Case Name: HERMAN STURM, Plaintiff and Respondent, v. JOHN S. WILLIAMS, Defendant and Appellant
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1874-12-09
Citations: 6 Jones & S. 325
Docket Number: 
Parties: HERMAN STURM, Plaintiff and Respondent, v. JOHN S. WILLIAMS, Defendant and Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 38
Pages: 325–349

Head Matter:
HERMAN STURM, Plaintiff and Respondent, v. JOHN S. WILLIAMS, Defendant and Appellant.
L CONTRACT ALTERNATIVE.—ACTS OF PARTIES.—QUESTION FOR THE JURY.
1. Where the evidence leaves it in doubt, under which alternative the acts were done, and it is material to determine the point, the question must be submitted to the jury.
H. EVIDENCE. • •
1. Words accustomed to be used in different senses.
1. Parol evidence admissible to show the sense in which they are-used in a particular business.....
2. Acts of Parties ; Questions as to which alternative of a contract. they were done under.
1. What evidence admissible.
a. The party to the action who did the act, or caused it to be-done, may be inquired of as to the intent with which it was." • done.
8. Value, how ascertained when there is no market value.
1. By reference to the •probaMlities of the case founded on proof of facts which, in the ordinary transaction of business, would affect the mind of a dealer in similar articles in determining the price-to be asked or given.
a. What facts bear on this question.
1. The cost of the article to the party claiming its value does. -. ..
a. In determining such cost , when payment was. made, otherwise than by cash, the value of the article or property so given in payment, may be inquired into. . . .
2. Auction sales. Where dealers in the article in question-are for the most part furnished with the article from auction sales, the prices given at such sales may be shown. . .
a. But where the -question .is as to the cost of the-article at a" particular time," the proof must be limited to such sales as took place at or about that time.
4. Opinions of witnesses.
1. A dealer in articles that have no market value may give his-opinion as to their value.'
6. Overvaluation.—Fraudulent.
1. Estimate made by the plaintiff, being, the assured of the value, of the property given by him in payment for the property,, which was the subject of the insurance, may be given in evi dence.
2. Actual cost to the assured of the subject of insurance is involved' in the question of fraudulent overvaluation, both when the valuations in the policy is stated to be invoice cost and five percent., and where the valuation is upon a general agreement, irrespective of invoice cost and five per cent.....
'' 6. Conversations.—Writings.—Entry in books. " "■
1. One party introducing in evidence apart, the other party is not necessarily entitled to have the whole put in evidence.
•a. He is only entitled to such other part as will in any way explain or qualify the part first given.
1. The party objecting to the introduction of apart on the ground that it is but a part, must, to make his objection good, show that there are other parts which bear upon the part offered.
7. Operation op the mend.
1. A question which calls for a reflection of the witness upon a . supposed state of facts is properly excluded.
APPLICATION OF ABOVE PRINCIPLES Insurance marine.
The plaintiff, in 1867, made application for marine insurance “ on military goods, and merchandise valued at invoice and five per cent, unless otherwise agreed. ” After this application the plaintiff' instructed his broker to have the valuation made at two hundred and thirteen thousand dollars. The broker went to the defendants’ attorneys, and asked them to fix the permanent valuation, and gave the figures at two hundred and thirteen thousand dollars. Nothing further was said. The policy was. issued valuing the goods and merchandise at two hundred and thirteen thousand dollars. The answer, among other defenses, set up fraudulent overvaluation. It appeared on the' trial that the goods had no market value, that plaintiff had paid for a portion of them in Mexican bonds, at sixty cents on the dollar, and that for the most part dealers in the kind of goods insured were furnished by the government at auction sales.
HELD,
1. The evidence leaving it doubtful whether the two hundred and thirteen thousand dollars, was proposed as the amount of “invoice, and five per cent.” and as such agreed to by the insurers, or was proposed to fix the valuation independent of what in fact was the amount of 11 invoice and five per cent.” but under the phrase in the application, “unless otherwise agreed,” the defendants had the right to have the question determined by the jury.
3. Evidence as to the meaning of the words “invoice and five per cent.” according to the usage of underwriters, was admissible.
8 The plaintiff might be asked if he did not intend the two hundred and thirteen thousand dollars to be what was stated in the application as “invoice cost and five per cent, added.” .
a. It is relevant to defendant’s claim that the sum was fixed as invoice or first cost, and that it was intentional and tendered with other facts to show a fraud in the valuation.
Present, Sedgwick, Yah Yoest and Speib, JJ.
Decided December 9, 1874.
