Case Name: The Insurance Company of Pennsylvania against Duval and another
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1822-04
Citations: 8 Serg. & Rawle 138
Docket Number: 
Parties: The Insurance Company of Pennsylvania against Duval and another.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Sergeant & Rawle)
Volume: 8
Pages: 138–149

Head Matter:
The Insurance Company of Pennsylvania against Duval and another.
dentki bomban the form gene-Philadelphia {for-which see the case,) the payment of the debt and murine interest, depends upon the sate regoodsfand the ahip*1*4 °* Therefore, if recei\°es°hisr goods uninther'véssei"0" payls lloantl t0
An utter ship, within ofstmíTa'con tract, is not a loM.'bmVn1*1
dentia bond, insurance on°^ the goods, as
THE Insurance Company of Pennsylvania, the plaintiffs in this cause, brought an action of debt against fames S. Duval and Andrew Curcier, the defendants, on a respondentia bond, bearing date 11th December. 1818, the condition 7 ° 7 7 of Which was as follows -
<c Whereas, The Insurance Company of the State of Penn-r j o . j sylvania, have this day lent unto and advanced the said Andrew Curcier and fames S. Duval, the sum of twelve thousan<^ dollars upon the specie, goods, wares and merchandises laden or to be laden on board the ship Atlas, whereof fames Girdon is master, bound on a voyage from Philadelphia to Bombay, with liberty to touch and trade at Pulo Pe• nang and Calcutta or Malacca, and at and from either, back to Philadelphia, with the usual liberties on such voyages: Now the condition of this obligation is such, that if the said ship do and shall, with, all convenient speed, proceed and sail on sa*d voyage from Philadelphia to Bombay, with liberty to touch and trade at Pulo Penang and Calcutta or Malacca, and without any unnecessary delay shall return to this port Philadelphia, with the usual liberties on such voyages, and here end her voyage, and that without any deviation, (the casua^es °f ^ seas excepted :) And if the said Andrew Curcjer and fames S. Duval, their heirs, executors or administrators, do and shall within sixty days next after the said ship shall have returned to the said port of Philadelphia, from her said intended voyage, well and truly pay or cause to be paid to the said The Insurance Company of the State of Pennsylvania, their successors or assigns, the sum of twelve thousand dollars money of the United States, together with the sum of two thousand four hundred dollars of the like money, and also with interest for the said sixty days after the said ship shall have returned to this port of Philadelphia, or if daring the voyage, and before the return of the said property to Philadelphia, an -utter loss of the said ship or vessel, by fire, enemies, men of war, or any other casualties, shall unavoidably happen, and the said Andrew Curcier and James S. Duval, shall and do within three calender months after such utter loss, well and truly account for upon oath or affirmation, and pay unto The Insurance Company of the State of Pennsylvania, their successors or assigns, a iust and i ’ „ , , b, J , proportional average on all the said specie, goods, wares and merchandises of the said Andrew Curcier and James S. Du-val, so carried from Philadelphia on board the said ship, and the neat proceeds thereof, and on all other goods, specie, wares and merchandises which the said parties shall therefrom acquire du. ing the said voyage, and shall ship on board the said vessel, and which shall not be unavoidably lost as aforesaid; then this obligation to be void, otherwise to be and remain in full force and virtue. It being first declared to be the mutual understanding and agreement of the parties to this contract, that the lenders shall not be liable for any charge, damage or loss that may arise from seizure or detention of the within mentioned property, in consequence of illicit or prohibited trade. But the said lenders shall be liable to average, and entitled to all the benefits of salvage, in the same manner, io all intents and purposes as underwriters, as though this instrument was a policy of insurance, executed by the said The Insurance Company of the State of Pennsylvania
The following agreement accompanied the bond«
“ Whereas it hath been agreed, that the bills of lading for the specie, goods, wares and merchandises mentioned in ■the within obligation, shall be endorsed to The Insurance Company of the State of Pennsylvania, as a collateral security for the loan within mentioned : Now it is hereby expressly declared and agreed, that such endorsement shall not be held to exonerate the persons of the borrowers nor to compel The Insurance Company of the State of Pennsylvania to accept the goods, specie, wares and merchandise which may arrive under such bills of lading, in discharge of such debt. But it shall be lawful for the said The Insurance Company of the State of Pennsylvania, their successors or assigns, to receive and hold the said goods, specie, wares and merchandise for the space of sixty days after their arrival at this port of Philadelphia, and in case the principal and interest in the within obligation mentioned,, shall not be paj¿[ or satisfied Within the said time, to dispose of the .same at public auction; and to charge the borrowers with the ba~ , r . ’ . , r° , , . c , lance that may remain due after deducting from the amount sales.» the freight, duties, commissions, and other just anc^ ProPer barges.
