1. A policy upon a cargo in the name of A., "on account of whom
it may concern," or with other equivalent terms, will inure to the
interest of the party for whom it was intended by A., provided he
at the time of effecting the insurance had the requisite authority
from such party, or the latter subsequently adopted it.
2. No proof is necessary that the assured had an insurable
interest at that time. It is sufficient if such interest subsisted
during the risk and when the loss occurred.
3. A policy "lost or not lost" is a valid stipulation for
indemnity against past as well as future losses. A contingent
interest may be the subject of such a policy.
4. In an action against A. to recover the amount paid to him by
the underwriters, who allege that neither he nor his principal had
an insurable interest in such cargo, the burden of proof is on the
plaintiffs to show that fact.
5. A. having received the money as agent, and promptly paid it
over to his principal, without notice of any adverse claim, or
reason to suspect it, the plaintiffs, having been guilty of laches,
must look to that principal.
The British steamer
Carolina came to Baltimore,
consigned to James Hooper & Co. They were also her agents while
she remained in that port. The plaintiff in error was a member of
the firm. Having taken on board her return cargo, the steamer
proceeded on her homeward voyage. While in the Chesapeake Bay she
was injured by a collision with another vessel, and put back to
Baltimore for repairs. She was repaired, and Hooper & Co. paid
all the bills and made other disbursements for her. McGarr, the
captain, drew on Good
Page 98 U. S. 529
Brothers & Co., of Hull, England, for the amount in favor of
Hooper & Co., and at the same time directed them to protect the
drawees by insurance, which was intended to be done by the policy
here in question. The draft bore date Oct. 20, 1872; was for
�1,611 18
s. 7
d.; was payable in London
thirty days after sight; and directed that the amount should be
charged "to account for advances for repairs and disbursements of
steamship
Carolina and her freight, to enable the ship to
proceed on her voyage."
The policy of insurance was dated on the 26th of October, 1872,
and was to "James Hooper & Co., on account of whom it may
concern, in case of loss to be paid to their order." The insurance
was "lost or not lost, . . . on merchandise, to cover such risks as
are approved and endorsed on the policy." The endorsement set forth
the date of the insurance, the name of the vessel, the course of
the voyage, the rate of the premium, the amount insured ($8,000),
and the remark, "paid advance to cover disbursements and repairs."
The names of the agents of the underwriters were affixed. The
instrument was a cargo policy. No inquiry was made of Hooper as to
whom he was insuring for, and no representation was made by him
except as is disclosed in the memorandum endorsed upon the policy.
The draft of McGarr was bought by Brown & Sons, bankers, of
Baltimore. They transmitted it to their correspondents in London.
On the 11th of November, 1872, it was accepted by Good Brothers
& Co., and on the 14th of December following they paid it. On
the 14th of November, 1872, the steamer foundered at sea. On the
28th of that month notice of the loss was given to the
underwriters. On the 6th of December, in answer to a call for proof
of loss and interest, Hooper & Co. furnished the Baltimore
agent of the underwriters with the protest and a full account of
the items of "outfit and disbursements of the British steamer
Carolina." In the statement was the charge, "to cash paid
insurance on advances $117.33." On the 15th of January, 1873, the
agent in Baltimore drew on the defendants in error, his principals
in New York, for $8,012, at five days' sight. The draft was paid on
the 24th of that month, and on the 31st Hooper & Co. remitted
the amount to Good Brothers & Co. in England. When Hooper &
Co. received
Page 98 U. S. 530
the draft of the 15th of January, they gave a receipt setting
forth that when the draft was paid it would be
"in full for claim for total loss of advancements for
disbursements and repairs per steamer
Carolina, . . .
insured 26th of October, 1872, under policy No. 22,706."
