Merchants & Miners' Transportation Co. v. Associated Firemen's Insurance , 53 Md. 448 ( 1880 )

Robinson, J.,

delivered the opinion of the Court.

This suit is brought by the appellant, owner of the steamer “ George Appold,” on a fire policy issued by the appellee, insuring said steamer against loss by fire.

It appears that on the 20th October, lS^T, while loading at the port of Savannah, a fire was discovered among a cargo of cotton stowed in the forehold of the steamer, and in order to save both the steamer and cargo from destruction, it was found necessary to submerge the vessel.

The damages direct and indirect to the steamer itself, were estimated at $2500, and the damages to the cargo at $10,500.

The adjuster to whom the matter was referred decided, that the damages to the cargo were according to the usage and laws of 'the port of Baltimore, subject to the law of general average; and the appellant as owner of the steamer was obliged to contribute to the cargo the sum of $5231.29.

The steamer was insured by the appellee and other fire companies to the amount of $80,000; and the cargo was insured under marine policies.

The fire companies tender themselves ready to pay $2500, the amount of damage sustained by the steamer, hut the appellant claims that in addition to this sum, he is entitled to recover the amount paid hy him under the law of general average to the cargo. And this is the question, and the sole question at issue between the parties.

Were this a question to he determined purely upon equitable principles, there might he some ground to support the appellant’s contention.

The steamer was fully insured hy the fire companies, and in the event of its destruction hy fire, they would have been liable for the entire loss sustained hy the appellant. In that event, instead of the sum of $5231.29 now claimed hy the appellant, they would have been obliged to pay the entire amount covered by their respective policies.

If the steamer was saved from destruction hy being submerged, and the appellant as owner was in consequence thereof, obliged to pay five thousand dollars for damages to the cargo, it would seem hut fair and equitable that he' should he reimbursed a loss thus incurred for the benefit and protection of the insurers.

The liability however of the insurer is one arising upon contract, and must be determined by the terms of the policy upon which this suit is brought. It is hardly necessary to say, that a policy of insurance like any other contract, must he construed according to the evident intention of the parties, to he gathered from the language used taken in connection with the subject-matter to which it refers.

The rights and obligations of the parties to this suit must therefore he determined hy the contract as made between them; and we have no power to add new conditions or to extend the risk beyond what is fairly within the terms of the policy itself. Now what are the terms of this policy ? Looking to the face of it, we find the thing insured is a steamer, and the peril insured against is loss by fire. No other risk was assumed hy the insurer, and indemnity against loss from this peril and this alone was the consideration for which the premium was paid by the insured. Here then is a contract in regard to a specific subject and made for a specific purpose, and by it the córrela tive rights and obligations of the parties must be determined.

It is not contended that the appellee has in express terms agreed to reimburse the appellant for losses which as owner he might be obliged to contribute to the cargo, but the argument is, that the insurer is liable for all damages resulting directly from the peril insured against, and that actual combustion is not always the test by which such damages are to he ascertained. This in a certain sense is true.

The insurer of a stock of goods may he liable for damages caused by water, although the water was used to extinguish a fire upon the house in which such goods are stored. And upon the same principle it has been held, that the insurer of a house is liable for its destruction, when such destruction was absolutely necessary to arrest the progress of a fire in a city. City Fire Ins. Co. vs. Corlies, 21 Wendell, 367; Wetherall vs. Marine Ins. Co., 49 Me., 200; Geisek vs. Crescent Mutual Ins. Co., 19 La. An., 297; Hillier vs. Allegheny Co. Mut. Ins. Co., 3 Penn., 470; Thompson vs. Montreal Ins. Co., 6 U. C., Q. B., 319.

In these and other like cases, the law presumes, that the parties from the very nature of things, must have contemplated the natural aad physical consequences resulting from the peril insured against. So, in this case, the appellee is not only liable for the damages to the ship from actual combustion, hut also for damages to the vessel resulting directly from the means used to extinguish the fire. But the liability of the insurer arising in cases where the peril insured against has been the proximate cause of the loss, has never been held to cover damages to other property not insured by the policy.

If, then, the appellant is entitled to recover in this suit, it must he upon the ground, that the law of general average, by which he was obliged to contribute to the loss sustained by the cargo, constitutes and forms a part of the risk assumed by the appellee. Fire policies, it is well known, have been in existence for centuries, and it is but fair to presume that cases like the present, where the vessel has been insured by such policies, and the cargo insured under marine policies, must have frequently occurred ; and yet no case has been found, in which it has been held, that the fire policy must contribute to the loss sustained by the cargo. Hot only this, but the proof in the record shows, that the usage and laws recognized by mercantile men, and by which such policies are construed, are all against this contention. In determining for the first time a question arising upon insurance, such usage and laws are entitled to weight, not only because they are approved and sanctioned by practical and sagacious men, in regard to a subject-matter, in which they are alike interested, but also because'the parties must be presumed to have contracted with reference to them. In fact it has been said, that the whole law of insurance has done little else, than to adopt such laws and usages, and to give to them the force of authority.

In the absence then of any authority to support the appellant’s contention, let us see whether it can be supported on principle. The whole scope and object and purposes of a fire policy, are different from those of a marine policy.

By the former the insurer agrees to indemnify against loss by fire. That is the only peril for the loss by which he agrees to become responsible; and we have no right to enlarge the contract, or to extend the risk by implication. By a marine policy, the underwriter engages to pay not only the loss or damage to the thing insured, but also to reimburse the owner all sums paid by him under the laws of general average.

General average, is a contribution by all tbe parties in a sea adventure, to a loss suffered for tbe common benefit of all. In such cases, where any sacrifice is deliberately and voluntarily made, or any expense is fairly and bona fide incurred, to prevent total loss, or some greater disaster, it is hut just and right, that the sacrifice or expense should be borne relatively by the owner of the ship, freight and cargo, to the end, that the loss may fall equally upon all the parties in interest. Birkley vs. Presgrave, 1 East, 228; Hallett vs. Wigram, 9 C. B., 580; Fletcher vs. Alexander, 37 L. J., (C. P.,) 196, L. R., 3 C. P., 380.

For risks thus assumed, and which may he said to he co-extensive with the perils of the sea — embracing general average, salvage, and abandonment, the insured pays a premium more than five times greater than the premium against loss by fire alone.

If the appellant desired protection against the risk of general average, or against other perils of the. sea, he should have insured under a marine policy. If he preferred to insure at a lower rate of premium, and to take upon himself all risks, other than loss' by fire, he has no reason to complain, because the insurer refuses to reimburse him for a loss not covered by the policy; and which by the well settled law of insurance constituted no part of the contract between thé parties.

In the many cases relied on by the counsel for the appellant, the questions considered and decided arose on marine policies, under which the rights and obligations of the parties are altogether different from those belonging and incident to a fire policy.

The policy sued on in this case limits the liability of the appellee to losses to the steamer itself by fire, and upon such a policy, the appellant is not entitled either upon principle or upon authority to recover the amount which under the law of general average, he was obliged as owner of the vessel to contribute to the cargo, even though the damages to the cargo were occasioned by the means used to extinguish the fire in the vessel.

(Decided 30th March, 1880.)

The statement of facts shows, that the damages direct and indirect to the steamer were $2500, and this sum the appellee tenders itself ready to pay. There was no error therefore in refusing to grant the appellant’s prayers, and the judgment below must he affirmed.

Judgment affirmed.