Hooper v. Robinson

ERROR to the Circuit Court of the United States for the District of Maryland.

The British steamer 'Carolina' came to Baltimore, consigned to James Hooper & Co. They were also her agents while she remained in that port. The plaintiff in error was a member of the firm. Having taken on board her return cargo, the steamer proceeded on her homeward voyage. While in the Chesapeake Bay she was injured by a collision with another vessel, and put back to Baltimore for repairs. She was repaired, and Hooper & Co. paid all the bills and made other disbursements for her. McGarr, the captain, drew on Good Brothers & Co., of Hull, England, for the amount in favor of Hooper & Co., and at the same time directed them to protect the drawees by insurance, which was intended to be done by the policy here in question. The draft bore date Oct. 20, 1872; was for 1,611 18s. 7d.; was payable in London thirty days after sight; and directed that the amount should be charged 'to account for advances for repairs and dispursements of steamship 'Carolina' and her freight, to enable the ship to proceed on her voyage.'

The policy of insurance was dated on the 26th of October, 1872, and was to 'James Hooper & Co., on account of whom it may concern, in case of loss to be paid to their order.' The insurance was 'lost or not lost,'. . . 'on merchandise, to cover such risks as are approved and indorsed on the policy.' The indorsement set forth the date of the insurance, the name of the vessel, the course of the voyage, the rate of the premium, the amount insured ($8,000), and the remark, 'paid advance to cover disbursements and repairs.' The names of the agents of the underwriters were affixed. The instrument was a cargo policy. No inquiry was made of Hooper as to whom he was insuring for, and no representation was made by him except as is disclosed in the memorandum indorsed upon the policy. The draft of McGarr was bought by Brown & Sons, bankers, of Baltimore. They transmitted it to their correspondents in London. On the 11th of November, 1872, it was accepted by Good Brothers & Co., and on the 14th of December following they paid it. On the 14th of November, 1872, the steamer foundered at sea. On the 28th of that month notice of the loss was given to the underwriters. On the 6th of December, in answer to a call for proof of loss and interest, Hooper & Co. furnished the Baltimore agent of the underwriters with the protest and a full account of the items of 'outfit and disbursements of the British steamer 'Carolina." In the statement was the charge, 'to cash paid insurance on advances $117.33.' On the 15th of January, 1873, the agent in Baltimore drew on the defendants in error, his principals in New York, for $8,012, at five days' sight. The draft was paid on the 24th of that month, and on the 31st Hooper & Co. remitted the amount to Good Brothers & Co. in England. When Hooper & Co. received the draft of the 15th of January, they gave a receipt setting forth that when the draft was paid it would be 'in full for claim for total loss of advancements for disbursements and repairs per steamer 'Carolina,". . . 'insured 26th of October, 1872, under policy No. 22,706.' The receipt concluded with a promise, upon the payment of the draft, 'to assign all our right, title, and interest in the above advances for disbursements and repairs to the underwriters.' Hooper said at the time to the agent 'that he had nothing to assign.' On the 10th of February, 1873, Hooper & Co. executed to Robinson & Cox, the attorneys of the underwriters, the promised assignment, which was a printed form filled up by the agent, 'such as is taken in all cases of abandonment for total loss.' Hooper then again told the agent 'that he had no interest in the matter, but as it was customary, he would sign the paper.'

During all these transactions Hooper & Co. were not asked whether they had insured for themselves or for others; whether they had been or expected to be repaid their disbursements; whether any one else was interested in the policy, or for whom they were collecting the insurance. More than a month after the loss had been paid and the money remitted to England, a marine adjuster came from New York to Baltimore 'to ascertain who owed Mr. Hooper for advances.' A full disclosure was thereupon made by Hooper. The adjuster suggested to him 'to write his friends on the other side to return the money.' Hooper asked if the underwriters did not get the premium for insurance, and if the vessel was not lost. Being answered in the affirmative, he said he 'would not have the face to write to the parties to return the money.' No offer has been made to return to Hooper & Co., or to Good Brothers & Co., the premium for insurance. This suit was brought by the underwriters on the 30th of October, 1873, more than nine months after the loss had been paid and the money remitted to Good Brothers & Co., and more than seven months after Hooper's disclosure to the adjuster.

