Case Name: James Whiting, use of the Sun Mutual Insurance Company vs. The Independent Mutual Insurance Company
Court: Court of Appeals of Maryland
Jurisdiction: Maryland
Decision Date: 1860-05-09
Citations: 15 Md. 297
Docket Number: 
Parties: James Whiting, use of the Sun Mutual Insurance Company vs. The Independent Mutual Insurance Company.
Judges: The cause was argued before Le Grand, C. J., Eccles1ton and Bartol, J.
Reporter: Maryland Reports
Volume: 15
Pages: 297–330

Head Matter:
James Whiting, use of the Sun Mutual Insurance Company vs. The Independent Mutual Insurance Company.
Three policies,- on a Teasel, the firát for §7300) the second for $7400; and the third for $7300, werfe effected on three successive days; in three-separate insurance companies. Each policy contained the American clause, arid covered the same period and the same risks, and in each the vessel was valued at $99,000. A loss of $2189.04 occurred, and the assured brought three suits therefor, one against each of the companies. In that against the first company he recovered a judgment for the whole amount of the loss, which was paid hy Bat company, and the judgment satisfied. The suit against the second company was then entered for the use of the first company and was prosecuted for its benefit to recover the proportion of the loss for which the second company was answerable on its policy. Hiiim-i
1st. That the liability of tiro second co&ípaiiy on its policy was not, in’ any maimer, affected by the American clause, and the assured had a clear right to recover from it that proportion of the loss which the amount underwritten in its policy bore to thfe whole amount at risk.
2nd. As soon as the loss occurred, the liability of the second company to pay its just proportion thereof was fixed', and became a debt duo the assured, which, like any other chose in áction, might be sued for and recovered, or assigned.
3rd. The several underwriters were strangers to each other; there was noprivity between them, and each was liable on its separate contract for its just proportion of the loss; they were not co-sureties and neither was bound to pay the whole, with the right of calling on the others for couIribution.
4th. The payment of the whole amount by the first company did not discharge the second company from Us liability to the assured, for its proportion of the loss, unless such payment was made and received with the intention and for the purpose of satisfying and discharging the debt due by the second company.
5th. The payment by the first company, not having been made on behalf ■ of the second company, or for the purpose of satisfying and discharging its debt, the suit against the latter was properly entered for the use of the first company which is equitably entitled to be protected in its prosecution.
6th. The payment made to the assured, by the first company, does not enure to the benefit of the second company, which is a stranger to the transaction, and is no bar to a recovery in the suit against the second company.
7th. The judgment against the first company,'for the whole amount, does not affect the rights, or liabilities of the second company in the suit against it; the second company was no party to that judgment; it was res inter alios, and neither binds nor discharges the second company; inter partes the judgment is an estoppel, but it cannot operate on strangers.
On a marine policy of insurance, the liability of the underwriter for loss, whether total or partial, is to pay that proportion which the amount underwritten bears to the whole amount at risk.
The proviso in marine policies, generally called “The American clause,” is to be construed by its terms, in the same manner as any other written instrument, and so construed, it applies only to cases of double insurance.
The purpose for which the clause was introduced, although it may afford some aid in arriving at its meaning, cannot control the construction of its language.
Where the assured, after loss, assigns his right to recover that loss, such assignment, like that of any other chose in action, gives the assignee an equitable interest and a right to recover, in the name of the assignor, subject to set-off and all other equities.
Where a stranger pays the debt of another, without his consent or knowledge, such payment does not necessarily discharge the debtor and cannot be taken advantage by him unless he can show it was intended by the payer and receiver to operate a discharge.
When it is said a marine or fire insurance is a contract of indemnity, the meaning is, that in order to support it the assured must have some interest in the thing insured, which is at risk and liable to be injured, and that no action can be maintained on the policy, unless there has been some loss incurred.
Appeal from the Superior Court of Baltimore city.
in this case an action of assumpsit was brought at May term 1855, of the court below, by the appellant, Whiting, against the appellee, on a policy of insurance, made by the defendant, on the 16th of March. 1854, to the amount of §7400, on the barque £íA. A. Drebert,” valued in the policy at §22,000. Plea non assumpsit. with agreement to waive all objections to the form of action and errors in pleading, and with leave to either party to give in evidence any matter which would be admissible under any form of action or issue. The record also shows that some time prior to the trial the case -was entered for the use of the Sun Mutual Insurance Company.
Exception. At the trial an agreement of facts was submitted, from which it appears that Whiting, the owner of the vessel, obtained three policies of insurance upon her in each of which she was valued at §22,000, viz., one from the Sun Mutual Insurance Company, dated the 15th of March 1854, to the amount of §7300; one from the Independent Mutual Insurance Company, dated the 16th of March 1854, to the amount of $7400, and one from the Commercial Insurance Company, dated the 17th of March 1854, to the amount of $7300. Each of these policies were for the same period and covered the same risks, and were produced and read to the jury, and' each of them contained the proviso or clause set out in the opinion of this court, similar to that known as the “American clauseThe vessel sailed upon the voyage indicated in the policies and sustained injury from the perils insured against, to the amount of $2189.04, after deducting new for old. After the occurrence of this loss, Whiting instituted three suits (of which this is one) against each of said companies, and, on the 4th of December 1855, recovered judgment against the Sun Mutual Insurance Company for the whole amount of the above loss, with costs, and this judgment was satisfied and, paid, in full by the Sun Mutual Insurance Company; during the trial of that case no question of the proportionate or pro rata liability of said company was raised by the Sun Mutual Insurance Company, or its attor ney, and, on satisfaction of said judgment by the Sun Mutual Insurance Company, Whiting paid to the Independent Mutual Insurance Company the premium which was in the consideration for the insurance made by that company. The registry and American ownership of the vessel were also admitted, and it was agreed that any or all of the above facts may be offered in evidence under the present pleadings in the case in the same manner as if the matter had been specially pleaded by pleas puis darrein continuance or otherwise, and also that they may be given in evidence under this agreement, in the case pf The Sun Mutual Insurance Company vs. The Independent Mutual Insurance Company, now pending in the Superior Court. The defendant then offered two prayers, in substance as follows.
