Court Opinion

ID: 3627815
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:08:02.405474+00
Date Added: 2024-06-11T09:15:26.493343
License: Public Domain

The judgment of the Supreme Court in this case ought not to be sustained. It does not appear to be founded upon any principle of fair dealing which the law should approve. When the policy upon the ship was written insuring it against the perils of the sea it was a total wreck at the bottom of the ocean, near the coast of England, and this was known to the owner, for whose benefit *Page 167 
the action is brought, but not communicated to the underwriter. The subject of the insurance, therefore, at the time of making the policy, was not in existence. The ship insured was named the Sunda, owned by William Fry Angell, and on the 25th day of October, 1866, was lying in the port of Liverpool receiving a cargo of coal preparatory for a voyage to Aden, and probably from thence to Bombay, to load cotton for England. On that day, desiring to effect an insurance on the vessel in the city of New York, he directed his broker in Liverpool to write to the plaintiffs in New York by the first mail, to effect an insurance on the vessel. In pursuance of these instructions, on the twenty-seventh day of October a letter was written to the plaintiffs and forwarded by the mail steamer of that day, and reached New York on the eighth day of November following, and on the ninth the policy was issued on account of whom it may concern, from the twenty-seventh day of October, at noon, for one year, for the sum of $5,000, and in consideration a premium note for $750 was given by the plaintiffs. On the twenty-ninth day of October the Sunda sailed from the port of Liverpool on her voyage to Aden, and on that night, while proceeding to sea, was wrecked and lost on the coast of England, by a peril insured against, and this fact was known to the owner, Angell, on the following day, the 30th of October 1866. On the thirty-first the broker of Angell at Liverpool wrote to the plaintiffs informing them of the disaster to the ship, and sent it by the first mail to the United States, and the plaintiffs received it on the fifteenth of November after the policy had been written. It sufficiently appeared that information of the loss of the Sunda could, at greater or less expense, have been communicated to the plaintiffs in New York by cable telegraph, then in full operation, many days before the policy in question was issued; but this was not done. In the letter last referred to the broker of Angell says: "Probably you may hear of this by telegram before you receive my letter, but if you do not, and have the insurance effected, I suppose it will be all right, as the owner, Mr. Angell, has nothing more on *Page 168 
the ship * * * and is a person who never insures much. * * * I do not suppose it my duty to telegram the loss of said ship; do you? And if so I shall better know how to act in future. Please inform me on this point?" The case does not show whether the desired information was or was not given, but, we may assume that it was not thought to be necessary to send a cable telegram of the loss of the ship, and this view was concurred in by the Supreme Court.
In a contract for marine insurance, the rule is specially stringent that every fact within the knowledge of the assured affecting the risk must be communicated to the underwriters. (3 Kent Com., 282.) It is to be regarded as settled law that if an order for insurance is given and the insurance effected before either party knew that a loss had happened the policy will be valid. But if, after an order given to insure a ship against the perils of the seas, and before the insurance is in fact effected, a loss happens to the knowledge of the applicant, he is bound to use the utmost degree of reasonable diligence to communicate the fact or countermand the instructions. This is not only sound law but good morals. (1 Arnold on Ins. [2d Am. ed.], 642; id. [3d Eng. ed.], 537; Green v. Merchants' Ins. Co., 10 Pick., 402.) It must be admitted that even under such a condition of things the applicant is not bound to resort to any unusual or extraordinary means to communicate the fact or countermand the instruction. It is not necessary in this case to undertake to consider the cases where a distinction is sought to be made between the knowledge of a principal and agent where one or the other knew or was ignorant of a fact material to the risk not communicated to the underwriters. In this case both the owner and his agent at Liverpool knew the fact of the loss of the ship in season to have advised the plaintiffs before the insurance was applied for. There can be but two reasons why the cable telegraph was not resorted to, and one is that it was more or less expensive and not resorted to except for special reasons, and the other is that the owner of the vessel *Page 169 
was willing to take a policy of insurance that he could enforce against the underwriters, when he knew the subject of insurance, was lying a total wreck in the very bottom of the ocean, when the perils of the voyage to be insured against had scarcely commenced. In such a case I think the utmost degree of reasonable diligence should require a party to employ any improved means of speedy communication across the ocean. When vessels under sail alone traversed the waters of the Atlantic between Liverpool and New York, a communication sent by that means of conveyance, if the first opportunity was employed, would have been regarded as reasonable diligence; when steamships were introduced which made the voyage in greatly less time, the employing of a sailing vessel to carry an important message, in which time was to the last degree material, could not have been approved. So when speedier means of communication by cable was in full and successful operation, it was not reasonable diligence to employ the mail carried by steamship, when the owner and his agent at Liverpool knew that the message could not be received, at least in season, to prevent an application for insurance in New York against the perils of a voyage to the east, of a vessel then lying a total wreck, near the harbor of Liverpool, on the coast of England. It is urged that the cable was not at the time in general use; but I think the evidence shows that it was, and it is undisputed. It was mainly the production of commercial men, as a means of communicating speedy information between distant countries whose commercial relations were intimate and important; and at the time of the loss of the Sunda it was extensively used for that purpose. It was, doubtless, expensive to a considerable degree, and we are asked to decide, as a matter of law, that the owner of the vessel was not obliged, in the effort to act with reasonable diligence, to resort to it. We are unable to fix the money tariff of commercial integrity, whether the amount is to be measured by the value of greenbacks or gold, but I think it is at least *Page 170 
worth as much as any contract procured by deliberate concealment, indirection or fraud. (Watson v. Delafield, 2 J.R., 526;Andrews v. Marine Ins. Co., 9 id., 34; 1 Arnould on Ins. [Am. ed.], 26; Proudfoot v. Montefiore, 2 Eng. Law R. [Q.B.], 511.) We think the law required that the owner of the vessel, after he knew of the loss, should have countermanded the order to insure by the very best means at command, to make it effectual. It was known that this could be done by cable; and whether a message should thus be sent was, obviously, a matter of consideration at Liverpool; but there is nothing to indicate that it was not sent on account of the cost. Angell did not insure much, and had none on the ship except such as was made by the defendant in New York. The broker of Angell at Liverpool, as shown by his letters of the thirty-first of October, obviously struggled between his duty to telegraph and the desire to have a policy which could be enforced for the benefit of his employer, who he most probably, in such an emergency, consulted. He doubted if he was bound to telegraph; and if the insurance was effected before the news of the loss of the ship had reached New York he had a somewhat shadowy notion that it would be "all right." But I am compelled to come to a different conclusion. If the hazard of incurring the expense of the cable telegram was the reason why the fact of the loss of the vessel was not sent through that speedy channel, it may be suggested that there was no special obligation on the part of Angell to attempt to enforce the policy thus obtained for his benefit. If motives of economy deterred him from communicating a fact in the last degree material to the risk which the defendant, in pursuance of the true state of the case, had undertaken to assume, it was very easy to direct his broker, by the next mail steamer for New York from Liverpool, instead of a suggestion that if the policy was obtained before the fact was known, it would be "all right," to say, that if one had been obtained it must be at once surrendered.
I think the policy is void, for reasons before stated; that *Page 171 
the plaintiffs are not entitled to recover, and that the judgment below must be reversed and a new trial granted, with costs to abide the event.
For affirmance, LOTT, Ch. C., EARL and DWIGHT, CC.
For reversal, REYNOLDS and GRAY, CC.
Judgment affirmed.