Johnson & Higgins v. Harper Transp. Co.
| Decision Date | 13 April 1915 |
| Citation | 228 F. 730 |
| Parties | JOHNSON & HIGGINS v. HARPER TRANSP. CO. |
| Court | U.S. District Court — District of Massachusetts |
[Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted]
Warner, Warner & Stackpole, of Boston, Mass., for plaintiff.
Stimson, Stockton, Livermore & Palmer and Goodwin, Procter & Ballantine, all of Boston, Mass., for defendant.
This is an action at law to recover for an alleged breach of contract by the defendant to employ the plaintiff as its insurance broker or representative. A jury was waived and the case was tried before me upon fact and law.
The defendant operated a fleet of steamers and barges employed in coastwise transportation on the Atlantic coast. The plaintiff is a corporation engaged in the business of a broker in marine insurance. It had placed for the defendant during the early or middle part of the year 1911 a large amount of insurance on the vessels composing the defendant's fleet. The defendant did not pay promptly the premiums due on this insurance, and in November, 1911, appears to have been indebted therefor in the sum of more than $100,000, due in part to the plaintiff for premiums paid by it to the underwriters on the defendant's account, and in part to the underwriters with whom the insurance had been placed by the plaintiff. At that time the plaintiff began to press the defendant, both orally and by letters, for payment of this account. The defendant was unable to make payment, and by letter to the plaintiff dated November 10, 1911, requested extensions of credit running about a year. The plaintiff declined to accede to this request, but suggested, in a letter bearing date of November 18, 1911, that if it could be sure of the defendant's insurance business for three years it would consider an extension of credit. Both parties understood at this time that, if a satisfactory arrangement was not reached between them, the plaintiff was likely to proceed at once to enforce payment of its overdue account, something which the defendant greatly desired to avoid. The defendant informed the plaintiff that it was prepared to agree in principle to the suggestions made to it in the plaintiff's letter of November 18, 1911, the exact details of the arrangement being left open; and, relying upon this assurance, the plaintiff took no steps at that time to enforce payment of its demand. There were several conferences between the parties. Finally they agreed that the plaintiff should have the defendant's marine insurance business for two more years, subject to the latter's approval as to rates, should forbear immediate suit and pressure, should pay to the underwriters on the defendant's account the balance of the 1911 premiums, and should grant to the defendant an extension of credit. The duration of the extension was not very exactly stated at the time when the agreement was entered into. Both parties then understood that the defendant was to make payments as fast as it reasonably could from its receipts as they came in, that dates and amounts of future payments should be settled later, and that the account should, in any event, be paid in full by July 1, 1912, or thereabouts. Substantial payments on account were made by the defendant to the plaintiff between November 18 and January 12, 1912; and the result of the arrangement finally agreed upon was not substantially different in the forbearance part of it from the proposal in the plaintiff's letter of November 18.
By January 12, 1912, the parties had reached a satisfactory understanding as above stated, and on that date the defendant's directors passed the following vote:
'Resolved, that a contract be entered into with Messrs. Johnson & Higgins authorizing them to place insurance on the fleet of the Harper Transportation Company for the next two years, commencing on or about October 1, 1912, at rates to be approved by the board of directors of the Harper Transportation Company before final acceptance.'
The plaintiff was within a few days notified orally of this resolution. Thereafter both parties understood that a contract as above stated was in force between them.
About the 1st of March, 1912, the plaintiff called the defendant's attention to the fact that there was nothing in writing confirming the oral understanding, and requested that the matter be put into writing. In consequence of this the defendant wrote to the plaintiff, on March 8, 1912, as follows:
To which the plaintiff replied on March 11, 1912, as follows:
It is these two letters, in connection with the correspondence more particularly referred to hereafter, which are relied upon by the plaintiff as constituting a memorandum in writing of the contract, upon which recovery is sought in this action.
The first of the 1911 policies ran out on August 21, 1912, and by the terms of the agreement between the defendant and the Trust Company holding title to the vessels had to be renewed at least 30 days before that date. In June of that year the plaintiff called the defendant's attention to the impending expirations and requested definite instructions as to the amount and character of the insurance desired for the coming year. There were interviews between the parties upon this subject. The plaintiff wrote, on July 15, 1912, both to the president and treasurer of the defendant, saying, in substance, that the matter of renewals required immediate attention, and that it had not yet received definite instructions for placing the insurance. It is clear that the plaintiff was entitled to have such instructions, and that the delay up to this point, at least, was the fault of the defendant. Instructions as to the number, amount, forms of policies, etc., were given to the plaintiff on or about July 26, 1912.
By the terms of the contract the defendant reserved the right to approve the rates at which the insurance was to be placed by the plaintiff. A dispute arose between the parties as to whether, according to the contract, it was the business of the plaintiff to procure and submit offers from underwriters of rates on the required insurance for approval by the defendant, or of the defendant to indicate rates which it would approve. The rates on marine insurance in large amounts are not uniform, and are reached by bargaining between the underwriters, the broker, and the insured in each particular case. The plaintiff's objection to the method proposed by the defendant was not so much that it violated the contract, as that it was inexpedient, because the plaintiff thought that the trading could be more advantageously done on the defendant's behalf by proposing a low rate to the underwriters and working up with them. The plaintiff did not definitely refuse to do as requested, and the parties continued to argue about the matter.
By the strict terms of the contract, I think the usual course of business was to be followed, and that it devolved upon the plaintiff to get and submit rates from the underwriters; but, in view of the defendant's omission to give definite instructions as to the insurance, and upon all the circumstances shown, I do not think that the plaintiff's failure to get and submit rates constituted a breach of the contract. On July 26th the defendant, having in the meantime procured an offer of insurance from another broker receded from its position, named to the plaintiff rates which it would approve, and directed the plaintiff to secure the insurance at once. This was a recognition by the defendant of the contract as still existing. If there had been a breach of it by the plaintiff, it was at that time waived by the defendant. Forbes v. Appleyard, 181 Mass. 354, 63 N.E. 894; So. Pacific Co. v. Fore River Co. (C.C.A. 1st Circuit) 219 F. 378, 384, 385, 135 C.C.A. 120.
The amount of insurance required was large. Both parties knew that part of it would probably be obtained in London, and that considerable time would be required to secure it upon the most advantageous terms. The plaintiff promptly started to do so. Six days later, on August 1, 1912, two nonbusiness days in England having intervened, the defendant notified the plaintiff that it was no longer authorized to act in the matter, and arranged to procure the insurance through other persons, who dealt, in part at least, with underwriters who had been approached by the plaintiff. The causes assigned by the defendant in the vote of its board of directors for terminating the contract were that the plaintiff had not placed the insurance and had not 'made any proposition' regarding it. Prior to the revocation of the plaintiff's authority to act for it, the defendant's directors had an interview with the plaintiff's representative on August 1st, at which the latter said, in...
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...as insurance is written, and as the defendant might elect, if it be adjudged that a contract continues to exist. In Johnson & Higgins v. Harper Transportation Co., 228 F. 730, plaintiff sought to recover damages for failure of the defendant to take insurance policies for two years. Even tho......
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Dillon v. Lineker
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