1st. If the- jury find, from the evidence, that prior to the date of the policy sued on, Whiting had made another insurance upon his vessel, for- the same voyage, in the Sun Mutual Insurance Company, and that the injury for the indemnity of which this action was brought, was occasioned by perils insured against in each of these policies, and that the whole amount of the injury did not exceed the sum for-which the vessel was insured in the Sun Mutual Insurance Company, and that, he sued for and has recovered full indemnity for such injury in an action against the Sun Mutual Insurance Company, then the jury must, in this case, find a. verdict for the- defendant.
2nd. (Alternative prayer.) If the jury find, from the evidence, that Whiting was insured oii his vessel on the same-voyage in each of the three companies above mentioned, and that the loss was from perils insured against in each of these companies, then the plaintiff in this action is only entitled to recover from this defendant such proportion of said loss as the sum insured by this defendant bears to the amount at which the vessel is valued in the policy on which this suit is brought.
The plaintiff then asked the court to instruct the jury, that upon the facts admitted in this cause, the Sun Mutual Insurance Company were to the plaintiff responsible for pnly ¿55 of the loss mentioned in the statement of facts, and that any payment beyond the proportion for which the said company was so liable to the plaintiff, does not exonerate the defendant in this cause from any loss for which the defendant was liable, provided' the jury shall find that this suit is now prosecuted for the benefit of ihe Sun Mutual Insurance Company.
Whilst these prayers were being discussed, and before the court had given any decision thereon, the plaintiff’s counsel made to the defendant’s counsel the offer set out in the opinion of Judge Ecclestou. The court (Lee, J.) then rejected the plaintiff’s prayer, and without passing on those of the defendant, instructed the jury that upon the facts stated in the admissions of facts, their verdict must be for the defendant. To which ruling of the court, rejecting the plaintiff’s prayer, and instruction to the jury, the plaintiff excepted, and the verdict and judgment being in favor of the defendant, the plaintiff appealed.
The cause was argued before Le Grand, C. J., Eccles1ton and Bartol, J.
Vivian Brent and Levin Gale, for the appellant,
argued:
1st. That each of the policies was upon separate and distinct interests in the vessel. That consequently there was no double or over insurance to which the American clause could apply, and that, there being no double or over insurance, the company now sued, has nothing to do with what was paid by, or recovered from, the other companies, and cannot defend itself on account of any transactions with those companies. 3 Kent, 347. 2 Parson’s Maritime Law, 97, 100. 2 Phillips on Ins., secs. 1176, 1261. Angell on Fire & Life Ins., secs. 249, 271. 16 Wend., 386, Ætna Fire Ins. Co. vs. Tyler. 14 Wend., 399, American Ins. Co. vs. Griswold. 2 Barn. & Cress., 255, Clark vs. Blything, 2 Marshall on Ins., 691, Mason vs. Sanisbury. 4 Bing., N. C., 272, Yates vs. Whyte, et al. 80 Eng. C. L. Rep., 365, Dalby vs. Life Ins. Co. 4 Mass, 336, Stetson vs. Mass. Fire Ins. Co. 15 Moss, 344, Coolidge vs. Gloucester Marine Ins. Co. 2 B. Monroe, 50, Franklin Ins. Co. vs. Drake.
2nd. That the payment of the Sun Mutual Insurance Company did not operate to extinguish the claims against the other companies, especially as between the plaintiff and that company, since the settlement is treated by both of them as an equitably assignment, and this suit is now actually prosecuted for the benefit of the Sun Mutual Insurance Company. 5 H. & 423, Merryman vs. The State. 14 Wend., 399,, American Ins. Co. vs. Griswold. 3 Metcalf, 69, Wilson vs. Hill. 1 Wheat., 233, Welch vs. Mandeville. 2 G. & J., 344, Williamson vs. Allen.
