Perry v. Cobb

• Decision Date: 11 February 1896
• Citation: 88 Me. 435,34 A. 278
• Parties: PERRY et al. v. COBB et al.
• Court: Maine Supreme Court

34 A. 278

88 Me. 435

PERRY et al.

v. COBB et al.

Supreme Judicial Court of Maine.

Feb. 11, 1896.

(Official.)

Report from supreme judicial court, Knox county.

Bill in equity by Jarvis C. Perry and others against William T. Cobb and others on a contract of insurance.Heard on report.Dismissed.

W H. Fogler, for plaintiffs.

C. E. & A. S. Littiefleld and Eugene P. Carver, for defendants.

HASKELL, J.The plaintiffs and the defendants, lime burners in the county of Knox, formed a business company, to continue one year, for the purpose of insuring each other upon cargoes of lime shipped by them coastwise.The business was to be conducted by a committee of members, who, in case of damage to any cargo underwritten, were to "determine the amount due and pay the same at their first regular meeting after the claim for loss is presented, unless the association has insufficient funds, in which case thirty days' time for payment shall be granted.An appeal may be made to a majority of two-thirds of the votes of the association, whose decision shall be final."Each kiln was entitled to one vote.All suits at law between members were prohibited, except on demand notes.

No action at law could be maintained upon any policy, because the promise was to be joint, and not several, as in the Lloyds method, and the assured would become both plaintiff and defendant.So the prohibition against suits at law on policies was but declaratory of the law itself and therefore has no significance.

The stipulation in the articles that the association shall finally determine the amount due on any loss is not strictly an arbitration clause, because it is an agreement inter sese, between associates, and does not purport to submit controversies to disinterested persons.An arbitrator is said to be "a private, extraordinary judge, chosen by the parties who have a matter in dispute, invested with power to decide the same."Gordon v. U. S., 7 Wall. 194.He should be disinterested, "for no man can lawfully sit as a judge in his own case."State v. Delesdernier, 11 Me. 473;In re Friend, 53 Me. 387."An interest that disqualifies from judicial action may be small, but it must be an interest, direct, definite, and capable of demonstration; not remote, uncertain, contingent or unsubstantial, or merely speculative or theoretic."Andover v. Commissioners, 86 Me. 185, 29 Atl. 982;Fletcher v. Railroad Co., 74 Me. 434;Jones v. Larrabee, 47 Me. 474;Warren v. Baxter, 48 Me. 193.The duties of an arbitrator are judicial, and while many cases hold that interest, known to the parties, is waived by the submission, it would be going very far to say that the interest of a debtor, who was to determine his own liability finally, should have been waived by it.But, however that may be, it has been settled law in this state for more than a quarter of a century that an arbitration clause in a contract, ousting the courts of jurisdiction over the liability, is ineffectual for the purpose Stephenson v. Insurance Co., 54 Me. 55.That case, like this, was upon a policy of marine insurance, and it was cited with approval in Buck v. Rich, 78 Me. 437, 6 Atl. 871.

The stipulation in question differs from an arbitration clause in that it is an agreed method of procedure between associates, partners, joint promisors, where the claimant is himself one of them.Viewing it thus, what good reason can be given why they should not be held to their agreed methods of procedure?It is very like the by-laws of a benefit corporation, that bind the members to their observance, as a prerequisite to a forum in the courts.Jeane v. Grand Lodge, 86 Me. 434, 30 Atl. 70.It is certainly a reasonable requirement, consistent with the purposes of the association, to mutually indemnify each other in the specific transit to market of their manufactured goods, upon equitable conditions.Equity alone has jurisdiction over their matters, because of mixed interests in all controversies that may arise.