4. It was proper, on cross-examination, to ask a witness, whose firm dealt in the kind of articles insured, and who sold to plaintiff a part of the goods insured, the following question: “Did you not, because you took bonds in payment, charge forty per cent, more for these goods than their cash value on that account ? ” a. It calls for the opinion of the witness as to cash value of the article.
6. It was admissible to show the actual value of the Mexican bonds given in payment for some of the insured goods. a. This was an element in ascertaining the prime cost of such insured goods to the plaintiff.
6. Questions put to the plaintiff on cross-examination, intended to draw from him his estimate of the value of Mexican bonds, were proper.
a. His belief or opinion as to their value, was at least evidence of the quo animo he made the valuation at two hundred and thirteen thousand dollars, and was relevant to the issue of fraudulent valuation.
7. It was error to require the plaintiff to put a whole book, written by plaintiff, in evidence, as a condition to permission to read from it all such parts as related to the value of Mexican bonds, in 1867, it not appearing that any other part of the book referred to anything relevant to the issue.
8. The question as to fraudulent overvaluation in this case materially involved what the actual cost was to the plaintiff even upon the basis that the valuation was not upon invoice cost and five per cent., but upon a general agreement irrespective of that.
9. It was competent to give evidence of the prices given at auction sales in the year 1867.
10. The following question was properly overruled. “Would you have taken this risk at the amount of valuation at which it was taken, if you had known that that valuation was based in part on Mexican bonds.”
a. It does not ask for the effect on the mind of what was said.
Appeal from judgment entered for plaintiff, and from order denying motion for new trial.
The complaint is, that, on August 30,1867, for good consideration, the defendant and others, associated in the business of marine insurance, under the name of the United States Lloyds, executed and delivered a policy of insurance, whereby they severally insured the plaintiff, on account of whom it might concern, in case of loss to be paid to him, to the amount of fifteen thousand dollars, on a voyage at and from New York to Vera Cruz, upon a cargo of military goods and merchandise, laden or to be laden on board the schooner Samuel J. Keese, which said cargo was in and by the said policy valued at two hundred and thirteen thousand dollars, in and by which said policy, the said associates of the United States Lloyds did state they had been paid for said insurance four hundred and fifty -dollars. The complaint further set out the risks insured against, and that the defendant was an underwriter, on said policy, for one hundred and ninety-four dollars and sixty-two cents; that the said vessel, while in the prosecution of said voyage, and the said cargo and merchandise laden upon her, about October 13, 1867, by a peril insured against, was totally wrecked and lost.
The answer, among other things, averred that, before the issuance of said policy, in order to induce the defendant and his associates to consent, the plaintiff represented to them, among other things, that there was merchandise then on board, or to be taken on board the schooner, which was reasonably worth the sum of two hundred and thirteen thousand dollars; and the answer denies that the military or other goods contemplated by the said insurance, and referred to in the policy, were, at the time of the issuance thereof, or afterward, on board or laden on the said schooner; and further denies that the schooner, having on board the goods contemplated by and described in the policy,, or the said goods, was wrecked or lost.
The answer further avers that it was pretended by the plaintiff that the said schooner, when she left New York, was loaded with a large and Valuable cargo of muskets, revolvers, sabers, knapsacks, accouterments, coal, batteries, ammunition, and other like goods, which were the property of the plaintiff, and had actually cost him over one hundred and ninety-four thousand dollars; that, in fact, the plaintiff was not the owner of said goods ; that the valuations were excessive and fictitious ; that the defendant made the above pretense, with others averred in the answer, with the intent that the cargo of the said schooner should be valued specially for the purpose of insurance, at an extravagant, unfair, and fictitious valuation, and that thereby a large sum, exceeding many times the actual market value of the goods, should be unfairly and fraudulently claimed and obtained from the defendant and his associates, and other underwriters. The an swer, among other things, demands that the policy of insurance may be decreed to have been fraudulently obtained by the plaintiff, and to be void ; and that the valuation may be duly reformed and corrected.
The reply put in issue all the allegations of the answer tending to set up a Counter-claim, and, among other things, avers that the goods had actually cost him over one hundred and ninety-four thousand dollars ; that the same had-been in good faith and at that cost purchased-by him from Herman Boker & Co., B. F. Mullen, J. T. Ames, and others. The reply further alleges that the plaintiff also admits and asserts that, he paid for a portion of the said cargo in Mexican bonds, so called, at the rate of sixty per cent, of their par value, being their fair and reasonable value at the time.-
The action was tried by jury. The verdict was for plaintiff.
Certain exceptions were taken upon the trial. They and the evidence, to which they relate, appear in the opinion of the court.
A motion was made for a new trial, upon affidavits.