When the testimony was closed on both sides in the court below, the defendant, Hooper, asked the court to charge the jury, in effect, that if they believed the advances and the insurance were made; that the draft on Good Brothers & Co. was drawn, accepted, and paid; that the steamer was lost; proof of loss and payment demanded; that Hooper then furnished the plaintiffs with the account of his disbursements; that the plaintiffs thereupon paid him and took the assignment without having made any inquiry as to whether he was collecting for himself or for others, and that within a few days thereafter he remitted the money to Good Brothers & Co.,-all as stated in the evidence, the plaintiffs were not entitled to recover. This instruction the court refused to give, and instructed, in substance, that if the jury believed that when Hooper made his claim for indemnity under the policy he produced the account and subsequently gave the receipt and executed the assignment, and that when he received payment and delivered the assignment he had received notice of the payment of the draft upon Good Brothers & Co., given to him to recover his advances, which fact he did not communicate to the underwriters, then the plaintiffs were entitled to recover the amount of the insurance money which he had received. Hooper excepted to the refusal to instruct and to the instruction given. The jury found for the plaintiffs, and judgment was entered accordingly. The defendant then brought the case here for review.

Mr. Thomas W. Hall for the plaintiff in error.

That advances to cover disbursements and repairs constitute an insurable interest is settled. Insurance Company v. Barings, 20 Wall. 163, and cases cited.

The present is a stronger one than that case, for neither Hooper, who effected the insurance and to whose order the loss was made payable, nor Good Brothers & Co., for whom it was effected, are suing to recover upon the policy.

If they had an insurable interest in the advances, even 'an inchoate and contingent' one, there can be no doubt that it was covered by the policy 'on account of whom it may concern.'

It is essential to the case of the plaintiffs that they show affirmatively that Good Brothers & Co., to whom Hooper paid over the money as soon as collected, were not entitled to receive it. There is, however, no evidence in the record to support any such view. It is merely an assumption, which the plaintiffs did not attempt to maintain by proof at the trial.

For whom a policy 'on account of whom it may concern' is underwritten, is a question of intention on the part of the person procuring it. It is sufficient that it was intended to indemnify any party having an insurable interest, and it will be applied to that of any person subsequently ascertained to have such an interest who adopts the insurance.

It is immaterial whether the person intended to be protected, therefore, authorizes the insurance beforehand or subsequently adopts it. 1 Phillips, Ins. (5th ed.), sects. 383-385; Buck & Hedrick v. Chesapeake Insurance Co., 1 Pet. 151; Insurance Company v. Chase, 5 Wall. 509; Newsoms' Adm'r v. Douglas, 7 Har. & J. (Md.) 451; Maryland Insurance Co. v. Bathurst, 5 Gill & J. (Md.) 229; Franklin Fire Insurance Co. v. Coates, &c., 14 id. 285; Routh v. Thompson, 13 East, 285; Bridge v. Niagara Insurance Co., 1 Hall (N. Y.), 347; Blanchard v. Waite, 28 Me. 59; 3 Kent, Com. 260. So the interest covered may itself be inchoate and contingent. Lucena v. Craufurd et al., 3 Bos. & Pul. 75; Hancock v. Fishing Insurance Company, 3 Sumn. 132.

That Good Brothers & Co. were the parties whose interest was intended to be insured and protected is clear. They ratified in the fullest manner all that had been done by Hooper and the master of the vessel for their protection. It is a case for the application of the maxim, ''Omnis ratihabitio retrotrahitur et mandato priori aequiparatur. Lucena v. Craufurd et al., supra; Hancock v. Fishing Insurance Company, supra; Lee v. Massachusetts Fire & Marine Insurance Co.'', 6 Mass. 208; 3 Kent, Com. 262.

The court erred in assuming as a conclusion of law that Hooper's omission to communicate to the underwriters, 'when he received payment of said insurance, and made and executed said assignment, that he had already received notice of the payment of the draft' (if the jury should find these facts), entitled the plaintiffs below to recover in this action. He was under no obligation, legal or moral, to disclose the fact that he was insuring for Good Brothers & Co., when he took out the policy, or that he was receiving for them the money, which by the terms of the policy was payable to him.

