Case Name: Warder against Horton and Cummings
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1812-07-18
Citations: 4 Binn. 529
Docket Number: 
Parties: *Warder against Horton and Cummings.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Binney)
Volume: 4
Pages: 481–492

Head Matter:
[Philadelphia,
Saturday, July 18, 1812.]
*Warder against Horton and Cummings.
In Error.
A and B American citizens, having learned from the captain of their ship, then in England, that he intended to bring home a cargo of salt, &c., for their account, effected insurance on goods, warranting them American property: C and D British merchants and the consignees of the ship abroad, loaded the ship with salt, &c., which they paid for with their own funds, and took a bill of lading from the captain, making the same deliverable to their agent in the United States. They at the same time insured the cargo in their own names in England, and instructed their agent to deliver it to A and B upon their paying him a sum exceeding the cost of the cargo; otherwise to dispose of it for account of C and D. The ship foundered upon her voyage to America.
Held 1. That A and B had no insurable interest in the cargo; that they could insure under the description of cargo, or goods; and quiere, if they had any at all. 2. That if they had, the warranty of American property was falsified by the British interest in C and D. 3. That this was not the case of a double insurance, because the insurances were not on the same risk and for the same person.
This was a writ of error to tbe District Court for the city and county of Philadelphia.
By the record and bill of exceptions the case was thus: Horton and Cummings, the plaintiffs below, were the owners of the ship Charlotta, R. M’Call master, which in the year 1806 sailed from Savannah to Liverpool with a freight of cotton, amounting to 435i. 7s. lid, and from Liverpool to Charente in Prance and back with a cargo of brandy, earning a further freight of 491i. 17s. 9d These sums and the concerns of the ship, were placed by the captain in the hands of Messrs. Logan, Lenox and Co. of Liverpool, who paid all the ship’s disbursements. On the 3d of August 1806, the day after the ship’s arrival from France, the captain wrote a letter to the plaintiffs of which the following is an extract. “ I have the pleasure of informing you of my arrival with your ship. If nothing of freight offers, I intend to come home as soon as possible with salt and crates on your account. I shall make as short a delay as possible at this place, and make the best of my way home.” On this letter, the foregoing extract of which accompanied the order for insurance, the plaintiffs, on the 5th of November 1806, directed insurance to be effected on the ship Charlotta at and from Liverpool to Philadelphia, and “ on cargo, 3000 dollars, valued at that sum, warranted American property, proof to be made here only.” The defendant Warder was an underwriter for 500 dollars on cargo. . The policy contained the usual clause, that if the assured should have made any prior assurance upon the premises, the assurers should be answerable in proportion to the sum by them respectively subscribed, only for so much as the amount of such prior assurance might be deficient towards fully covering the premises assured.
INo freight offering to the Charlotta, Logan, Lenox and Co. *purchased a cargo of salt, earthenware and crates, amounting to 329i. 2s. 3d. including their commissions, with which they loaded her; but having found upon closing her accounts after the cargo was on board, that the cost of the cargo exceeded the funds in their hands, for their own security they took a bill of lading on the 4th September in the names of Messrs. M’Clure and Robertson their friends in Philadelphia, for whose account and risk the invoice also stated the cargo to have been shipped, and accompanied it with a letter, directing them to give up the cargo to the plaintiffs on their paying the sum of 229b Is. lid. sterling; but if they would not pay that sum, M’Olure and Robertson were ordered to sell the cargo on account of Logan, Lenox and Co., and to pay the plaintiffs 100b Os. 3<b sterling, the balance due to them, throwing the cost of the cargo out of consideration. The letter announcing this arrangement, and one of the same import to one of the plaintiffs, were not received tmtil the 20th of November. The ship sailed with this cargo for Philadelphia on the 23d of September.
