Augusta Insurance & Banking Co. v. Abbott

Bartol, J., delivered the opinion of this court. This action was instituted by the appellee, on a policy of insurance made by the appellant, upon a cargo of lumber per brig Orb, at and from Baltimore to Boston. The policy was issued in the name of ££Parker Fall, for whom it concerns;” and the first question presented for our consideration is, whether the appellee has such an interest in the policy as to give him a right of action upon it? The evidence shows that the brig was lying at the port of Baltimore, and that Frisbie, the captain and part owner, employed Parker Fall, as his agent at Boston, to obtain insurance on a cargo of lumber, in order to enable him to procure freight for the vessel; that the appellee had told Frisbie he would freight the brig with lumber if an insurance could be obtained upon it, but did not expressly authorize either Frisbie or Fail to obtain the policy in question, nor had he any knowledge of it until after it was issued, when he adopted it,, and, upon the faith of it, placed his cargo on board.

The assignment of the policy by Frisbie to Abbott, made on the 18th day of November 1852, not being made “-with the ³⁷³ previous consent inwriting of the insurers,” as required Ity its terms, conferred no right upon the assignee, and his interest in the contract must be determined as if that assignment, had not been made. The law is Well settled, that a policy of insurance is not a negotiable security. The Court of Appeals have said, that “A policy in the name of one, with the general clause for whom it may concern, will cover and protect the interest of any person for whose benefit it was intended, and who authorized it to be effected; and if, in the absence of any express order or authority from the owner, or any previous communication with him on the subject, such policy is effected in his behalf, the intention at the time of the party effecting it to cover his particular interest, will so connect him with the policy as that his adoption of it afterwards, will cause it to inure to his benefit. The subsequent adoption of a policy by a party interested, and for Whose benefit it was intended, being deemed equivalent to his prior order for insurance.

But no one can, by subsequent adoption, avail himself of such a poliejr who was not at the time in the contemplation of the party procuring the insurance, and for whose benefit it was not intended, notwithstanding any interest he may have in the thing insured.” Newson’s Admr. vs. Douglass, 7 H. & J., 451, 452 . In this case it is contended, on the part of the appellant, that the pol^ on which the action was brought, was not, intended to cover the particular cargo of Abbott; but that it was procured at the instance of Captain Frisbie, for the purpose of enabling him to obtain freight, and was designed to cover any cargo of lumber which he might obtain for the vessel, no matter from whom. If that be so, then upon the authority cited, the appellee cannot maintain his action upon it. But it is properly a question for the jury to determine, from the evidence, whether the policy in question was or was not designed, when obtained, to cover the particular cargo of the appellee, and the Superior Court erred in taking that question from the jury.

The second prayer of the plaintiff, which was granted by the court, treated the policy as if it had been issued to Abbott himself, or in his own name. ³⁷⁴ The next question presented by the record, is whether, in obtaining the policy, there was misrepresentation or concealment of material facts connected with the condition of the vessel? This depends upon the particular facts and circumstances which attended the obtaining of the policy; but before proceeding to an examination of them, it is proper to say that we do not concur in the view taken by the appellee’s counsel in the argument, “that a difference exists between such a case as this and the case where a party desiring insurance applies for it by himself or his agent.” So far as the question of good faith in obtaining the insurance is concerned, the case where the policy is issued “for whom, it may concern,” stands upon the same ground as if the name of the assured were inserted. “Every such policy supposes an agency;” ( 7 H. & J., 450 ;) no one can avail himself of it, but he for whom it is intended, and although obtained without his knowledge, and without any previous authority to the agent, its adoption by him after-wards, binds him to the acts and representations of the parties or agents connected with the business of procuring it, to the same extent as if they had acted under his authority previously given. See Park on Insurance, 208. In this case, therefore, the appellee is responsible for the acts of both Frisbie and Fall, in their dealings with the company, and if any misrepresentation or concealment of facts material to the risk, be shown on the part of either of them, the policy would be void, no matter how innocent the appellee might be in the transaction; and no matter whether such misrepresentation or concealment be fraudulent, or result from negligence or inadvertence on the part of the agents connected with the business of procuring the insurance. 12 Wheaton, 412 . 4 Mason’s Rep., 74. 1 Term, 12. 3 Kent, 286.

