Marsh v. N. W. Nat. Ins. Co. , 3 Biss. 351 ( 1872 )

MTT/TjETL District Judge.

Under the agreement between Marsh & Sternberg, the libellants, and William B. Hibbard, he purchased several cargoes of wheat in Milwaukee, and shipped them for Marsh & Stern-berg to Buffalo. This business continued through a portion of the season of 1871. The associates of Hibbard were not known to or recognized by Marsh & Sternberg as partners. Hibbard associated these persons with him on his own account, without regard to Marsh & Sternberg. These persons were in no sense the partners of Marsh & Sternberg, nor do they in any manner change the original relations between the parties. Hibbard may have an account to settle with his associates, but Marsh & Sternberg have no connection with them, as partners or otherwise.

The purchase and shipment of each cargo was a distinct and separate venture. By the arrangement the parties mutually granted to each other a legal remedy. Hibbard acquired a legal right to prosecute an action at law against Marsh & Sternberg for his share of the profits on the respective cargoes, and they had a right of action against him for their share of each loss. Hibbard did not acquire an interest as a partner with Marsh & Sternberg in any of the cargoes. A hill in equity would not lie between these parties for an account of profit and loss, as each party had a complete remedy at law, and Hibbard had no share or interest in the wheat. His interest in the business was provided for by way of compensation, and nothing more. Independently of the agreement, ■one venture or transaction would not make the parties technical partners, requiring a bill in equity for adjusting their accounts. Musier v. Trumpbour, 5 Wend. 274; Brubaker v. Robinson, 3 Pen. & W. 295; Gillis v. McKinney, 6 Watts & S. 78; Coles v. Coles, 15 Johns. 159; Brigham v. Eveleth, 9 Mass. 538; Galbreath v. Moore, 2 Watts, 86; Borrell’s Adm’r v. Borrell, 9 Casey [33 Pa. St.] 492; Van Amringe v. Ellmaker, 4 Barr [4 Pa. St. 281.

There are decisions to the contrary, but courts are inclined to relieve parties of the complication of proceedings in equity in this respect as far as possible. But speculation is unnecessary, as the agreement between the parties fixes their respective rights. The objection'in the answer in regard to the alleged partnership raises a question of remedy and not of right; and in this case there cannot be necessity of a settlement between the libellants and Hibbard for either profit or loss, as the cargo became a total loss by the vessel foundering before reaching her port of destination.

The dispatch of Marsh & Sternberg to Hib-bard, on which he ordered the risk cancelled, was dated October 11th. On that day Ferguson, in trust for the bank, held the legal title to the cargo and the beneficial interest under the insurance. On that day no person could control the insurance but himself, and neither Marsh & Sternberg nor Hibbard, nor the respondent could disturb his interest in the insurance without his consent. Any act of theirs jointly or severally in this regard, would be void as to him.

On the morning of the 12th October Marsh & Sternberg, having honored the draft, became the legal owners of the cargo by in-dorsement of Ferguson of the bill of lading, and the assignees of the certificate of insurance, entitled to be paid the loss, if any, on return of the certificate. They acquired the same rights as Ferguson in the insurance. The right of Ferguson or his assigns to the loss became vested in Marsh & Sternberg, who have the same power as he had to maintain this libel.

William B. Hibbard had no authority from any source to cancel, or give notice of can-, cellation, of the policy of insurance while it was in the hands of a bona fide holder entitled to the payment of the loss, if any. At the time he gave the notice to respondent the certificate of insurance had passed to Marsh & Sternberg. He gave the notice without their knowledge or consent; and for this reason the cancellation, if made, was void as to Marsh & Sternberg, and it was also void as to them on the ground of mistake on the part of Hibbard. It cannot be claimed that this mistake prejudiced the respondent, as the loss was total, and the company could not have prevented it. If the loss had been partial, possibly the company might, by the notice of cancellation, have been induced not to investigate the loss. By the terms of the insurance contract, in case of loss, the money was payable to Ferguson or order on return of the certificate. The company demanded the certificate, which was not returned, but was in the hands of Marsh & Sternberg. It also demanded a portion of the premium, which was not adjusted nor paid. A mere memorandum of cancellation was made on the books. It is questionable whether the liability of the company did not continue, even in the absence of the mistake, until the certificate was returned and cancelled and the rate of premium fixed.

To hold the contract of insurance rescinded under these circumstances would sanction a very loose manner of business where the utmost strictness is called for. At all events the error of Hibbard was corrected by notice to the company, and the original rights and liabilities of the parties were not disturbed or changed. The company has not been released from its obligation to pay the amount of the insurance.

NOTE. That the fact that the premium had not been actually paid is not a good defense to an action on the policy, consult Trustees of First Baptist Church v. Brooklyn Eire Ins. Co., 28 N. Y. 153; Post v. Aetna Ins. Co.. 43 Barb. 351: Boehen v. Williamsburgh Ins. Co., 35 N. Y. 131; Pino v. Merchants’ Mut. Ins. Co., 19 La. Ann. 214; De Gaminde v. Pigou, 4 Taunt. 246. The cancellation of a policy must be the act of the principals; a broker or agent, even though the policy may have been left in his hands, has no right to demand or consent to the cancellation. Xenos v. Wickham, 33 Law X C. P. 13.

The objection that the premium had not been paid cannot avail the respondent. The company and Hibbard’s insurance agency mutually credited each other, and at the end of every month they struck a balance of their accounts. This was a payment in effect; and at all events the certificate that W. B. Hib-bard is insured implies a receipt of the premium, which is binding in the hands of third persons and innocent holders of the certificate. The legal presumption was that the premium had been paid.

Decree for libellants.