U.S. Supreme Court Hughes v. Union Insurance Company of Baltimore, 21 U.S. 8 Wheat. 294 294 (1823)
Hughes v. Union Insurance Company of Baltimore
21 U.S. (8 Wheat.) 294
ERROR TO THE CIRCUIT
COURT OF MARYLAND
Insurance for $18,000 on vessel valued at that sum, and $2,000 on freight valued at $12,000, on the ship Henry "at and from Teneriffe and at and from thence to New York, with liberty to stop at Matanzas; the property warranted American." The policy was executed in 1807, and in the same year another policy was made by the same underwriters on freight for the same voyage to the amount of $10,000, and the property was also warranted American, but there was no liberty to stop at Matanzas. The following representation was made to the underwriters on the part of the plaintiff, who was both owner and master of the ship:
"We are to clear out for New Orleans; the property will be under cover of Mr. John Paul, of Baltimore, who goes super-cargo on board, yet Mr. Paul will only have a part of the cargo to his consignment. There will be three other persons on board that will have the remainder of the cargo in their care. We are to stop at the Mantanzas to know if there are any men of war off the Havana."
The vessel sailed from Teneriffe on 17 April, 1807, with a cargo belonging to Spanish subjects but appearing to be the property of John Paul Dumeste, a citizen of the United States, and the same person called John Paul in the representation. The cargo was shipped under a charter party executed by the plaintiff and Dumeste, representing New Orleans as the place of destination. The ship arrived at the Havana on 7 July, having put into Matanzas to avoid British cruisers, and unladed the cargo, which was there received by the Spanish owners and the freight, amounting to $7,000, paid to the plaintiff, who received it "in full of all demands, for freight or otherwise, under or by virtue of the aforesaid charter party and cargo." At the Havana the ship took in a new cargo belonging to merchants in New York and was lost with the greater part of her cargo on the voyage from Havana to New York. An action of debt was brought on the first policy for the value of the ship and freight. The sum demanded in the writ was $20,00, but the plaintiff limited his demand at the trial to $18,000 on the ship and $420 for the freight actually earned on the voyage from Havana to New York. Held that he was entitled to recover.
In debt, a less sum may be recovered than that demanded in the writ, where an entire sum is demanded and it is shown by the counts to consist of several distinct accounts or where the precise sum demanded is diminished by extrinsic circumstances.
This was an action of debt upon a policy of insurance in the usual form, dated 27 May, 1807, on the ship Henry, "lost or not lost," "at and from Teneriffe to Havana, and at and from thence to New York, with liberty to stop at Matanzas." $18,000 was insured on the ship, valued at that sum, and $2,000 on the freight, valued at $12,000, and the property was warranted American.
On 1 June in the same year, a policy was executed on the freight of the ship Henry, by the same Company, for the same voyage, to the amount of $10,000, the whole freight being valued at $12,000. In this policy also the property was warranted American, but there was no liberty to stop or touch at Matanzas or any other place.
Both these policies were effected under an order for insurance by Henry Thompson of Baltimore, as agent for the plaintiff, an American citizen, who was master for the voyage as well as owner. The order bears date 18 May, 1807, and is in the following words:
"Baltimore, May 18, 1807"
"Insurance is wanted on $18,000 on the American ship Henry, Capt. Henry Hughes, and $12,000 on her freight, each valued at the same, at and from Teneriffe to Havana, and at and from thence to New York, against all risks."
"The Henry was expected to sail on or about the 12th ult.; she is a remarkably good vessel, about 270 tons burden, and now on her first voyage. Said ship and freight are the sole property of Capt. Hughes, who gives the following particulars in his letter of instructions to N. Talcott, of New York."
" We are to clear out for New Orleans; the property will be under cover of Mr. John Paul, of Baltimore, who goes supercargo on board, yet Mr. Paul will only have part of the cargo to his consignment. There will be three other persons on board that will have the remainder of the cargo in their care. We are to stop at the Matanzas to know if there are any men of war off the Havana."
"When you make insurance, which I expect will be done low, you will state the whole of this business, so that there will be a right understanding of the voyage."
"At what premium will you insure the above risks?"
The Henry sailed from Teneriffe on 17 April, 1807, with a cargo for the Havana,
which belonged to Spaniards, but appeared as the property of John Paul Dumeste (the person mentioned in the order for insurance by the name of John Paul), a citizen of the United States, who went as supercargo. She took a clearance for New Orleans. This cargo was laden at Teneriffe, under a charter party, which bore date 10 March, 1807, and represents New Orleans as the port of destination, without any mention or notice of the Havana. The parties to it were Dumeste, and Henry Hughes, the master. The freight mentioned was $11,000, of which it was stipulated that $5,000 should be paid at New Orleans, and the remaining $6,000 at New York.
