Hume, Small & Co. v. Providence Washington Insurance , 1885 S.C. LEXIS 92 ( 1885 )

The opinion of the court was delivered by

Mr. Justice McGowan.

This was an action of plaintiffs upon a policy of insurance issued by the Providence Washington Insurance Company, incorporated under the laws of Rhode Island, and doing business in this State, “on the tug boat ‘Jennie,’ her hull, tackle, apparel, boiler, machinery, appurtenances, and furniture, on board, for one year from October 20, 1882, at noon. Yessel valued at $4,000. Privilege to tow phosphate and lumber in and around the rivers and creeks between Beaufort, S. C., and Savannah, Ga., and to proceed to Charleston, S. C., if necessary, and also to tow vessels, not oftener than twice a month, from and to sea, off Tybee Light. Vessel valued at $4,000, including premium. Insurance on vessel $3,000, premium $150.” The complaint made an exhibit of the policy and set forth the interest of the plaintiffs in the boat, being as stated, for “the repayment of advances made to one Schlegelmilch, who was the purchaser, and • engaged in the lumber business on New River; the bill of sale of said tug boat being taken in the name of W. B. Pringle, Jr., the chief clerk of the plaintiffs, and a citizen of the United States, who held the same as security for the repayment of said advances to the plaintiffs.” It charged that within the time insured the tug was lost “by the perils of the sea,” &c.

The defendants answered, admitting the execution of the policy, but making several defences, which may be condensed as follows: 1. They deny that the legal title to the tug was in the plaintiffs, and insist that the equitable title was not an insurable interest. 2. They allege concealment of their true title by the plaintiffs. 3. Misrepresentation by them. 4. Unseaworthiness of the tug. 5. That the loss of the boat was occasioned by the negligence of insured and agents; and, 6. “Deviation.”

The cause was heard by Judge Kershaw and a jury, when much testimony was taken, all of which is printed in the “Brief.” In general terms, the testimony tended to show the execution of the policy and the receipt of the insurance by the defendants after full knowledge of the relations of the plaintiffs to the vessel — who had purchased the “Jennie” from the Uric Guano Company and paid the purchase money — that one F. Schlegelmilch was to have her, if he was able to work out her purchase money; and in the meantime the legal title was taken in the name of W. B. Pringle, Jr., the chief clerk of the plaintiffs,' who really had no interest, but was to hold it for the benefit of his employers; that Schlegelmilch, the prospective owner, took charge of the boat as master, and ran her in his raft and lumber business; that generally, when she was unemployed, the boat was anchored out in the middle of New River, in front of the house of the master, Schlegelmilch, which stood some fifty yards from the river, and in full view of the boat riding at anchor; that while in that position the master was absent, but the boat was under the charge of one Hahn, who visited her several times during the day and night, but slept at the house ; and that in the evening of April 5, 1882, she was struck by a gale of wind from the southwest, which continued all night, and before daylight the next morning the boat dragged her anchor, went ashore, and sank.

It seems that both parties made requests to charge, but they are not in the “Case,” nor is it stated whether the judge refused any of the requests made. Upon the charge, the jury found for the plaintiffs the full amount of the policy, $3,000. The defendants made no motion before the Circuit Judge for a new trial, but appeal to this court upon three exceptions, which will be considered in their order.

The first exception alleges error in the following part of the charge : “If the jury find that the plaintiffs paid the money for the purchase of the tug and for subsequent repairs, and the premiums and insurance, and.that the legal title to said tug was taken and held in the name of W. B. Pringle, Jr., to dispose of the same as the plaintiffs should direct, the said W. B. Pringle assenting thereto, then the plaintiffs had an insurable interest in-said tug, and if entitled to recover at all, are entitled to recover to the extent of that interest up to $3,000, provided such interest be covered by the policy, and the policy be in force at the time of the loss.” “Whereas it is submitted that the plaintiffs, being aliens, could not acquire an interest as equitable owners in the tug, and could have no insurable interest as such in the same.”