A. S. Ridgely, for the appellee:
1st. Every insurance to which the law gives effect is, in its; nature, a contract for indemnity from loss, as distinguished from a contract by way of gaming or wagering. It is in its-nature, a guaranty of the insured against loss or injury to-the subject of the insurance, by the intervention of some> peril covered by the policy. Its intention is not to put the party insured in as good condition as he would in fact have been had no loss happened. It only means that he shall be repaid the expenses incurred, and so much of the insured subject as is lost. 1 Phillips on Ins., secs. 1, 2, 124. 9 East, 81, 82, Godsall vs. Boldero. By the proof in this cause, what were the expenses incurred, and how much of the insured subject was lost ? The only proof is in the statement of facts, which admits the vessel was injured to the amount of $2189.04, and the only inquiry now is, has that sum been paid the assured ? by whom, and under what circumstances? and the effect of that payment upon the rights of the plaintiff to recover in this action ? The statement of facts shows that three suits were brought, one against each of the insuring companies for this amount. The case against the Sun Mutual Insuranee Company was prosecuted, and judgment recovered for the ivhole of this amount, and the plaintiff was of this judgment satisfied and paid in full by that company. In other words, the assured’s claim for full indemnity was prosecuted to judgment against that company, and, by payment of that judgment, was satisfied in full. Assuming, therefore, that a right of action existed originally against all three of these companies, the right was arrested the instant Whiting received full indemnity for his loss, no matter from what source that indemnity was derived. 2 Smith’s Lead. Cases, (5 Amer. Ed.,) 309. 2 Barn. & Adol., 193, Irving vs. Richardson. It is submitted, therefore, that upon the facia admitted in this case, the plaintiff was not entitled to recover. The indemnification of the insured, in respect to which his action upon the insurance contract is alone maintainable, was obviated by the payment made by the Sun Mutual insurance Company. The plaintiff’s demand is for indemnity, in the language of Lord Mansfield, 2 Burr., 1210, “A party cannot receive two satisfactions for the same loss; whatever undoes the damnification,, in whole or in part, must operate on the indemnity, in the same degree.” “It is a contradiction, in terms to bring an action for indemnity, when, upon the whole event, no damage has been sustained.” This principle is affirmed by Lord Fllenborough, in Godsall vs. Bollero, 9 East, 82, and, though subsequently overruled as applying to insurances upon lives, it has, as respects marine and fire insurances, by both the courts in England and in this country, been re-enunciated and endorsed to the fullest extent. 2 Smith’s Lead. Cases, (5 Am. Ed.,) 296, 309. 12 East, 493, Tunno vs. Edwards. 28 Eng. Law & Eq. Rep., 312, Dalby vs. India & London Life Ins. Co. 2 Barn. & Adol., 193, Irving vs. Richardson. 6 Cowen, 635, Lucas vs. Jefferson Ins. Co. 11 Melcalf, 195, Brinley vs. National Ins. Co. Not only has the plaintiff received full indemnity for his loss, but the judgment against the Sun Mutual Insurance Company was treated by him as full satisfaction of that loss, as the admitted facts clearly show. Would he have paid the appellee the amount of the outstanding- premium note due for his insurance, had he considered lie still had a claim against it unsettled? It being shown, therefore, that the sum paid by the Sun Mutual Insurance Company was received by the plain tiff in full satisfaction of all the insurances, it constitutes an available defence in the present action. The case of Lucas vs. The Jefferson Ins. Co., 6 Cowen, 635, was an insurance against fire, and, ordinarily-, there is a marked distinction between marine and fire insurances, in regard to the mode of adjusting losses. In the former, unless -otherwise provided in the policies, in cases of paYtial loss, the insurer is liable only for such proportion thereof as the amount insured by him bears to the whole amount at risk. In the -latter, he is liable to make good all the actual damage sustained-, if within the amount insured, whether the loss be partial or total, -and this without regard to the amount of the risk taken by the assurer himself, and if there are other underwriters he has a remedy against them for contribution. Ellis on Fire Marine Ins. 136. Angell on Fire & Marine Ins., sec. 248. Parson's Mercantile Law, 537. Sometimes, however, a clause is inserted in fire policies, the operation of which is to limit the obligation of the underwriter to a pro rata liability. 3 Phillips on Ins., sec. 1265. Such a clause was contained in the policy of the Jefferson Insurance Co., -in the above case, establishing an analogy between that case and the present, and though the ruling of .the court was against the defend- ' ant, it was because the facts in that case differed from those in this* There was .no proof showing that Lucas' had been fully indemnified, while it is admitted in this case that Whiting was. There the plaintiff’s proof showed the loss to be $20,000. The Chatham and Aütna companies settled without suit, being allowed a deduction of -one-sixth for prompt payment, and, the court say, the presumption was that the policies were alike as regards the pro rata clause, and that they only paid what they were bound .to pay, not contemplating any action for contribution against the other company. Lucas claimed $20,000, and they paid only $9583.04. Nor was it any where pretended that the payment of the Chatham and JEtna companies was received in full satisfaction of the plaintiffs loss. Had it been so received, the ruling of the -court would have been in the defendant’s favor, for, on page " 641-, they’ say, '“the' plaintiff- claims of the defendants'the proportion they were bound to pay under their policy. They contend it has been paid by otiier companies. But, to make this defence available, it must be shown that the companies paid, in fact, a sum of money which was received in full satisfaction of all the insurances.” 'If these positions be sound, as between Whiting and the defendant, there can be no recovery in this action.
