Case ID: mass_10/html/0033-02.html
Source: Caselaw Access Project
Author: {"author": "\n      By the Court.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Benjamin P. Homer versus Andrew C. Dorr.
    Evidence of custom and usage is useful, in many cases, to explain the intent of parties to a contract; but the usage of no class of citizens can be sustained in opposition to principles of law. Therefore, where insurance was “ on cargo from Boston to Archangel, and back to Boston ,” the assured was holden to pay the whole note given for the premium, although no properly was returned in the ship; and it was proved to be the universal usage in Boston, where the insurance- was effected, to return a portion of the premium in such cases.
    Assumpsit. The declaration contained two counts, upon two several promissory notes made by the defendant to the plaintiff.
    At the trial, which was had upon the general issue at the last November term in this county, before Parker, J., these was no defence as to the first count. But to the second count evidence was offered of the following facts, the same being objected to on the part of the plaintiff, but admitted by the judge, in order that the opinion of the whole Court might be had on the merits of the defence.
    The note declared on in the second count was the premium note on a policy of insurance, made in the office of which the p.aintiff was agent and treasurer, (the underwriters not being incorporated,) on property' laden by the plaintiff on freight on board the ship Regulas, from Boston to Archangel, and back to Boston, taking the risk on shore as well as on board. The outward property was valued in the policy at 4600 dollars.
    It was agreed that the cargo arrived safely out; but, on account of the state of the market there, it was left unsold, and the ship returned home without any cargo or insurable property belonging to the defendant.
    It was then proved to be the invariable practice in all the insurance offices in Boston, public and private, to return a portion of the premium on such policies, when the vessel [ * 27 ] * returned without any cargo belonging to the assured ;
    and that one half, except one per centum, or one half per centum, is returned ; unless a greater portion of the risk was applicable to the outward than to the homeward voyage, in which case the sum returned was conformed to the estimated risk.
    The witnesses, who proved this usage, also testified that it was well known at the several offices, that there had been sundry decisions of this Court, establishing the right of the underwriters to the whole of the premium, notwithstanding the existence of this usage.
    It was also proved to be the practice to return the premium in one other case, where it appeared that by law the whole might be retained, viz., in the case of a vessel insured out and home, and, after arriving out, instead of returning home, departing for some other foreign port.
    It appeared, from the testimony of one of the witnesses, who was the president of one of the incorporated insurance companies that, witlr regard to the premium, he considered a policy upon a voyage out and home in the same manner as he should two distinct policies.
    It further appeared that, at the time the policy was subscribed, upon which the note in question was given, the office in which it was made had been recently established, although the underwriters had generally frequented former associations for the purpose of insuring, held in the same place, and where the practice above mentioned also existed.
    When it was ascertained, in this case, that there was no return cargo, the agent of the office, having consulted the individual underwriters, agreed to deduct five per cent, from the premium note, provided the defendant would pay another premium note, which was due from him in the same office; which he had refused to do, on the ground that he expected a loss had occurred on the policy to which the note last mentioned applied. He then had no evidence or direct information of the loss, saving that he had heard said vessel * had put into a port in distress; [ * £8 J but a loss was afterwards proved to have happened, and it was adjusted.
    If the above facts were properly admitted in evidence, and con stituted a legal defence against the said note, so as to authorize the jury to deduct any thing therefrom by way of return premium, the verdict, which was found for the whole sum and interest, was to be altered so as to amount to seven twelfths of the said note and interest; otherwise judgment was to be rendered upon the verdict, with additional interest.
    
      Amory for the defendant.
    Here were, in effect, two voyages insured. They were made perfectly distinct, in this policy, by the circumstance of the outward policy being a valued one, while that on the return voyage remained open. The latter insurance was to be governed by the amount of property at risk, and if none was at risk, no premium was due. It was a contingency, whether any or how much property would be at risk in the homeward voyage ; and contingencies always have an effect and bearing on the rate of premium, as, for instance, whether the vessel sails with or without convoy.
    But whatever might have been the construction of the policy in itself, the invariable usage found in the case is abundant evidence of the intent of the parties in this case; and the intent of parties to a contract is always to govern in its construction, whether the law would of itself give such a construction or not. 
    
    
      Jackson for the plaintiff.
    The evidence of usage was improperly admitted. It went to control a settled, established principle of th law. But if usage is to be admitted, it should be the usage of Massachusetts, not of one town, as Boston. The most manifest inconvenience will arise from the admission of these local customs, in different ports, to prevail against general law. Alia lex Bornee. alia Athenis. 
      
    
    
      
       3 Burr. 1237, Stevenson vs. Snow. — Doug. 201. — Marshall, 663, &c.
    
    
      
      
         2 Burr. 1216, Edie & Al. vs. East India Company.
      
    
   By the Court.