No point is made but that the terms of the stipulation have been complied with.The associates considered the plaintiffs' claim, after investigation by the committee and a full hearing, and decided that they had none.In this proceeding the decision was in the nature of an award.Each associate was an insurer.All participated and determined the whole matter, not effectually, either as to liability or damages, so as to preclude all judicial investigation, but they did pass upon the whole matter, as the very terms of their existence provided they might do; and the question arises, what effect, if any, shall be given to their decision?No suit at law can be maintained.Relief in equity, suited to the conditions of the controversy, is the only remedy.That is never given when equities are balanced, or when a sound judgment may not be moved to interfere.The decision was by all the associates, standing together for a common purpose,—men well versed in shipping lime, and familiar with precautions necessary for its safe carriage and discharge, and with matters that do or do not injure its quality or value and affect its price in the market.Why, then, should not this method, agreed to by the associates, have such force and effect upon a court of equity as the fairness of the investigation and deliberation of the decision indicate would be safe, work justice, and save expensive litigation to the parties, as it was originally intended that it should do?No good reason suggests itself, and some of the rules touching awards may safely apply.The opinion of the court in Burchell v. Marsh, 17 How. 349, upon a bill in equity to set aside an award of arbitrators, is very instructive.It holds that an honest decision upon a fair hearing should stand, although the court feels that it could have arrived at a better result; for otherwise it would be the "commencement, not the end, of litigation."A judgment of Lord Thurlow is cited in confirmation of the doctrine.Knox v. Symmonds, 1 Ves. Jr. 369.

In this cause the decision of the associates is not an award, in the strict sense but a procedure in an equitable controversy between joint associates, that determines their rights inter sese; and it should bind them, except for cause shown to the contrary.They were all interested parties, and that fact, and the evidence adduced, may show a denial of equitable relief that should be given, and it may show the reverse.At any rate the whole cause may be heard anew, to see if any such error or mistake intervenes as should change the result.The relief prayed for is equitable relief, and will be granted or withheld as sound discretion may demand.

The plaintiffs contracted with the association for insurance to the amount of $2,548 on a cargo of lime on board ship, under deck, at Rockland for New York.There were no conditions in the contract, except that 5 per cent. particular average on the whole value of the cargo was exempted from insurance.The vessel was 36 days at sea,—an unusually long time for the voyage, occasioned by rough weather, head winds, and successive gales.She sailed the 14th of February, and arrived the 21st of March.She labored heavily, and strained somewhat, but arrived tight, and with no special damage in the hull, save the loss of a skylight, some sails, and a compass box.On the 27th of March, she was given a berth, and broke cargo.Some 75 barrels of lime were discharged.About the 14th of April she was moved, and began the further discharge of cargo that was all out on the 28th.A few of the casks may have been stove, a few more showed signs of fire, and a few were bursting from swollen contents.The balance of the cargo was in bad condition, in that staves had shrunken and hoops loosened, allowing the lime to sift out and fall through the tiers of barrels to the deck or floor of the hold.No sea water reached the cargo, unless in a few instances when a hatch had been taken off, or when the cabin was flooded once.The damage from sea water must have been very slight, and did not affect the cargo, beyond the few barrels that it touched.

The insurance was against perils of the sea for a particular voyage.A voyage policy does not attach unless the vessel be seaworthy at the inception of the voyage, which is presumed, but may be rebutted.Dodge v. Insurance Co., 85 Me. 215, 27 Atl. 105;Hutchins v. Ford, 82 Me. 370, 19 Atl. 832.It is so whether the insurance be upon the ship, or upon the cargo, or upon freight.Van Wickle v. InsuranceCo., 07 N. Y. 350;Higgle v. American Lloyds, 14 Fed. 143;Higgie v. National Lloyds, 11 Biss. 395;Daniels v. Harris, L. R. 10 C.P. 1."She must not be overloaded, and the cargo must not be badly stowed."Arn. 649.

In this cause the insurance was "at and from Rockland to New York,"—meaning until safely, landed in New York, or for a reasonable time to land there under the usages of that port.The sea risk continued until the goods might be put on shore by reasonable dispatch.On the sixth day after arrival the vessel was given a berth at the wharf, and the hatches were opened.No damage to the cargo is claimed after that time, and no point is made that the insurance ended before.During the voyage the decks had been awash, and the cabin once flooded.Some sea water found its way to the cargo, and may have caused the bursting of a few casks, and the scorching of a few more; but this...