The receipt concluded with a promise, upon the payment of the
draft, "to assign all our right, title, and interest in the above
advances for disbursements and repairs to the underwriters." Hooper
said at the time to the agent "that he had nothing to assign." On
the 10th of February, 1873, Hooper & Co. executed to Robinson
& Cox, the attorneys of the underwriters, the promised
assignment, which was a printed form filled up by the agent, "such
as is taken in all cases of abandonment for total loss." Hooper
then again told the agent "that he had no interest in the matter,
but as it was customary, he would sign the paper."
During all these transactions Hooper & Co. were not asked
whether they had insured for themselves or for others; whether they
had been or expected to be repaid their disbursements; whether any
one else was interested in the policy, or for whom they were
collecting the insurance. More than a month after the loss had been
paid and the money remitted to England, a marine adjuster came from
New York to Baltimore "to ascertain who owed Mr. Hooper for
advances." A full disclosure was thereupon made by Hooper. The
adjuster suggested to him "to write his friends on the other side
to return the money." Hooper asked if the underwriters did not get
the premium for insurance, and if the vessel was not lost. Being
answered in the affirmative, he said he "would not have the face to
write to the parties to return the money." No offer has been made
to return to Hooper & Co., or to Good Brothers & Co., the
premium for insurance. This suit was brought by the underwriters on
the 30th of October, 1873, more than nine months after the loss had
been paid and the money remitted to Good Brothers & Co., and
more than seven months after Hooper's disclosure to the
adjuster.
When the testimony was closed on both sides in the court below,
the defendant, Hooper, asked the court to charge the jury, in
effect, that if they believed the advances and the insurance were
made; that the draft on Good Brothers & Co. was
Page 98 U. S. 531
drawn, accepted, and paid; that the steamer was lost; proof of
loss and payment demanded; that Hooper then furnished the
plaintiffs with the account of his disbursements; that the
plaintiffs thereupon paid him and took the assignment without
having made any inquiry as to whether he was collecting for himself
or for others, and that within a few days thereafter he remitted
the money to Good Brothers & Co. -- all as stated in the
evidence, the plaintiffs were not entitled to recover. This
instruction the court refused to give, and instructed, in
substance, that if the jury believed that when Hooper made his
claim for indemnity under the policy he produced the account and
subsequently gave the receipt and executed the assignment, and that
when he received payment and delivered the assignment he had
received notice of the payment of the draft upon Good Brothers
& Co., given to him to recover his advances, which fact he did
not communicate to the underwriters, then the plaintiffs were
entitled to recover the amount of the insurance money which he had
received. Hooper excepted to the refusal to instruct and to the
instruction given. The jury found for the plaintiffs, and judgment
was entered accordingly. The defendant then brought the case here
for review.
Page 98 U. S. 536
MR. JUSTICE SWAYNE, after stating the facts, delivered the
opinion of the Court.
As the facts of which the instruction given was predicated were
all indisputable and undisputed, that instruction was equivalent to
a direction to find for the plaintiffs. The same remarks apply
mutatis mutandis to the instruction asked by the
defendant. The case, then, resolves itself into this: were the
plaintiffs entitled to recover upon the case as presented in the
record?
A policy like the one here in question, in the name of a
specified part, "on account of whom it may concern," or with other
equivalent terms, will be applied to the interest of the persons
for whom it was intended by the person who ordered it, provided the
latter had the requisite authority from the
Page 98 U. S. 537
former, or they subsequently adopted it. 1 Phillips, Ins., sec.
383.
This is the result, though those so intended are not known to
the broker who procures the policy, or to the underwriters who are
bound by it.
Id., sec. 384.
One may become a party to an insurance effected in terms
applicable to his interest, without previous authority from him, by
adopting it either before or after the loss has taken place, though
the loss may have happened before the insurance was made.
Id., sec. 388.
The adoption of the policy need not be in any particular form.
Anything which clearly evinces such purpose is sufficient.
"It is now clearly established that an insurable interest,
subsisting during the risk and at the time of loss, is sufficient,
and that the assured need not also allege or prove that he was
interested at the time of effecting the policy; indeed, it is every
day's practice to effect insurance in which the allegation could
not be made with any degree of truth, as, for instance, where goods
are insured on a return voyage long before they are bought."