This results from the nature of the contract: “The utmost good faith and fair dealing are of its very essence, and every fact and circumstance which can possibly influence the mind of any prudent and intelligent insurer, in determining whether he will underwrite the policy at all, or at what premium he will underwrite it, ought to be communicated to him.” 2 G. & J., 162 . ³⁷⁵ In this case, the representations of Parker Fall to the agent of the appellant, were made in answer to the question, “ Where is the Orb, and what is her condition as to seaworthiness?” The reply was, “She is at Baltimore, about ready to sail, (or she will sail soon.) She is a good old vessel; on the voyage before, she brought a freight of coal from Philadelphia to Charlestown, and the cargo was not insured; that the man for whom she brought the coal, never had his cargoes insured, as I understood.” The policy was dated the 28th day of October 1852; the vessel did not sail till the 22nd day of December 1852. The objection of the appellant, that the statement made as to the time of sailing, was a promissory representation which bound the assured, and that the breach of it vitiates the policy, is conclusively answered by the decision of the Court of Appeals, in the case of Allegre's Admr. vs. The Maryland Ins. Co., 2 G. & J., 159 , and was abandoned by the counsel in the argument. The time of sailing is not, therefore, material in the consideration of this branch of the case.

As to the statement that she was “a good old vessel,” according to our construction of those words, they import no more than that she was seaworthy, a fact the truth of which it was proper to submit to the jury upon all the evidence; but that is embraced in the implied warranty, and does not stand upon representation, which is always matter outside of the policy. It has been argued that the statement made by Fall, “that the Orb had carried a cargo of coal on her previous voyage from Philadelphia to Charlestown for a man who did not insure,” &c., was equivalent to a representation that she was then capable of transporting such a cargo, and that there was evidence tending to show the same was not true. In support of this construction the counsel cited 1 Phillips on Insurance, sec. 567, where the principle is staled, “that, a representation imports not only what is expressed, but also all the natural and obvious inferences from it.” Without impugning the principle, it is sufficient to say, we do not consider that it sustains the view contended for here. It is not pretended the particular fact, stated was untrue; besides, the statement was ³⁷⁶ made merely on information, and in such case the assured “is not answerable for the truth of the facts stated,- but only for the truth with which he has stated the information received.” 1 Arnould, sec. 193.

Nor did that statement, in our opinion, operate to change the contract. The policy issued was on a cargo of lumber;, the implied warranty was that the Orb was seaworthy for the transportation of such a cargo, and the statement made to the agent of the underwriter did not enlarge that warranty so as to require the assured to prove that the brig was seaworthy for the transportation of coal at the time of the contract. The difference between a representation and a warranty,-is,-that while the latter must be literally fulfilled, it is sufficient if the former be substantially complied with. In the language of Lord Mansfield, in 1 Term Rep., 345, “A representation may be equitably and substantially answered; but a warranty must be strictly complied with.” Having disposed of the question of allegatio falsi, we have next to consider whether there was suppressio veri in obtaining the policy?

It is undoubtedly true that a concealment of facts material to the risk, which the assured is bound to communicate, stands upon the same ground and has the same effect as a statement of material facts which are untrue, and will avoid the policy, whether such concealment be through design or from inadvertence. This brings us to the inquiry, what facts is the assured bound to communicate? In this case the alleged concealment has reference entirely to matters touching the seaworthiness of the vessel, or going to show that the risk had been declined by others. The authorities all agree, that “if the subject on which disclosures would otherwise be requisite, be covered by a warranty either express or implied, in that case it need not be matter of representation.” (3 Kent, 286.) “And as in every contract of insurance there is an implied warranty of seaworthiness, the assured need not, in the first instance, disclose any fact, however material to the risk, which tends to show that the ship was unseaworthy when she sailed.” Haywood vs. Rodgers, 4 East, 597. 1 Arnould, 56. ³⁷⁷ It is true this rule is changed when inquiries are made as to matters embraced in an implied warranty.

Such inquiries may render it necessary for the insured, or his agent, to disclose facts respecting which he might otherwise be silent. (See 1 Phillips, sec. 601. 1 Arnould, 518. And i-t has been argued that the inquiry addressed to Fall, in this case, “What is the •condition of the Orb as to seaworthiness?” imposed upon him the obligation -of disclosing— 1st. The contents of Frisbie’s letter of the 20th of October. 2nd.

The facts and circumstances which had occurred in the port of Baltimore, tending to show the insufficiency of the brig t.o carry coal. 3rd. The fact that the marine reports in Baltimore had discredited her as unseaworthy. It is clear that there was no obligation upon the assured, or his agents, to disclose any of these things, unless particularly interrogated with regard to them. The insurer had an undoubted right to ask for information upon such matters, and if he had done so, the assured would be bound to make true answers to such inquiries; but in this case no such inquiry was made.

The question was general and indefinite, not pointing to any particular fact; it imported no more than an inquiry as to whether the Orb was seaworthy, ajad imposed no more obligation upon the assured to disclose the matters alleged to have been concealed, than if no question had been asked. The rule is well settled, that the assured is not. bound to disclose the fact that the risk has been declined by others, or the estimate they put upon it, unless information on the subject be particularly called for. See Ruggles vs. The General Interest Co., 4 Mason, 83 . 3 Kent, 286. Upon these grounds we are of opinion, that even if the facts and circumstances to which we have referred were all proved, the agents of the assured were not bound to disclose them, and