Treadwell Cleveland, attorney, and Joseph H. Choate, of counsel for appellant,
among other things, urged;—I. By reference to the application for the insurance, it will be seen that it originally read: “Loss, if any, payable to him for $15,000 on military goods and merchandise, valued at invoice and 5 per cent., unless otherwise agreed.” The words “invoice and 5 per cent, unless otherwise agreed” were afterward stricken out, and the figures “$213,000” written above them. Concerning the making of the contract of insurance, “and its subsequent alteration,” the testimony of Mr. Cox, the attorney in fact of the defendant, and the person who accepted the risk, is to the effect that, on August 30, 1867, Mr. Tooker, the agent of Sturm, presented the application for insurance, reading, “invoice and 5 per cent, unless otherwise agreed upon,” and for twenty thousand dollars, and that it was then made binding in that form and in currency. That there was never any new contract between the defendant and the plaintiff, except that the amount of the insurance was reduced from twenty thousand dollars to fifteen thousand dollars; that subsequently Tooker came on to close the application, and gave those figures as the exact amount of the valuation. Tooker, plaintiff’s agent, says that when the two hundred and thirteen thousand dollars was written in, and the words “invoice and 5 per cent., unless otherwise agreed,” stricken out, he had an interview with Mr. Cox, and said he wanted to fix the permanent valuation. The following questions were asked and excluded, the defendant’s counsel excepting. To the plaintiff:
Q. The two hundred and thirteen thousand dollars was intended by you, in the making of the insurance, to be what was first stated in these applications as invoice cost, was it not, and five per cent, added ?
The court then said: “I shall hold, as matter of law, that this original application, which required invoice and five per cent., was subsequently changed to the valuation of $213,000 by the agreement of all the parties, and that this was a change which suppressed the original application.” To this ruling, defendant’s counsel excepted.
Q. What difference did you intend, if any, between the invoice cost and five per cent., as it was first written in the application, and two hundred and thirteen thousand dollars, as it afterward appeared there ?
It is submitted that the court was here clearly in error in holding, “as a matter of law,” what was the legal effect of the testimony of persons who had not yet been called as witnesses. And what good reason can be suggested why the defendant should not be allowed to show, by the plaintiff himself, that the change in the application was not, in reality, a change of substance, but only a change of correlative terms. That any misrepresentation, which is relied upon, of a material fact, whether made by mistake or design, renders void the contract of insurance, is too plain for argument or authority. The defendant alleges, in his answer, that there was this very misrepresentation, viz.: in the value of the cargo; and the application for the insurance having been put in evidence, it was proposed to show, by the plaintiff, that he first applied for insurance upon the cost of the cargo, and five per cent, added, and that the change to two hundred and thirteen thousand dollars was a representation that this cost and five per cent, was two hundred and thirteen thousand dollars. This is to the very substance of the issue on this point.
II. These questions were asked Mr. Cox, and excluded, under exception:
Q. Was there ever any agreement between you that the valuation should be at anything else than the invoice cost and five per cent ?
Q. What is the usual course of business after the presentation of the application, and until the making out of the policy, in reference to any alteration of the application, or in reference to getting in the exact amount of the insurance, as first made ?
Q. What, in the usage of underwriting, is the meaning of the term “invoice cost and five per cent, added?”
Q. State what the usage among underwriters is, as to an application being first made in general terms, and a subsequent exact statement of the amount substituted?
To Mr. Tooker:
Q. What happened then ?
A. I asked them to fix the permanent valuation. I said I wanted to fix the permanent valuation.
Q. What figures did you give them ?
A. Two hundred and thirteen thousand dollars.
Q. Valuation of what?
The court erred in excluding this evidence. Mr. Cox was the agent of the defendant in accepting the risk, and an expert in marine insurance. The contract had been made binding by him at “invoice and 5 per cent.,” a technical term in his business, the legal import of which is not fixed. The defendant was entitled to proof of the meaning of this technical phrase, and of its use among underwriters, and of its use at this occasion. By the ruling of the court this was prevented, and under a defense of fraud in the inception of the contract, the defendant was not allowed to show what positive representations were made to him ; and claim ing that this was not a valued policy, he was prohibited from showing what the agreement was. Nor was he allowed to, prove false representations as to the cost of the property; or, in other words, to show that, instead of taking the risk, or say one-sixteenth of the subject-matter of insurance, he was taking the risk on one-half of it. Moreover, viewing the policy as a valued one, the defendant had the right to lay the foundation for the proof of overvaluation, and to show that “$213,000” was but a return of particulars of the “invoice and 5 per cent.” It is submitted that a valued policy is void if fraudulently made in any respect; and that the valuation is conclusive only in those cases where there is no fraud or imposition (Lewis v. Eagle Ins. Co., 10 Gray, 508; Clark v. Ocean Ins. Co., 16 Pick. 295).