This exception seems to concede that a mere equitable interest in property may be the subject of insurance as charged by the judge, and in that view we concur. From the terms in which the proposition was announced, it must be assumed that the jury found that the plaintiffs had paid the purchase money of the tug and for subsequent repairs, premiums, and insurance, and that the legal title was held by Pringle only for their benefit. Under these circumstances it would require a very strong case to authorize the insurers, after loss actually occurred, to deny liability according to the terms of a contract made by themselves, with full knowledge of the circumstances, and as to the manner in which the property was held. It has even been matter of controversy whether a mere hope or expectation without any interest in the subject matter, a mere wager policy or bet that a certain event would or would not take place, might or might not be recoverable as a valid contract; but there can be no doubt that any lawful interest existing at the time of the loss will entitle the insured to recover on his contract, whether that interest in the subject insured be absolute or contingent, legal or equitable. A creditor to whom property is assigned as collateral security has an insurable interest to the extent of his debt. Chancellor Kent, with whom the subject of marine insurance seems to have been a sort of specialty, says: “The interest need not be a property in the subject insured. It is sufficient if a loss of the subject would bring upon the insured a pecuniary loss, or intercept a profit. Interest does not necessarily imply a right to, or property in, the subject insured. It may consist in having some relation to, or concern in, the subject of the insurance, and which relation or concern may be so affeeted by the peril as to produce damage. Where a person is so circumstanced, he is interested in the safety^ of the thing, for he receives a benefit from its existence, and a prejudice from its destruction, and that interest, in the view of the English law, is a lawful subject of insurance,” &c. 3 Kent Com., 276; Arnould Ins., 229.

It is, however, claimed that on the trial below, the plaintiffs themselves proved the fact that, although residing in this State and doing business here, they were British subjects, aliens; and as soon as that fact appeared, there was introduced a new defence not adverted to before, viz., that the plaintiffs, being aliens, could not, under the navigation laws of the United States, hold any interest in a vessel licensed in accordance with those laws ; and that, therefore, they could not recover upon a policy insuring said vessel even against those who had made the contract and received the consideration; and that it was error on the part of the Circuit Judge to omit so to charge. The issue of the alienage of the plaintiffs was not made in the pleadings. The evidence was not developed with reference to such issue, and the fact of their being British subjects only fell out casually and incidentally, being assigned as a reason why the legal title to the vessel was taken by Mr. Pringle; yet it was urged before us that the defence, based upon this new fact, should have been held conclusive, and that the omission of the Circuit Judge so to charge was error of law.

It does not appear that the Circuit Judge was requested so to charge, and we do not consider the point properly before this court. In a law case, as frequently held, our only province is to correct errors of law committed below, and that cannot be affirmed of a mere omission to charge, even in a case when the issue is made by the pleadings, unless it appears that the judge refused to charge after he was so requested. It is the office of exceptions to bring before the court only such matters as were contested below. Exceptions going beyond that will not be considered. Any other course, as we conceive, would be in excess of our very limited jurisdiction, and neither just to the Circuit Judge nor promotive of a systematic, orderly administration of the laws. “To permit this court to consider alleged errors of the Circuit Judge in omissions to charge, it is absolutely necessary that the case should show that he was requested so to charge.” Sawyer, Wallace & Co. v. Macaulay, 18 S. C., 543, and authorities cited.

It is, however, ingeniously urged that as soon as the evidence that the plaintiffs were British subjects fell out on the trial, that fact became a part of the case, and the Circuit Judge was bound, without being specially requested so to do, to charge that the plaintiffs, as aliens, could not hold “an equitable interest” in the boat “Jennie,” for the reason that, under the navigation laws of the United States, aliens can hold no interest in an American vessel; that being incapable of holding any interest, they could not, on the principle that the whole includes all its parts, hold an “equitable interest,” and that the failure so to charge was really not a mere omission, but an error of commission in charging the law incorrectly on the facts fairly in the case. This is certainly plausible, but it does not seem to us sound. The question made by the pleadings was not whether the plaintiffs had any interest in the boat, but that having only an equitable interest, that would not support the policy and authorize a recovery on it. The defence that the plaintiffs were aliens was a very different affirmative defence, which was not made in the pleadings. When the proof of alienage fell out, it was really irrelevant to the issues joined, and as such possibly might have been stricken out or disregarded. “The question of the relevancy of a fact to a given inquiry is of importance, because evidence is not admissible to prove an irrelevant fact.” Best Evid., 352; Steph. Dig. Evid., 135; 2 Rap. Law. Dict., 1092.

