Case ID: mass_8/html/0322-01.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

* Stephen Higginson and Others versus William Gray.
    An agreement had been entered into between A. B., an underwriter, and the assured, to abide the final determination of an action pending between the same assured and an incorporated company, who had insured for them upon the same risk. — On the trial of that action in this Court, the demand was not contested by the company, but a verdict against them was submitted to under the expectation of prosecuting a review; which they accordingly prosecuted ana entered, having given bond therefor. — An adjustment afterwards took place between the parties to the action, the company paying the assured two thirds of a total loss, and relinquishing their claim to salvage ; and the review was discontinued. It was held that A. B. was not bound by his agreement to adjust with the assured on the terms on which the company had adjusted the loss on their policy.
    The declaration was “ in a plea of the case for that whereas the said Gray, at said Boston, on the first day of July, 1800, had subscribed a certain policy of insurance, which the plaintiffs had caused to be made upon the cargo of the ship Diana, of which the plaintiffs were the owners, and therein and thereby, for a valuable consideration therein mentioned, as the premium of insurance paid the said Gray by the plaintiffs, insured for them the sum of 3000 dollars on the same cargo, in which the plaintiffs were interested to that amount, and to the amount of all other sums by them thereupon insured for and during the voyage in the said policy described, and against certain risks, perils, and accidents in the same policy enumerated, which same cargo was afterwards totally lost to the plaintiffs by certain perils and risks enumerated in said policy, and in the course of the same voyage; whereby the„said Gray became liable to pay the plaintiffs the said sum of 3000 dollars insured by him as aforesaid, as the plaintiffs then and there averred, and the said plaintiffs, at said Boston, on the first day of July, 1801, demanded payment of said Gray of said sum of 3000 dollars by him insured as aforesaid, due to them on account of said loss, as they then and there averred, which the said Gray then and there refused to pay; — and whereas the said plaintiffs, afterwards, at said Boston, on the second day of April, 1803, had commenced an action against The Massachusetts Fire and Marine Insurance Company on a certain policy of insurance made and effected with the said corporation for the plaintiffs on the same cargo, to insure the sum of 15,000 dollars on part of the same cargo, in the same ship, for and during the same voyage, and against the same perils, risks, and accidents enumerated in the policy * of insurance subscribed by the said Gray, to recover of and from the said 
      Massachusetts Fire and Marine Insurance Company the sum by the said corp > ration so insured ; which said suit was depending in the Supreme Judicial Court on the twenty-seventh day of July, 1804 ; and whereas the plaintiffs and the said Gray, on the said last-mentioned day, at said Boston, agreed to be bound and governed by the final determination of the action aforesaid; — and whereas the plaintiffs did then and there agree with and promise the said Gray, that if final judgment should be rendered against them in the said action against the said Massachusetts Fire and Marine Insurance Company, they would not sue nor prosecute any action against said Gray on the said policy subscribed by said Gray, nor demand nor claim any loss or damages from said Gray, on account or by reason of said policy; and the plaintiffs aver that the said Gray, in consideration of the promise aforesaid of the plaintiffs, did then and there agree to and with the plaintiffs that if final judgment in the said action of the plaintiffs against the said Massachusetts Fire and Marine Insurance Company should be rendered against said corporation, he, the said Gray, would thereupon pay to the said plaintiffs, at the same time said corporation should pay the amount of such judgment, the same sum in proportion to the amount by him subscribed on the policy first above referred to, as the sum so recovered against said corporation should be in proportion to the whole amount insured by said corporation; — meaning the amount recovered as and for damages, and exclusive of costs. — And it was then and there further agreed by and between the plaintiffs and the said Gray that if the said action of the plaintiffs against the said Massachusetts Fire and Marine Insurance Company should be reviewed by either party after one or more trials, the judgment on the last review should be considered as the final judgment referred to in said agreement. — Now, the plaintiffs in fact say that such proceedings were had in the same action of the plaintiffs * against the said Massachusetts Fire and Marine Insurance Company, that at the Supreme Judicial Court holden at Boston, in the county of Suffolk, for the counties of Suffolk and Nantucket, on the fourth Tuesday of November, 1806, the plaintiffs, by the consideration of the justices of the same court, recovered judgment against the said Massachusetts Fire and Marine Insurance Company for the sum of 18,300 dollars damages, which sum the plaintiffs aver was in full of the sum of 15,000 dollars so insured as aforesaid by the said corporation, and interest thereon due to the second day of December, 1806 ; — And the plaintiffs further aver that the said last-mentioned judgment has in no wise been annulled or reversed, and that the said corporation, on the ninth day of October, 1808, at said Boston, paid and satisfied the said judgment with the interest due thereon; of all which tho said Gray ihereafterwards on the same day had notice and thereby became liable, according to his said last-mentioned promise and agreement, to pay to the plaintiffs another large sum, viz., the sum of 4014 dollars; yet the said Gray, though then and there requested, hath never paid,” &c.
    The cause was tried before Sedgwick, J., at November term, 1810, on the general issue, and a verdict taken for the plaintiffs, subject to the opinion of the Court upon a case stated by the parties; it being agreed, that if the Court should be of opinion that the evidence contained in the case stated was sufficient to support the plaintiffs’ action, judgment should be entered on the verdict, with increase of damages for interest to the time of the judgment, without a right of review for the defendant; otherwise the plaintiffs were to become nonsuit, and the defendant to be allowed his costs.
    The case agreed by the parties was as follows, viz.: —
    “ This action is assumpsit on a special agreement set forth in the declaration, and filed in the case. — By an attested copy of the proceedings in the action, referred to in the agreement, against the Massachusetts Fire and Marine * Insurance Company, it appears that at the November term of this Court, in the year 1806, a verdict was returned in favor of the present plaintiffs, and judgment was rendered thereon at the same term. The record and proceedings in that case are to be considered as parts of this statement. It is admitted that the plaintiffs’ claim was not contested at that trial, and that the verdict was submitted to by the defendants in the action, under the expectation at that time of prosecuting a review; but there was no assent of the plaintiffs that the verdict should pass proforma.—On the 19th of October, 1808, an adjustment took place between the parties to that action, as appears by the paper of that date in the case.”
    [The paper referred to purports a receipt, by the plaintiffs, from the Massachusetts Fire and Marine Insurance Company, of the sum of 13,952 dollars 75 cents, in full of all demands for loss on the policy on the Diana’s cargo, this day adjusted by compromise, the said company relinquishing all claims for salvage.]
    “ This adjustment took place after a writ of review had been sued out, and the action of review had been entered, as' will appear by the copy of the record of that action, which is referred to, as in the case.
    “ At the said November term, 1806, the said company endeavored to procure a continuance of said cause, in the hope or expectation of obtaining some other or further evidence; but the continuance was not allowed. After this judgment, the said company gave bond m due form of law for prosecuting the said action of review.
    