In a few days she put back to Liverpool, in consequence of an injury received by another vessel’s having run foul of her. Additional expenses were incurred; and when she sailed again on the 20th of October, Logan, Lenox and Co., by a letter of- the 18th, instructed M’Olure and Robertson not to deliver the cargo unless the plaintiffs paid the sum of 445b 10s. 2d. sterling, in which sum was included 4b 18s. the premium of an insurance effected in their own names upon cargo and freight. The insurance was effected upon freight, because for the excess of the 445b 10s. 2d. beyond the cost of the cargo, they took a receipt from the captain as for so much paid on account of freight. After the ship sailed the second time, she never was heard of. On the 2d of September 1807, Logan, Lenox and Oo. wrote to tbe plaintiffs, “ the cargo and balance on your account we insured, and have received the amount from our underwriters. A balance of a few pounds is due us, but as it was an unfortunate business, we will not ask for it. We insured the balance you owed us as freight, and took Captain M’Call’s receipt for it.”
If the cargo had arrived, the profit would have been about a thousand dollars.
'"Upon these facts the defendant below contended 1. That the plaintiff’s had- no insurable interest in the cargo. 2. That if they had, it was the case of a double insurance, and that being fully covered in England, nothing could be recovered here; and 3. That the warranty of American property had been falsified. His Honor the presiding judge, charged the jury, however, that there was an insurable interest, and that it was not the case of a double insurance. On the third point, after stating, that if the warranty had not been complied with, it was fatal to the claim of the assured, though the loss happened from an entirely different cause, he said “ that upon a disclosure of the whole facts, it was evident that there was mingled in the property in some degree a belligerent interest. That a development of all the circumstances would have reached a foreign prize court was highly improbable, yet not impossible. Under a full view of the whole case would the risk have been increased ? Could the insurance have been effected for the same premium? This branch of the investigation is left to the consideration of the jury.” The defendant took a bill of exceptions.
J. It. Ingersoll and Hallowell for the plaintiff in error.
1. There was no insurable interest. Horton and Cuimftings had neither property nor possession. The cargo was not purchased with their funds, nor shipped at their risk, nor to be absolutely delivered to them. Two things must have happened before any property could vest in them: the vessel must have arrived, and they must have elected to pay for the cargo. Where there is neither interest, property nor possession in the assured until the cargo shall arrive, he has no insurable interest. The point is plain both upon the general law merchant, and the particular law of insurance. By the general law, the bill of lading indicates the property; Evans v. Marlett, 12 Mod. 156 ; 1 Ld. Ray. 271, S. C.; but the shipper, if the real owner, may at any time before delivery countermand, because the property is not absolutely changed until delivery. Nay, if the shippers be mere agents in advance, and the bill of lading, filled to their own order and indorsed in blank, come to the hands of the #principal, the agents may nevertheless obtain and retain possession of the goods, until their advances be paid. Snee v. Prescot, 1 Atk. 245; Godfrey v. Furzo, 1 P. Wms. 185 Lickbarrow v. Mason, 1 H. Black. 357; Ellis v. Hunt, 3 D. & E. 469. What in this case prevented Logan, Lenox and Co. from countermanding their instructions to M’Clure and Robertson and directing a sale on their own account ? There was not even a contract between them and Horton and Cummings. By the law of insurance it is equally clear. The utmost length to which the cases have gone, has been to permit an insurance upon a hope of future gain connected with possession, or some interest which the law could recognize. 1 Marsh. 83. 1st ed.; 1 Condy’s Marsh. 107. The result of all the cases as stated by Sergeant Marshall is, that any qualified property in the thing insured, or any reasonable expectation of profit or advantage to arise therefrom, will constitute that sort of interest which the party may protect by insurance. But an insurable interest must still be founded on some legal or equitable title. A mere claim, notwithstanding as between the assured and the owner it may be thought reasonable, will not answer. 1 Condy’s Marsh. 115. It is impossible more accurately to discriminate between an insui’able interest, and that which is set up by the plaintiffs. Logan, Lenox and Oo. treated the property as their own; they insured it, and paid freight for it. It might have been attached for their debt3. If bankrupt, it would have passed to their assignees. By their abandonment, everything would have gone to their underwriters, and by the plaintiffs’ abandonment nothing. The property continued in every sense the property of the Liverpool house, until delivery here. Ludlow v. Browne, 1 Johns. 1 ; Toppan v. Atkinson, 8 Mass. Rep. 365 ; Bodwy v. Union Insurance Co., 1 Condy’s Marsh. 473. But be the interest of the plaintiffs insurable or not, it can only be so eo nomine, or under a proper description, It could not possibly be insured as salt and crates, or generally as goods. Tom v. Smith, 2 Caines 249. An insurance of such an interest, if permitted under the description in the plaintiff’s order, would *be a source of fraud. In fact they did not mean to insure such an interest.
