1. Where, by the terms of a policy, a vessel is insured "to
a port in Cuba, and at and thence to port of advice and
discharge in Europe," and the vessel is lost in going from the port
of discharge in Cuba to another port in the same island for
reloading, held on a suit on the policy for a loss that evidence by
the assured was inadmissible to show a usage that vessels going to
Cuba might visit at two ports, one for discharge and another for
loading. [In the present case, the court held that the evidence
offered did not show such a usage.]
2. Where there has been a deviation in a voyage insured, no
decree will be made for a return of any part of the premium. The
deviation annuls the contract as to subsequent parts of the voyage
and causes a forfeiture of the premium.
Hearne filed a bill in the court below against the New England
Mutual Marine Insurance Company to reform a contract of insurance,
he alleging that the policy as made out did not conform to the
agreement of the parties, taking that agreement with the usage or
custom which he insisted entered into and formed a part of it.
The case was thus:
On the 7th of May, 1866, Hearne made his application by letter
to the company for insurance. He said:
"The bark
Maria Henry is chartered to go from Liverpool
to Cuba and load for Europe, via Falmouth for orders where to
discharge. Please insure $5,000 on this charter valued at $16,000,
provided you will not charge over 4 percent premium. "
Page 87 U. S. 489
On the 9th of that month, the company, through its president,
replied:
"Your favor of the 7th is at hand. As requested, we have entered
$5,000 on charter of bark
Maria Henry, Liverpool to port
in Cuba and thence to port of advice and discharge in Europe, at 4
percent."
The policy was made out on the same day and described the voyage
as follows:
"At and from Liverpool
to port in Cuba and at and thence to
port of advice and discharge in Europe."
Thereafter, the policy was delivered to the assured and received
without objection. The vessel was loaded with coal at Liverpool and
proceeded thence to St. Iago de Cuba. There she discharged her
outward cargo. She went thence to Manzanillo, another port in Cuba,
where she took on board a cargo of native woods. On the 13th of
September, 1866, she sailed thence for Europe, intending to go by
Falmouth for orders. Upon the 18th of that month, on her homeward
voyage, she was lost by perils of the sea. Due notice was given of
the loss, and it was admitted to have occurred as alleged in the
bill. The company refused to pay upon the ground that the voyage
from St. Iago de Cuba to Manzanillo was a deviation from the voyage
described in the policy, and therefore put an end to the liability
of the insurers.
On the 7th of December, 1868, two years after the loss occurred,
Hearne brought an action at law against the company. The court held
that he was not entitled to recover by reason of the deviation
before stated. He failed in the suit. On the 16th of January, 1871,
he filed the bill in this case and prayed therein to have the
contract reformed so as to cover the elongated voyage from St. Iago
to Manzanillo.
The bill averred that at the time of chartering the bark and at
the time of the issuing of the policy, there existed at Liverpool a
general and uniform usage of trade that all vessels chartered at
said port for a round voyage from said port to the Island of Cuba
and thence to return to
Page 87 U. S. 490
Europe, carrying coal as their outward cargo to Cuba and
bringing a return cargo thence to Europe, should visit one port in
the said island for the purpose of discharging the outward cargo,
and that they should then proceed to another port for the purpose
of shipping a return cargo, and further that this usage was well
known to all merchants and others engaged in the trade between
Liverpool and Cuba.
Evidence was introduced to establish the usage. It showed that
about four-fifths of the vessels which go laden with coal to Cuba
take their return cargo elsewhere on the island than at the port of
discharge, and that a few used the same port for both purposes. But
it appeared also that the contract in both cases was expressed
according to what the parties purposed.
The court below dismissed the bill, and from its action Hearne
took this appeal.
MR. JUSTICE SWAYNE, having stated the case, delivered the
opinion of the Court.
The reformation of written contracts for fraud or mistake is an
ordinary head of equity jurisdiction. The rules which govern the
exercise of this power are founded in good sense and are well
settled. Where the agreement as reduced to writing omits or
contains terms or stipulations contrary to the common intention of
the parties, the instrument will be corrected so as to make it
conform to their real intent. The parties will be placed as they
would have stood if the mistake had not occurred. [
Footnote 1]
The party alleging the mistake must show exactly in what it
consists, and the correction that should be made. The evidence must
be such as to leave no reasonable doubt upon the mind of the court
as to either of these points. [
Footnote 2] The
Page 87 U. S. 491
mistake must be mutual and common to both parties to the
instrument. It must appear that both have done what neither
intended. [
Footnote 3] A
mistake on one side may be a ground for rescinding, but not for
reforming, a contract. [
Footnote
4] Where the minds of the parties have not met, there is no
contract, and hence none to be rectified. [
Footnote 5]
This jurisdiction is applied, where necessary and proper, to the
reformation of contracts of insurance. [
Footnote 6]
Here, the application was to insure on a charter "from Liverpool
to Cuba, and load for Europe,
via Falmouth," &c. This
was indefinite as to Cuba, and may have been regarded by the
company as ambiguous. The answer was, as "requested, we have
entered $5,000 on charter
to port in Cuba, and thence to
port of advice and discharge in Europe." This answer shows clearly
two things: (1) how the company understood the proposition; (2)
that they agreed to insure according to that understanding, and not
otherwise.
There was no mistake nor misapprehension on their part. The
circumstances show there could be none.
The correspondence between the parties constituted a preliminary
agreement. The answer to Hearne's proposal was plain and explicit.