      
      “ It was also admitted that the Boston Marine Insurance Company had made a like insurance for the plaintiffs on the same vessel, cargo, and voyage; and an action brought by the plaintiffs on that policy had been tried at the November term of this Court in the year 1805, when a verdict was rendered for the plaintiffs. — On the said last-mentioned trial, the defendants therein offered and availed themselves of all the evidence in their possession, and * neither they, nor the said Massachusetts Fire and Marine Insurance Company, nor any other underwriters on said vessel, cargo, and voyage, have procured any other or further evidence since the said trial in November, 1805. The trial in 1806 was had before the same judge, who tried the said cause in 1805. — The Boston Marine Insurance Company prosecuted a review of the aforesaid action against them, which was discontinued upon making the settlement herein after mentioned. — The president of the Massachusetts Fire and Marine Insurance Company testified that a settlement having been made by the plaintiffs with the Boston Marine Insurance Company, on their policy before mentioned, the terms of which settlement he knew, and a copy of which is in the case, Mr. Otis, who was counsel for the plaintiffs, proposed to him to settle the action then pending upon the same terms; — that having in a short time consulted the directors, with their approbation he agreed so to settle, and informed Mr. Otis of his determination. The adjustment soon after took place according to the paper before referred to. He also testified that it was known that a decree of restitution of the property had been obtained; but that difficulties existed, which rendered a final restitution, or the amount of it, very uncertain ; — that the prospect of success had varied at different times, intelligence being sometimes favorable, and sometimes other wise; — that when the adjustment was made, there was no estimate made by him of the probable value of the salvage; but he agreed at once to settle on the same terms as the Boston Marine Insurance Company. — The same witness likewise testified that the review was prosecuted with the intention to try the merits of the cause; that the company, together with the other company, and the underwriters on the policy in Mr. Brooks’s office, had been at considerable pains and expense to obtain an authenticated copy of the laws of Spain relative to trade with her colonies. A person had been sent to Madrid for that purpose, who obtained certain documents, whicji, however, were thought by the counsel for * the companies to be insufficient, and were not offered in court at any trial, though the agent who procured them was in court when the trial was had. — Mr. Brooks, insurance broker, among other things, testified that the first adjustment was made by him for some of the underwriters upon the same policy which was subscribed by Mr. Gray.”
    