The ship went to Calcutta, where she took in a-cargo and sailed for Philadelphia. In going down' the river from. Calcutta she grounded ; in consequence of which she sprang aleak after she got to sea, and put in at the Isle of France in order to stop the leak. Having sailed from the Isle of France, the ship was found to be in a bail condition, and not being able to make Philadelphia, she went to Port Royal, in the island of Martinique, for repairs. There she was-condemned,, because it was found that the repairs would cost more than she was'Worth, .and the goods of the defendants were unladen and sent to Philadelphia in others vessels. At- Philadelphia, the goods, which had suffered no damage, were delivered to the plaintiffs, according to the agreement annexed to the respondentia bond, and at the expiration of sixty days were.sold by the plaintiffs, by virtue of the power vested in them by the same agreement. On receiving intelligence of this disaster, the defendants offered to abandon, tbe goods, but the plaintiffs refused to accept the abandonment, and brought this action to recover- the balance due upon the bond, after deducting the proceeds of the sale of the goods.
Upon these facts the defendants contended, they were not personally responsible to the plaintiffs; and a.t the trial at Nisi Pr'vus before the Chief Justice, on the 12th February, 1822, a verdict was found for the plaintiffs for 4765 dollars 52 cents, .subject to the opinion of the Court upon the evidence ; conformably to which, it was agreed, judgment should be entered for the plaintiffs or the defendants. ' .
Finney and. Razvle, for the plaintiffs.
The ship not having been wrecked- or lost, but condemned at Martinique, because the repairs would cost more than she was worth, and. all the goods having arrived safely at Philadelphia, the defendants are personally bound to pay the debt. A respondentia contract, comprises both a loan and an insurance on certain goods, for a certain voyage, and the . , , . . , ° ’ . , ... j. , matenal thing is, the sate arrival, not or the ship, but ot the goods. The contract should be construed liberally, according to its spirit. But the plaintiffs are entitled to recover, , , , . . „ TT , . . whether the case be put: — 1. Upon the strictest construction of the contract: 2. Upon the settled law in relation to respondentia loans ; or 3. Upon the terms of this particular instrument, which is in some respects a policy of insurance.
1. The defendants agreed, that the ship should perform her voyage and return to Philadelphia, (the dangers of the seas excepted,) and that if she should be utterly lost, they would account for the goods saved. The utter loss contemplated by the bond, does not mean a technical total loss, but an actual one, and one which naturally and unavoidably destroys some of the goods. Where the ship is so much damaged as not to be worth repairing, it is not an utter loss in the case of a bottomry bond, as was decided in Thomson v. Royal Exchange Assurance Company, 1 Maule & Selw. 30. This is the established construction of a bottomry bond ; but Lord Elxenborough evidently does not mean to confine the rule to that description of instruments, but to, extend it to respondentia bonds also ; making a policy of insurance the only instrument in reference to which a technical total loss will be sufficient. If therefore a rigid and literal construction is insisted upon, the plaintiffs come within it; for no actual loss has occurred, the ship having,remained in. specie in the hands of the owners. A literal construction, however, is not the true construction of such an instrument 3 for if the ship had arrived at Philadelphia without any goods, by the letter of the bond, the defendants would haye been liable to pay, though by the spirit of it, they were discharged. And if she had stranded at Calcutta, by the letter they would have been bound to account for the goods saved within three months, though it would have been impossible to have heard of the disaster within that period.