2nd. The next inquiry ic, does the entry of the case to th'é use óf the Sun Mutual Insurance Company, place the defendant in any worse position? We contend that it does not. As much of the strength of this position depends upon the intention of the parties, we must recur to the proviso, or American clause, as it is called, contained in each-of these policies-, and examine the conduct of both the legal and equitable plaintiff in the suit in which the latter was defendant. It is not proposed to discuss the origin or object of this clause, nor to examine what interpretation usage has put upon it in other cases and elsewhere. This matter has been elaborately considered in the casé of the American Ins. Co. vs. Griswold, 14 Wend., 399. The language of the clause is confessedly ambiguous. Interpreted by usage, uncontradicted by a manifest intention of the contracting parties, it may mean one thing; interpreted by that intention, it may mean another. But the maxims for the exposition of contracts are'simple and consistent, and well calculated to effect their sole object, viz: to do justice between the parties by enforcing a performance of their agreement, according to the sense in which they mutually understood it at the time it was made. That the parties in this case contracted with the mutual intention that the Sun Company was to be primarily and exclusively,-liable to tile extent of their subscription, in the event o-f any loss, seems to be proved by -the subsequent conduct of both, which shows that they admitted the clause, intending thereby to provide that the Sun Company should be first and only liable to the extent of §7300 in the event of loss to that amount, and that the subsequent insurances were made by Whiting, with the expectation, that, in the event of the loss exceeding that amount, the other companies should be successively liable to the extent of their separate undertakings. The reference to the return of premiums was to be effectual only in the event of over-insurance.. But as there- was is in this case no over-insurance, but aliment sufficient to feed all the policies, there was no case presented for a return of premium. The risk attached to all, and had the loss been $22000, they would all have had to pay. Had it been $14000, the first and second companies only. They confused the principle governing marine with that which governs fire insurances, save only the right of the first company to sue the subsequent insurers for contribution, which they considered expressly provided against in this clause. That this was the plaintiff’s understanding, is evinced by his prosecuting the suit to judgment; otherwise his. conduct was fraudulent, which cannot be presumed. The defendant so understood it, or it would have raised the question at the trial. If usage has put a different interpretation on the clause, knowledge of the usage (either directly or by proving its universality) must be brought home to the ■parties, to make it effectual in interpreting their contract. Usage is admissible in the interpretation of contracts, because it interprets the otherwise indeterminate intention of the parties. 2 Sumner, 567, Schooner Reeside. But if -these intentions are determined by the express words of the contract, or by the conduct of the parties to the contract, or other evidence uncontradicted, the object of its admission fails; it no longer interprets the intention of the parties. 2 Parsons on Cont., 50, 51. Smith on Cont., 34, note, and cases referred to. 2 Gill, 78, Benson vs. Boteler. 2 Md. Rep., 239, Merchants Mutual Ins. Co. vs. Wilson. 13 Pet., 89, Bradley vs. Steam Packet Co.
That such was their intention — their actual contract — looking at the verdict and judgment in the case against the Sun Company, as admitted in the statement of facts, must be presumed by the court in this case. Everything that they could object will be presumed to have been made in the trial against them, and overruled. The court will presume that the particular thing required to sustain the judgment was proved at •the trial. 8 Gill, 75, Merrick vs. Bank of Metropolis. If the intention of the parties were, as we have contended, there can be no recovery in this action. If, however, the court think the contract cannot be thus interpreted, yet, bearing in mind the conduct of the parties, as already alluded to, we now contend that at no time, from the beginning of the suit of Whiting vs. Sun Co., did either otherwise than believe that that company was answerable for the whole amount of the loss, and that the payment of the judgment was to release that company from a liability incurred, through mistake of law it may be, but not with an intention to acquire a beneficial interest in this suit, so as to entitle them to any quasi equitable consideration of the court. The entry of the use was an afterthought. The payment of the judgment satisfied Whiting. By it his damnification is repaired. If the loss has already been recovered and paid, the claim for a ratable proportion against this defendant is necessarily extinguished. That the plaintiff thought so, is manifest, from his paying the amount of the premium due this defendant. The judgment in the case of the Sun Company was obligatory on them. They paid the whole amount to satisfy the judgment — to avoid execution — they had no alternative. Not objecting to the amount claimed against them, not raising at the trial the question of pro rata liability, amounts to a virtual confession of their liability for the whole amount. That they intended thus to make themselves liable for the whole of their subscription in the first instance, and then seek indemnity by way of contribution, or by having this entry to their use made, it is absurd to suppose. If, under their contract, they were liable for only -HdW of the loss, their permitting the judgment to go against them for the whole amount, was done either voluntarily or through ignorance. If done voluntarily, they must stand the loss — volenti noil jit injuria. It certainly gives them no claim against this defendant. Every claim arises out of a contract, express or implied. No one can be made a debtor against his will. 2 Comyn on Cont., 151. 5 H. & J., 426, Merry-man vs. State. 13 Pet., 412, Heirs of Emerson vs. Hall. 1 G. & J., 497, Mayor C. C. of Balto. vs. Hughes. 5 Gill, 247, Morris vs. Mayor & C. C. of Balto. 1 Parsons on Cont., 392. 4 Johns., 244, Hall vs. Shultz. If through ignorance they are in no better position. Jgnorantia legis neminem. excusat, applies equally to civil rights and criminal offences. 2 Parsons on Cont., 556. 6 Clark if Finnelly, 968, Stewart vs. Stewart. 4 Gill, 431, Mayor & C. C. of Balto. vs. Lefferman. 5 Gill, 247. If a patty pay money through mistake of law, he cannot recover it back. 13 Pet., 269, Bend vs. Hoyt. 6 Barn. & Cress., 671, Milnes vs. Duncan. 5 Gill, 242, Gordon’s ex’crs vs. Mayor & C. C. of Balto. 4 Gill, 431. If it was the fault of his attorneys, his remedy is against them; but as between client and third parties,, whatever is done by the attorney in the progress of the cause, is done by the client, and is binding upon Rim to whom the attorney is answerable for the faithful dis nharge of his duty. 2 Md., Ch. Dec., 425, Thornburg vs. Macauley. 3 Md. Ch. Dec., 392, Kents vs. Ricards. 7 H. & J., 278, Henck vs. Todhumter The entry to the use rpakes no difference., 3. G. & J., 75, State vs. Dorsey. 3 H. & J., 437, Hollins vs. Barney. The idea of having this suit entered to the use of the Sun. Company formed no part of the consideration of the judgment against them. The., payment was made to discharge the liability of that, company, upon the judgment which was obligatory of such payment, and that company neither did nor could intend thereby to acquire any beneficial interest in this suit. 2 G. & J., 356,. Williamson vs. Allen, et al.