' III. It will be convenient to classify the exceptions • to rejections of evidence offered by the defendant to prove gross fraud in the valuation of the goods, under three heads, (it). As to overvaluation of goods when sold for bonds. Under this head, the court excluded evidence designed to show that one of the vendors who sold a portion of the insured goods to plaintiff charged forty per cent, more than the cash value, because he took bonds in payment, also evidence designed to show that a vendor who had sold military goods to plaintiff, in 1867, took his pay in Mexican bonds, which bonds he sold in the market from eighteen to twenty-two cents on the dollar, having effected said sale before he fixed the price for the goods sold plaintiff. (5) As to the overvaluation of the bonds: Under this head the court excluded a line of questions as to the value of Mexican bonds, in 1866. Also excluded the following question put to the plaintiff. “Did you estimate a Mexican bond to be worth sixty cents on the dollar, at that time ? ” And also overruled an offer to read in evidence all such parts of a certain pamphlet written by plaintiff, as related to the value of Mexican bonds, in New York, in 1867, unless defendant’s counsel would put the whole book in evidence, ip) As to overvaluation of the goods, irrespective of whether they were paid for in cash or bonds. The witness Hartley was asked :
Q. What was the average price brought for knapsacks at auction sales by the government in the city of New York during those periods of time? [1866 to 1868. ] Excluded.
Q. Did knapsacks, at those sales to which I have referred, sell at the price of from five to thirty cents ? Excluded.
Q. How about haversacks—what did they bring at those sales ? Excluded.
Q. Did they bring as low as twelve cents? Excluded.
It is submitted that the court erred in these various rulings. The question of a fictitious invoice or valuation being the issue, and more than half of this valuation consisting of goods purchased for bonds at sixty, the defendant offers to show, by the witness who sold the goods for bonds, that he charged forty per cent, more than the cash market value, on that account. Whether “invoice and five per cent.” be correlative in this case with two hundred and thirteen thousand dollars, the defendant has the right to attack the two hundred and thirteen thousand dollars on the ground of fraud, and what can be more material to the issue of fraud than the proof that half the valuation was increased forty per cent, over the cash market value? This evidence is equally admissible on the ground of gross overvaluation. It was one of the issues in this case, the value of these bonds ; the answer alleges twenty cents—the reply sixty cents. On what theory, then, was the defendant not allowed to ask the plaintiff at what he estimated a Mexican bond to be worth at that time, nor allowed to show by the plaintiff that these bonds were in reality not worth sixty cents, as he had sworn they were, but only ten to twenty cents ? Again, to prove by Sturm himself through means of his own published statements, that the valuation of two hundred and thirteen thousand dollars, one-half made up-of bonds, was false, and that he knew that it was false-at the time he gave it to the underwriter, was, on all reasonable or legal grounds, in the highest degree relevant and material; evidence on both these latter points would also have gone to the jury as impeaching; his credibility. The testimony of the broker Shreeve was clearly admissible to show the market value of the commodity exchanged for the goods. That there is no-regular market price for military goods, appears from the case. In this light, the question to Hartly, as to-the average price on auction sales, it is submitted is entirely competent.
IV. Tooker, Sturm’s agent for effecting the insurance, swears that Sturm did.not disclose to him, nor-he to the defendant, that the valuation was in great measure based upon Mexican bonds. Mr. Cox, the attorney in fact of underwriter, was then asked this-question: “ Would you have taken this risk at the amount and valuation at which it was taken, if you had known that valuation was based in part on Mexican, bonds ? ” (Excluded under exception.) One of the defenses in this case was the withholding of material facts. Why was it not competent to show that had the-facts been disclosed, the risk would not have been underwritten ? That any concealment of a material fact is-sufficient to avoid the policy must be conceded. The facts of the invoice being based in large part on Mexican bonds, and failure to disclose this are also admitted. To show that this concealment had its effect upon the-underwriter was the best method of proving its materiality.
V. Receipts for the cargo purporting to have been-signed by the mate were admitted, so far as they were evidence of the receipt of cases. Thev were objected to- as immaterial and as mere hearsay, and as no evidence against the defendant.