The law applicable to this case is plain, well settled, and generally understood. Evidence of custom [ * 29 ] and * usage is useful, in many cases, to explain the intent of parties to a contract. But the usage of no class of citizens can be sustained in opposition to principles of law.

Judgment on the verdict.

ADDITIONAL NOTE.

[Evidence is not admissible that a policy executed in blank is considered by in eurance companies and merchants equivalent to a policy, for whom it may concern Turner vs. Burrows, 8 Wend. 144. — See Stebbins vs. The Globe, &c., 2 Hall, 631. —1 Bolton vs. Colder, 1 Watts, 360. — Foster vs. U. S. Ins. Co., 11 Pick. 185. — Taunton, &c., vs. Merchants, &c., 22 Pick. 108. — Shaw vs Mitchell, 2 Metc. 65.— Crofts vs. Marshall, 7 C. & P. 597.

Where goods are shipped for a voyage, and an insurance is effected upon the goods out, and the proceeds thereof home, the latter words do not apply to the goods themselves, if brought back on the return voyage. But parol evidence is admissible of a usage of trade, or a practice between insurers and insured, to give a different construction to these terms, so as to include the identical goods carried out. — Dow vs. Whetten, 8 Wend. 160. — See Paddock vs. Franklin, See., 11 Pick. 227. — So of a usage among commission merchants in New York to effect insurance of goods consigned to them without express orders. — De Forest vs. Fulton, &c., 1 Hall, 84. — So upon the question, whether, according to the usage of insurance companies, the word cargo, in an order for insurance, covers live stock. — Allegre vs. Maryland, &c., 2 Gill. & J. 136.

In an action on a policy, in the usual form, upon ship, boat, &c., evidence is not admissible, of a usage for the underwriters never to pay for the loss of boats on the outside of a ship, and slung upon the quarter. — Blackett vs. Royal, &c., 2 C. & J. 244. — F H I 
      
      ») [The general rule undoubtedly is, that there can be no apportionment of the premium where the risk is entire. And on account of the supposed difficulty of apportionment in the case of a policy out and home on ship or goods, though the ship is not able to return, or there is no interest home, the insurer having run the risk on the voyage out, and been once subject to a total loss, it has been held that no return can be demanded. — Hughes's Ins. 445. — Stevens, 180. — But it is well settled that where an express usage is found to apportion the premium, in such case, this will control the general rule of law. It was so held by Lord Mansfield, C J.. in Allen vs. Long; and Sutler, J., in the same case, said that usage in such cases had been admitted to explain and control the policy ever since Lord Holt's time. — Park, Ins. 589. — Marsh. 669. — Hughes, 446. — Hughes, referring to Long vs. Allen, says, “A usage like this, if fully proved, prevents the difficulties which would otherwise arise to the apportionment apparently entire, because it must be presumed to be known to both parties.” In Rothwell vs. Cooke, (1 Bos. Pul. 172,) the direction was to inquire whether there had been in practice an apportionment of the premium, where there had been only one insurance, without distinguishing the different risks. Mr. Justice Park, in his treatise on insurance, allows the same effect to usage in regard to apportionment of the premium, (p. 589.) Hughes says, that, on policies out and home, in case of East India voyages, the custom is said to be, under circumstances like those above mentioned, to return half the premium. — Hughes, 446. — In Lewis Al. vs. Thatcher Al., (15 Mass. Rep. 438,) usage is held to make a part of the contract betwéen the assurer and the assured. In Stevenson vs. Snow, (3 Burr. 1237,) a return of premium was recovered on a policy at and from London to Halifax, warranted to depart with convoy from Portsmouth, where the ship, having sailed from London, did not arrive at Portsmouth until the convoy was gone. It was said, in tins case, that usage had sanctioned the principle, although it had not ascertained ar y definite part of the premium that ought to be returned. Sergeant Marshall lays dov n the general rule in these terms, viz., “If the insurance be upon a voyage divisible inte several distinct risks, which are, in effect, several distinct voyages, the premium may be apportioned according to these several risks; and in case one or more of those ricks should not have been commenced, the proportion of premium applicable to those parts shall be returned.” In cases like that of Homer vs. Dorr, there docs not seem to be any difficulty in the way of an apportionment. And it is said that this decision has never been acted upon. The practice or usage of apportionment in like cases, in the insurance offices in Boston, remains unchanged. In cases before and after this decision, the Court have allowed to usage an extraordinary and seem ingly unwarrantable effect, (Jones vs. Fales, 4 Mass. Rep. 245 — City Bank vs. Cutter, 3 Pick. 414. — Loring vs. Gurney, 5 Pick.;) and it is unaccountable that it should have been held for nought in this case. — Ed.]