3rd. But tjh,e judgment against the Sun Company for the whole amount of. this loss was solemnly pronounced and re-, corded by a court, of competent jurisdiction. To this judge, ment no objection, appears to have been made, and from it< no appeal was taken. On-the contrary it was acquiesced in. by that company and has been paid to the plaintiff, and whether right or wrong, it cannot be inquired into in this collateral manner. It was an adjudication by a court of competent jurisdiction, and conclusively settled the liability of that company, upon its policy, for the whole amount of this loss. 1 Gill, 214, Bowie vs. Jones. 9 Gill, 241, Powles vs. Dilley. 3 Md. Rep., 60, Ramoul vs. Griffie. 14 How., 586, Huff vs. Hutchinson.

Opinion:
Bautor, J.,
delivered the opinion of this court.
The policy on which this suit was brought was underwritten by the appellee, on the 10th of March 1854, and a partial loss having occurred from the perils insured against, the question presented for our decision is, whether the appellee is liable in this action for any portion of the loss?
On a marine policy, the liability of the underwriter for loss, whether total or partial, is to pay that proportion which the amount, underwritten bears to the whole amount at risk. No authority need be cited in support of this rule; it is universally conceded to be the law governing such contracts, unless there be in the policy some stipulation to the contrary. In the case- before us, which is a policy on a ship valued at $22,000, the amount insured $7400, and the loss incurred, $2189.04:, the liability of the appellee, unless otherwise provided in the P0ÜC5T, would be -//«Vo of $2189.04. It is contended, however,, that by the true construction of the policy, the appellee never ivas in any manner answerable for the loss incurred; this leads, us to consider the first ground of defense taken by the appellee.
On lire day before this policy was underwritten, Whiting, the owner, obtained insurance, on the same vessel, from the Sun Mutual Insurance Company, to the amount of $7300, and,, on the day following, another insurance from the Commercial Insurance Company, to the amount of $730Qj The vessel was valued at the same sum in each policy, and each was for the same period of time, and covering the same risks. Each of the policies contained the following clause: "Provided always, and it is further agreed, that if the said assured shall have made any other insurance upon the premises aforesaid, prior in date to this policy, then this insurance company shall be answerable only for so muck of the amount as such prior insurance may be deficient towards fully covering, the premises hereby insured, without any deduction for the insolvency pf all oj ad-31 of the underwriters, and this insurance company shall return the premium upon so much of the sum by them insured, as they shall be by such prior insurance exonerated from. And in case of any insurance upon the said premises, subsequent in date to this policy, this company shall, nevertheless, be answerable for the full extent of the sum by them 'subscribed hereto, without right to claim contribution from such such subsequent assurers, and shall accordingly be entitled to retain the premium by them received, in the same manner as if no such subsequent assurance had been made."
It has been argued, on behalf of the appellee, that the effect of this clause is to make the first underwriter responsible for the whole loss, where it does not exceed the amount underwritten in the first policy, and in such case to exempt subsequent underwriters from all liability for contribution. In support of this construction the case of 2he American Ins. Co. vs. Griswold, decided by the Supreme Court of New York, and afterwards affirmed by the Court of Errors, 14 Wend., 399, has been cited and much relied upon. In that case, the construction of a clause similar to the one before us, was most ably and elaborately discussed and considered, and although in the opinion delivered by Chief Justice Savage, some sanction may be found for the position taken by the appellee, yet a careful examination of that case, and a mature consideration of the question, has confirmed us in the opinion, that the interpretation of the clause contended for by the appellee, cannot be supported upon any sound principles of construction. This proviso was first introduced into marine policies in the United States, and is generally called, "The American clause." It is unnecessary to enter into any particular examination of the origin and ¡purpose of its adoption. It has been said that it was intended to restore the ancient rule of construction governing cases of double or over insurance, which had been disturbed by the decision of Lord Mansfield in Newby vs. Reed, 1 W. Black. Rep., 416. That decision was followed in the case of Thurston vs. Koch, decided in 1800 by the Circuit Court, of the United States, for the district of Penn sylvania, 4 Dall., 348. This last decision, it is said, led to the adoption of the American clause in marine policies. 5 Sergt. & Rawle, 481. 14 Wend., 461, 482, 497. Tt may be conceded, however, that the purpose for which the clause was introduced, although it may afford some aid in arriving at its meaning, cannot 'control the construction of its language. As it was said by Chief Justice Savage, in 14 Wend., 473: "It is well settled that a policy of insurance is to be construed by its terms, in the same manner as any other written instrument; and if the fair and evident meaning of the language used, be to extend to all cases of prior and subsequent insurance, I know not what power the court has to limit the operation of the contract to double insurances only.'5. Adopting this method of construction, and looking at the words of the clause, we have had no difficulty in arriving at their meaning, and are clearly of of opinion that they can apply only to cases of double insurance. In the first part of the clause the stipulation is, that if there bo a prior insurance, the underwriter shall not be answerable on a subsequent policy except so far as the amount at risk may remain uncovered by the previous insurance; that is, if the prior policy is sufficient in amount to cover the whole value of the tiling at risk, then the subsequent policy does not attach, the underwriter is at no risk, and the premium is to be returned. So far as tile amount at risk remains uncovered by prior insurance, a subsequent policy does attach, and the second underwriter is pro tanto liable upon his policy, and entitled pro tanto to retain the premium. It will be obscived, that the stipulation is not, that the underwriter is to be exempt, from liability, if there has been prior insurance to an amount sufficient to cover the loss, but that he is not answerable at all upon his contract, unless there be something to which his policy can attach remaining uncovered by prior insurance. When we look at the latter part of the clause, which provides for the case of a subsequent insurance, the meaning of the whole is alike clear and free from difficulty.