2. The English law is rather barren on this subject, but the French is full and clear. In case of shipwreck, contracts a la grosse (and bottomry and respondentia contracts are a la grosseJ are to be reduced to the value of the effects saved. 2 Valin. 20. Ord. of Louis XIV, art. 17. 2 Emerig. 504. 3 pothier, 247. If only part of the goods be saved, tne borrower accounts only for the part saved ; but if all the goods be landed safe, before the loss of the ship, the borrower pays w^°^e> provided the goods be put on board another vessel; the risk of bringing the goods in the other vessel being upon the lender. But the lender does not run the risk, if the goods are shifted to another vessel without necessity. 2 Emerig. 545. 523. If the ship be rendered innavigable and no other vessel can be found, on board of which to put them, they are then in the predicament of goods saved, and the value is to be reduced .to that standard. The contract is then dissolved, and the goods are sold for the benefit of the lender; but if a ship might be obtained, and the borrower will not take her but sells the goods, he shall pay the whole debt and maritime interest. 2 Emerig. 546. 550. This contract is always liberally construed. If no mention is made of maritime interest, this being a contract of good faith, the error shall be corrected, and maritime interest inserted according to the usual rate. 2 Emerig. 406. By the French law, respondentia is a contract of loan, with insurance superadded. 2 Valin. 13. In this respect it differs from the English law, and resembles our own.
3. By the terms of the contract between the parties, the plaintiffs are entitled to recover. It is declared in express terms to be a contract of insurance, and was so considered in the case of Gibson v. Philadelphia Insurance Company, 1 Binn. 405, in which it was taken for granted, that the lenders were liable for a partial loss on the homeward cargo. On a respondentia contract there can be no abandonment, nor could the defendants have abandoned, if this had been a policy of insurance in the usual form, because when the abandonment was offered, it was known that the goods were to be sent to Philadelphia. If the master may get another vessel to bring the goods on and does not, the insurers are discharged ; for there is no loss of the voyage, if the goods are or may be brought on. Schieffelin v. New York Insurance Company, 9 Johns. 21. Wilson v. Royal Exchange Assurance Company, 2 Camp. 623. Anderson v. Wallis, 3 Camp. 440. Henrickson v. Margetson, 1 Marsh. 101. Though, if at the time of the abandonment there was no prospect of getting an« ¡other ship to bring the goods on, the insured may recover for a total loss, although the goods should be afterwards sent on. The mere suggestion that a respondentia contract depends upon the safe return of the ship, and not of the goods, in opposition to an uniform practice and usage of twenty years, is alone calculated to excite uneasiness ; and if such should be the opinion of the Court, it will probably put a stop to loans of this sort altogether. The entire property in relation to which the contract was entered into, was returned to the borrowers ; and by the agreement annexed to the bond, it was to be placed in the hands of the lenders as a collateral security, no matter in what vessel it returned.. It is a contract highly favourable to the borrower; for if he borrows elsewhere, he is obliged to repay the amount with interest, in any event, besides a premium of insurance j and in case of loss, he encounters the uncertainty of recovery against the underwriters. But where the characters of lender and insurer are united, he has nothing to, pay in case of loss. Our form is borrowed from the English, with the exception of the clause which makes the lender liable to average and gives him the benefit of salvage. In both, the loss of the ship is spoken of, probably in compliance with ancient forms and because it was the expectation of the parties that the ship would return. The ship however is merely a description of the vehicle for the transportation of the goods. If before she got out of the Delaware, she had been rendered innavigable, and the goods had been put on board another vessel, and proceeded on the voyage, the contract would certainly have continued in full force. The return of the property which.is stipulated for, means the return of the goods, because it is upon the goods, and not the ship, that the money is lent. This has been the uniform construction of these instruments in England. The lender must be paid if the ship perish, provided the goods are safe. Park. 410. Marsh. 