Schaefer v. Baltimore Marine Insurance

Stewart, J., delivered the opinion of the Court. The policy in this case, with its accompaniment, the policy-book, constitutes the written contract between the parties. In the trial below, objection was made by the defendant to the admissibility of certain proposals of insurance made by the plaintiff to the defendant, for the purpose of shewing that the article “ bacon,” claimed by the plaintiff to have been insured, was not in fact valued, although it so appears in the endorsement in the policy-book; because the tendency of such parol testimony was to vary the written contract between the parties. This objection the Court overruled at that stage of the trial.

The parties then agreed that all the evidence, whether conflicting with the written contract or not, should be admitted, subject to exceptions after the testimony was closed. Evidence was then introduced in relation to the controverted article “bacon,” and as to the course of dealing, or manner of transacting the business of insurance between the parties. When the evidence on both sides was closed, the Court, below, upon the application of the defendant, excluded from the consideration of the jury all the testimony tending to show that the valuation in the policy-book does not include the value of the “ bacon ” mentioned therein. This ruling occasioned the plaintiff’s first exception, and it is urged in his behalf, amongst other reasons, that this was error, because the ¹¹⁷ defendant itself had offered parol testimony which was excluded.

By the agreement all the evidence was admitted, subject to exceptions. Both parties, under the agreement, having offered parol testimony, the defendant might ask to have it all excluded if really inadmissible, without being estoped under the circumstances from excluding that offered by itself. But it is not material whether the parol testimony was excluded or not, so far as the plaintiff is concerned. If the case is determined by the written contract, the policy and the policy-book, the plaintiff can only recover according to the provisions of the policy, and that expressly excludes all shipments, unless approved and endorsed on the policy, and the valuation to be fixed by the endorsement.

If the parol testimony is admitted explanatory of the circumstances connected with the entry of the article of “ bacon,” and that it was not, in fact, valued in the endorsement made in the policy-book, and shewing the course of dealing between the parties, whilst it proved that the “ bacon ” was not in fact estimated in the value of the articles carried out, it shows at the same time that if it had not been included with the other articles, “ the soap in boxes, Ac.,” but had been written on a line to itself in the policy-book, it would not have had its value extended and endorsed in due time, because of the omission of the plaintiff to furnish the invoice of prices and values. According to the tenor of the policy, and the custom of dealing between the parties, the policy was designed not to be an open but a valued policy upon all articles insured, and though a running and continuing policy, leaving every specific shipment itself, to constitute a distinct subject of insurance. When the value of the interest at risk is not fixed in the policy by agreement between the parties, but is estimated by a certain standard to be made out in case of loss, it is an open policy. 1 Arnould on Insurance, p. 324, sec. 130. Under the open policy the prime cost must be proved.

In a valued policy it is agreed. The effect of the valuation is to ¹¹⁸ settle conclusively the prime cost. Lewis vs. Ricker, 2 Burrows, 1196. This running but valued policy, as other policies, constitutes the contract - between the parties, and must be construed by the same rules as govern in the construction of other contracts, purely to accomplish the purposes, and carry into effect the meaning and intention of the parties.

Being designed as a valued policy, it was not complete as to any specific shipment until the endorsement of the value; and it was, certainly, too late to ask for such endorsement when the shipment was in all probability lost. The contract of insurance requires the purest good faith and fairness on both sides. Indemnity is designed on the one