In that, it is stipulated, that, in case of any subsequent insurance, the underwriter shall remain answerable for the amount underwritten, £'without right to claim contribution from such subsequent assurers, and shall, accordingly, be entitled to retain the premium received, in the same manner as if no such subsequent assurance had been made.'1'1 rThese last words, which We have italicised,'qualify the rvhole sentence, and are a key-to its construction. If, in the case before us, there had been no policy on the ship except the first, (that of the Sun Mutual Insurance Company,) it is clearly settled, that the liability of that company would have been for only ¡rVoVV part of the loss. • The owner not having any other insurance, would stand as his own insurer, for that portion of the value of the ship remaining ¿uncovered by the policy, and the loss, whether total or partial-, Would be apportioned between him arrd the underwriter. This relation ¿between the assurer and assured is not changed, when the latter obtains a subsequent assurance, thereby substituting another underwriter for himself, as to that portion of the thing at risk, which is not covered by the first policy. According to the construction contended for by the appellee, the Sun Mutual Insurance Company, would be rendered liable for the whole loss, only in consequence of there being a subsequent assurance, which is directly in the face of the words -of the contract,-that it "shall be ansu>erable in the same manner as if no such subsequent assurance had been made.' ' On the construction of this clause, we concur in the views expressed by Senator Tracy, in his very able dissenting opinion, in 14 Wendell, 497 to 502; and also in the opinion on that subject, expressed by the Chancellor in the same case. 14 Wend., 482, 483.
On page 482, he says: ££If the -object of the American clause was, to -restore this ancient-rule of apportionment between the underwriters in successive policies, as it original^ existed in the mercantile law of England, as well as the rest of Europe, it was hardly possible to do it in more appropriate and explicit language, than is used in the last paragraph of this clause."
The conclusion, from what has been said,is, that in the cases before us, the liability of the appellee,.- upon the .policy ¿sue.d-. on. is not in any manner affected by the clause we have been -considering; and at the time this action was brought the appellant had, under the admitted facts in the cause, a clear right to recover in this suit, -¿t/e'H part °f $2189.04, being that proportion of the loss, for which the appellee was answerable on its policy.
The remaining question for us to consider, is whether anything which has since occurred has operated to discharge the appellee from liability on its contract? We have seen that by the true construction of this policy, so soon as the loss occurred, the liability of the appellee to pay its just proportion of that loss was fixed; it became a debt due to Whiting, which like any other chose in action might be sued for and recovered, or assigned. As was said by Chief Justice Shaw, in the case of Wilson vs. Hill, 3 Metcalf, 69, after deciding that the transfer of the title to property insured against fire, did not confer upon the assignee any right to recover the insurance money: "These considerations, said he, however, do not apply to a case where the assured, after a loss, assigns his right to recover that, loss; it would stand on the same footing as the assignment of a debt, .or right to recover a sum of money actually due, which like the assignment oí any other chose in action, would give the assignee an equitable interest, and a right to recover in the name of the assignor, subject to set-off and all oilier equities."