The ship proceeded to the Havana, where she arrived on 7 July, having put into Matanzas on 2 June, to avoid British cruisers then in sight, and unladed the cargo, which was there delivered to the real Spanish owners. The real freight to the Havana, amounting to $7,000, was paid at Matanzas to the plaintiff, who received it "in full of all demands for freight or otherwise, under or by virtue of the aforesaid charter party and cargo." It was proved that this unlading did not produce any additional delay or increase of risk, for the ship left Matanzas and proceeded to Havana in ballast, as soon as there was any reasonable prospect of escaping the cruisers stationed in the way, and was enabled to proceed sooner and more safely, by being in ballast, which put it in her power to keep closer in shore. At the Havana she took in a new cargo, belonging
to persons in New York, and consisting of 120 boxes of sugar, at a freight of $3.50 the box. On the voyage, she sprung a leak, soon after which she transshipped a part of her cargo, consisting of 60 boxes, into the Rising Sun, a vessel bound to Norfolk, where the property was safely landed. Within about two days after the transshipment, the Henry sunk, and was totally lost, with the rest of the cargo. The master and crew escaped in their boat. In attempting to make their may to New York, they were taken up at sea in an almost desperate situation.
The freight was abandoned to the underwriters, and a demand was made of payment for that and the ship, which being refused, this action was brought to recover both. The sum demanded by the writ and declaration was $20,000, and the loss declared on was by the dangers of the seas, one of the perils mentioned in the policy. On the plea of nil debet, issue was joined, and the case went to trial.
At the trial, the plaintiff gave the charter party in evidence, as one of the documents necessary or proper for establishing the neutral character of the vessel and freight; but there was no evidence of its having been at any time produced or mentioned to the defendants, or in any manner known to them. He also proved his own national character, and that of the ship, his interest in the ship and freight, the commencement and prosecution of the voyage, and the loss and abandonment. By an admission at the bar he expressly limited his demand of freight to that earned on the 120 boxes
of sugar, amounting to $420, and renounced all claim to any further or other sum on that account.
The defendants then gave in evidence the separate policy on the freight, which is mentioned above, and also produced evidence tending to show, that the plaintiff, in his management respecting the said ship, after the leak was discovered, was guilty of gross negligence in not using such means as were in his power for conducting the said ship into a place of safety in the Delaware, and that he might have conducted her into a place of safety there had he used those means.
The plaintiff then gave evidence of the causes, nature, and duration of the delay at the Matanzas, as stated above, and of the effect produced on the risk by unlading the cargo there. He also gave in evidence, that after the said leak was discovered, the plaintiff did all in his power, according to his skill and ability, to save the said ship, and to conduct her safely to her port of destination, and that there was no place of safety in the Delaware to which the said ship could have been conducted, nearer, or more easily reached, in the state of the wind and weather at that time, than New York.
The defendants then prayed the opinion of the court and their direction to the jury:
1. That if the jury should be of opinion from the evidence that the cargo shipped at Teneriffe, which the order for insurance of 18 May, 1807, mentions, and which the charter party, and the policy of insurance upon freight of 1 June, 1807, read in evidence on this trial, also
mentions, was landed, and finally separated from the ship at Matanzas, and was there delivered by the plaintiff, at the instance of the freighters, and accepted by the freighters, the plaintiff receiving from the said freighters $7,000, in lieu of all demands upon the said charter party, including the whole freight to the Havana, and that a cargo of sugar, for an entirely new account and risk, to-wit, for the account and risk of Le Roy Bayard & McEvers, of New York, was, by the plaintiff, taken in at the Havana, with which the ship sailed upon her voyage to New York, as proved by the plaintiff's testimony, then the plaintiff is not entitled to a verdict for any freight, upon the issue and pleadings in this cause.
2. That if the jury should find from the plaintiff's declaration and the evidence that the cargo shipped at Teneriffe, which the order for insurance of 18 May, 1807, mentions, and which the charter party, and the policy of insurance upon freight of 1 June, 1807, read in evidence on this trial, also mention, was landed and finally separated from the ship at the Matanzas by the freighters and the plaintiff, and was there delivered by the plaintiff and accepted by the freighters, and their contract of freightment abandoned, the plaintiff receiving from the said freighters the sum of $7,000 in lieu of all demands upon the said charter party, including the whole freight to the Havana, and that a cargo for an entirely new account and risk, to-wit, for the account and risk of Le Roy Bayard & McEvers, of New York, was, by the plaintiff, taken in at the Havana,
with which the ship sailed to New York, as proved by the plaintiff's testimony, and further, that in the course of her said voyage to New York, a part of the said cargo was transshipped into the Rising Sun, as stated in the plaintiff's evidence, and if they also find that the risk was increased by taking in the new cargo aforesaid, and the transshipment aforesaid, beyond what it would have been, had the said ship proceeded in ballast from the Havana to New York, then the policy was wholly discharged, and the plaintiff cannot recover as to the vessel, on the issue and proceedings in this case.