Man & Parsons, attorneys, and John E. Parsons, of counsel for respondent,
among other things, urged; —I. On September 18, 1867, the goods being then on board, and the “Keese” ready to sail, Mr. Tooker changed the application so as to read: “On military goods and merchandise, valued at $213,000and the policy was issued accordingly. The defendants called Mr. Tooker as a witness, and he stated that nothing was said at the time the valuation was changed. The defendant sought to show, by evidence of the intention of the parties, that, in either form, the valuation was designed to have the same legal effect; or, in other words, that the policy should read as if, instead of valuing the goods at two hundred and thirteen thousand dollars, it valued them at invoice and five per cent. This was properly excluded. (1) All that preceded the policy was merged in it. (2) The language-of the policy is perfectly clear: “ the said goods and merchandise hereby insured, are valued at $213,000.” Parol testimony was not admissible to vary or explain the contract. (3) The complaint alleged, and the answer admitted that the policy was a valued policy, and that the valuation was two hundred and thirteen thousand dollars, and not five per cent, over the invoiced cost. The defendant was permitted to prove everything that took place when the insurance was effected and what was excluded was evidence of intention, and of the usage of underwriters to vary the clearly-expressed terms of the policy. Usage is inadmissible for any such purpose, and especially the usage of a particular class not assumed or proved to be known generally, or to be known to the plaintiff.
II. Many of the questions on the general subject of the value of Mexican bonds, the objections to which were sustained, were incompetent in form. The de- ' fendants were not prevented from proving the value of the goods. They did not propose to do this ; but, some ■of the goods having been purchased for Mexican bonds, to shift the issue to a contest over the value of such bonds. This was inadmissible. (1) The question was of the value of the goods; a fixed, determinate matter, ¡susceptible of exact proof. The defendants, in the end, were forced to examine witnesses upon the point, and so showed that there was no difficulty in proving what the value of the goods was. The jury found, on this testimony, that there was no fraudulent overvaluation. The value of the goods was neither more nor less, from the fact that some had been purchased for Mexican bonds, or that the sellers had taken such bonds at one price or another. It appeared that there was no market value for Mexican bonds ; and the object of the defend- ’ •ants was to prove specific transactions in such bonds, •with a view to create a false impression of the value of " the goods. Both. Judge Fbeedmar and Judge Jores, in the cases tried before them, held that, properly, the issue was the value of the goods; and that, whatever was such value, it was immaterial what was the value ■of the bonds for which some of such goods had been' purchased. (2) For this reason, the pamphlet of the' plaintiff was inadmissible. The ruling of the Court, iñ reference to this pamphlet, was, however, correct upon' other grounds. The defendants claimed the right to introduce only parts of it. The plaintiff assented that the whole should be received, the plaintiff thus having the right to read such portions as the court deemed material and' relevant; but this the defendants declined. (3) It appeared that there had been government sales of military goods prior to the purchase of those in ques-. tion ; and the defendants attempted to prove prices at such sales. Their own witnesses showed that the purchases at such sales were by a combination, or pool, formed to prevent competition ; and the rule is clear, that a party can not show value by evidence of specific transactions, but must do so by the testimony of experts on the subject.
III. The charge of Judge Freedmaw was much moro favorable to the defendants than was their right. He directed the jury that the defendants were entitled to their verdict, if the jury came to the conclusion that the captain and mariners ought to have continued on board and endeavored to bring the “Keese” into port, and that they would have succeeded in doing so had they made the attempt; or, in other words, in accordance with the 23rd, 24th, and 25th requests of the defendants, that the plaintiff was not entitled to recover if the vessel was unnecessarily abandoned, or was lost in consequence of the negligence of the captain. The rule is just the reverse (See Draper v. Commercial Ins. Co., 4 Duer, 234, 239 ; and numerous other cases cited on the brief in the action against the Atlantic Insurance Company). The court was correct in declining to •charge the 30th of the defendants’ requests: that if the vessel and the goods were lost by the willful act of the master, and he was part owner, it was not a loss by barratry, nor by the perils of the sea, and that the plaintiff could not recover. This will scarcely be contended for by the appellants. Jones v. Nicholson (26 Eng. L. & Eq. 542), is a recent case establishing the rule to be just the reverse (See 1 Pars, on Mar. Ins. 571). The issue of fraudulent overvaluation was left, in a manner the most liberal to the defendants, to the jury; and their verdict conclusively exonerates the plaintiff from all imputation of unfair conduct.
IY. The rulings of the court on the introduction of ■evidence were all correct. The receipts, and the bills of lading, were properly received in evidence, not as •establishing the truth of their contents, but as part of the testimony of the witnesses to show the number of cases received. They were a part of the transaction, and supplemented the testimony of the witnesses (Cole-v. Jessup, 10 N. Y. 96). They were also admissible as part of the proofs of loss, the court expressly limiting-their effect.