2. If they had any interest, this was a double insurance. They reaped the advantage of the English insurance, because it paid their debt; and where two insurances upon the same risk and fund enure to the use of the same person, it is a double insurance.
3. The warranty was falsified. To verify such a warranty, the property must be wholly American for the purpose of being protected. How is it possible to doubt that a French Court of Admiralty would have condemned this property on account of its British interest; and if they would, it was not neutral to the extent of being protected. Several cases are in point. Arnold v. United Ins. Co., 1 Johns. Ca. 363; Murray v. United Ins. Co., 2 Johns. Ca. 168; Jackson v. New York Ins. Co., 2 Johns. Ca. 191. The Aurora, 4 Rob. 180, contains a case precisely like the present. There Sir William Scott asked, if there had not been a late case of goods sent by an enemy merchant to A a person in America, by order of B, and for account of B, but with directions to A not to deliver them unless satisfaction could be given for the payment, in which case the property was held not to be divested out of the enemy shipper, and condemned. And it was agreed by the counsel upon whom the question bore, that there had been such a case. To the same purpose are The Josephine, 4 Rob. 21, and The Atlas, 3 Rob. 243. The judge of the District Court supposed it improbable that a French court would know of the British interest; but that is not the question ; the parties agree if there is a Brit ish interest there is no contract. He states the fact of such an interest, and leaves it to the jury to say whether it increased the risk. He erred by putting the question upon a wrong point of law material to the issue, which is sufficient to reverse the judgment. Phœnix Ins. Co. v. Pratt, 2 Binn. 323.
Bradford and J. S. Smith for the defendants in error.
1. There was an insurable interest, What is it that is embraced by this expression is not perfectly clear; but whether we *adhere to definitions, or appeal to the analogy of adjudged cases, the present will be comprehended. Combining all the definitions, it seems to be a fair result, that it is enough if the assured has such an interest as upon a certain event will enable him to claim possession of certain property, or receive a certain benefit out of it. An equitable interest is sufficient, as in Godin v. London Assurance, 1 Burr. 489, where the assured had merely a promise of the bill of lading, which was in fact sent to another person. This case also shows that possession is not necessary. So it is sufficient if the assured have a promise of receiving part of the proceeds of the goods after an event takes place, which is however entirely contingent. As in Le Cras v. Hughes, 1 Condy’s Marsh. 108, where the captors of an enemy ship were held to have an insurable interest, although in law the crown alone had title. In Grant v. Parkinson, Ibid. 97, 109, there was neither a vested interest, nor possession of that in which the interest was claimed, but only a bare expectation of profit. It is asserted by Lord Kenyon as a general proposition, that a trustee, consignee, or agent -for prizes, has an insurable interest. Crawford v. Hunter, 8 D. & E. 22; Page v. Fry, 2 Boss. & Pull. 242, involves the same principle. The case of Hill v. Secretan, 1 Boss & Pull. 318, is in a considerable degree like the present. There, A being indebted toB, without any order consigned goods to C, with instructions to hold part for B his creditor; and it was held that B, though in nowise bound to take the goods for his debt, had an insurable interest. The court considered C as a trustee for B from the moment the goods were consigned to him, Erom all these cases it follows, that neither possession, nor a legal title, nor a certain benefit,’is