1 Perkin's Arnould 238.
This is consistent with reason and justice, and is supported by
analogies of the law in other cases. We will name a few of
them.
A deed voidable under certain circumstances may be made valid
for all purposes by a sufficient after-consideration. A devise to a
charitable use may be made to a grantee not
in esse, and
vest and take effect when the grantee shall exist. The doctrine of
springing and shifting uses is familiar to every real property
lawyer. They always depend for their efficacy upon events occurring
subsequently to the conveyance under which they arise.
Where the insurance is "lost or not lost," the thing insured may
be irrecoverably lost when the contract is entered into, and yet
the contract be valid. It is a stipulation for indemnity against
past as well as future losses, and the law upholds it.
Where a vessel insured for a stated time was sold and
transferred, and was repurchased and transferred back within that
time, it has been held that the insurance was suspended while
Page 98 U. S. 538
the title was out of the assured, "and was revived again on the
reconveyance of the assured during the term specified in the
policy."
Worthington v. Bearse, 12 Allen (Mass.) 382.
A right of property in a thing is not always indispensable to an
insurable interest. Injury from its loss or benefit from its
preservation to accrue to the assured may be sufficient, and a
contingent interest thus arising may be made the subject of a
policy.
Lucena v. Craufurd, 3 Bos. & Pul. 75;
S.C. 5
id. 269;
Buck &
Hedrick v. Chesapeake Insurance Co., 1 Pet. 151;
Hancock v. Fishing Insurance Company, 3 Sumn. 132.
In the law of marine insurance, insurable interests are
multiform and very numerous.
The agent, factor, bailee, carrier, trustee, consignee,
mortgagee, and every other lienholder, may insure to the extent of
his own interest in that to which such interest relates; and by the
clause, "on account of whom it may concern," for all others to the
extent of their respective interests, where there is previous
authority or subsequent ratification.
Numerous as are the parties of the classes named, they are but a
small portion of those who have the right to insure.
Where money is advanced, as in this case, for repairs and
supplies to enable a vessel to proceed on her voyage, the lender
has a lien not on the cargo, but upon the vessel, and the amount of
the debt may be protected by insurance upon the latter.
Insurance Company v.
Barings, 20 Wall. 163, and the authorities there
cited. If the owner of a vessel, being also the owner of the cargo,
or the owner of the cargo, not being the owner of the vessel,
procures a third person to make such advances upon an agreement
that he shall be repaid from the cargo, and a bill of lading is
furnished to him, he has a lien on the cargo for the amount of his
advances, and may insure accordingly.
Clark v. Mauran and
Others, 3 Paige (N.Y.), 373;
Dows v. Greene, 24 N.Y.
638;
Holbrook v. Wight, 24 Wend. (N.Y.) 169. The
assignment of a bill of lading passes the legal title to the goods.
Chandler v. Belden, 18 Johns. (N.Y.) 157. The assignment of a debt,
ipso facto, carries with it a lien and all other
securities held by the assignor for the discharge of such debt.
The Hull of a New Ship, 2 Ware,
Page 98 U. S. 539
203;
Pattison v. Hull, 9 Cow. (N.Y.) 747;
Langdon
v. Buel, 9 Wend. (N.Y.) 80.
Where a lien subsists either on the vessel or cargo, a third
party may pay the debt, and, with the consent of the debtor and
creditor, be substituted to all the rights of the latter. Dixon on
Subrogation, 163;
Garrison v. Memphis Insurance
Co., 19 How. 312;
The Cabot, 1 Abb. (U.S.)
150. Where there is neither an agreement nor an assignment, there
can be no subrogation, unless there has been a compulsory payment
by the party claiming to be substituted.
Sanford v.
McLean, 3 Paige (N.Y.) 117.