    Upon these facts the cause was argued at the last March term in tliis county, by Otis and Jackson for the plaintiffs, and Dexter and Prescott for the defendant.
    
      Jackson.
    
    There cannot be a doubt that the intention of the parties, in making the agreement declared on, was to conform to such a result as has taken place. Two actions were pending on similar policies against two incorporated companies. The defendant might naturally rely on their judgment and attention to their interests, and submit to be governed by the terms they should accede to. If that arrangement had not been made, seventeen other actions must have been brought, when in fact one question alone was to be tried. The agreement was in its nature like a consolidation rule, but stronger than that, as in this case the other underwriters had no control over the action by which they were to be governed. They agreed to be governed by the "issue of the suit against one of the companies, who stood, in effect, as arbitrators between these parties.
    As to the review commenced and afterwards abandoned, all that can be inferred from it is, that the company at the time were dissatisfied with the judgment on the verdict, that they might entertain hopes of altering the state of the evidence on another trial, and thought it discreet to secure to themselves that chance by interposing a review; but that afterwards, finding the chance a hopeless one, they discontinued the review, and paid a total loss, deducting therefrom what the expectation of salvage might be estimated at.
    The agreement, on which the action is brought, is not a sealed instrument, and a liberal construction may be applied to it. In the recital it is said the parties had agreed * to be bound by the final determination of the suit against the company, not limiting it to a judgment; and the use of other language in the latter part of the instrument may well be considered as merely an amplification of the other expression, — rather than an alteration of the terms of the agreement. Nor can a doubt be entertained that, if the parties had anticipated such a final adjustment as was made between the plaintiffs and the company, they would have explicitly agreed to be bound by it.
    If the company had suffered judgment to go against them by default, the defendant would unquestionably have been bound. But it certainly is a much stronger case for the plaintiffs, that after a full trial had been had between the other company and the plaintiffs, the whole detail of which was known to this company, these lotier should see fit to discontinue their review, and pay a total loss. For a total loss was in fact paid, and the only compromise respected the value of the salvage the company were' to give up, or rather of the spes recuperandi — the prospect of ever recovering it.
    The review, commenced and afterwards discontinued by the company, is to be considered as if no review had ever been instituted. It was never prosecuted to final judgment. The judg ment in the original action was then the final one. That was for a total loss, and the defendant was bound by law, as well as by principles of integrity and honor, to have conformed to it on his part.
    
      Dexter and Prescott.
    
    The parties to this agreement meant to abide by a judgment which might be rendered on a satisfactory trial of the merits of the question, and by such a judgment only. This judgment was to be in the action to which the Massachusetts Fire and Marine Insurance Company was to be a party. Now, in that action no such judgment has been rendered, no such trial has been had. The policy in the action against the other company might have been differently expressed, or the questions in issue might vary. It was the final determination of the action * that was contemplated, which must intend final judgment, as afterwards appears in the agreement itself. If a review was instituted, then was intended the final judgment on the review; and if there was no judgment rendered on the review, after it was commenced, then there was no judgment, to which the parties were bound to conform; for the very commencement of the review suspended the whole effect and operation of the first judgment.
    Besides, to hold the defendant bound by a judgment rendered without any trial or opposition on the part of those who were in the same interest with himself, would be to intrap him, in violation of common sense and common justice. The loss was adjusted with the company by a compromise, and not by a satisfaction of a judgment. They paid two thirds of the amount insured by them, and for that received a full discharge of the policy. Now, the defendant certainly never agreed to be bound by any compromise, which the parties to the other action might think fit to make out of court.
    This agreement may well be compared to a consolidation rule. But it will be remembered that, by such a rule, the defendants undertake to be bound only by such a verdict as ought to stand as a final determination of the action;  in other words, such a verdict as may be rendered on a full and fair trial of the merits; not, as was the case here, a mere formal verdict given for the plaintiffs, because the defendant, contemplating a review, made no defence
    