Opinion:
By the Court.—Sedgwick, J.
The insurance in this case, was made by a valued policy. The policy contains the clause, "the said goods and merchandise-hereby insured are valued at two hundred and thirteen thousand dollars."
The valuation of a policy is deemed to be the result of an agreement between the insurer and insured, which liquidates the amount of the indemnity, which the insured is entitled to have, in case of loss. This agreement may be invalidated by the insurer, if his assent be procured, by material misrepresentation, fraudulently made. It is unnecessary to determine on this appeal that it may be avoided by anything less.' The answer substantially avers that the insured acted fraudulently in procuring the valuation in the policy.
It appeared that the policy was issued upon an application made by the insured, through his broker, to-which the insurer had assented. By the terms of the-application, the insurance was to be "on military goods and merchandise, valued at invoice and five percent. unless otherwise agreed." This clearly provided that at all events the policy was to be valued, but the-amount of the valuation was not specified. The amount, was either to be the subject of a future agreement, orín case such agreement was not made, the amount was^ to be "invoice and five per cent."
After this application was made and agreed to, the-plaintiff instructed his broker to have the valuation-made at two hundred and thirteen thousand dollars.. The broker testified that he went to defendant's attorneys and asked them "to fix the permanent valuation,"' :and gave the figures two hundred and thirteen thousand •dollars. It would appear that this was done for the purpose of having the policy immediately thereafter issued. The broker took the application, and making a line with the pen through the words " invoice and five percent, unless otherwise agreed," wrote above them "$213,000." Nothing further was said according to a construction of the testimony most favorable to the plaintiff. The policy was then made out in its present form.
Without now adverting to considerations peculiar to •contracts of insurance, it appears to me a correct position, that the facts that have been stated, leave -doubtful whether the amount named as the proposed permanent valuation by the broker, was proposed as :the amount of '£ invoice and five per cent.," and as such agreed to by the insured, or was proposed to fix the valuation independent of what in fact was the amount of "invoice and five per cent.," but under the phrase of the application " unless otherwise agreed." In naming two hundred and thirteen thousand dollars the broker had acted as he was instructed by the plaintiff. In -these instructions the plaintiff had said nothing as to .the mode in which the valuation was to be made. The broker had said nothing on that subject in his interview with the witness. Apart from naming a sum as permanent valuation nothing was said which indicated that an agreement was about to be made independent of " invoice and five per cent." If the parties intended to insert the amount of "invoice and five per cent." in the policy as the value, a sum for that purpose would have to be named, or at least it was appropriate and usual that it should be named. Therefore, the naming of the sum only, as the amount of permanent valuation, is not decisive evidence of the intention •of the parties. Although the broker struck out of the application "invoice and five per cent, unless otherwise agreed upon," that was not done to make a néw and.' independent contract, but was under the application as. it was made at first. At any rate, this is not certain one way or the other, as a matter of law.
The defendant had a right to take the verdict of the jury as to which was the correct construction of the-evidence, and to urge that as matter of fact the naming of two hundred and thirteen thousand dollars was-under the provision that the value was to be "invoice- and five per cent." and was a representation, therefore, that that amount was "invoice andfive per cent."(Simar v. Canaday, 53 N. Y. 298). If this representation was-untrue to the knowledge of the plaintiff, and the defendant acted upon it, the valuation was not binding-upon the defendant.
It was necessary to inquire what did ." invoice and. five per cent." mean. Literally it means, after supplying the word price or cost as understood, the amount: stated as price or cost in the invoice of the goods, and would imply the existence of a paper properly called an invoice. The word is used, however, to denote-other meanings. As is often the case in the use of words, the word invoice is sometimes used to designate things of which it is the frequent accompaniment or-evidence. An invoice accompanies goods, and states price or cost. Consequently an invoice of goods sometimes means the goods themselves, and invoice price or-cost sometimes means the prime price or cost of goods, although there is no invoice in fact. On the trial, therefore, the defendant had a right to show in what particular manner those words were used in the business of underwriting (1 Greenl. Ev. § 292, and note 8). They were employed in a transaction between an insurer and an insurance broker. The defendant, on the trial, put. questions to the witnesses on the subject, for the purpose of proving, as was stated, that the words meant. among insurers first cost or prime cost, irrespective of the existence of an invoice.