3. That if the jury should be of opinion from the evidence that the plaintiff had an opportunity of causing the said ship, after the discovery of the leak, to be carried into the Delaware or elsewhere and there saved from the total loss which afterwards happened, and that he did not act with proper and reasonable care in forbearing to do so, he is not entitled to recover in this action.
These directions were given by the court, which further instructed the jury, that this was a valued policy, on which an action of debt lies, the sum claimed being specified by an agreement of the parties. But the whole must be recovered or no part of it can be recovered. In this suit, the action is for two distinct sums, $18,000 on the ship, and $2,000 on the freight. The party can recover either entire, and not the other, but not a portion of either, without accounting for the residue.
To these opinions and directions the plaintiff
took a bill of exceptions, on which judgment was rendered for the defendants, and the cause was brought by writ of error to this Court.
MR. JUSTICE JOHNSON delivered the opinion of the Court.
This suit was instituted on a policy of insurance on the ship Henry, and on the freight to be earned by her, on a voyage from Teneriffe to Havana, and thence to New York. $18,000 on the ship, and $2,000
on the freight, were insured in this policy, and another sum of $10,000 on the freight, was insured in a distinct policy, by the same Company. At the trial, the defendants prayed certain instructions to the jury, which the court gave, and added a further instruction in their favor, in pursuance of which, the jury found for the defendants below. The question is whether the instructions so given were conformable to the law of the case.
This must depend upon the construction of the policy, as modified by the representations made at the time of the contract.
The vessel, it appears, was at Teneriffe when the order for insurance was written, and had engaged in the transportation of Spanish property, to be covered as American, in the manner specified in the representation. By the charter party, John Paul Dumeste appears as the owner and affreighter of the goods, and the voyage stipulated for is precisely that insured against, to-wit, from Teneriffe to Havana (under the disguise of New Orleans), with liberty to put into Matanzas, and from Havana to New York. There is no imputation of unfairness, the nature of the voyage was distinctly understood between the parties, and the only question which goes to the negation of the right of recovery of freight altogether, is raised upon the supposed termination of the voyage insured against at Matanzas, and the actual receipt there of the whole freight insured. And as against the sum insured on the vessel, the defendants insist, that the act of taking in a cargo at
the Havana, which was not permitted by the contract of insurance, avoided the contract.
The argument is that the insurance was altogether confined to the voyage stipulated for under the charter party.
And it has been contended that the voluntary surrender of that contract at the Matanzas put an end to the voyage or to the adventure insured.
That the receipt of a compensation, by way of compromise, for the $7,000 freight stipulated for on the voyage from Havana to New York was in fact the receipt of the whole freight on that voyage
And lastly that taking in a cargo at the Havana, not in contemplation under the charter party or representation, put an end to the insurance on the vessel and discharged the underwriters altogether.
It is obvious that if this case be disposed of upon the contract, as exhibited on the face of the policy, the right of the plaintiff to recover would be unquestionable. The defendants, however, avail themselves of the right of insisting on the contract, such as it really was in the intendment of the parties, whatever the policy might purport on the face of it.
The benefit of the same principle, therefore, cannot be withheld from their adversary, and accordingly the existence of a charter party becomes altogether an immaterial circumstance in the case. No mention of it was made in the representation, and the voyage might have been prosecuted without it. The representation was
the document to which the parties were referred for their respective undertakings. Engaging in a voyage different from that, whether with or without a charter party, would have vitiated the contract. But a charter party so strictly conforming to that representation, would only leave the parties where it found them; and answered no other purpose than to furnish the authentic evidence of freight engaged, in case of loss, while sailing under it. And this is the whole effect of the cases cited to sustain this supposed intimate and mutual dependence between policies and charter parties.
Has, then, the representation been complied with substantially?
This depends upon the real nature of the voyage insured, in considering which it is obvious that although it was indispensable that the American mantle should be thrown over the cargo, it was by no means so that the cargo should continue to need the protection of that mantle. It would be as reasonable to contend that if Spain had ceased to be a belligerent, or John Paul Dumeste, instead of being the nominal, had become the real owner of the cargo, the contract of insurance would have been avoided. We consider a representation of property, being covered as American, as substantially complied with, if the property be actually American. And as the presence and agency of John Paul Dumeste had the cloaking of the property as their sole object, that his presence was dispensed with when the cargo became actually American.
So much for the national character of the shipper.
