Thurston v. Koch , 23 F. Cas. 1183 ( 1805 )

The following opinion of the district judge was delivered at large, and a copy was furnished for publication by Mr. Gondy:

PETERS, District Judge.

Tlie point in this cause is, whether in a ease of double insurance, the policies are to be taken according to priority; that is, whether the second is answerable before the first is exhausted, if the loss is greater than the sum covered by the first? And if the loss is fully covered by the first, whether, if it be paid by- the insurers on the first, they can oblige those on the second to contribute, pro rata? To be respectable abroad, and to facilitate and simplify mercantile business at home, we should have a national, uniform, and generally received, law-merchant. The custom, or practice, of one state differing, perhaps, from that of another, must yield to general and established principles.

There is, however, no custom of merchants, in this, or any other, district of the United States, stated in the case, and we cannot travel out of the statement, in giving our judgment.

I mention as an extraneous fact, of which I have been informed by persons intelligent in business of insurance, that the rule in New York, where they followed the British practice for a great length of time, was variant from that they now use. The custom in Philadelphia, has been, for a long course of years, to settle losses, where there are double insurances, according to priority of policy in date, without regard to time of individual signature: tnat is, not to call on the second set of underwriters, if those on the first policy were competent, or had paid the amount of subscription, or loss. In this event, those on the second policy return the premium, retaining one half per cent. If this be so, and 1 have no reason to doubt, it is one of the very few subjects, in which I have been able to discover a decided and universal custom of merchants here. It may have originated, when the British rule was more similar to that of many other nations, than it is now, and was at the time of our Revolution. It appears to me, that the custom here is agreeable to the general maritime custom and law of Europe, in this particular. The authorities produced in this cause, on the part of the defendant, warrant me, in this opinion. All the European nations, it is true, do not agree. There may not in every detail, be an exact conformity among any considerable number. But., I conceive, that where the greater number of particular laws are coincident in a general principle, this will establish ■ what is called, general law. In the point before us, there are exceptions ■ in the laws of Spain, and those of England, to what seems to .be the general principle and rule, among other trading nations. And the arrangements of those two countries, differ from each other. The law, or custom of merchants in England, was, formerly, more agreeable to tne general custom and maritime law of other nations, than it has been decided, in later times to be. It is contended, that the British authorities, do not shew direct decisions of their courts, on this point; yet, they are sufficient to satisfy me, of what the law there is. It appears to me to be clearly settled, as law, in England, that in eases of double insurances, if all the policies cover the same risques, there shall be a rateable contribution. It was so settled at the period of our independence. It was their law-merchant, which, being part of the common law, was binding on us; and is now engrafted into our maritime code. The cases, before our declaration of independence, clearly shew, that the law was then so settled. And in cases since that declaration, it is rec-ognised and agreed to be the law. Our in surances in that country being still considerable, the rule is yet useful on that account, among others. In Prance, agreeably co an ordinance of Lewis XIV., the first policy is to be exhausted, before the second operates, if dated at different times. But different policies, of the same date, are considered as one, and there is a rateable contribution. In Spain, the date and time of individual subscriptions are attended to, and insurers are called on, according to priority of subscription, even on the same policy. I have had frequent occasions to recur to Spanish regulations. There is, in most of the Spanish maritime laws and customs, a peculiarity which creates an exception, rather tuan a rule, on many general principles. I cannot see, that it will be materially disadvantageous to commerce, to settle this auestion, in either way, contended for in this cause. It is of most importance, that the point should be clearly decided and settled in one or the other way; that merchants may know, and accommodate their affairs to the decision. This court can, at least, com-menee the means of final decision. I believe with Professor Smith, in his “Wealth of Nations,” cited in this cause, that distributing the burthen of losses, among the greater number, to prevent the ruin of a few, or of an individual, is most conformable to the principles of insurance, and most conducive to the general prosperity of commerce. The wisdom and experience of the British nation, grown out of their more modern and extended state of commerce, have given additional value to this opinion. Whatever respect (and it is not slight), I may entertain for the laws of other nations, I deem myself bound to follow, what was the established law and custom of merchants in England, at the time of our becoming an independent nation; not because it was the law merely of that country; but because, it was, and is, our law. There is sufficient evidence in my mind, in the cases produced out of the British books, to this point, to satisfy me of the law and custom there established on this question. I, therefore, conclude, according to the case of Newby v. Reed, 1 Wm. Bl. 416, that “the insured may recover the whole sum; and leave the insurer to recover a rateable proportion, from other insurers, on a double policy,” and the insured may elect which set of insurers, or which of the individuals, he will sue, for the amount of actual loss; beyond which he cannot recover, as he can have but one satisfaction.

On the point stated (the details of which merchants can best adjust). 1 am of opinion, that the defendant is liable to pay to the plaintiff a contribution, upon the loss paid by him, as stated. This contribution must be made by all the insurers, on all the policies rateably, as their respective subscriptions bear a proportion to each other, and all of them to the actual loss. The defendant of course, must pay to the plaintiff his rateable proportion, on these principles, according to the amount of his subscription.