Johnston v. Phœnix Insurance

Robinson, J., delivered the opinion of the Court. C. G. de Garmendia effected insurances with the appellee at various times, on sundry cargoes, and at different premiums, from February 11th, 1868, to July 21st, 1868, inclusive, under Policy No. 183, entered in what is known as a policy book, — loss, if any, payable to Johnston Brothers & Co., the appellants. On the 12th of February, 1868, the appellants agreed with the appellee to guarantee the payment at maturity of all notes given by Garmendia, for premiums on marine risks, under policies issued by the appellee, wherein the loss was made payable to them. On the 1st of July, 1868, Garmendia passed to the appellee, his promissory note for one thousand and four dollars, being the balance due by him for unpaid premiums on policies, in which the loss if any, was pay-aide to the appellants.

Prior to the maturity of this note, Garmendia failed, and suit was brought by the appellee to .recover of the appellants as guarantors, the’ amount due on said note. In this suit, the appellants claim a set-off against said note under the following state of facts: On the 26th of September, 1868, Garmendia effected an insurance with the appellee on a cargo of shooks, under Policy No. 176, the loss, if any, payable to Garmendia himself. The shooks were valued at $2376.06, and the premium charged on account of same was $17.86. The shooks arrived in Baltimore in a damaged condition, and Garmendia and the appellee agreed they should be sold at auction to ascertain whether there was a loss, and if so, whether there was a claim against the company under the policy.

The shooks were sold at auction on the 15th of October, and the nett proceeds of sale amounting to $1471.46, were paid by the appellee to ²³⁹ the appellants in pursuance of the following letter and endorsement: “Office of Johnston Brothers & Co. Bankers and Brokers, Baltimore, October 12, 1868. “James Carey Ooale, Present. “ Dear Sir: — I have received from Messrs. Johnston Brothers & Co. two thousand ds. on account of the 6000 pair of headings insured by you for $2400, and I hereby transfer to said gentlemen, the settlement of the insurance, which you told me would be done as soon as you made arrangements with Mr. Bennett to sell them at auction on Thursday next. Respectfully, C. G. be Garmendia.” Endorsed:— “ Gents: — The nett proceeds of sales of the within named shooks wd. come in the usual course to Mr. Garmendia, but in accordance with his request I will arrange with Messrs. Bennett & Co. to hold the amount for your account.

Respy. yours, James Carey Goale, Agt. Messrs. Johnston Bros. &s Co.” In December, 1868, Garmendia exhibited to Coale the agent, a statement by an insurance adjuster and proofs of loss, showing a partial loss of $905.16, on the said cargo of shooks. In the meantime Garmendia failed, owing the appellee a note of $1341.87, dated July 1st, 1868, payable four months after date, and the further sum of $891.85, the whole amount of said indebtedness being on ²⁴⁰ account of unpaid premiums under Policy No. 176, and for the payment of which the appellants were not liable under their guarantee, the loss on account of said policies being payable to Garmendia.

The appellants contend, that in the suit against them on the note of Garmendia for one thousand and four dollars, their liability on account of which is admitted, they have a right to set off the adjusted loss of $905.16, under Policy 176, and which they claim was assigned to them by Garmendia by his letter of October 12th, 1868, and to which the appellee by their endorsement assented. The appellee on the other hand insists that the letter of October 12th, together with its indorsement, operated as an assignment to the appellants of the net proceeds only, and further, conceding it to be an assignment of the entire interest of Garmendia of the insurance on the cargo of shoots, the appellee claims the right to deduct from the said adjusted loss of $905.16, the amount due by Garmendia, on account of unpaid premiums under Policy No. 176. We take the law to be well settled, that by an assign-' ment of a policy of insurance, the assignee takes it subject to all the equities which attach to it in the hands of the insured, and that in a suit by the assignee, the insurer has the right to claim any set-off or make any defence he could have made against