And as to his identity, we see nothing in
the contract to prevent the change which took place under the transactions at Matanzas and the Havana. It is very clear that, provided John Paul Dumeste had continued in the capacity of supposed owner, the representation would have admitted of taking in a cargo from the Havana, belonging to any other Spanish subjects than the shippers from Teneriffe. The plaintiff, then, was not bound by anything in the representation to hold the original shippers to their contract, but was left at large, as in all such carrying voyages, to do the best he could for himself in earning freight, provided the cargo still continued covered as American. He was, then, at liberty to change the actual shipper, and he has done nothing more in compounding with the Spanish charterers and putting his vessel up as a general ship at the Havana.
But it is contended that by the composition made at the Matanzas, the plaintiff has actually received what he is now suing for, to-wit, his freight from Havana to New York.
Plausible as this argument appears, we are of opinion that the facts will not sustain it. The sum received in composition, to-wit, $7,000 (from which, we presume, was deducted both primage and specific compensation, as stipulated for under the charter party), could not have been for the hire of the vessel to New York. To say nothing of the difference in amount, what interest could the first charterers have had in sending her empty to New York? The true understanding of the arrangement is that those shippers purchased
a release from the obligation to find a cargo for New York, and thus avoided paying the sum of $7,000. The master then took the risk of not being able to procure a freight for the last port of his voyage. This was the consideration of the composition paid him, and events proved, that he made a very hard bargain for himself, and a very beneficial one for the underwriters. Had the vessel taken in full freight from the Havana for New York, it might have been a question, upon the loss happening, whether the underwriters were entitled to deduct the $7,000 so received, but in the present state of facts, no question can be raised upon it, but that which has been raised, to-wit, whether it operated as a receipt in full to the underwriters for all freight that might, by possibility, be engaged on the remaining voyage. We have expressed out opinion that it did not.
With regard to that part of the instruction which was voluntarily given by the court, it is necessary to remark that although it does not appear to have been moved by the defendants' counsel, yet it was on a point certainly presented by the case, and as it is one on which this cause may, by possibility, be again brought up to this Court, it is proper now to decide it.
So far as relates to the policy on the ship, there can be no difficulty. The plaintiff is entitled to the whole or nothing. We are of opinion that he was entitled to the whole. But as the plaintiff demands only the sum of $420 for freight from the Havana, the question arises whether, in this form of action, he could recover less than the
$2,000 specified in the contract, and claimed by the writ. On this point, the court charged the jury,
"that the whole must be recovered, or no part of it could be recovered; that the party could recover either of the two sums claimed, entire, without the other, but not a portion of either without accounting for the residue."
On this subject, this Court is satisfied that the law of the action of debt is the same now that it has been for centuries past. That the judgment must be responsive to the writ, and must therefore either be given for the whole sum demanded, or exhibit the cause why it is given for a less sum. Otherwise non constat, but the difference still remains due. That this is the law where an entire sum is demanded in the writ, and shown by the counts to consist of several distinct debts, is established by the case of Andrews v. De la Hay, Hobart 178, that the law is the same where an entire sum is demanded, and only half of it established, is laid down expressly in the case of Speak v. Richards, in the same book, pp. 209-210, and adjudged in the case of Grobbam v. Thornborough, p. 82, and in the more modern case of Ingledew v. Crips, 2 Lord Raym. 814-816. Our own courts, in several of the states and districts, have also recognized and conformed to the same doctrine.
And the same cases establish, that the requisite conformity between the writ and judgment, in the action of debt, may be fully complied with, either by the pleadings, the finding of the jury, or a remitter
entered by the plaintiff, either before or after verdict, or even after demurrer.
If, therefore, the instruction to the jury on this point, was intended to intimate, that they could not find for the plaintiff any less sum than the $2,000 valued on the freight, we deem it exceptionable, inasmuch as the plaintiff had a right to claim a verdict for the freight established by the evidence, and enter a remitter for the difference.
There was another question made by the defendants' counsel, on the argument, which had relation to the quantum of the sum to be recovered for freight under this policy. It was contended, that it ought to be reduced by reference to the ratio which it bears to the other policy executed on the same freight. But we decline deciding the point as well because it is not brought up under the bill of exceptions as because we cannot discover how it can affect the interests of the parties, since both policies were executed between the same parties upon the same representation.
Judgment reversed, and a venire de novo awarded.
JUDGMENT. This cause came on to be heard on the transcript of the record of the Circuit
Court of the United States for the District of Maryland and was argued by counsel. On consideration whereof, this Court is of opinion that the said circuit court erred in the first and second instructions given to the jury, as prayed for by the defendants' counsel and in the voluntary opinion of said circuit court so far as the said opinion was intended to instruct the jury that they could not find any less sum than $2,000 valued on the freight.
It is therefore ADJUDGED and ORDERED that the judgment of the said Circuit Court of the United States for the District of Maryland in this case be and the same is hereby reversed and annulled, and it is further ORDERED that said cause be remanded to said circuit court with instructions to issue a
venire facias de novo.