Sun Mut Ins Co v. Ocean Ins Co

• Decision Date: 22 January 1883
• Citation: 1 S.Ct. 582,27 L.Ed. 337,107 U.S. 485
• Parties: SUN MUT. INS. CO. v. OCEAN INS. CO
• Court: U.S. Supreme Court

107 U.S. 485

1 S.Ct. 582

27 L.Ed. 337

SUN MUT. INS. CO. v. OCEAN INS. CO.

January 22, 1883.

This was a libel in admiralty, filed in the district court of the United States for the southern district of New York by the appellee upon a policy of marine insurance. A decree dismissing the libel was rendered in that court, which, on appeal, was reversed by the circuit court, and a decree entered in favor of the libelant. From that decree the present appeal has been prosecuted. The findings of fact made by the circuit court as the basis of its conclusions of law are as follows:

(1) At the several times hereinafter mentioned, the libelant and the defendant were insurance companies engaged in the business of insuring against losses by perils of the sea. The libelant, to be referred to herein as the Ocean Company, was incorporated under the laws of the state of Maine, and had its principal place of business at Portland, in that state. The defendant, to be referred to as the Sun Company, was incorporated under the laws of the state of New York, and had its principal place of business in the city of New York.

(2) On or about January 19, 1864, the Sun Company issued its open policy, No. 51,564, to the Ocean Company in the usual form for the insurance of cargoes at and from Cuba to Boston or Portland; it being, however, expressly understood and agreed that no risk would be taken under it unless the Ocean Company 'take or have an amount on same risk equal to one-half the amount covered by' the Sun Company. On the ninth of February, 1864, it was agreed in writing, noted upon the policy, that the policy should 'cover such other risks as this (the Sun) company may approve and indorse' thereon. Under this new arrangement the clause limiting the risks to such as the Ocean Company retained an interest in to the extent named, to-wit, an amount equal to one-half that of the Sun, was kept in force; but February 24, 1864, the president of the Sun Company wrote to the Ocean Company as follows: 'We are willing that you be not obliged to retain a half of risk when you do not wish to do so, but we reserve the right to object to amounts returned, which it is not probable will be too great very often.'

A copy of the policy issued, with the indorsements thereon, is printed in the apostles in this case as Exhibit No.

1.

[Reproduction of policy from pages 487-489 intentionally omitted] A copy of the policy issued, with the expectation that it would be used by the Ocean Company for the purposes of reinsur- ance, an arrangement for such a business on the part of the company having been made.

(4) December 24, 1863, Charles S. Pennell, as an owner and agent of the ship C. S. Pennell, of 975 tons burden, and then lying in the harbor of Portland, Maine, chartered the whole of the vessel, including the state-rooms in cabin not used by the officers, and deck-rooms not used for the crew or for sails and stores, to Sutton & Co., for a voyage from New York to San Francisco. No cargo was to be received on board except with the written consent of the charterers, and they were to pay 'for the charter or freight,' on the good and proper discharge of the cargo in San Francisco, $26,500, less 2 1/2 per cent. commission. George M. Melcher was at the time master of the ship, and his primage on the freight money, if earned, would have been $1,325. This charter will be referred to as the San Francisco charter.

(5) After the making of this charter the vessel sailed from Portland to New York, and was there put up and advertised by Sutton & Co. as a general ship for San Francisco. That firm at that time represented what was known as the Dispatch line of San Francisco packets.

(6) January 30th, while the ship was in New York, loading under her San Francisco charter, and advertised for that voyage, her master chartered her again to the Peruvian government. By the terms of this charter she was to sail from New York on or before June 1, 1864, to San Francisco, and thence proceed, with all convenient dispatch, to Callao, Peru, and from thence, if on inspection she should be found to be well conditioned for the voyage, to the Chincha islands for a cargo of guano to be taken to Hamburg or Rotterdam. The freight to be paid was at the rate of £4 per ton of 20 cwt. British net weight of guano, subject, however, to a deduction of five shillings per ton, if the vessel was not ready in Callao to proceed to Chinchas by December 15th. This charter will be referred to as the Rotterdam charter.

(7) On the fifth of February, 1864, while the ship was is New York, loading, Charles S. Pannell, a part owner, took from the Ocean Company a policy insuring his interest in the ship for $8,000 against war risks, and his interest in the Rotterdam charter for $8,000 against marine risks on the voyage between New York and the Chinchas. In this policy the duration and locality of the risk was described as 'at and from New York, to, at, and from San Francisco, Callao, and the Chinchas.'