essential. In fact anything which the assured can possibly derive advantage from, may be the foundation of an insurance. The present case has some peculiar features. Logan, Lenox and Co. undoubtedly bought the cargo for the plaintiffs. They loaded it on board the vessel for them, and charged a commission. Possession was given to the plaintiffs’ agent onboard their own ship. Until it was found that their *funds were not adequate to the entire purchase, Logan, Lenox and Oo. did not think of taking a bill of lading for themselves ; and when they did take it, they had no authority to divest the interest which the plain tiffs had in it by the purchase, and which is covered by the policy. But if this absolute interest was divested, still the plaintiffs at the first departure of the ship, had an interest in part, because part had been purchased with their money, and an equitable contingent interest consisting in the right to take the whole at first cost. For the subsequent advances, Logan, Lenox & Oo. had no right to change the state of the cargo; but if they had, still the cargo was in the plaintiffs’ ship, and they had a reasonable expectation of profit from it. A prize court would have considered the property out of the Liverpool merchants, from their charging a premium of insurance and a commission. As to the name under which the insurance was effected, it was proper, because the interest of the plaintiffs was strictly an interest in cargo. Commissions may be covered under the name of property. Holbrook v. Brown, 2 Mass. Rep. 282. They had as much an interest in cargo, as the assured had in Godin v. London Assurance.
2. This was not a double insurance; for it is not a case in which the insured has made two insurances on the same risk, and the same interest. 1 Marsh. 146. Several persons may insure several interests in the same thing, and may recover. 1 Marsh. 151. That is the case here.
3. The point of warranty was placed before the jury as it ought to have been. If the interest of one owner be insured, and if that interest be neutral, it is no breach of warranty of neutrality if another owner whose interest is not insured, be belligerent. The assured do not warrant that the whole cargo, or all the interests in it are neutral, but only that the interest insured is neutral. Livingston v. Maryland Ins. Co., 6 Cranch 274. “ If,” said Chief J ustice Marshall, “ the assured represented the whole cargo to be neutral when it was not, or if they concealed the interest of a belligerent, when it ought to have been disclosed, the effect of the misrepresentation or concealment on the policy depends on its materiality to the risk.” Hence in the present case, the *jury were told, that notwithstanding there was a belligerent interest in the cargo,-it was for them to say whether it affected the risk, -because this was not such, an interest as falsified the warranty. If the plaintiffs had an interest in the cargo, however small, the warranty was- not broken, provided their interest was distinct from that of the belligerent. The case above referred to, is from the highest judicial authority in the country, and is in direct opposition to the New York cases.

Opinion:
Tilghman C. J.
This was an action on a policy of insurance on goods valued at 3000 dollars, the cargo of the ship Charlotta, on a voyage from Liverpool to Philadelphia, warranted American property. Warder, the defendant below, who is plaintiff in error, underwrote the policy for 500 dollars. The case comes before us on a bill of exceptions, and there are three questions for decision. 1st. Whether the plaintiffs had an insurable interest in the goods. 2. Whether there was a double insurance. 3d. Whether the warranty of the property being American was complied with.
[The Chief Justice then stated the material facts.]
