Case ID: mass_6/html/0068-01.html
Source: Caselaw Access Project
Author: {"author": "Sewall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Pearson versus Nathaniel Lord.
    Where one of several owners of a vessel and cargo insured the same in his own name only, and a loss accrued, which an underwriter had paid, and it after-wards appeared that the assured had covered more than his own part of the property at risk, previously to such underwriter’s signing the policy, this latter recovered back the money he had paid, although it was agreed that the assured intended the insurance for his partners as well as himself, and that the partners had usually insured in the name of one, when intending the insurance for the joint benefit of all.
    Case for money had and received to the plaintiff’s use. The parties agreed to a statement of facts, from which it appears, that the money demanded was paid by the plaintiff to Tobias Lord, Jun., who received it for the defendant. The payment was endorsed upon a policy of insurance, made to the defendant alone, to insure for him 1000 dollars on the brigantine Mariner, and 500 dollars on her cargo, for a voyage and risk, in which it is admitted that [ * 83 ] * a total loss happened ; and that, at the time of the loss, the defendant was owner of one quarter of the said brigantine, the whole being valued at 5500 dollars, and of her cargo, the whole being valued at 2008 dollars and 33 cents.
    By subscriptions on this policy prior to the plaintiff’s, and by two other policies of a prior date, the defendant was insured in his own name, and upon the same property and risk, to the amount of 4600 dollars; and upon the happening of the total loss, he became entitled, upon those policies, and by the subscriptions prior to the plaintiff’s upon the policy in question, to the sum of 2920 dollars, after deducting the premiums.
    It is admitted, also, that all those policies, although made in the name of Nathaniel Lord only, were bona fide intended by him for the use and benefit of his partners as well as himself; that those partners had usually made their insurance by a policy in the name of one, with a view and intention that it should avail for the common benefit of the joint owners ; and "that only 2000 dollars had been insured in the name of Tobias Lord, Jun., one of the partners, and owner of three eighth parts of the vessel and cargo, by a policy prior in date to either of those effected by the defendant.
    All the policies are expressed as assurances to the party named alone, and in each of them there is a proviso against an over-insuronce ; by which, in that event, subscribers after the property at risk is wholly covered, are to be discharged.
    It is likewise agreed, that the plaintiff, upon proof of the loss, paid his subscription ; but that neither at that time, nor at the time of his subscription, had he any particular notice of the concern of the other part owners of the vessel and cargo.
    If, upon these facts, the Court should be of opinion that the plaintiff is entitled to recover back the said 200 dollars paid by him, or any part of that sum, then the defendant was to be defaulted, and the plaintiff’s damages assessed* by the Court; [ * 83 ] if otherwise, the plaintiff was to become nonsuit, and the defendant have judgment for his costs.
    
      Jackson, for the plaintiff,
    contended that the money, in this case, having been paid through the plaintiff’s ignorance of the facts, he was well entitled to recover it back in this action.
    
      Dane, for the defendant,
    argued that, from the facts, it was apparent that the defendant believed, both at the time of effecting this insurance, and at the time of receiving the money of the plaintiff, he was acting as well for his partners as himself. Here was no fraud, but the most fair and upright intentions. This action stands on different ground from an action on the policy to recover the loss. There the plaintiff might fairly resist a recovery; but having once paid the money upon an equitable demand, the maxim potior est conditio possidentis applies, and the plaintiff is not entitled to recover it back. 
    
    The action was continued nisi, and the opinion of the Court de livered at the succeeding March term in Suffolk by
    
      
       3 Burr. 1354, Price vs. Neal. — 4 D. & E. 561, Munt & Al., Errs., vs. Stokes & Al — 1 Mass. Rep. 65, Gates & Al. vs. Winslow. — Marsh. 323. 354.
    
   Sewall, J.

Since the important alteration in the forms of policies of insurance, by omitting the words once so appropriate as to be printed in the blank forms, purporting that the assurance availed to all concerned in interest by whom the policy had been authorized, several cases have happened, where policies, probably intended by the party assured to avail for all concerned in interest, have been restricted to the party named, to the severe disappointment of his partners or employers. This seems, however, to be the necessary construction of the forms of policies now in the most frequent use with us. Until this alteration shall be better understood, or more regarded, there will be danger that the misapprehension or neglect of the broker, or party effecting a policy, in naming and describing the party proposed to be assured, may operate to defeat the assurance in whole or in part. And from mistakes of this kind, cases of return premium may arise : several cases of defences against losses have already arisen. It may be presumed that the * fair intentions of the parties to the instrument, or of [ * 84 ] one of them at least, are, in all cases of this kind, avoided by verbal omissions or mistakes. Against these, however, no remedy can be afforded, while the instrument itself is regarded as the best, and for this purpose it must be understood to be the only evidence of the contract. No case can, I believe, be imagined, where the maxim expressio unius est exclusio alterius applies more emphatically than in the naming of the party assured in a policy of insurance ; especially when the contract is so carefully guarded against the case of an over-insurance, or a single subscription, or fraction of a subscription, exceeding the property at risk. Over-insurances are no longer with us, either for the return of premiums, or payment of losses, cases of contribution. Each policy and underwriter, where there are several upon one risk, is distinguished as engaged in a separate concern ; and the liability of the insurer depends upon the order of time in which the policies or subscriptions are effected.

Over-insurances are never to be confounded, in considering the principles applicable to them, or their practical consequences, with gaming insurances; especially in arguing upon English decisions, made since the prohibitory statute of 19 Geo. 2, c. 37. The maxim potior est conditio possidentis, relied on in the argument for the defendant, will be ever very justly applied in cases arising upon illegal contracts, where the law will not enforce the contract against either party, though clear and explicit in itself, and where no mistake is alleged. The maxim was thus applied in the case cited of Munt & Al., Exrs., vs. Stokes & Al., and by this Court in the case of Gates & Al. vs. Winslow.

In the case at bar, the demand arises upon a lawful contract, effectual to the extent of what the parties, or at least the party plaintiff in this action, can be presumed to have intended. From an ignorance of the facts, or a misapprehension of the state of the contract, he has allowed an operation to it which was [ * 85 ] not intended, and which is, * indeed, contrary to the express stipulations of the parties in the written instrument, to the words of which they have both consented.

Is a mistake of this nature to be rectified ?— In such a case, the law is equal between the parties, and the equity is with the party, whichever it may be, who has paid money upon it by a mistake of the fact. In the case at bar, notwithstanding the intentions of the defendant in effecting this insurance, the law entitled him, upon the words of this contract, to a restoration of the premium paid to the plaintiff, if a different event had given occasion to the demand, and the defective wording of this contract, as it respects the supposed intentions of the defendant, had been discovered. And we must presume that the plaintiff would have been then as ready to restore the premium, as he is now to reclaim his payment upon the loss. There was no effectual contract between these parties ; as the policy of insurance appears to be expressed, and limited, as it must be, to the interest of the defendant.

Upon the whole, we conceive the plaintiff entitled to recover back the sum paid; that is, 140 dollars, the amount of his subscription, deducting the premium at thirty per cent, upon 200 dollars.

Defendant defaulted.