(8) George M. Melcher was at the time owner of one-eighth of the ship, and master. On the twentieth of March he wrote one Sawyer, his agent at Portland, advising that the ship was about ready to sail, and directing that insurance be effected on his interest as follows:

War risk to San Francisco, ship,.... $5,000

Charter to San Francisco, $26,500-1/8,. 3,300

Primage on same,..................... 1,325

Homeward charter from Chinchas, insure out, say,. 1,750

tons, at £ 4 to £ 7,000, at

currency rate of exchange, $52,400, my 1/8,. 6,550

Primage on same,..................... 2,650

Chronometers, Dent, 1883; Negus, 1,261,. 500

And our effects, clothing, etc.,..... 1,000

--------

$19,425

In the same letter it was said: 'I think you had better put 5 or $6,000 more marine risk in case I should lose the ship.'

(9) Upon the receipt of this letter Sawyer applied to the Ocean Company for a policy upon Rotterdam charter, primage, and personal effects to San Francisco. In doing so he exhibited his letter of instructions, and explained fully all the circumstances. The risk was accepted, and the policy issued March 23d, in which the risk was described as follows: '$6,550 on charter; $2,650 on primage; and also $1,500 on property on board ship Charles S. Pennell, at and from New York to San Francisco.'

(10) On the same day the Ocean Company insured the master for $3,000 on his interest in the ship during the whole of her voyage, describing the duration and locality of the risk as 'at and from New York to, at, and from San Francisco and Chinchas, with usual liberties at Callao, to her port of advice and discharge in Europe.'

(11) On the same twenty-third of March, the president of the Ocean Company wrote the vice-president of the Sun as follows:

'* * * I also inclose returns for registry as follows: * * * $5,000, ship C. S. Pennell, to San Francisco and Chinchas, war; $5,000 fr. of do. * * * P. S.—I also inclose an additional return for insurance on charter, primage, and property per ship C. S. Pennell to San Francisco only.'

The returns inclosed in this letter were as follows:

'To the Sun Mutual Insurance Company: Enter on open policy of this company No. 51,564, $5,000 on charter of ship Charles S. Pennell at and from New York to, at, and from San Francisco and Callao to Chinchas.

'Rate, 3 per cent. on board.

'New York, March 23, 1864.

'J. W., V. P. Ocean Ins. Co.

'Per G. A. W., Sec'y.'

'To the Sun Mutual Insurance Company: Enter on open policy of this company No. 51,564, war risk only, $5,000 on ship Chas. S. Pennell, at and from New York, to, at, and from San Francisco to Callao to Chinchas.

'Rate, 3 per cent. on board.

'New York, March 23, 1864.

'J. W., V. P. Ocean Ins. Co.

'Per G. A. W., Sec'y.'

'To the Sun Mutual Insurance Company: Enter on open policy of this company No. 51,564, $6,550 on charter, $2,650 on primage, and $1,500 on property, on board ship Chas. S. Pennell, at and from New York to San Francisco, including war risk.

'Rate, 6 per sent. on board.

'New York, March 23, 1864.

'J. W., V. P. Ocean Ins. Co.

'Per G. A. W., Sec'y.'

The first and second of these returns were for reinsurance on the risks taken for Charles S. Pennell, and the last on account of the risks taken in favor of the master of the Rotterdam charter and personal property on board, from New York to San Francisco. The risk to the vessel, taken in favor of the master at the same time, was not reported to the Sun Company.

(12) Upon the receipt of this letter, with its inclosures, the president of the Sun Company wrote the Ocean Company, under date of March 24th, as follows:

'Your favor of the twenty-third inst. is received, * * * and returns as stated. Those * * * on charter per Chas. S. Pennell, $10,700, in conformity thereto. For the marine risk per Chas. S. Pennell to San Francisco, thence to Callao and Chinchas, our regular tariff rate is 4 1/2 per cent.; the war risk is worth the same, but we propose to enter for both marine and war on $5,000 for 4 per cent.'

(13) To this the president of the Ocena Company replied, under date March 26th, as follows;

'Your favor of the twenty-fourth inst. is received. I think, really, considering that you have the risk on charter, primage, and property to San Francisco at full rates, you should take the war and marine to San Francisco and Chinchas on C. S. Pennell at 6 per cent., as there is or will be but little risk in the Pacific after leaving San Francisco. I can have both risks taken at less than these rates. * * *'

(14) In response to this the vice-president of the Sun wrote, under date of March 28th, as follows:

'Your favor of the twenty-sixth inst. is received with a return, * * * which is entered in conformity thereto, as have also been the returns of the twenty-third inst., per ship C. S. Pennell.'

(15) The indorsement of these returns upon the open policy was as follows:

1864. Vessel. From To

March 23. Ship Chas. S. Pennell, N. Y., San Francisco,...