I consider M'Clure and Robertson as no more than the agents of Logan, Lenox and Co., and bound to obey their instructions in all respects. Consequently the property was not vested in M'Clure and Robertson, but remained in Logan, Lenox.and Co. Captain M'Call, by signing the bill of lading, acknowledged that the property was not in the plaintiffs. Indeed the plaintiffs had no right to the property either by law or equity. Logan, Lenox and Co. were under no obligation to advance their money to purchase a cargo for the plaintiffs, who were perfect strangers to them. They had a right to retain the property in themselves, until they were fully reimbursed; and that they intended to retain it, they explicitly declared in their letters, both to their agents and to the plaintiffs. Then what kind of interest had the plaintiffs? No other than what arose from the order of Logan, Lenox and Co. to deliver them the cargo on payment of a certain sum, which exceeded the cost of the cargo with all charges. Now if there had been occasion to abandon to the underwriters in Philadelphia, what would the plaintiffs have had it in their power to abandon ? Nothing at all, because *^)e abandonment made by Logan, Lenox and Co. to the English underwriters, would have carried every thing. The cases cited by the plaintiffs' counsel, do not come up to the point. The strongest of these cases are an insurance on profits, an insurance by an agent of prizes, before the king had granted the property to the captors, and an insurance by A, who having a debt due to him from B, goods were consigned by B to his own agent C, with orders to deliver them to A in payment of the debt. As to the insurance on profits, it is to be remarked, that it was made for the use of the person who owned the goods, and had them in possession, and who therefore might abandon both the goods and the profits expected to he made out of them. This was the case of Grant v. Parkinson; and it is material, that in that case, the insurance was not generally on goods, but it was specially expressed that' the goods were valued at 1000Í., " being the profits expected to arise on the cargo of the above ship in the event of her safe arrival at Quebec." (See this case cited in 1 Condy's Marsh. 97.) So an interest of a consignee in his commissions is insurable; but the special nature of the interest must be mentioned. In the case of the prize agent, the property in strict law was in the king, but the custom of granting all prizes taken from an enemy to the officers and men of the capturing ship, is so constant and uniform, that the court thought it no unwarrantable departure from rigid law, to consider it as an insurable interest. It is a case sui generis, from which no general inference is to be drawn. In the case of goods consigned to his own agent by the debtor of A, with orders to deliver them to A in payment of the debt, the consideration might be said to be paid, on A's making his election to take the goods. A's effecting an insurance, did, at least between him and the underwriters, amount to an election; and he would not have been permitted afterwards to demand a return of premium from them, on the principle of his having no property. But the case before us is very different. When the plaintiffs effected the insurance, they supposed that their captain had funds, with which he would be able to purchase a cargo in England. But in this they were mistaken. The cargo was not purchased with their funds, or shipped as their property, nor could any election *of theirs, cause an interest to be vested in them, until they had paid the whole cost and charges, and more. I do not think it necessary however to determine, whether, if the plaintiffs had known and fully explained to the underwriters the nature of their situation, the law would have permitted an insurance to be made- on their right to take the goods at a certain price, from which they expected to make a profit by the sale in this city; because I presume that the question before the jury, was whether plaintiffs had an interest insurable in the manner in which it was insured, and in that point of view, I am of opinion that they had not an insurable interest.
2. If the plaintiffs had not an insurable interest, it was because the property was vested in some other persons, and those persons were not Americans, consequently the warranty was broken. This possibility of property can never be called property, within the fair construction of a warranty, which engaged that it should be bona fide American, so that it could not be condemned by the French, without a breach of the law of nations. It is perfectly immaterial, and useless to conjecture, whether the true nature of the transaction would have come to the knowledge of the French Court of Admiralty, in case of capture. We ought rather to suppose, that with that knowledge the court was called upon to decide. How could they separate this imperfect right claimed by American citizens, from the substantial property remaining in the English subjects who shipped the cargo? They would have been justified in condemning it. The very case, or rather a stronger one, has happened and been decided by one of the belligerents, the English. In the case of the Aurora, Lindberg master, 4 Rob. 181, Sir William Scott asked Mr. Lawrence, whether there-was not a case very lately, of goods sent by a merchant in Holland to A, a person in America, by order of B and for account of B, but with directions to A not to deliver them, unless satisfaction could be given for the payment, in which case the property was held not to be'divested out of the Dutch shipper, and condemned. Lawrence, against whom it bore hard, answered that the case had occurred, but the goods - not going to the hands of the purchaser, but to a third person, who IrӤk'fc supposed to keep up the *possession of the shipper as an intermediate agent, it might be distinguished from that before the court. So in the case before us, the bill of lading being sent to the agent of the English merchants, the possession as well as the property continued in them. I am therefore of opinion that the warranty was broken.
