting of citizens of the United States.' Ibid. The terms of the provision do not, therefore, embrace the present case, the case of an American citizen, residing and registering his vessel in an American port; and its policy may reasonably be confined to Americans resident abroad, who are so much exposed to the temptation of covering belligerent property, and so little exposed to the dangers of detection*.
Considering all the circumstances, therefore, it does not appear to us, that there was an actual sale; and, if a future sale was only intended, we have no right to contradict, or modify, the contract of the parties. But while this opinion is expressed, it cannot be denied, that there are strong facts in support of the defence. Mr. Dunkerson would have been the absolute, unqualified, owner of the ship, under the first bill of sale; and even under the subsequent agreement, he obtained possession of her, loaded her, received the freight, and exercised other acts of superintendance and ownership. Though the Plaintiff effected the insurance, he was reimbursed the premium; and though he issued the sailing orders to the captain, it is said to have been done at the instance of Mr. Dunkerson. On the weight of these facts, therefore, the jury must decide: And if, after all, you should think, that there was an actual and immediate sale to Mr. Dunkerson, an alien, there must be a verdict for the Defendant, notwithstanding the register and oath of the Plaintiff; which are prima facie, but not conclusive, evidence of the American property of the ship.
But another question has been agitated in the cause, which is entitled to consideration. It was insisted, that an underwriter is discharged from the obligations of the policy, if any thing material to the risque is not disclosed to him at the time of effecting the insurance. Though there was an attempt to encounter this position, by evidence of the general notoriety of
the contract between the Plaintiff and Mr. Dunkerson; yet that circumstance is too vague to be construed into notice either to the Defendant, or the Insurance Broker. Notice, however, is a matter of fact; but whether notice is necessary, is partly a matter of fact, and partly a matter of law. Now, the Plaintiff warranted the ship to be an American bottom, which of itself superseded, in our opinion, the necessity of making any communication on the subject of the property. But, still, if, in the opinion of the Jury, a knowledge of the circumstances that were suppressed, would have induced the insurer to demand a higher premium, or to refuse altogether to underwrite, it will be sufficient, on commercial principles, to invalidate the policy. A respectable witness (an underwriter) has declared, however, that a disclosure of these circumstances would not have prevented his underwriting the risque at the same premium.
If, upon the whole, the contract was a fair one, with a view to a lawful purpose, a voyage to India; and not with a view to aid one Belligerent power at the expence of another, by a fradulent cover of property (which would certainly be fatal to the Plaintiff's demand) we think that the ship remained an American bottom, at the time of the capture and condemnation; and, therefore, that the verdict should be in favor of the Plaintiff.
But if there was an actual and immediate sale of the ship to Mr. Dunkerson; or if there was any concealment which ought to invalidate the policy; we think the verdict should be in favor of the Defendant.
Verdict for the Plaintiff. Footnotes
[ Footnote * ] The Chief Justice, who had presided at the opening, was obliged, by indisposition, to be absent during the rest, of the trial.
[ Footnote * ] The Judge did not expressly refer in his charge to another section of the Registering Act, which was cited by the Defendant's Counsel, as proof that the vessel was forfeited, if the sale was an absolute one. The words of the section are: 'That if any ship or vessel, heretofore registered, or which shall hereafter be registered, as a ship or vessel of the United States, shall be sold or transferred, in whole or in part, by way of trust, confidence, or otherwise, to a subject, or citizen, of any foreign Prince, or State, and such sale or transfer shall not be made known, in manner herein before directed, such ship or vessel, together with her tackle, apparel, and furniture, shall be forfeited.' 2 Vol. p. 148. s. 16. Swift's Edit. I presume, the Judge, having adopted the reasoning of the Plaintiff's Counsel, that there was no actual and immediate sale and transfer of the Mount Vernon, or, in other words, that the contract was executory, not executed, did not think the section applicable to the present case. For the manner of making known the sale and transfer here alluded to, See sect. 7. p. 137.