Williams v. Albany City Ins. Co.

• Decision Date: 05 January 1870
• Citation: 19 Mich. 451
• Court: Michigan Supreme Court
• Parties: Edward Williams et al. v. The Albany City Insurance Company

19 Mich. 451

Edward Williams et al. v. The Albany City Insurance Company

Supreme Court of Michigan

January 5, 1870

Heard October 22, 1869 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Case made from Wayne Circuit.

This is an action of assumpsit upon a policy of insurance, issued by the Albany City Insurance Co. on the twenty-seventh day of April, in the year one thousand eight hundred and sixty-eight, upon the schooner Stanley L. Noble, to run from said date to the thirtieth day of November, then next, in the sum of two thousand dollars. The plaintiffs aver a total loss within the period for which the vessel was insured.

To this were added the common counts. The defendant pleaded the general issue.

On the trial the parties, by stipulation, agreed to the following statement of facts:

1. The Albany City Insurance Company is a corporation, etc.

2. Prior to the date of said policy said Henry Howard, at Port Huron, Michigan, sold and delivered the schooner Stanley L. Noble to Edward Williams and Hazard M. Wentworth, of Racine, Wisconsin, for the sum of $ 5,500, and on the day of purchase the buyers aforesaid made and delivered to the seller a mortgage on said vessel to secure the payment of said purchase money, which mortgage was duly recorded; and that $ 4,400 of said purchase money is still unpaid, and said mortgage valid, and that said buyers owned and had possession of said schooner from the day of said purchase till the day of the loss, hereinafter mentioned, subject to the said mortgage.

3. That said plaintiffs applied to I. H. White & Co., insurance brokers at Port Huron, to obtain insurance on said schooner, and said White & Co. applied to A. G. Lindsay at Detroit, who was the general agent of defendant in that city, and who sent the application to the defendant at Albany.

4. That on the 27th day of April, A. D. 1868, said defendant, at Albany, New York, made and entered into a certain contract or policy of insurance with said plaintiffs, of which Exhibit A., hereto annexed, is a true copy.

5. That said defendant transmitted said policy by mail to Detroit, to A. G. Lindsay, and said Lindsay transmitted it by mail to I. H. White & Co., at Port Huron, in whose possession said plaintiffs first saw said policy.

6. That upon the 27th day of April, A. D. 1868, at the time the plaintiffs applied to I. H. White & Co., the said plaintiffs, to secure the payment of the premium named in said policy, executed and delivered to the said I. H. White & Co., their promissory note, to the order of Howard & Son, of which Exhibit B., hereto annexed, is a true copy, one-half of which note was for a premium for a similar amount in the Republic Insurance Company, the course of business having been that the plaintiff applied to White & Co. for $ 4,000 insurance, on the 27th April, 1868, and then executed said note for the premium on that sum, which White & Co. subsequently obtained insurance for in said two companies, the application in this case passing from White & Co., through Lindsay, to the company at Albany.

7. That said Howard & Son, who endorsed said note, were and are pecuniarily responsible.

8. That said White & Co., after receiving said endorsed note, and upon the 12th day of May, delivered said policy to said plaintiffs, and sent said note to said Lindsay, who endorsed it for collection, and deposited said note in the bank at Port Huron, where it was made payable.

9. That on the 12th day of November, 1868, and while the said schooner was seaworthy and was employed on the waters of Lake Michigan, and there was no other insurance made upon said schooner, which, together with that made by said policy, exceeded four thousand dollars; and while taking on a cargo of cordwood, railroad ties, and cedar posts at Brown's Pier--being an outside pier in Lake Michigan, and while said schooner was on Lake Michigan--in said policy mentioned, the said schooner, with her body, tackle, apparel and other furniture, was totally lost, by being wrecked by a peril of the sea; and that the amount of the said loss was $ 5,500.

10. That on the day and at the time of said loss, the said endorsed note, which fell due prior to said loss, on the 30th day of October, and was payable at Port Huron, was not paid, and was protested in due form of law, so that said endorsers were legally bound. That on the 10th of November said Lindsay addressed a note to said endorsers, of which exhibit D. is a copy, and by due course of mail received the reply subjoined to said copy.