If the defence of the alienage of the plaintiffs, under the complex and numerous provisions of the navigation laws of the United States, was to be insisted on, it should have been distinctly stated in the answer and argued before the Circuit Judge. But it does not appear that it was considered at all, or that even the statutes of the United States, under which the defence is claimed to arise, were submitted for his consideration and construction, or that he was requested to charge the jury upon the subject. . In his charge, the judge appears to have made no reference to the matter, and we cannot say that he committed error of law in confining himself to the issues made in the pleadings. As was said in the case of Eason v. Miller & Kelly (15 S. C., 202): “Generally the issues of fact involved in a case will be found contained in the allegations of the plaintiff and the statements of the defence as stated in the answer; and where there is nothing more in the complaint and answer but questions of fact, then an examination of these pleadings will present the true issues submitted to the jury, and to which their verdict will be understood to be responsive. But the pleadings, in addition to questions of fact, may also raise questions of law. In such case, the questions of law do not go to the jury, but must be decided by the court,” &c.

But as the court is always desirous that every case should have full consideration and be decided according to the law and the evidence, we have looked through the authorities upon the subject of the alienage of the plaintiffs, so far at least as to satisfy ourselves that no injustice has been done. There can be no doubt that in this State an alien who is not an alien enemy may acquire, hold, and contract concerning property in the same manner as a natural born citizen. Gen. Stat., § 1768. There is nothing about the contract of insurance which makes it an exception. 3 Kent, 253. But it is claimed that, in reference to a certain kind of property, American vessels, there is in the laws of the United States a prohibition against ownership by aliens on pain of forfeiture. The point as applied to this case has a double aspect; that the “Jennie” at the time she was insured was liable to forfeiture under a section of those laws (U. S. Rev. Stat., § 4320), which, among other things, provides that “the master of such vessel shall also swear that he is a citizen, &c., * * * and if such vessel be less than twenty tons burden, the husband or managing owner shall swear that she is wholly the property of citizens of the United States,” &c.; and that, therefore, being liable to a forfeiture for the violation of this law, a policy on the vessel was illegal and void.

It will be observed that the vessel had not been forfeited, and that this was not a proceeding on the part of the government to have a forfeiture declared, and therefore we need not inquire whether the facts would make -out a violation of the law; but it w'as an action on a contract to insure the vessel made by the defendants themselves upon fair and valuable consideration received. In such an action, as we understand it, the insurers may not escape the consequences of their contract by interposing the defence that the boat insured was liable to forfeiture. The Ocean Insurance Company v. Polleys, 13 Peters, 163. That case was very analogous to this. The defendants had insured the schooner “Mary” for one year. They were afterwards sued on the policy, and made defence that the “Mary,” at the time she was insured, Avas liable to forfeiture under a laAv of the United States, and therefore the policy was not binding. The Supreme Court overruled the defence, and Judge Story, in delivering the judgment, said: “The objection then as insisted on by the counsel for the company involved two distinct propositions. The first was that the schooner was liable to forfeiture; the second was that the policy on her Avas therefore void. Noav, the first might have been most fully admitted by the court, and yet the second have been denied, upon the ground that the policy was a lawful contract in itself, and only remotely connected Avith the illegal use of the certificate of registry, and in no respect designed to aid, assist, or advance any such illegal purpose. We all know that there are cases where a contract may be valid, notwithstanding it is remotely connected with an independent illegal ti’ansaction, which, however, it was not designed to aid or promote. * * Suppose the ‘Mary’ had been repaired in port, and the shipwrights had known the circumstances under which she had obtained the new certificate of registry, would they, in consequence of such knowledge alone, have lost their right to recover for their work and labor ? Suppose a vessel had been actually forfeited by some antecedent illegal act, are all contracts for her future employment void, although there is no illegal object in view, and the forfeiture may never be enforced?” &c.

In this case the legal title to .the vessel was in Pringle, a citizen; but even if the equitable interest of the plaintiffs made the use of the certificate of license illegal, rve cannot see that the policy, a contract in itself lawful and in no way forbidden, was in any respect designed to aid, assist, or advance that illegal purchase. See Clark v. Protection Insurance Company, 1 Story, 131; Wilkes v. People’s Fire Insurance Company, 19 N. Y., 187; The Kate Heron, 6 Sawyer, 106.

The second exception complains that the Circuit Judge “erred in charging that ‘the defences of deviation, misrepresentation, and concealment are questions of fact for the jury, and must be proved by the party alleging the same’; whereas it is submitted that the interpretation of the policy as to the voyage prescribed therein and the causes thereof was a question of law for the court, and not of fact for the jury. The court should have construed the terms of the policy in relation thereto, and the jury have applied the facts adduced in evidence to the law so declared.”