Silence is not concealment, unless disclosure be a duty. ''Aliud est celare; aliud tacere. Carter v. Boehm'', 3 Burr. 1905; 1 Smith, Lead. Cas. (7th Am. ed.), 834, and notes to leading case; 2 Parsons, Contracts, 363, and cases cited; Russell v. Union Insurance Co., 1 Wash. 409; Finney v. Warren Insurance Co., 1 Metc. (Mass.) 166; Higginson, v. Dall 13 Mass. 96; Wells v. Philadelphia Insurance Co., 9 Serg. & R. (Pa.) 103.

In any aspect of the case the court erred in its instruction in withholding from the jury the question of the materiality of Hooper's alleged omission to inform the defendants in error that the master's draft had been paid. Materiality in such cases is always a question for the jury, even when the fact the improper concealment of which is alleged is one which might and reasonably would have influenced the action of the underwriters in entering into the contract, in accepting or rejecting the risk, or in fixing the amount of the premium. Livingston v. Maryland Insurance Co., 6 Cranch, 274; Maryland Insurance Co. v. Ruden's Adm'r, id 338; McLanahan v. Universal Insurance Co., 1 Pet. 170; Columbian Insurance Co. v. Lawrence, 10 id. 516; New York Firemen's Insurance Co. v. Walden, 12 Johns. (N. Y.) 513; Franklin Insurance Co. v. Coates, 14 Md. 299; Carter v. Boehm, supra; 1 Smith, Lead. Cas. (7th Am. ed.), pp. 848, 850, notes to Carter v. Boehm; 3 Kent, Com. 284, 285.

Viewed, as this action must be, as an ordinary one to recover back money paid under an alleged mistake of facts, the right of the plaintiffs to recover must be determined by the equities of the case and the rules ordinarily applicable to such actions. They will not be permitted to recover if it would be manifestly inequitable to allow them to do so. Moses v. Macfarlane, 2 Burr. 109; Insurance Company v. Chase, 5 Wall. 509; 2 Smith, Lead. Cas. (7th Am. ed.) 402, notes to Marriott v. Hampton.

The plaintiffs are suing to recover back from Hooper money which they paid him without inquiry, and which he, in perfect good faith, paid over to the persons for whom he had collected it, and who, he supposed, were entitled to receive it, long before suit brought, or any notice of any claim or demand on the part of the plaintiffs to have the money refunded.

There is no equity in the claim thus set up. They chose voluntarily, with the fullest opportunity for inquiry, to pay the money without inquiry to a person who received it innocently, and with no fraudulent intention at once paid it over to the parties to whom he believed it to belong. Elliott v. Swartwout, 10 Pet. 137; Buller v. Harrison, 2 Cowp. 565; Carter v. Boehm, 3 Burr. 1905; Milnes v. Duncan, 6 Barn. & C. 671; Cox v. Masterson, 9 id. 902; Townsend v. Crowdy, 8 C. B. N. S. 477; Clarke v. Dickson, El., B. & E. 148.

Mr. Stewart Brown and Mr. Arthur George Brown, contra.

The instruction granted by the court below was correct. Carpenter v. Providence Washington Insurance Co., 16 Pet. 495; Insurance Company v. Barings, 20 Wall. 159; Insurance Company v. Newton, 22 id. 32; Home Insurance Co. v. Baltimore Warehouse Co., 93 U.S. 527; Hidden v. Slater Insurance Co., 2 Cliff. 269; Allegre v. Maryland Insurance Co., 6 Har. & J. (Md.) 408; Angell, Insurance, sect. 59; 2 Parsons, Mar. Ins., p. 474.

The underwriters were entitled to the best evidence that Hooper possessed, 'so that they might be able to form some estimate of their rights and duties before they were obliged to pay.' Columbia Insurance Co. v. Lawrence, 10 Pet. 507; Lawrence v. Ocean Insurance Co., 11 Johns. (N. Y.) 259; 1 Parsons, Mar. Ins. 468, 469; Smith v. Columbia Insurance Co., 17 Pa. St. 253.

