Case ID: mass_8/html/0335-01.html
Source: Caselaw Access Project
Author: {"author": "* Sedgwick, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*The Newburyport Marine Insurance Company versus Francis J. Oliver and Another.
    The plaintiffs insured for the defendants the freight to be earned by their ship m a voyage from Teneriffe to Jamaica. The ship being captured by the French and recaptured by the English, a salvage of one half was decreed to the re-captors. The balance of freight being paid into the master’s hands, he delivered it to the owners, the defendants, who claimed a total loss of the plaintiffs. This was paid pursuant to-the opinion of arbitrators, neither the plaintiffs nor the arbitrators then knowing that the defendants had received any part of the proceeds from the cargo as freight The defendants afterwards remitted the money received by them to the freighters; and they were held not to be accountable for the same to the plaintiffs, the underwriters.
    This was an action of assumpsit for money had and received.
    At the trial, which was had on a review at the term of this Court in November, 1809, before Parker, J., the plaintiffs rested their case on the following facts proved or admitted, viz.: In March, 1800, they insured for the defendants 5000 dollars on the freight of the ship Columbia from Teneriffe to Jamaica. The said ship was laden at Tenerife with a cargo of wine belonging to Mess. Pollard if Co. of London, which was to be transported to Jamaica at 3Z. sterling per pipe. On her passage the ship was captured by a French privateer, and after being in possession of the captors more than 96 hours, was recaptured by a British armed vessel, and carried into Antigua, having in her way been damaged by getting on- rocks. The ship and cargo were libelled in the Vice Admiralty Court at Antigua, for salvage, and ordered to be sold, and one half the gross proceeds to be paid to the captors, and the other half, after deducting all costs, to be paid to the master, for the use of the owners and all concerned.
    The master testified that he could find no agent of Mess. P,ollard if Co. in Antigua, but understanding that a Mr. Colquhan was their friend and correspondent, he employed said Colquhan to assist him, and placed the proceeds of the cargo in his hands, to be remitted to the owners in London, except the sum of 5211. 19s. 5d. sterling, being the balance of account in his hands, which he retained and paid over in a bill of exchange to Mess. Oliver and Procter, the present defendants, as the freight pro rata itineris, in case they should be entitled to such; but otherwise to be remitted to Mess. Pollard if Co.; the master * being ignorant, as he stated, whether freight was due or not, or whether that sum was due, if any.
    The defendants, having abandoned to the underwriters all their interest in the freight, claimed of them payment of a total loss, which was refused by them. The question was submitted to the dicision of J. Russel and T. Bennie, viz., “ whether all, or what proportion of said freight, was due from the plaintiffs, or from Mess. Pollard if Co., the freighted in London; ” and the arbitrators having determined that the company were liable for a total loss of the freight, the sum of 5000 dollars was paid to the defendants on their receipt; and an assignment of the right or interest in the freight was made to the plaintiffs on the back of the policy, with a power of attorney to recover the same.
    The plaintiffs alleged, in support of their action, that although at the time of the demand on them for a total loss, and of their agreement to submit the question to arbitrators, the defendants had in their hands the above-mentioned sum of 52 lZ. 19s. 5d. of the proceeds of the cargo on account of freight, they gave no information of that fact to them, nor afterwards, at the hearing of the question, did they make it known to the arbitrators, nor was it ever made known to them by the defendants; but was accidentally discovered by the plaintiffs in the adjustment of another concern between the same parties. And they contended that freight being due for that part of the cargo, which came to the hands of the correspondent of the freighters at Antigua, pro rata; although the defendants had, after the decision of the arbitrators, remitted the sum before retained on account of freight to Mess. Pollard &f Co., yet the plaintiffs were entitled to recover said sum ; because they ought to have been informed that such money was on hand for that purpose; and they further contended, that from the terms of the submission and the subsequent proceedings, it was apparent this circumstance was concealed from the plaintiffs by the defendants.
    * The defendants contended that under the circumstances of this voyage, no freight was due from Mess. Pollard &/• Co., and that if it were, the submission and proceedings thereon precluded the plaintiffs from now demanding it of the defendants, they being by these proceedings justified in remitting the amount to Pollard Co., to whom alone the plaintiffs ought to resort for payment. They also insisted that no concealment had been proved by the plaintiffs, who were bound, in support of their action, to prove the same : but that, on the contrary, it ought to be inferred from the facts in the case, {viz., that the decree of condemnation had been laid before the officers of the company, as also other papers touching the loss,) that they had full knowledge of the aforesaid sum being in the defendants’ hands. There was no proof that the account of the master, containing the charge on account of freight, was exhibited ; but it was said, that this was to be inferred from the ordinary course of business, and the accustomed vigilance of underwriters. The master’s testimony was relied on to prove, that the company’s officers knew the fact, or that they might have known it with ordinary prudence ; and so that they were liable to the con sequences of their own negligence. — Upon this point he testified that he had made no secret of his having brought home a bill of exchange on account of the freight, and having delivered it to his owners: on the contrary, he mentioned it to several persons, but did not know to whom; that he went with Mr. Oliver to Newburyport on account of the insurance, when he was ready and willing to answer any questions that might have been put to him.
    The referees were also examined as witnesses, but they did not recollect any information from any persons, that any thing had been received or retained on account of freight.
    It appeared that Pollard Co. had insured the cargo in England; and had abandoned their interest to the underwriters there.
    * The jury were instructed, that if the cargo, or any part of it, or the proceeds thereof, were received by the agent or correspondent of Mess. Pollard Co. at Antigua to their use, freight was unquestionably due for so much as was received, pro rata itineris; — that if the insurance company, or its officers, knew either by information from the defendants, the master of the ship, or from any other source, that the sum before mentioned was reta ned on account of freight; but that they neglected to communicate the fact to the arbitrators, .and afterwards paid the whole amount of the loss to the defendants, the remittance made by the defendants to Pollard &/■ Co. would discharge them; and the plaintiffs must look to the latter for freight; — but that if the plaintiffs were not made acquainted with the fact, and had no means within their power, with ordinary vigilance, to ascertain it, notwithstanding there was no evidence of any fradulent intention in concealing it, the payment over by the defendants was in their own wrong; — that therefore they must, refund to the plaintiffs what ought to have been deducted, when they received payment of the loss, with interest, and must seek their indemnity against Mess. Pollard &f Co., to whom they had remitted it under a mistake.
    A verdict being returned for the plaintiffs, a new trial was moved for by the defendants, 1. Because, on the state of the facts to be reported by the judge, the judge ought to have directed the jury to have found their verdict for the defendants. — 2. Because the jury, on the evidence delivered, ought to have rendered their verdict in favor of the defendants, or if for the plaintiffs, for a sum much less than the one contained in the verdict.
    The cause was argued upon the foregoing report of the trial, at the last March term in this county, by Dexter and Jackson for the plaintiffs, and Amory and Otis for the defendants.
    