734. By the agreement of the parties, a lien was provided for, by making the goods deliverable , to the plaintiffs ; and. what shews the understanding of the master on the subject is, that by the bills of lading by the schooners, the goods were consigned to the President of the Company. The defendants themselves have also affirmed our right; for if such a loss had happened as exempted them from liability to pay, they ought not to have permitted the goods to go into the hands of the lenders ; thus treating it as a subsisting contract. The question is, wheplaintiffs have received satisfaction by receiving the goods ? The express terms of the bond prove that they have not. The goods discharge the loan only pro tanto. If the borrower was to receive the excess in case of profit, it inllows that he was to sustain the loss, if there should be loss. Profit or no profit, is the concern, not of the lender, but of the borrower. The lender insures only against casualties. But the doctrine of the defendants, by making the contract depend on a subject, in reference to which it was not made, would involve the lender in the risk of the market, and thus convert the contract into a wager,.
C. J. Ingersoll and Chauncey for the defendants. ,
The question is, whether, as the ship was lost, the borrowers are personally liable ? The defendants shield themselves under what they consider the terms of the condition of the bond, which cannot be illustrated by reference to any general system of commercial law. The French authorities only shew that the French have turned much attention to the subject; but as commercial contracts are variously shaped by the parties, and the laws of different countries vary, we must refer ourselves to the particular contract before us. The conditions of the bond upon which this suit is brought are two: 1. That the borrowers shall pay the debt and marine interest within sixty days after the return of .he ship. 2. If during the voyage and before the return of the property, an utter loss should happen and the borrowers pay an average, they shall be discharged.
1. If the ship never arrives without the fault of the borrowers, the day of payment never arrives. But it is argued, that as the goods have been received, the defendants are liable ; and thus the Court are called upon to substitute a new contract, by declaring, that although the parties have said that.payment shall depend on the return of the ship, it shall depend on the return of goods. The Court are to enforce contracts, not to make them. Cook v. Jennings, 7 T. R. 377. The language of the condition is explicit, and no latitude of construction is admissible. The defendants are not responsible for inevitable delay. If they do all in their power to get the ship back, .'Which is all they are bound to do, they have the benefit of the condition. They bind themselves to perform the.voyage without unnecessary delay, casualties excepted ; and if from casualties the ship never returns, they are under no obligation to pay. It is said that a literal construction of the instrument would involve the borrowers in difficulties ; for they are required, in case of loss, to pay an average within three months after the loss, which, in some cases, for example if the ship stranded near Calcutta, would be impossible. .But the contract is not to be interpreted so literally as to require impossibilities. If by an absolutely literal construction, it cannot be carried into execution, the construction must be as nearly literal as possible; and in the instance put, the three months must be calculated from the time of information or notice of the loss. But if the contract can be effectuated by giving it a literal construction, it must be so construed. If the parties had intended to make the loan dependent on the return of the goods, they would have said so. But this-they have omitted to say ; and it is evident, that a shipment of the goods on board of other vessels, was not contemplated When the contract was executed. The plaintiffs might have had good reasons for making it depend upon the ship. They probably wished to connect the goods with the fate of the ship, and did not choose to insure the goods even against sea damage, unconnected with the vessel in whic'h they were originally shipped. But whether or not they had good reasons, is not material. If thé parties shaped their contract in this way, the Court are bound to enforce it.