It admitted but of one construction. He was bound carefully to read
it, and it is to be presumed he did so. In that event, there was as
little room for misapprehension on his part as on the part of the
company. Such a result was hardly possible. There is nothing in the
evidence which tends to show that any occurred. The inference of
full and correct knowledge is inevitable. It is
Page 87 U. S. 492
as satisfactory to the judicial mind as direct evidence to the
same effect would be.
So far, the complainant's case is as weak in equity as it was at
law.
But it is said there was a usage that vessels going to Cuba
might visit at least two ports -- one for discharge and the other
for reloading. It is insisted that this usage authorized the voyage
to Manzanillo; that the voyage was not a deviation; that it in no
wise affected the liability of the company in equity; and that
hence, the contract of the parties in this particular should be
reformed accordingly.
It is not necessary that the usage relied upon in cases like
this should have been communicated or known to the assurers. Lord
Mansfield said: "Every underwriter is presumed to be acquainted
with the practice of the trade he insures, and if he does not know
it, he ought to inform himself." [
Footnote 7]
Usage is admissible to explain an ambiguity, but it is never
received to contradict what is plain in a written contract.
[
Footnote 8] If the words
employed have an established legal meaning, parol evidence that the
parties intended to use them in a different sense will be rejected
unless, if interpreted according to their legal acceptation, they
would be insensible with reference to the context or the extrinsic
facts. [
Footnote 9] If no such
consequence is involved, proof of usage is wholly inadmissible to
contradict or in any wise to vary their effect. [
Footnote 10] In no case can it be received
where it is inconsistent with or repugnant to the contract.
Otherwise it would not explain, but contradict and change, the
contract which the parties have made -- substituting for it
another
Page 87 U. S. 493
and different one, which they did not make. [
Footnote 11] To establish such
inconsistency it is not necessary that it should be excluded in
express terms. It is sufficient if it appear that the parties
intended to be governed by what is written, and not by anything
else. [
Footnote 12]
The principle of the admission of such testimony is that the
court may be placed, in regard to the surrounding circumstances, as
nearly as possible in the situation of the parties -- the question
being what did they mean by the language they employed? [
Footnote 13] What is implied is as
effectual as what is expressed. [
Footnote 14] The expression and the implication in this
case are equally clear. It is expressed that the vessel should
proceed to a port in Cuba and thence to Europe. It is implied that
she should visit no other port in Cuba.
Expressum facit tacitum
cessare. Under these circumstances, usage can have no
application and proof of its existence is inadmissible. But the
usage relied upon is not sustained by the evidence.
It appears that a large proportion of the vessels, perhaps
four-fifths, which go laden with coal to Cuba take on their return
cargo elsewhere on the island than at the port of discharge. A few
use the same port for both purposes. But the proof is also that the
contract in all such cases is expressed according to the intent.
There is no proof that where the policy is upon a voyage to one
port and back, the vessel may proceed to another port before her
return, and that by usage or otherwise, the latter voyage as well
as the former shall be deemed to be within the policy.
Viewing the case in this aspect, we find nothing that would
warrant the interposition of a court of equity.
We are asked, if we decline to reform the contract, to decree
the return of the premium. This we cannot do.
Page 87 U. S. 494
We regard the case as one of mere deviation. It is essentially
of that character. In that class of cases, the law annuls the
contract as to the future and forfeits the premium to the
underwriter. Here equity must follow the law. We cannot apply a
different rule.
Decree affirmed.
[
Footnote 1]
Kerr on Fraud and Mistake 419, 420.
[
Footnote 2]
Beaumont v. Bramley, 1 Turner & Russell 41-50;
Marquis of Breadalbane v. Marquis of Chandos, 2 Mylne
& Craig 711;
Fowler v. Fowler, 4 De Gex & Jones
255;
Sells v. Sells, 1 Drewry & Smales 42;
Loyd v.
Cocker, 19 Beavan 144.
[
Footnote 3]
Rooke v. Lord Kensington, 2 Kay & Johnson 753;
Eaton v. Bennett, 34 Beavan 196.
[
Footnote 4]
Mortimer v. Shortall, 2 Drury & Warren 372;
Sells v. Sells, supra.
[
Footnote 5]
Bentley v. McKay, 31 L.J.Chancery 709;
Baldwin v.
Mildeberger, 2 Hall 176;
Coles v. Bowne, 10 Paige
534;
Calverley v. Williams, 1 Vesey Jr. 211.
[
Footnote 6]
Harris v. Col. Co. Ins. Co., 18 Ohio 116;
Fireman's
Insurance Co. v. Powell, 13 B.Monroe 311;
National Fire
Insurance Co. v. Crane, 16 Md. 260.
[
Footnote 7]
Noble v. Kennoway, 2 Douglas 513;
see also 1
Duer on Insurance 266, and the cases there cited.
[
Footnote 8]
Blackett v. Royal Exchange Assurance Co., 2 Crompton
& Jervis 250;
Crofts v. Marshall, 7 Carrington &
Payne 607;
Phillipps v. Briard, 1 Hurlstone & Norman
21.
[
Footnote 9]
Wigram on Wills 11-12.
[
Footnote 10]
Yates v. Pym, 6 Taunton 446;
Blackett v. Royal
Exchange Assurance Co., supra.
[
Footnote 11]
Holding v. Pigott, 7 Bingham 465;
Clarke v.
Roystone, 13 Meeson & Welsby 752;
Trueman v.
Loder, 11 Adolphus & Ellis 589;
Muncey v. Dennis,
1 Hurlstone & Norman 216.
[
Footnote 12]
Hutton v. Warren, 1 Meeson & Welsby 477;
Clarke
v. Roystone, supra.
[
Footnote 13]
1 Greenleaf on Evidence, § 295a.
[
Footnote 14]
United States v.
Babbit, 1 Black 61.