11. That on the 19th day of November the said endorsers paid the amount of said note, with interest and expenses, to I. H. White & Co., who, as well as said endorsers, had seen a notice of the loss in the newspapers, and that said White & Co. received said amount and delivered up said note to said endorsers. That said White & Co. paid the said amount to said Lindsay, who received the same, also with the same knowledge of said loss. That said Lindsay transmitted said amount of money so received to the defendant at Albany, who received and kept the same.

12. That at the time and place of said loss the said schooner, her tackle, etc., was worth the sum of $ 5,500.

13. That afterwards, and on the 4th day of December, 1868, and more than sixty days prior to the commencement of this suit, due and sufficient proof of the aforesaid loss and of the damage to the extent of the whole nature of the property insured, and of the interest of the said plaintiffs and beneficiary owners and mortgagee, as aforesaid, was made as provided in and by said policy, and transmitted to the office of said defendant in Albany.

14. That said defendant has paid no part of the two thousand dollars insurance money named in said policy, or the interest, and hath hitherto refused to pay, and upon the 27th day of November addressed a letter to the plaintiffs' agent in reference to his demand for payment, a true copy of which is hereto attached and marked C.

The policy referred to in the statement as "exhibit A" contained the following condition:

"And in case the notes or obligations given for the premium therefor, or any part thereof, be not paid at maturity, the full amount of premium shall be considered as earned, and this policy becomes void, while said past due notes or obligations, or any part thereof, remain overdue and unpaid."

"Exhibit B.--Six months after date we promise to pay to the order of Howard & Son three hundred and sixty dollars at Jno. Miller's Bank, city of Port Huron, Michigan, for value received; being for premium of insurance ($ 360) on schooner S. L. Noble. (Signed) Edward Williams, Hazard M. Wentworth, Thos. A. Ellery. Policy No.--. And in case this note be not paid at maturity, the full amount of premium shall be considered as earned, and the said policy becomes void, while this note remains overdue and unpaid."

"Exhibit C.--Albany City Insurance Company, office cor. State and James sts., Albany, N. Y., Nov. 27, 1868. Alfred Russell, Esq., Detroit, Mich. Dear Sir--We have just received your favor of the 25th instant, and in answer beg to say that this company is under no liability for schr. S. L. Noble, the policy being by its terms void at time of disaster, by reason of non-payment of premium note at maturity. Very respectfully yours,

(Signed) W. A. Young, Secretary."

"Exhibit D.--A. G. Lindsay's General Insurance Office, No. 77 Griswold street, Bank Building, Detroit, Nov. 10, 1868. Messrs. Howard & Son, Port Huron, Mich. Gents: The premium note, $ 360, for insurance on schr. S. L. Noble, loss, if any, payable to H. Howard, and endorsed by you, was protested at the banking house of John Miller & Son, at maturity, for non-payment. We now look to you for payment of this note. You are probably aware that in case of a premium note being unpaid at maturity, as in this case, the vessel remains uninsured until it is paid. I respectfully beg your immediate attention to this fact.

"Truly yours, (Signed) A. G. Lindsay.

"We expect the amount daily from the owner.

(Signed) Howard & Son."

A judgment having been rendered for the defendants, a case is settled and signed under the statute and brought into this court.

Judgment of the Circuit Court in favor of the defendant affirmed with costs.

Alfred Russell, for plaintiffs in error.

The defense in this case arises upon two clauses, inserted by the defendants in their policy.

The defendants insured plaintiff's schooner and took a negotiable note for the premium, which was secured to be paid by a perfectly good endorser, by whom it was paid 19 days after maturity.

Defendants inserted in their policy a statement, that in case the note was not paid at maturity, the policy should become void while the note remained unpaid, the full amount of premium to be considered earned nevertheless.

The insurance was for $ 2,000, and the premium was $ 180. The note fell due October 30th, 1868, and was paid by the endorser 19th of November, 1868. In the interim a total loss occurred November 12th.

I. The forfeiture was intended nerely to secure promptitude of payment. This is sufficiently evident from the fact that the enforcement of the forfeiture would not produce the money. The company then take another and a perfect security for payment itself.

a. We say then, that the company will be held to have elected to rely upon the security given for payment, and not upon the penal provision directed merely towards promptitude.--4 Kent 57. Taking the note of a known agent is an election not to look to the principal.--Patapsco Ins. Co. v. Smith, 6 Har. & J. 166; Patterson v. Gandasequi, 15 East, 62....