Moody v. Webster ( 1826 )

Putnam J.

delivered the opinion of the Court. It seems to be considered as settled, that a broker has a general lien on policies in his hands. He is entitled to deduct the money due for premiums, out of what he receives on the policies which are put into his hands to collect from the underwriters. Whitehead v. Vaughan, 1 Cooke’s Bankr. Law, 579, 580. And although the broker should part with the policy, if i should come into his hands again, the lien would revive', ibid 457. If, therefore, this case is to be decided as if Bond, the underwriter, made the claim upon Taylor, the insurance broker, for premiums, it would be clear that Taylor would have a right to deduct what Bond was indebted for losses paid by Taylor, and that he would be liable to Bond only for the balance. And this right of set-off results from the implication of the law touching this subject, and need not be proved by any express agreement.

It has been contended for the plaintiff, that the remuneration under the award of the commissioners under the treaty, is to be considered as independent of the loss, and in the nature of a grant, which belongs to the former owner of the vessel ; and not as salvage, in which light the defendant contends it should be considered. But it seems to us that the view which the defendant has taken of the matter, is correct upon that point. It was a satisfaction for the illegal capture, and if it had come to the hands of the broker, it would have been properly an item of account between him and the underwriter.

It is true, that when Bond became a bankrupt, Taylor might have presented and had this claim allowed against his estate. Taylor, however, preferred holding the policies as security ; and he might lawfully exercise his own judgment in that respect. He could not, indeed, get any dividend upon the estate ; but if, in virtue of his having the policies, be could obtain enough to satisfy his claim, he might properly insist upon that advantage.

This case is to be decided upon general principles applicable to underwriters and brokers as the business is here usually conducted. For the payment by the commissioners has been made without prejudice to the rights of either party.

If this money had been paid to the broker pursuant to a decree of a court of admiralty, it should seem to be clear that it would be subject to his lien. But it makes no difference, in principle, whether it has been recovered in the regular course of judicial process, or in virtue of the stipulations of a treaty. The abandonment and the policy were retained by the broker, and were coupled with an interest; which, so far as it concerned the underwriter, should be protected in the hand s of the legal representatives of the broker.

There is some confusion in the cases upon this subject, which may be reconciled by considering the nature of the agency of the broker. Where he acts under a del credere commission, he may be permitted to set off losses against the claim of the underwriter for premiums, which he would not be allowed to do, if he were acting as a broker without such a commission ; because under such a commission he procures policies for his principals in his own name, although as agent, and he is considered, as between the underwriters and himself, as the owner of the policies. And this arises from his in-' creased liability to the assured for the losses. He is in such cases, therefore, permitted to set off losses, in the same manner as he would be if he were the sole proprietor of the property and policies. He is also liable to the underwriter for the premiums in such cases. The underwriter and the as sured, in short, treat with the broker having such a commission, as with a principal.¹ But where one effects policies as agent, in his own name, without such a commission and such liabilities, and a loss happens, it belongs exclusively to the principal, and the broker cannot set it off against'the premiums claimed from him by the underwriter, unless he should have paid it pursuant to the authority given to him by the underwriter. From thenceforward it would become an item in their mutual accounts, as in the cases cited touching this point.

In the case at bar it does not appear that Taylor had a del credere commission ; but he paid the losses upon receiving the abandonments, taking and holding the policies as his vouchers and for his security, within the general scope of his authority. And under the circumstances which are agreed, we are all of opinion that the plaintiff should become nonsuit.²

1 Hughes on Ins. 106 to 109; 2 Phil. Ins. 366.

2 2 Phil. Ins. 364.