Case ID: mass_15/html/0040-01.html
Source: Caselaw Access Project
Author: {"author": "Parker, C. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Nathaniel P. Russell versus Peter P. F. De Grand.
    To a policy of insurance of a vessel on “ a voyage from Boston to the port of discharge in Europe,” was annexed a memorandum, that no “ exceptions were to be taken on account of ports interdicted by the laws of the United States; ” and, in an action upon the promissory note given for the premium, the defendant, the assured, was permitted to prove that the voyage was intended and made to a port so interdicted; and this evidence was holden sufficient to avoid the note, as given in consideration of an unlawful contract.
    This was assumpsit upon two several promissory notes, the con sideration of which was the p emium upon a policy of insurance, made in March, 1810.
    
      * The insurance, as expressed in the policy, was from Boston to the port of discharge in Europe. At the foot of the policy was the following memorandum, viz.: “ No exceptions to be taken on account of ports interdicted by the laws of the United States ”
    
    In June, 1809, a statute of the United States was made, which prohibited all vessels from going to any port in France or England; and this statute was in force at the time of the execution of the policy.
    At the trial before the Chief Justice, at the last November term, there was paroi evidence, tending to prove that the voyage insured was, at the time the policy was effected, intended to be for France, and that the writers so believed and understood; that she actually sailed for a port in France, and arrived there.
    There was an objection made by the plaintiff to the receiving oí the paroi evidence, which objection was overruled.
    The jury were instructed that, if they believed the voyage insured was, in fact, intended to be a voyage to France, the insurance was void, and the premium notes also; and that they might take into consideration the paroi evidence, in connection with the memorandum at the foot of the policy.
    A verdict was returned for the defendant; and the plaintiff moved for a new trial, on account of the admission of the said paroi evidence; and because it was insisted that the premium ought to be considered as paid, and the defence to be viewed as an action by the defendant to recover it back from the underwriters.
    
      Gorham,, for the plaintiff, argued,
    that the evidence was inadmissible, as tending to show another intention of the parties to a written instrument than that whicli was intelligibly expressed by the instrument itself.
    The voyage insured was a lawful one. There were many ports in Europe to which the vessel might lawfully have gone ; and no evidence should be received to rebut the presumption * that she was intended for one of those. It is immaterial that the parties had a different understanding.
    They adopted a more general phrase; and the memorandum may be construed to mean only that, if the vessel should go to an interdicted port, and a loss should happen, the underwriters would not avail themselves of thé law to avoid payment of the loss. This is very different from a contract directly insuring a voyage to a place prohibited by law.
    The memorandum may be considered as merely void, as it is inconsistent with the contract itself. An exception or condition annexed to a deed, which avoids or is inconsistent with the deed, is itself void; as a grant in fee, with a condition against alienation. Thus, suppose an insurance to Bristol, and several other ports distinctly named in the Irish Channel, and a memorandum that no insurance shall attach to any port in the Irish Channel; the memorandum would be rejected as inconsistent with the principal contract.
    Suppose, instead of France, this vessel had made her voyage for Russia, and on entering the port of Cronstadt had been wrecked ; the underwriters must have paid the loss, and would not have been permitted to show the understanding of the parties, that a voyage to France was intended.
    But, though the policy were unlawful, yet the premium, once paid, cannot, in such case, be recovered back. The giving of the negotiable note for the premium was tantamount to the payment of the money.  The policy acknowledges the premium paid, and the defendant cannot now avail himself of this objection. The ac knowledgment of the underwriters, that the premium was paid, formed a sufficient consideration for the note.
    
      Prescott for the defendant.
    
      
       14 Mass. Rep. 121, Hemmenway vs. Bradford.
      
    
   Parker, C. J.,

delivered the opinion of the Court. We think there is no doubt that the contract between the undei writers * and the assured in this case was illegal, and that the paroi evidence was rightly admitted to prove it.

The evidence does not contradict the policy ; for it does not show that a voyage was contemplated different from that which was insured. The insurance was to any port in Europe, and the memorandum goes to include voyages prohibited by the law of the United, States. The evidence went to show which port was actually intended by the parties, and that proves to be an interdicted port. If such evidence is not admissible, parties can always control the laws, by the terms of their contracts; and in order to defeat an illegal contract, it would be necessary that the parties should be weak enough to expose the illegality in the instrument they adopt for their security.

It is said, however, that the premium should be considered as paid, and the defence, as a demand for money to be paid back again, which had been paid as the price of an unlawful bargain.

To give to this suggestion the effect contended for, would be to value the forms more than the substance of law. To some purposes a premium is considered paid although there has been only a promise to pay it; for instance, to enable the insured to recover it back, when the underwriters have no right to retain it. Tins is because the underwriter has the right to compel the payment of it upon the note ; and has in his possession the evidence of the promise to pay, which may exist after a judgment, to the prejudice ef the assured. The underwriters are prevented, in such cases, from saying they have not received the premium ; their acknowledgment of that fact operating quasi an estoppel.

But when they sue for the premium upon a note, which has reference to the policy, the insured has always been let in to prove any facts which destroy their right to recover; such as, that the risk never commenced, or that the insurance was ineffectual for want of seaworthiness of the vessel.

* The plaintiff is demanding, in this action, the price of an unlawful contract; and cannot, by a fiction, consider the defendant as suing to recover that price back, as if it had been once paid. The rule of law is of universal operation, that none shall, by the aid of a court of justice, obtain the fruits of an unlawful bargain. If there be any principle of mercantile honor which renders this defence odious, the only penalty is the disapprobation which will be felt and discovered by those who regulate public opinion in questions of this nature,

Judgment on the verdict. 
      
      
         Vide Gould vs. Cornwall, 4 Pick. 444. — Whitcomb & al. vs. Williams & Al. Pick. 228.
     
      
      
         Inhab. of Worcester vs. Eaton, 11 Mass. Rep. 368. — Swett & Al. vs. Poor, 11 Mass. Rep. 549. — Wheeler vs. Russell, 17 Mass. Rep. 258. — Dwight & Al. vs. Brewster & Al. 1 Pick. 50.—Richardson & Al. vs. The Marine F. & M. I. Co. 6 Mass. Rep. 111. — Springfield Bank vs. Merrick & Al. 14 Mass. Rep. 322. — Tauro vs. Cassin, 1 Nott. & M. 174.