Such was the nature of the debt due by the appellee to Whiting', at the time this suit was instituted. It is not pretended that the appellee has paid any part of it; no acquittance or discharge has ever been given to it; but it is contended that the money which the appellee owed, was paid to Whiting by the Sun Mutual Insurance Company, and the appellee cl aims the benefit of that payment, although this case has been transferred to the Son Mutual Insurance Company, and this suit is prosecuted for its benefit. In the consideration of the questions arising upon this branch of the case, it must be borne in mind that the several underwriters are strangers to each other; there is no privity whatever between them; each is liable upon its separate contract, for its just proportion of the loss, according to the amount underwritten in its owu policy, and there would seem to be manifest injustice in al-' lowing any one to escape from the payment of its own just debt, in consequence of another debtor, who is an entire stranger, having paid to the creditor more than he was justly entitled to claim, and the injustice becomes the 'more manifest, where, as in this case, the claim is assigned by the creditor to the use of the party who has thus overpaid his indebtment, and the suit is prosecuted for his benefit. In the case of Merryman vs. The State, at the instance of Harris, use of Murray, 5 H. & J., 423, Murray, who Avas not Merry-man's surety, paid to Harris a debt of $162.36, which was in fact due from Merryman, and not, as Murray erroneously supposed, due from him. A suit Avas instituted in the name of Harris, for the use of Murray, to recover the amount from Merryman. The defense was urged that Harris' debt had been paid and satisfied. Judge Earle, in delivering the opinion of the court, (page 426,) says:
"If the payment of this $162.36, is at ail to be considered as payment for Merryman, it is manifest Murray Avas not liable to pay it for him, and not having paid it at Merryman's instance, it presents the case of a stranger paying the debt of another, without his consent or knowledge. Such a payment does not necessarily discharge the debtor, and cannot be taken advantage of by him, without showing, by an acquittance or other means, that it was intended by the payer and receiver to operate a discharge. And, we think, there is great reason in this, for an action for money paid, laid out and expended, cannot be sustained by a stranger against a debtor, whose debt he has paid voluntarily and without directions, and, therefore, he (the debtor) shall not avail himself of such payment in a suit by his creditor, unless he can show an express intention to extinguish the debt. This is not the case before us. The payment was made by Murray to Harris voluntarily, and without the knowledge of Merryman, and certainly without any intention in Harris to discharge the debt of Merryman." This language has been cited as expressing what we believe to be sound law, as it is plain jus lice, and strictly applicable to the case before us. In the particular case of Mcrryman vs. The Slate, the adjudication did not rest, entirely upon the ground stated in the paragraph which we have quoted. In that case tire payment by Murray had been made through a mistake of fact, and therefore he had a legal claim against Harris to recover it back. This circumstance would have aggravated the injustice of construing the payment by Murray to be a discharge of Merryraan; but it is difficult to perceive how the legal obligation of Merryman could in tiny manner be affected by the legal rights existing between Harris and Murro,y, who was a stranger to him. - It is clear to ns that whether lire payment by Murray to Harris had been through mistake of fact or mistake of law, whether he would have had alega! right to recover it back from Harris or not, Merryraan would equally have been liable for his debt. This depended, not upon the legal rights between Harris and Murray, but upon whether the money was paid by Murray, and received by Harris, with the intention of discharging Mcrryman's debt. Now, in this case, there is no pretence that the money paid by the Sun Mutual Insurance Company to Whiting, was paid for the purpose of satisfying and discharging the debt due by the appellee. This suit, which was then pending, remained upon the docket, and was entered to the use of the Sun Mutual Insurance Company, which is equitably entitled to be protected in its prosecution. See, 1 Wheaton's Rep., 233. 13 Johns. Rep., 353. 2 G. & J., 344, 353. The payment of the premium by Whiting to the appellee, made after the satisfaction of the judgment against the Sun Mutual Insurance Company, which has been relied on by the appellee's counsel as showing that the appellee was no longer held responsible on its policy, would rather evince the contrary, because, upon the construction of the policy, which would exonerate the appellee from responsibility, the assured would be entitled to a return of the premium.
We have treated this question as if the amount, claimed in this suit, were an ordinary debt due from the appellee on contract. But it has been earnestly insisted, in argument. that being a contract of insurance, it stands upon entirely different grounds; and although, if it were an ordinary debt, the appellee might remain liable, yet being a contract of indemnity, no action will lie upon it after the loss has been paid to the assured, no matter by whom or from what source. When it is said that a marine or fire insurance is a contract of indemnity, we understand the meaning to be, that in order to support it, there must be an insurable interest; the assured must have some interest in the thing insured which is at risk, and liable to be injured; and that there can be no action maintained upon the policy unless there has been some loss incurred.
In the case of Godsall, and others, vs. Boldero, 9 East., 72, which was on a policy of insurance upon the life of William Pitt, obtained by the plaintiffs, who were his creditors, it appeared, that, after the death of Mr. Pitt, an appropriation was made by Parliament for the purpose of paying his debts, and out of the money thus appropriated his executors paid the debt due the plaintiffs'. The court in deciding the case treated the insurance as a contract of indemnity; the insurable interest of the plaintiffs was the debt due them by Mr. Pitt, and to secure them against the loss of that, the policy was executed; before the action was brought upon the policy, the debt had been paid; so that, in point of fact, no loss or damnification had been suffered by the plaintiffs, and it was held that they could not recover upon the policy. See Lord Ellenborough's decision, page 81. See, also, the observations on the case of Godsall vs. Boldero, made by the YiceChancellor, Sir Thomas Plumer, in Ex-parte Andrews, in re, Emett, 1 Madd., 573, and 2 Smith's Leading Cases, (American Edition of 1855,) pages 303 and 304. In subsequent cases overruling the decision of Godsall vs. Boldero, it has been repeatedly said, that the only error consisted in applying. to a case of life insurance the principles which are applicable to marine or fire insurance.