Recurring to the facts, there are two points upon which we deem
it proper particularly to remark:
First, we find no ground for any imputation of bad faith upon
Hooper. We think there was no indirection and no purpose of
concealment on his part. Before the insurance was effected, the
underwriters had a clear right, if they so desired, to know for
whom they were asked to insure.
Buck & Hedrick v.
Chesapeake Insurance Co., supra. They made no inquiry. This
excused Hooper from making any communication upon the subject. When
the insurance money was paid, although the face of the policy and
other facts, patent and notorious, which must have been known to
the underwriters, showed clearly that the advances were made, and
that the insurance was effected by Hooper, not for himself, but for
others, the underwriters were again silent. The draft on Good
Brothers & Co. had then been sold, and Hooper had received the
money. Thereafter he had nothing at stake but the solvency of the
drawees. When the adjuster, more than a month later, made the
inquiry, which should have been made before, Hooper had paid over
the money. He then made a frank and full disclosure. We see no
reason to doubt that if the inquiry had been made earlier it would
have been answered in the same way. In this respect the
underwriters have themselves to blame, rather than Hooper. The
record discloses no ground upon which,
ex aequo et bono,
he can be called upon to pay back the fund in controversy.
Second, it does not appear in the record to whom the vessel and
cargo belonged. There is not a ray of light upon the subject. In
that respect the case is left wholly in the dark.
Page 98 U. S. 540
The proof as to who were intended to be insured is that they
were Good Brothers & Co., and no one else, though, according to
the terms of the policy, payment in the event of loss was to be
made to Hooper & Co. The former fact is established by the
testimony of Hooper, and there is none other upon the subject. He
is unimpeached, and his testimony is conclusive. The inquiry then
arises whether Good Brothers & Co. had any insurable interest
in the cargo. It does not appear whether they had or had not. We
have suggested several ways in which such an interest may have
arisen, and have shown that under the policy in question it would
have been sufficient if it had subsisted at any time before the
loss was known to them. It may possibly have arisen in other modes.
This brings us to the question of the burden of proof. Did it rest
upon the plaintiffs or upon the defendant? In order to maintain the
plaintiffs' case it was necessary to be made to appear that Good
Brothers & Co., the assured, had no insurable interest in the
cargo, the cargo being the thing insured. Upon both reason and
authority, we think the
onus probandi was upon the
plaintiffs.
It was for them to make out their case. The premium had been
paid, the loss had occurred, and the indemnity money had been
received by the agents of the assured and paid over to their
principals. The plaintiffs claim the right to go behind all this,
and to reclaim from Hooper the fund thus received and parted with.
It was incumbent upon them to establish every thing necessary to
entitle them to recover, and they have no right to throw upon the
defendant any part of the burden that belonged to themselves. For
authorities upon this subject,
see 1 Greenl.Evid., secs.
34, 35, 80, 81, and the notes. Such is the legal result,
notwithstanding the negative form of the averment, to be
established.
But suppose the case were made out as against Good Brothers
& Co., and that a recovery could be had if the action were
against them, still it by no means follows that the plaintiff in
error was liable.
There was laches on the part of the underwriters, or their
agents, which is the same thing. Nothing in the record is clearer
than that Hooper received the money as the agent of
Page 98 U. S. 541
the assured. It was his duty immediately to advise his
principals and promptly to pay them. 1 Waite, Actions and Defenses
252, 255. This latter duty it appears he performed. He had then
received no notice of the adverse claim subsequently made, and had
no reason to expect it. His parting with the money is proof of his
sincerity and honesty.
Under all the circumstances, we think he is entitled to the
benefit of the principle which in such cases gives immunity to the
agent and refers the party complaining for satisfaction to the
principals who have received and hold the money.
There was error in the instruction given by the court to the
jury.
The counsel on neither side referred to the state of the
pleadings. We have therefore not adverted to that subject, but have
considered the case as it was argued -- entirely upon the
merits.
The judgment of the circuit court will be reversed, and the
cause remanded for further proceedings in conformity to this
opinion, and it is
So ordered.