      
      Otis, in reply.
    The defendant is bound by the very terms of his engagement.' He engaged to pay when a final judgment was rendered in the action of the plaintiffs against the company. This must mean the judgment of this Court, the highest appellate jurisdiction in the state, in the action then pending. That judgment was final. But because the law of the land has allowed, in certain cases, to parties aggrieved by such final judgment, a privilege to institute a new suit, by a writ of review, it was therefore further agreed, that if a review in that case should be brought and * prosecuted to final judgment, then such judgment on the review should be the judgment by which the parties to the agreement should be bound. But if there should be no such judgment on the review, then the judgment of this Court in the original suit was to be considered as the final judgment for this purpose. Thus, again, if, on the first judgment, the company had paid the sum recovered, and afterwards within the time limned by law therefor, they had brought their review, and had obtained a reversal of the former final judgment, then the plaintiffs, being held to repay the company, agreed also to return to the defendant the money he should have paid pursuant to the agreement. If the company had confessed judgment in the original action, always excluding the idea of fraud, the defendant would have been bound by such judgment, as much as if it had been rendered upon a verdict given after the most serious and strongly contested trial. In short, the plain and apparent meaning of the defendant, in this agreement, was that he would submit the question of a loss to the judgment and discretion of the company, and would be bound accordingly.
    A difference, essential in the view we take of this question, between the agreement in this case and the common consolidation rule, is, that the latter is always made to depend on a verdict; whereas here the defendant was bound by a judgment, though rendered by confession or consent of the company. He was bound by the judgment, not by the compromise, if such it is to be called. Nor has he any concern with the manner in which the plaintiffs adjusted their claim under the judgment which they obtained against the company; although in a trial by the jury, the amount received might perhaps plausibly enough be considered by the jury as the proper measure of damages.
    
      
      
        Marshall, 605.
    
   The cause stood continued to this term for the opinion of the Court, which was now delivered, as follows, by

*Sedgwick, J.

This is an action of assumpsit, brought on a special agreement, entered into between the parties on the 27th of July, 1804.

On the 1st of July, 1800, the plaintiffs obtained an insurance oil the cargo of the ship Diana for twenty months, at a premium of one and a half per cent, per month; and the defendant subscribed as an insurer for 3000 dollars.

The Boston Marine Insurance Company, and the Massachusetts Fire and Marine Insurance Company, also insured on the same voyage.

During the course of her voyage such occurrences took place, that the plaintiff claimed a total loss against the several underwriters ; and actions were commenced against both the corporations on their respective policies.

The action against the Boston Marine Insurance Company was tried in November, 1805, and a verdict rendered in favor of the plaintiffs, as for a total loss. This action was reviewed, and, during the pendency of the review, was compromised by an adjustment, whereby the insurers relinquished to the assured all right of salvage, and paid a gross sum, which was received by the plaintiffs in full satisfaction.

In November, 1806, the action against the Massachusetts Fire and Marine Insurance Company came on for trial before the same judge who tried the action before mentioned. The defendants endeavored, without effect, to put off the trial, under a hope of obtaining more evidence. Under these circumstances the claim of the plaintiffs was not contested ; and they obtained a verdict for a total loss, on which judgment was rendered. After judgment the defendants gave bohd according to law to prosecute a review of that action. This took place before an adjustment was made with the Boston Marine Insurance Company. After that a compromise was effected between the plaintiffs and the Massachusetts Fire and Marine Insurance Company, on the same terms with that of the Boston company, and payment was made in conformity thereto, and the motives * and considerations are detailed in the case referred to the decision of the Court; but they are not, in my opinion, of much importance. — The question is, whether, under the circumstances, the plaintiffs are entitled to recover, upon the agreement, an amount equal to what they would recover for a total loss in an action upon the policy ?

In their behalf it is said, that the defendant is bound by his agreement to pay a total loss, because the judgment against the Massachusetts Fire and Marine Insurance Company, by which he was to be bound, was for a total loss; and this is right, provided that judgment be such a judgment, as, according to the true intent and meaning of the parties, was to be binding on the defendant; and provided also the payment made by the company was a payment of that judgment. — But if that judgment, according to the meaning of the parties, was not a final judgment, or if the payment made by that company was not a payment made on that judgment, the plaintiffs cannot recover.