The defendants are protected from responsibility, because there was an utter loss, and they have paid the salvage. What is an utter loss l In England it seems to be settled, that nothing but absolute annihilation of the ship will discharge the borrower on bottomry. But are the Court, in relation to .this contract, to construe the words “ utter loss” by the rule settled in England, where there is no salvage or average ? Terms are to be construed with reference to the contract in which they are used. The fair" meaning of the words of this contract is, that if the ship should become in-navigable, incapable of transporting these goods, if a total loss, should ‘take place for the purposes of this voyage, thé responsibility of the borrowers should be discharged. If the ship is lost, and the goods saved are equal in value to the loan, the lender is satisfied. Nothing more is required than to account for the goods saved in proportion to the amount lent, and this vve have done. The plaintiffs have the goods jn their possession, and we have nothing more to do. .The parties have made this a contract on the ship, and the Court cannot convert it into a contract on the goods. Appleton v. Crowningshield, 3 Mass. Rep. 443.
The French law, if it is to have any weight, is with us 3 and the definition given of the contract, contrat a retour de voyage, is conclusive of the question. 3 Pothier, art. 1, sec. 1, p. 175, Bottomry. In Rome, the cradle of the law, the lending was upon the venture ; the lender running maritime risks until the ship returned. 2 Valin. 1, 2. 2 Emerig. 386. And so it sometimes is in England. In speaking of bottomry and respondentia loans, Blackstone says, money is sometimes lent not only on the ship or goods, but on the voyage itself. 2 Bl. Com. 458. The cases of Gibson v„ Philadelphia Insurance Company, 1 Binn. 405, and Jenning v. Insurance Company of Pennsylvania, 4 Binn. 244, though' they decide nothing material tp this case, show it to be the understanding of the commercial world, that the venture shall be fortunate, at least so far as regards the return of the ship. On what basis does marine interest rest ? It is allowed, in consequence of the risk the lender runs, that the ship will not return. This risk alone prevents the interest from, being usurious, and is what was contemplated by the parties, when the contract now in question, was entered into. 1 Holt. 419. 2 Marsh. 733. 736.

Opinion:
The.opinion of the Court was delivered by
Tilghman Q. J.
By the condition of the bond, the defendants were to be discharged from their obligation, " if, during the voyage, and before the return of the said property to Philadelphia,.an utter loss of the said ship, by fire, enemies, men of war, or any other casualty, unavoidably shall happen, and the said Duval and Curcier shall and do, within three calendar months after such utter loss, well and truly account for, upon oáth, and pay unto The Insurance Company of the State of Pennsylvania, their successors or assigns, a just and proportional average, on all the said spe eie, goods, wares and merchandises of the said Duval and Currier, so carried from Philadelphia an board the said ship, and the nett proceeds thereof, and on all other goods, specie, tvares and merchandises, which the said parties shall therefrom acquire during the said voyage, and shall ship on board the said vessel, and which shall not be unavoidably lost as aforesaid. It being first declared to be the mutual understanding and agreement of the parties to this contract, that the lenders shall not be liable for any charge, damage, or loss, that may arise from seizure or detention of the within mentioned property, in consequence of illicit of prohibited trade. But the said lenders shall be liable to average, and entitled to all the benefits of salvage, in the same manner, to all intents and purposes, as underwriters, as though this instrument was a policy of insurance, executed by the said Insu-. ranee Company of the State of Pennsylvania.