      Amory.
    
    The parties, having submitted the question to arbitrators mutually chosen, are bound by their decision, * be it what it may. The defendants made a regular abandonment, and gave authority to recover from the freighters whatever might be due for freight, if any thing was in fact due. To those freighters, then, the plaintiffs ought to resort. They knew that the master of the ship, who was the agent of the defendants, received at Antigua half the proceeds of the cargo. They might naturally have concluded that he had brought the avails home with him, and that if they had a right to any freight, they had a lien for it upon this money. They ought, as possessing common vigilance, to have inquired how the facts were. They neglected this, and when the defendants had received their indemnity pursuant to the award of arbitrators, they remitted the money, which the plaintiffs had neglected even to inquire for, to the owners of the cargo.—These facts give the plaintiffs no right to demand repayment of what they fairly paid the defendants, either with a full knowledge of the facts, or the means of arriving at such knowledge.
    
      Dexter and Jxclcson.
    
    If the plaintiffs had known the defendants to have had this money in possession, they would certainly never have paid their demand of a total loss, without deducting what they had- previously received from the freighters. They would have told them to retain it to their own use, at least until Pollard fy Co. had come here and entitled themselves to it by our own laws, which we say would never have been the event. Had they hesitated, the plaintiffs would certainly have engaged to indemnify them.
    The verdict establishes the fact, that the plaintiffs were ignorant of the defendants’ holding this sum. The suppression of such a fact was a fraud upon the plaintiffs, not morally so, or with a fraudulent intent on the part of the defendants ; but sufficient to vitiate the award of the arbitrators, and all the proceedings under it.
    The payment over of this sum to Pollard &f Co. by the defendants was made in their own wrong. It was never * demanded of them, nor would it probably ever have been demanded of them. It was not due to them by the English law.
    Neither does a parole submission and award, as this was, vary the rights of the parties. It is very distinct in its nature and effects from a judgment of the court; being more like an adjustment or an agreement to settle according to the opinion of those arbitrators; an agreement to pay, and a consequent payment; which being made under a gross mistake of essential facts, the money is properly recoverable in this equitable action.
    The money was in the hands of the defendants, in the nature of salvage, and as such they were bound to deduct it out of their claim for a total loss; instead of which they concealed the fact from the underwriters, put the amount of a total loss in their pockets, and then remitted the money to the freighters, from whom they had, on every principle, a right to retain it.
    
      Otis, in closing the argument, contended for a new trial, not so much on the ground of misdirection, as that the verdict was contrary to the legal effect of the whole evidence. Here was no concealment. The plaintiffs knew from the decree of condemnation, which must have been shown them, that the proceeds of the cargo were paid to the master. The defendants were under no obligation to show what appropriation had been made of those proceeds, unless particularly questioned. The plaintiffs, making no inquiry, must be presumed to have known the whole fact, or to have waived their right to such knowledge. — By the abandonment the defendants put the plaintiffs in their own place; but they were not obliged to pay this money to them. If they had so paid it, they must still have been answerable for it to the freighters, and they were not bound to depend on an indemnification from the plaintiffs for neglecting what was then duty to do as upright merchants.
   The action was continued to this term for advisement; and now the opinion of the Court was delivered as follows, by

* Sedgwick, J.