This exception states the law correctly, but, as it seems to us, there is a misapprehension as to what the judge did charge. There cannot be a doubt as to all questions of misrepresentation and concealment being pure questions of fact for the jury. That narrows the complaint down to the subject of “deviation,” which, as applied to marine insurance, is somewhat in the nature of a technical term. We concur that it was the duty of the Circuit Judge to construe the policy, a written instrument, explain what was meant by the term “deviation” and its effect, and then leave it to the jury to say whether the facts found made out the defence. It would be unjust to take particular detached sentences of the charge and construe them without reference to the context, and taking the different parts of the charge and considering it as a whole, it seems to us that the judge did all it is said he should have done. In the very same connection from which the words quoted in the exception were taken, he proceeds to say: “In marine insurance, anything that materially varies the risk insured against discharges the insurer; and unexplained and unreasonable delay, not justified by necessity or incurred bona fide with a view to the purposes of the voyage, does so vary it.”

We do not well see how the judge could have said more. The only “deviation” complained of was that of “delay”; that the boat was not fully manned and engaged every day; but at the time of the accident was lying at anchor in New River. In strictness, the doctrine of “deviation” applies to a particular voyage between places named, as to which delay in starting, change of season, local divergence, longer route, and many other circumstances may materially change the risk from that which was intended by all parties when the policy was effected. We do not, however, see how these things could be properly considered in reference to a policy not for a particular voyage, but for a year, so long as the insured vessel kept within her privilege “to tow phosphate rock and lumber in and around the rivers and creeks between Beaufort and Savannah, and to proceed to Charleston if necessary; also to tow vessels, not oftener than twice a month, from and to sea, off Tybee Light.” 1 Arn. Ins., 383, 409. But be this as it may, after the judge had charged the jury that “anything that materially varies the risk discharges the insurer,” it was for them to say whether the risk had been so varied.

The third exception is as follows: That “his honor erred in charging: ‘If the jury find that the loss has happened wholly from one of the perils insured against, then the negligence of the master and crew in failing to perform their duties as such is no defence to the company when the same did not contribute in any way to such loss.’ This language, appellants submit, assumed as a fact the presence of a master and crew, whose negligence would not exempt the insurers, and was calculated to mislead the jury.”

We make the same remark as to this exception. The charge must be considered as a whole. The Circuit Judge seems to have been particularly careful to state the law fully upon the subject of seaworthiness. Among other things, he said: “A policy of insurance on a vessel or tug imposes on the assured at all times during the continuance of the risk the legal duty of keeping the boat in a condition of reasonable security, and that if the plaintiffs or their agents allowed the ‘Jennie’ to remain in a leaky condition, anchored out in New River, with nobody on board competent to protect her against the perils to which she was exposed, and by reason of their negligence she sank, the plaintiffs are not entitled to recover,” &c. The defendants certainly had no right to complain of this charge. Considering it as applicable only to the question of seaworthiness, we cannot say that it was error, but it came very near trenching on that other doctrine announced by the judge that “when the loss has happened wholly from one of the perils insured against, the neg-. ligence of the master and crew in failing to perform their duties as such is no defence to the company where the same did not in any way contribute to such loss.”

For a period the effect of negligence on the part of the insured was in cases of insurance a vexed question; but it seems to have been finally settled upon the ground that causa proxima non remota spectatur. Busk v. Royal Exch. Ass. Company, 2 Barn. & Ald., 82; Columbia Ins. Company v. Lawrence, 10 Peters, 507; Street v. Augusta Ins. Company, 12 Rich., 13. In the case first cited, the “Carolina,” a Russian vessel, being delayed by stormy weather, was frozen up in the Gulf of Finland. The crew was discharged until the breaking up of the ice the following spring, and the ship was left in charge of the mate, who lighted a fire in the cabin and went on board another ship to sleep. About 4 o’clock the next morning the ship was discovered to be on fire, and was consumed to the water’s edge. It was conceded that the loss arose from the negligence of the mate, and it was held that “where the assured had once provided a sufficient crew, the negligent absence of all the crew at the time of the loss was no breach of the implied warranty that the boat would be properly manned.” This case has been followed, and the question may now be considered as finally settled. In our own case of Street v. Augusta Insurance Company, supra, Judge Wardlaw said: “A policy of insurance is construed so as to preserve its practical usefulness without nice metaphysical refinements. If a peril that has been insured against has been the immediate cause of the damage, the purpose of insurance would be defeated, and the general principle upon which courts refrain from considering ‘the causes of causes’ Avould be violated, by looking behind this peril for its cause.”

The judgment of this court is that the judgment of the Circuit Court be affirmed.