The Marine Insurance Company of Alexandria v. Hodgson

• Decision Date: 15 February 1813
• Parties: THE MARINE INSURANCE COMPANY OF ALEXANDRIA v. HODGSON
• Court: U.S. Supreme Court

11 U.S. 332

7 Cranch 332

3 L.Ed. 362

THE MARINE INSURANCE COMPANY OF ALEXANDRIA v. HODGSON.

February 15, 1813

Present. All the Judges except TODD, J.

THIS was an appeal from the decree of the Circuit Court for the district of Columbia, sitting at Alexandria, in a suit in equity, brought by the Marine Insurance Company of Alexandria against Hodgson, to enjoin so much of a judgment at law obtained by the latter against the former, as exceeded the value of the brig Hope as found by the jury in a special verdict upon a valued policy.

It was contended in the bill that the age and tonnage of the vessel was misrepresented, and that such misrepresentation induced the Complainants to value the ship at 10,000 dollars, when in fact she was worth only 3,300 dollars, as specially found by the jury on the trial at law. She was represented to be about 250 tons burthen, when she was only 161 tons, and to be from six to seven years old when she was between nine and ten years old.

The bill also alleged as a ground for relief, the refusal of the Court below to receive two pleas offered by the Complainants on the trial at law, the rejection of which pleas had been assigned for error in this Court when the cause was here last; (see Ante. vol. 6. p. 206) but this Court thought the rejection of a plea no ground for a writ of error, and therefore gave no opinion as to the propriety of admitting them.

The first of those pleas stated the above misrepresentation as to the age, tonnage and value of the vessel, and averred it to be material in regard to the risk of the voyage. The other plea stated in general terms that the policy was obtained by fraud with intent to defraud the Complainants of the difference between the true and the represented value of the vessel, which difference it averred to be more than 4,000 dollars.

Upon the answer of Hodgson and the other evidence in the cause the Court below dissolved the injunction and dismissed the bill.

E. I. LEE, for the Appellants, relied principally upon the evidence of the over-valuation, which he said was so excessive as to amount to proof of fraud. But even if it were only a mutual mistake it is sufficient to avoid the policy. Park. 12, 196, 225. Miller, 39, 43, 97.

As to the equity of the case, he contended that the pleas rejected by the Court of law, and which charge fraud, being made part of this bill, are to be considered as a charge of fraud, which is a ground of equitable jurisdiction. The rejection of the pleas, is of itself a ground for a Court of equity to relieve, for the Complainants have not yet had an opportunity to show the fraud.

A Court of equity will relieve against mistakes upon which contracts are founded.

All that the Defendant is entitled to upon a policy is indemnity. He ought in equity to recover only the value and interest.

To show that equity will relieve against error at law, he cited 2 Wash. 36, Ambler v. Wyld. Prec. in ch. 233, Kent v. Bridgman. 2 Vern. 146, Graham v. Stamper. id. Robertson v. Bell. Finch, 472. 2 Str. 733, Burrow v. Jemino. 2 P. Wms. 425. 1 Vez. Jr. 417. 2 Vez. 155. 5 Cranch, 110, Hodgson v. Marine In. Co.

SWANN and JONES, contra.

The bill contains no charge of fraud. Straas and Leeds, who were the persons insured, are not made parties. The pleas which are referred to in the bill are not to be considered as containing an allegation of fraud which is to be answered. It is not a bill for the discovery of any fact which the Complainants could not have proved at law. The object is to get rid of the over-valuation. It is to try the case over again. The answer shows that there could be no fraud; for the insurred lost a cargo, worth 7,000 dollars, which was not insured.

The bill contains no equity. Their remedy was at law. In cases of insurance there is the same remedy at law as in equity.

But there was no misrepresentation. It was only the opinion of Maxwell, that the vessel was about 6 or 7 years old, and about 250 tons burthen. A representation must be the positive affirmation of some material fact. There was no representation as to value—Hodgson only proposed that the vessel should be valued at 10,000 dollars: he never affirmed that she was of that value.

On the question of jurisdiction, and to show that the alleged defence, if it were a defence at all, was a defence at law, they cited 2 Marshall, 679. The Court did right in rejecting the pleas because they were complex, and offered after the law had been decided against the Complainants. 2 Burr, 717.

A valued policy is conclusive unless it be a cover to a gaming contract, or be made with a view to a fraudulent loss. 2 Vern. 119, Woodward v. Guile. 3 Bl. Com. 435. 1 Marsh. 123, 287. 4 Burr, 2228, Low v. Peers. Finch, 119. E. I. Comp. v. Blake. Prec. in ch. 102. 6 Br. Parl. ca. 417, 470. 1 Fonb. 167. Misrepresentation as to the age and tonnage was not material to the risk: it was guarded against by the implied warranty of sea-worthiness. No previous representation as to sea-worthiness is necessary. 1 Marsh. 475.

C. LEE, in reply.

The real value of the vessel is conclusively fixed by the verdict of the jury. But if it were not, there is evidence enough to show that she was not worth one half the sum insured. The value thus fixed has shown the amount which will be an indemnity to the Defendant.

By the refusal of the Court to receive the pleas, the Complainants were precluded from a just defence. This Court has decided the refusal to be no ground for a writ of error at law. But we contend it is a ground for relief in equity. It is also a sufficient ground of relief that the rule of indemnity has been violated.

The valuation in the policy is only prima facie evidence, and throws the burthen of proof on the underwriter. It shall be taken to be so fixed as to be an indemnity. An over-valuation is of itself evidence of fraud. If it is intended to be an interest policy, it amounts only to a contract for indemnity. Cowper, 583, Kent v. Bird.

Even if the Defendant was mistaken, and both parties were equally ignorant, yet the Complainants are not liable for more than an indemnity. M'Ferran v. Taylor, 3 Cranch, 270.

There is no difference in principle between insuring double the value at one office, and making double insurance at two offices. The reason against both is the same, viz. that the insured shall have only one indemnity.

The law of liquidated damages does not apply.

The Defendant might have had a return of part of the premium upon proving the mistake of the value.

Feb. 18th. (absent DUVALL, J.)

MARSHALL, Ch. J. delivered the opinion of the Court as follows:

This suit was brought in the Circuit Court sitting in chancery for the purpose of obtaining a perpetual injunction to a judgment rendered against ...