Having been, by Hooper's concealment and deceit, induced to pay him $8,000, the underwriters were entitled, after discovery of the real facts, to recover that sum in this action. 2 Parsons, Mar. Ins. 489, 490, and the authorities cited and fully referred to in the notes.

By the abandonment accepted by the underwriters they were put completely in the place of the assured, and were entitled to, and had the right to understand and assume that they thereby acquired and were subrogated to, all the rights which Hooper possessed at the time of the loss, including his right to demand repayment of the 'advances' which had been made by him. Chesapeake Insurance Co. v. Stark, 6 Cranch, 268; Hart v. Western Railroad, 13 Metc. (Mass.) 99; 1 Parsons, Mar. Ins. 229; 2 id. 492, 494; 2 Phillips, Ins., sects. 1511, 2123, 2162; 2 Am. Lead. Cas. 835; Hall & Long v. Railroad Companies, 13 Wall. 367; The Falcon, 19 id. 75; Atlantic Insurance Co. v. Storrow, 5 Paige (N. Y.), Ch. 285, 294; AEtna Insurance Co. v. Tyler, 16 Wend. (N. Y.) 385.

The phrase, 'on account of whom it may concern,' protects only persons who had an insurable interest at the date of the policy, and at the time of loss. 1 Parsons, Mar. Ins. 46, and the authorities cited in note 1, p. 46; 1 Phillips, Ins., sect. 387; Rider v. Ocean Insurance Co., 20 Pick. (Mass.) 259; Garrell v. Hanna, 5 Har. & J. (Md.) 412; 2 Am. Lead. Cas. (5th ed.) 806. Therefore Good Brothers & Co., the drawees of the bill of exchange, had no insurable interest, and no 'concern' with the policy.

When the policy was taken out, there is not the slightest evidence that Good Brothers & Co. had authorized the master to draw on them, or knew that he intended to do so, or were under any obligation to accept or pay the bill; and when the loss occurred, they had not paid the bill of exchange which had been drawn. They had therefore no insurable interest either at the date of the policy or of the loss; and the court properly ignored Hooper's testimony as to the master's orders to protect them, and rejected the defendant's prayer, which chiefly relied upon that testimony.

Defendant's prayer was also fatally defective, by reason of the fact that it assumed that Hooper, by direction of Good Brothers & Co., presented proofs of the loss, because there is no evidence of any such direction.

There is no evidence that either the master of Hooper was agent of Good Brothers & Co., or authorized to insure for them. The former was their friend, who, for some reason best known to himself, drew on them a bill of exchange in Hooper's favor. Seamans v. Loring, 1 Mas. 136. That bill Hooper took, holding on to his lien.

As regards Hooper, however, and his lien and 'advances,' that bill was conditional payment at the moment it was given, and when paid, Dec. 14, 1872, it became absolute payment, and destroyed the lien, and the advances which had been the subject-matter of insurance. The Emily Souder, 17 Wall. 666.

Indeed, his advances were, in fact, repaid to him in cash on the day he sold the bill of exchange to Brown & Sons, and thereafter his only risk was a possible liability as indorser. The indorsement and sale of that bill by Hooper to Brown & Sons was equivalent to an assignment to them of his claim to be repaid his advances, and as such it was a material fact which good faith required him to disclose when he applied to the underwriters to indemnify him for his pretended loss, and offered his proofs, and gave the receipt and assignment. Authorities supra, and 1 Parsons, Mar. Ins. 243 and note 4.

The contract of the underwriters was to pay on proof of interest and of loss. Hooper was therefore bound to show for when and in what right he was collecting the money. This, having exclusive possession of the facts, he undertook and pretended to do, by proving, as if for himself, a loss which he had not suffered, under an interest which had long since ceased to exist.

The underwriters have no concern with the disposition that Hooper chose to make of the money which he induced them to pay under this mistake of fact on their part, which was caused by his own concealments and false representations; and they contend that the instruction of the court below was correct, and should on this ground alone be sustained.

MR. JUSTICE SWAYNE, after stating the facts, delivered the opinion of the court.