This is the usual form of respondentia bonds in Philadelphia, and is peculiar to this city. It resembles the French contract.of respondentia much more than the English, but is not like the French, or any other which is known to me. In fact, contracts of this kind, are so different, in different'countries, (although they resemble each other in some prominent features,) that when disputes arise, they are to be decided by the words of the particular contract in question, rather than by any principles of general commercial law. In the present instance, therefore, we must endeavour to ascertain the meaning of the bond, and be governed by it. According to the construction given to it, by the defendants' counsel, the risk which the plaintiffs took upon themselves, relates to. the ship, and not to the goods; so that if the ship returned to Philadelphia, the defendants, would be liable for the whole principal and interest, though the goods were all lost. This indeed would be very- hard, and very extraordinary, considering that the loan was made upon the goods, and that the goods are the source from which the defendants were to derive the means of payment; and when we add to this, that by the express understanding of the parties, the plaintiffs are liable, to average, and have the benefit of salvage, in the same manner, to all intents and purposes as underwriters, as if this instrument zvas a policy of insurance, it will plainly appear, that the defendants' construction is so con trary to the main intent of the agreement, as not to be main* The defendants say, indeed, that the average to which the plaintiffs are liable, is only general average, bat I see no reason for taking it in that restricted sense. Ave-both general and particular, must have been intended ; for how can the instrument be considered to all intents and purposes as a policy of insurance, if the lenders are not to be subject to particular average ? Indeed I take this construction to have been settled in the case of Gibson v. The Philadelphia Insurance Company, 1 Binn. 405. I here, both Court and counsel, took for granted, that the lender was liable to particular average, arising on damage sustained by goods on the homeward voyage; and the only question was, as to the sum, on which the average was to be calculated. It is true, that the point now brought up, was not then presented to the Court. But why ? Because it never entered into the heads of the counsel that it was tenable. That cause came into Court on an exception to the report of referees. The referees were, I believe, the late Mt. EdwardTilghman and Mr. Rawle; and when the legal character of those gentlemen, as well as of the counsel who argued the exceptions, is considered, it is hardly supposable, that they should all have fallen into so gross an error as is imagined by the counsel for the defendants. Let us consider now, whether the condition of this bond has been performed ? The defendants say it has, because the ship was utterly lost, and the goods which were saved, came to the hands of the plaintiffs, who sold them, and have received the proceeds. But I cannot think that the ship was lost within the meaning of the contract. Utterly lost are strong expressions, intended, as I conceive, to be distinguished from technically lost. A ship is not utterly last, while she remains in specie, in the hands of the owners. Had she been taken by an enemy, she would have been utterly lost to the owner. So, had she been burnt, or wrecked and gone to pieces. But she is not utterly lost, merely because it may cost' more than she is worth to repair her. These words, in a bottomry bond, received a contruction in the case of Thomson v. The Royal Exchange Assurance Company, 1 Maule & Selw. 30. It was there decided, that nothing but an actual total loss, will discharge the borrower .of money upon bottomry, and the distinction was taken be tween the contract of bottomry and of insurance. In the latter, the assured may abandon for a total loss when the ship is m such a condition, that her repairs will cost more than she is worth ; but in the former, nothing short of a total destruction of the ship will constitute an utter loss. If she exists in specie, in the hands of the owner, it will prevent an utter loss. Then it appears, that if the defendants stand upon the words of the bond, the case is against them. And it is equally against them, if they forsake the letter, and resort to the spirit, of the contract. It must have been intended, that the borrower should pay the debt, when he received all his goods undamaged, otherwise the lender would be involved in the risk of the market, which could not have been intended. The defendants' argument, does in fact reduce the contract, under the existing circumstances, to a simple wager upon the market, than which nothing can be more foreign from the whole scope of the writing. The most liberal construction, and in general the most favourable to the borrower, would be to consider it as a contract of insurance ; for then, he will be indemnified for those partial losses which so frequently occur. Now considering this as an insurance on the goods, the assured could not recover. It is not essential that the goods should be brought home in the same bottom in which they were shipped. They must not be shifted, without necessity; but where necessity exists they may be sent in another vessel, and while in that vessel, they are at the risk of the insurer. Had the goods, in the present case, suffered damage on the voyage from Martinique to Philadelphia, the plaintiffs would have been answerable. But they received no damage, and therefore the defendants had no right to abandon. In whatever light, then, this case is considered, whether on the letter of the bond, or in the more enlarged view of a policy of insurance, the law and the merits are with the plaintiffs. They are therefore entitled to judgment upon the verdict.
Judgment for the plaintiffs.