3. Was there a double insurance? I think not. To constitute a double insurance, the property must be twice insured on the same risk, and for the benefit of the same person. If different persons claim different interests in the same subject, each may insure his own interest, and yet the insurance is not what the law esteems double.
The house of Logan, Lenox and Co. did not insure on account of the plaintiffs but on their own account. Therefore if the plaintiffs had a separate interest, there was no reason-why they might not insure it, and recover on their own account, although Logan, Lenox and Co. had received the invoice value of the goods from the English underwriters.
I am of opinion on the whole, that the judgment should be reversed, and a venire facias de novo awarded.
Yeates J.
I fully admit the correctness of the general legal principles laid down in the charge to the jury in the District Court; they are faithfully extracted from the books. But I cannot bring myself to agree to the application of those principles to the special circumstances of the case before the Court.
The evidence is wholly written; there is no contrariety in it. The bill of lading, which is the usual proof of property on the shipment of goods, is dated September 4th 1806. It expresses that 100 tons of stowed salt, 12 tons 3 cwt. of coals, and 20 crates of earthenware, were shipped at Liverpool by Logan, Lenox and Co. on account of M'Clure and Robertson merchants in Philadelphia. The shippers insured the goods in London on their own account, and on the 18th of October 1806, they wrote as well to M'Clure and Robertson, as to the plaintiffs below, that the goods were to be delivered to the latter on no other terms than their paying 445i. 10's. 2d. sterling to the former. The vessel sailed two days afterwards, and not having been since heard of, must have foundered at sea. *It is evident to me, that the cargo was subject to the orders of Logan, Lenox & Co. It was purchased by them with their own funds, sailed at their sole risk, and in the event which has happened, if they had not provided against it by insurance, the loss must have fallen upon themselves. Whether the plaintiffs below would ever acquire any property in the goods so shipped, depended on three contingencies, the safe arrival of the goods, their election to take them, and their actual payment of the sum stipulated. All these events must have occurred, before the legal interest in the cargo, could have vested in Horton and Cummings. The only exclusive privilege which they had, was the permission granted to them to purchase the goods at the prime costs and charges: and I cannot possibly think that they had such a legal or equitable title in those goods as the law would recognize, and confer on them an insurable interest. The intention of Logan, Lenox and Co. to preserve the absolute property, in themselves, is evidence throughout the whole transaction, and cannot be mistaken ; although in one of the minor parts, in charging the plaintiffs below with 4i. 18s. for premium of insurance, they appear to have overshot the mark.
I agree with the District Court, that there has been no double insurance in this case, for the reasons detailed in the charge. But on the remaining point, I cannot concur.
The cargo of the Charlotta was warranted to be American property, to be proved here only. The court correctly told the jury, that if the warranty had not been complied with, it was fatal to the claim of the assured, although the loss happened from an entirely different cause. This is the clear settled commercial law; whether the thing warranted was material or not, whether the breach of it proceeded from fraud, negligence, misinformation or any other cause, the consequence is the same. The contract is not binding, unless the warranty is complied with. 1 Condy's Marsh. 348. The court says, that upon a disclosure of the whole facts, it is evident that there is mingled in the property a belligerent interest; but in the close of the charge it was submitted to the jury, whether the risk was increased thereby, and whether the insurance could have been effected for the same premium? It is a very evident proposition, that intermingling *neutral with belligerent property, increases the risk, and that such a circumstance is seized on with avidity in the prize courts. The warranty was falsified by blending belligerent with neutral property, in the light wherein the subject insured was viewed by the District Court, and the contract was no longer binding. It was therefore a material error to put the point of warranty to the jury on the quantum of risk or premium, which could have no effect on an established rule of insurance. On this ground the judgment in Dansdale v. Burd, 2 Binney 324, was reversed.
I am of opinion that the judgment of the District Court be reversed, and a venire facias de novo be awarded.
Brackenridge J.
I am clearly of opinion that the judgment should be reversed, because the warranty was not performed, and I incline to think there was no insurable interest.
Judgment reversed.