The parties agreed to be governed and bound by the final determination of the action against the Massachusetts Fire and Marine Insurance Company. If the final judgment should be rendered against the plaintiffs, they were to prosecute no action against the defendant; and the defendant, and the other underwriters, who subscribed the agreement, if final judgment was rendered against the company, were to pay, in proportion to their respective subscriptions, as the company by such judgment should pay for damages. The agreement then proceeds to define what the parties meant by final judgment. If the action should be reviewed by either party, after one or more trials, a judgment on the last review was to be considered the final judgment; but if judgment should be given against the company, and the money should be paid, before or without any review, the subscribers to the agreement were to pay, in proportion and manner agreed upon, without waiting on account of the possibility or chance that such review might take place. And they conclude the agreement by providing that if after payment, * there should be a review, the final adjustment shall conform to the judgment upon that review.

The subscribers then were to pay in the same proportion, as damages should be assessed in a final judgment against the company, and at the time when the company should pay. — Was the payment made by the company a payment, in the sense of the agreement, of a final judgment ? The obligation assumed by the underwriters, who subscribed the agreement, was to pay when the company should make a payment on a particular event, and for a specified cause. What payment was this to be ?

A payment upon a final judgment. But in this case no payment was made on any judgment. A settlement was first made with the Boston company, and then a settlement with the Massachusetts company upon the same principles; according to which principles an adjustment was made, to ascertain the amount to be paid, which was paid upon that adjustment, and not upon any judgment. The event then never occurred, upon the happening of which the defendant undertook to pay. The plaintiffs cannot then recover upon the terms of the contract, nor can they, in my apprehension, claim upon any reasonable construction of the nature of the transaction.

In this case the claim of the plaintiffs was of a very large amount, distributed among a considerable number of individuals, besides two incorporated companies. Actions against the companies were commenced; and to prevent a multiplicity of suits, an agreement, in the nature of a consolidation rule, was entered into, by which the plaintiffs and the underwriters agreed, in substance, that upon a final judgment in one of the actions, — that against the Massachusetts Fire and Marine Insurance Company, — the underwriters would pay, as the rights of the plaintiffs should be ascertained by that judgment ; — and contemplating the case of a review, they particularly state, that if there should be on e, final judgment, which they meant, was the judgment that should be rendered upon it; that is, it must, to be binding, be such a judgment as that company should * submit to, and be willing to pay, without further litigation ; or such a judgment as should be compulsory upon them.

The defendant did not agree, however reasonable it might have been that he should so have agreed, that if a review should be brought, and thereupon a compromise should be made, an adjustment in pursuance of that compromise should form a rule, by which the other underwriters would pay. The case, then, which has happened, is casus omissus, and not a subject of the contract made by the parties. Without express words to that effect, it can hardly be supposed that parties would agree to be bound, as it is said these underwriters were. It is contended they are bound by the judgment; and yet it is admitted that the verdict, on which the judgment was rendered, was submitted to without any trial in fact, and so submitted to with an intention that the judgment should not be final, but merely the foundation of a review; a judgment which could not be enforced by execution, which was prevented by entering into the bond to review ; a judgment which was not to be the foundation of an action of debt; but where the remedy of the other party must be a future judgment in the action of review, or on the bond, or on both, as the case might be. Such a judgment could not be the final judgment contemplated by the parties, as the foundation of an obligation on the part of the underwriters.

The case under consideration seems to me to compare, as to the resulting obligation of the parties, to that of a consolidation rule There the parties undertake to be bound by a verdict in a certain action, and yet, although the agreement is absolute to that effect, a verdict, to be binding, must be satisfactory to the court. This is from the reason of the thing, So when the defendant and others in this case agreed to be bound by a final judgment, it must be understood that such a judgment was intended, as proceeded from a real trial, in which the claims of the plaintiffs were contested, and not a judgment which was submitted to for the very purpose of being overthrown in an action of review.

Plaintiffs nonsuit. 
      
       1 W. Black. Rep. 463, Hodgson vs. Richardson. — 3 Burr. 1477, S. C.