In the year 1800, the defendants insured, at the office of the plaintiffs, 5000 dollars on the freight of their ship Columbia, in her voyage from Teneriffe to Jamaica. The ship was laden with wine, the property of Mess. Pollard & Co., a commercial house in London. On her voyage she was captured by a French privateer, and kept in possession more than ninety-six hours; after which she was recaptured by a British cruiser, carried into Antigua, where she was libelled, and ordered to be sold ; one half of the gross proceeds to be paid to the recap-tors for salvage; and the other half, after deducting all expenses, to be paid to the master, for the use of all concerned.

The defendants claimed against the plaintiffs, a total loss. This claim was resisted by the plaintiffs, who contended that inasmuch as the goods were transported part of the way towards Jamaica, and were disposed of at Antigua, for the benefit of the shippers, freight was earned for so much,p?-o rata itineris; and that, for that portion of the freight, the defendants ought to look to the shippers, and not to the plaintiffs, the underwriters.

The question of difference between the parties, that is, whether all or what proportion of the freight was due from the company, the plaintiffs, or from Mess. Pollard Co., the freighters in London,” was by mutual agreement submitted to two respectable merchants, as arbitrators, who determined that the plaintiffs were answerable for a total loss.” To this award the plaintiffs submitted, and paid the defendants accordingly.

Now, it is most manifest, were there nothing more in the case, that this transaction would be conclusive between the parties, equally whether the award was or was not founded on just and correct principles; provided there was not (and in this case it is not pretended that there was) any fraud. It would indeed be a monstrous solecism, that a payment made in pursuance of a fair award should be set aside, and the transactions on which it was founded overhauled in a court of justice.

* It only then remains to be determined, whether there be any facts, in this case, which will make it an exception ; and will authorize the plaintiffs to recover back part of the money paid, although it was paid in pursuance of an award

The master paid to Mr. Colquhan, the friend and correspondent of Mess. Pollard &f Co., that part of the proceeds of the sale which he received, except the sum of 52 lZ. 19s. 5d. sterling, which he retained, and paid over in a bill of exchange to the defendants, as the freight pro ratá itineris, in case they should be entitled to such ; but otherwise to be remitted to Mess. Pollard Of Co. ; the master being ignorant, as he stated, whether freight was due or not, or whether that sum was due, if any.

From the report of the judge it appears that, although the above-mentioned sum of money was in the hands of the defendants at the time of the hearing before the arbitrators, yet no information was given to them of that fact; and the plaintiffs say that this was such a concealment as renders the defendants liable in this action.

It is in general true, that whenever, in an intercourse between two relative to property, one conceals a material fact, which he alone has had the means of knowing, and which he is bound in conscience to disclose, and such concealment occasions a loss or injury to the other party, he is entitled to recover an indemnity.—Was then the fact, that the defendants had in their hands a sum of money, under the circumstances which have been stated, a fact material to be disclosed to the arbitrators ?—If it was, I am ready to admit that the defendants ought in conscience to have disclosed it.

The subject submitted to the arbitrators was the abstract question, “ whether all, or what proportion of freight was due from the company, or from the freighters.” The arbitrators determined that the whole was due from the company. Now, that determination was equally true and * just, whether money was or was not in the hands of the defendants, which, in case of another determination of the arbitrators, might have been retained in part payment of the freight. And it is inconceivable that a knowledge, by the arbitrators, of the fact not disclosed, should have made a difference in the award. It is put to the arbitrators solemnly to determine a question in controversy between the parties, and they, as honorable, honest, and intelligent men, say the whole freight is due from the plaintiffs; and that declaration is equally true, whether the defendants had or had not any money of Pollard Co. in their hands ; or whether they had or had not any means of obtaining satisfaction from them. The disclosure, then, of the fact said to have been concealed, ought not to have had, nor could it have had, any effect in producing a different result from the arbitrators ; and it is not pretended that there was any other important or useful purpose, for which it ought to have been revealed. It may be added, that there is no motive suggested, that could have ' induced the defendants to a fraudulent or improper concealment; and they, as soon as it was determined that the whole loss fell on the plaintiffs, remitted the money in their hands to Mess. Pollard fy Co., to whom it of course belonged.

On the whole, we are satisfied, that the fact not disclosed was not a material fact to be known to the arbitrators; and as the verdict was found upon the belief that it was so, we think it ought to be set aside, and a new trial granted.

We do not mean to suggest an opinion, that the award of the arbitrators was founded on legal principles, nor of course that the plaintiffs have not a legal claim against the freighters, for the money they have received ; — but only that the defendants were justified in remitting it after the award was made.

New trial ordered.