In the case of Hamilton vs. Mendes, 2 Burr., 1210, upon which the decision of Lord Ellenborough, in Godsall vs. Boldero, Was based, Lord Mansfield made use of language which has been cited by the appellee and rebec! upon as sustaining bis view in this case. Hamilton vs. Mondes was an action on a marine policy upon a ship and cargo, which had been captured, and was afterwards recaptured; the ship and cargo arrived safely and uninjured at the port of destination; but the assured attempted to abandon and brought his action on the policy. It was held that the assured liad no right to abandon, after the peril was over and the thing in safety, and no damage having been suffered the action would not lie. If, 'was with reference to that case, that the language of Lord Mansfield, cited by the appellee's counsel, was used, and we need not say that the case of Godsall vs. Boldero, and that of Hamilton vs. Mendes, were wholly unlike the case before us. Here the loss has actually occurred. Upon the happening of the loss the responsibility of the appellee was fixed. The proportion due upon its policy became, according to the language of Chief Justice Shaw, in 3 Metcalf, before cited, a debt due from the appellee, like any other debt or chose in action, which has not been paid .or discharged by the appellee or by any one for it.
Each of the insurance companies was bound, on its separate contract, to indemnify the insured for a certain portion or fractional part of his loss. They wore not co-sureties, neither was legally bound to pay the whole, with the right of then calling on the others, for their respective proportions; and as the appellee is not legally liable over to the Sun Mutual Insurance Company for contribution, it (the appellee) cannot claim the benefit of the overpayment made by that company, which was not made on behalf of the appellee, or for the purpose of discharging its debt, but solely for the purpose of paying the debt which the other underwriter-supposed it owed to the assured.
In support of the view here expressed, we refer to the case of Lucas vs. Jeff. Ins. Co., 6 Cowen, 635, which is an express adjudication upon this point,. The question also arose in the : American Ins. Co. vs. Griswold, 14 Wend., 399. See the statement of the case, 400, 401, 402, 403, and the argument of counsel, 427 and 457. Whatever difference of opinion there was upon other points involved in that case, on this question there was no dissent, either in the Supreme Court or the Court of Errors, On page 483, the Chancellor said: "If either of the subsequent underwriters have paid to the assured upon a compromise of the claims made upon them, more than they were legally bound to pay under their contracts, that is a matter with which the underwriters, ir\ the first policy, have no concern; since they are not bound to refund any thing to the subsequent underwriters, and never had any claim upon them for contribution. If the assured have received any thing, under such a compromise, which they cannot conscientiously retain, they should restore it to 'those from whom it has been received; but the American Insurance Company, or its stockholders, have no equitable right to insist that it shall be allowed to them in discharge of their legal liability under the first policy."
Believing these views to be correct, we are of opinion, that under the facts and circumstances of this case, the payment made to Whiting, by the Sun Mutual Insurance Company does not enure to the benefit of the appellee, and is no bar to a recovery in this action. One other ground of defense has been taken by the appellee. It is argued that the judgment rendered against the Sun Mutual Insurance Company was an adjudication by a court of competent jurisdiction, which conclusively settled the liability of that company, upon its policy, for the whole loss; and is a bar to this suit. This ground of defense, like that which we have just considered, is purely technical, and if it be sustained, would defeat the plain justice of the case. This consideration, however, while it may invite us to scrutinize the argument more closely, cannot be allowed to control our judgment, so as to lead us to disregard the principles of the law which are applicable to the subject; if they are found to support the appellee's position, the defense must prevail, however technical it may be. We think, however, that this ground of defense is more ingenious than solid; and in this case, as in most others growing out of commercial contracts, it will be found that the rules of the law are consistent with the principles of justice.
No authority has been cited which sanctions the proposition, that the judgment rendered in the case of Whiting vs. The Sun Mutual Ins. Go., can in any manner affect the rights or liabilities of the appellee in this action; the appellee was no party to that suit; it was res inter alios, and the adjudication therein, could neither bind nor discharge the appellee. Inter partes, such a judgment is an estoppel; but it cannot operate upon strangers. To illustrate this, let us suppose that by the true const ruction of these several policies of insurance, the Sun Mutual Insurance Company had been legally responsible for the whole loss, and the appellee not liable for any part of it; and, in the suit against the former company, it had been erroneously adjudged that it was answerable for only a part, could it be for a moment maintained, that in a suit against the appellee, the judgment in the former case could be invoked as a judicial determination upon the construction of the policies, which would bind the appellee ? Such a proposition would not be tolerated for a moment, and yet the defense hero rests upon a proposition which is the same in principle. There is no doubt, that the judgment against the Sun Mutual Insurance Company, was a conclusive settlement of the rights between it and Whiting, whether that judgment was obtained upon a trial and verdict, or entered by voluntary confession. The defendant in that suit was thereafter conclusively bound to pay the amount of the judgment; and when paid would have no legal right to recover back any part of the money, no matter how erroneous the judgment might be. But its position in that respect would have been in no wise different if it had paid the whole of the money voluntarily, without suit, under a mistake of law; and yet, as we have before said, such a payment would not enure to the benefit of the appellee, which is a stranger to the transaction. In either case, the money so paid, beyond the amount clue, ought, in conscience, to be returned; the appellee has surely no right to insist that it shall be retained, so that it may be exonerated from the payment of fits .own debt. It follows from what has been said, that, in our opinion, none of the grounds of defense to this action can be sustained, and that upon the whole case, as presented on the statement of facts, the appellant is entitled to recover.
(Decided May 9th, 1860.)
Believing that the court below erred in refusing the plaintiff's prayer, and in the instruction given to the jury, the judgment must be reversed.
Judgment reversed and procedendo oi'dered.