Jackson Co. v. Boylston Mut. Ins. Co.
| Citation | 2 N.E. 103,139 Mass. 508 |
| Parties | Jackson Company v. Boylston Mutual Insurance Company |
| Decision Date | 24 June 1885 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Judgment for the plaintiff.
F Peabody, Jr., for the defendant.
E Merwin & R. H. Gardiner, Jr., for the plaintiff.
Devens J.
This is an action on a policy of insurance, by which the defendant insured the plaintiff on cotton in transit between ports and places in the United States and the plaintiff's mills in New Hampshire. The cotton was bought by one Ivy, as broker for the plaintiff, and was shipped by him by the Atlanta and West Point Railroad Company and connecting lines. It was in two lots, and Ivy, attaching the two railroad receipts to a draft, drew on the plaintiff for the amount of the purchases. The draft, with the railroad receipts attached, was received by the plaintiff's treasurer on October 17, 1883, and paid on presentation; after which he gave notice to the defendant of the shipments, and presented the policy that they might be indorsed thereon, which was done. The railroad receipts, given on behalf of the Atlanta and West Point Railroad Company and connecting lines, contained a stipulation that, in case of loss or damage to the cotton sustained during transportation, whereby legal liability might be incurred, only that company should be responsible in whose actual custody the cotton might be at the time of the occurrence, and, further, that "the company incurring such liability shall have the benefit of any insurance which may have been effected upon or on account of said cotton." There was an additional agreement in the stipulation as to the mode of computing the value of the property, not now important.
Ivy did not read the railroad receipts, and it does not appear whether he did or did not know their contents, so far as the clause relating to insurance is concerned. The railroad receipts were not sent to the defendant, nor their contents communicated, nor did it ask to see them. It did not appear that the defendant knew whether they were received. The plaintiff's treasurer did not read them, nor did he or the plaintiff know that they contained this clause, nor did they know that receipts containing such a clause would be, or were likely to be, taken; and no fraud or concealment from the defendant was intended.
While in transit, and in the actual custody of the South Carolina Railroad Company, a common carrier, and one of the connecting lines of the Atlanta and West Point Railroad Company, and in the State of South Carolina, thirty-six bales of the cotton insured were destroyed by a fire, the origin and cause of which are unknown. For the value of this cotton, this action is brought.
The defendant contends that, whether the contract between the plaintiff and the carrier is governed by the law of Massachusetts, Georgia, or South Carolina, it was, so far as it stipulated in favor of the carrier for the benefit of any insurance that might have been effected, valid and binding upon the plaintiff. While this question has been thoroughly discussed on both sides, and with careful examination of the statutes and decisions in each State, it will not be necessary to decide it. In the view we take of the case, we shall assume, in favor of the defendant's contention, that the stipulation was valid and binding between the plaintiff and the carrier.
If it be thus held, the defendant then contends that this was a contract in violation of the defendant's rights, and rendered the policy void, for the reason that, when the insurer of goods in the custody of a carrier pays the loss on the goods insured to the owner, he is ordinarily entitled to be put in the place of the insured, and clothed with all his rights. Hart v. Western Railroad, 13 Metc. 99. The defendant further contends, that, this being the well-recognized law at the time of the contract of insurance, both the plaintiff and the defendant must have contemplated this right of subrogation in case of loss, and, if the plaintiff has destroyed it by a contract which would deprive the defendant of this right, the policy is avoided.
Subrogation is the substitution of one person in place of another whether as a creditor or as the possessor of any other rightful claim, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities. This right does not necessarily depend upon contract, but grows out of the relation which two parties sustain to each other. The party subrogated acquires no greater rights than those of the party for whom he is substituted. It is, as a general principle, true, that, if goods are injured by transportation, under such circumstances that the carrier and the insurer are alike liable therefor, and the insurer pays for such injury, he will be subrogated to such claim as the owner may have against the carrier. And this, apparently, because the liability of the carrier is treated as primary, while that of the insurer is secondary only. The contract of insurance being one of indemnity, the insurer, when he has indemnified the insured, is equitably entitled to succeed to the right which he had against...
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