If these views are sound, we are obliged to sustain two exceptions upon the trial taken by the appellants. The first was to overruling the question put by defendant's counsel to the attorney of defendant in his insurance business. "State what, in the usage of underwriters, is the meaning of the term ' invoice cost and five per cent, added.' " The second was to overruling the question put by defendant's counsel to the-plaintiff, when a witness. " The $213,000 was intended by you, in the making of the insurance, to be what was first stated in their application as invoice cost, was it not, and five per cent, added ?" The plaintiff had instructed his broker to have the permanent valuation fixed at two hundred and thirteen thousand dollars. If the broker, although unwittingly, had that done as ' stating the invoice or prime cost, the plaintiff's design or purpose to cause him to do it was relevant to the-claim made by the defendant: 1st, that the sum was fixed at invoice or first cost; 2nd, that this was intentional and tended with other facts to show a fraud in the valuation.
There were other exceptions, that relate to attempts on the trial, by the defendant, to give evidence as to fraudulent overvaluation. The subjects of insurance were military goods, so-called, viz.: muskets, sabres, knapsacks, haversacks, pistols, shot, ammunition and infantry accouterments. The plaintiff had procured, them in 1867. By the testimony these did not have a market value. Our government was the principal source of supply. It would seem that they were such as were on hand at the end of the rebellion. The business was not of a kind that led to general competition. Prices given or demanded, depended upon the circumstances peculiar to the single instances of the sales and. purchasers. In such case value is to be ascertained by reference to the probabilities of the case (Sedgw. on Dam. 5 ed., p. 310, note 1), founded upon proof of facts, which in the ordinary transaction, of business, would affect the mind of a dealer in similar articles, in determining a price to be asked or given. And if the opinion of a witness, familiar with the market, can be given as to market value, it should seem clear that a dealer in articles that have no market value, can give his opinion as to value. Hot only would the jury have 'the facts which they should consider in determining value, but the aid of a skilled person in combining the isolated facts and in applying them practically to the point of inquiry.
A witness whose firm dealt in the kind of articles insured, which firm had sold a part of the goods insured to the plaintiff, amounting to thirty-nine thousand dollars of the valuation, was asked by defendants' counsel on cross-examination, "Did you not, because you took bonds in payment, charge forty per cent, more for those goods than their cash value, on that account ? ' ' An ob - jection to this question was sustained. This in effect called for the opinion of the witness, as to what was the cash value of the articles. The tendency of the question to elicit this, was not lessened, because the question suggested that the reason for charging forty per cent, more was that payment was to be made in bonds. If the witness had answered yes, the rest was matter of figuring. On cross-examination, the form of the question was not objectionable. In the absence of a market value, the cash value as called for from the witness was competent on the question of values, and the inquiry as to value was relevant to the defense of overvaluation fraudulently procured.
One of the facts the jury may consider in estimating - the value of articles that have no market value, is the cost of it to the party claiming the value/ Where a party to an action has given a price for goods, it is in the nature of an admission by him, as to its value.
In Smith v. Griffith (3 Hill, 338), Nelson, Ch. J., said, "Though the price paid by the plaintiff was not conclusive upon him, as he might have been fortunate enough to buy under the fair market value, yet it was some evidence of that market value, and might well have been taken into the account with the other testimony." Judge Co wen said, " The plaintiff was a party to the price, and virtually conceded that the net value of the trees was no more than he gave. It should have been received as high evidence, that they were really worth no more in New York" (Wells v. Kelsey, 38 Barb. 242, approved on that point in 37 N. Y. 143). Even on the question of market value, much more in the absence of a market value, was the cost of the goods insured to the plaintiff, evidence against him, of value.
On the trial, it appeared from a statement made by the plaintiff, of the first cost, that of the total first cost one hundred and ninety-four thousand seven hundred and ninety dollars, a part—one hundred and five thousand one hundred and eighty-two dollars—had been bought for bonds at sixty cents on the dollar. Thus the cost to the plaintiff, was not any number of dollars, but a number of Mexican bonds. In order that the jury might make a use of this relevant fact, it was necessary that the value of these bonds should appear in testimony, in the currency of this country. In this way alone could they compare this species of evidence as to value with the valuation of the policy, to determine whether there had been a misrepresentation as to invoice cost, if the valuation was intended to be that, or a gross overvaluation, if the plantiffs position was correct, that the valuation was made independent of invoice cost. Gross overvaluation was properly to be weighed on the issue of fraudulent overvaluation.
The plaintiff, being a witness in his own behalf, was asked on cross-examination by defendant's counsel,. "Did you estimate a Mexican bond to be worth sixty cents on the dollar at that time?" Other questions were asked, tending to draw from him what was his estimate of the value of Mexican bonds. These were objected to, and were overruled on the ground that they did not tend to show the market value of the insured merchandise. It had appeared that the Mexican bonds had no market value, and that the witness was an agent of the Mexican government, had dealt largely in the bonds, and was acquainted with the facts that determined the actual value of the bonds. The plaintiff's statement of the cost being evidence against himself of value, his belief or opinion, as to the value of Mexican bonds, was at least evidence of the quo animo he made the valuation at two hundred and thirteen thousand dollars through his broker. It was relevant to the issue of fraudulent valuation. I therefore think that the exceptions to the ruling upon questions of this class must be sustained.
While the plaintiff was under cross-examination a pamphlet was shown to him by defendant's counsel, entitled "The Republic of Mexico and its American Creditors," by Herman Sturm. The defendant's counsel offered to read in evidence all the parts of this book that related to the value of Mexican bonds in 1867. The plaintiff's counsel stated he had no objection to the book coming in evidence, but objected to parts of it being put in, and the court excluded the evidence offered, unless the whole book was put in evidence. The subject of the value of the bonds, and the plaintiff's estimate of that value, was, as we have seen, material. It did not appear, and there was no presumption, that the other parts of the book, not offered by defendant's counsel, referred to anything relevant to the issue. The defendant's counsel therefore offered all of the book presumptively that properly could be admitted. In Rouse v. Whited (25 N. Y. 173), it was considered as undisputed that a party has not a right to prove all that he said at the same time or in the same conversation (the other side having given part of what he said), solely because the further or other statements were made at the same time or in the same conversation. The rule was approved that when part of a conversation has been given in evidence, any other or further part might be given, which would in any way explain or qualify the part first given (Garey v. Nicholson, 24 Wend. 353). If the defendant's counsel had offered, what then appeared to be but a part of the declarations as to the value of the bonds, the plaintiff might have successfully objected that all that related to it should primarily be given in evidence ; but it was sought to force the defendant to offer in evidence, parts of the book, that did not appear to be relevant. I am of opinion, that the exceptions taken on this subject should be sustained. Of course, the times referred to should not be remote from the time of the transaction investigated.
Apparently, from the printed case, the plaintiff took the position that for the purpose of determining whether or not there had been a fraudulent overvaluation the value stated in the policy was to be compared with the market value. I think the testimony clearly showed there was no market value, so that the plaintiff's position must be changed to a comparison with actual value at time of shipment. I think, however, that the comparison should be, between the value stated in the policy and what the plaintiff could in a proper case have recovered upon an open policy. It perhaps may not be an universal and absolute rule in this State that upon an open policy, the insured shall only recover the invoice cost or prime cost (which in Leroy v. United Ins. Co., 7 Johns. 343, are deemed to be equivalent), besides the proper expenses, but there seems to be no doubt that the invoice cost or prime cost is prima facie evidence of the market value or real value (Grahn v. Broom, 1 Johns. Cas. 120; Suydam v. Marine Ins. Co., 1 Johns. 181; Leroy v. United Ins. Co., 7 Id. 343; 1 Pars. Mar. Ins. 246, 247, 248, and notes). For this reason, the question made upon the trial as to fraudulent overvaluation, materially involved what the actual cost was to the plaintiff, even upon the basis that the valuation was not upon invoice cost and five per cent., but upon a general agreement irrespective of that.
Upon the general proof that, for the most part, the dealers in the kind of goods insured were furnished by the government at auction sales, I think it was competent to show what prices were given at those auction sales for goods of the same character as those insured, and for this purpose to designate them by the names given to them in the evidence from plaintiff or in his statement to the insurance companies. The "average prices " were asked for. A particular objection would have required that this form be changed to inquire for the details of the prices. The defendant called for the average prices during the years from 1866 to 1868. I think he was properly limited to the year 1867, in which the sales to plaintiff were made. If there were any special reasons that justified the defendant in asking as to the years 1866 and 1868, they should have been shown in the first place.
The defendant's counsel asked of defendant's agent in making the insurance, "Would you have taken this risk, at the amount and valuation at which it was taken, if you had known that valuation was based in part on Mexican bonds ?" This would have called out a reflection of the witness upon a supposed state of facts. It did not ask for the actual effect on his mind of what was said by plaintiff ' s broker. It was properly overruled (Newell v. Doty, 33 N. Y. 83).
The receipts for the cargo by the mate, were allow ed in evidence by the court, who limited their effect to tending to prove the fact of shipment of somethirg, but not of what was shipped. There was in this nothing that may be successfully excepted to by the defendant.
For the reasons stated, I am of opinion that the judgment should be reversed, and a new trial granted, with costs to the appellant to abide the event. And also, that the motion for a new trial made upon the minutes of the judge, should have been granted, and that the order denying that motion should be reversed, with costs to appellant to abide the event.
Van Vorst and Speir, JJ., concurred.