Baltimore Insurance Co. v. M'Fadon

This is an action brought on an open policy of insurance, in which the plainfiff’must not only show that the event insured against has taken place, but also establish the value of the goods insured. Had the suit been on a valued policy, proof to the first point would only have been necessary — the parties themselves having agreed oa the amount to be recovered, in the event of a recovery, when the policy was entered into.

To free themselves from the plaintiff’s claim, the underwriters produced, by way of discount or set-off, several notes, joint and several, executed by the insured to them. These notes were, by the decision of the court below, rejected, because the policy being open, the extent of the plaintiff’s claim was uncertain — dependant on the real value of the goods insured.

*41In all instances of controverted claims on policies of insurance, ¡lie demand, in one sense, must be uncertain; for . . it being a question whether the underwriters are responsi" bie. a decision on that subject must be first obtained, before the extent of the claim presents itself — in the valued policy, that lias been agreed on-in the open policy it must be established by proof, it is then on account of the un-fceriaiuty as to the extent of the claim, and not the uncertainty of the claim itself, that the notes were rejected: for as the decision appears to be founded on the policy being open, had it been valued, a contrary decision would have been pronounced.

This is the first time, within my recollection, where this question has presented itself for the decision of this court, and it must depend on the true construction of the act of J785, ch. 46, in virtue of which the discounts were attempted to be made.

It would seen! but just that mutual claims should be set off, one against the other; that neither should be compelled to pay, when the sum so paid must be refunded on a judgment rendered on the adverse claim. Reasonable as this is, the common law, (if 1 may so term it,) excluded all .such payments, and the parties were left to their mutual .remedies at law by distinct suits, or one of them must resort to a court of equity to have his claim set off or dis-< -counted from his adversary’s judgment.

in this situation were claims of this description left until the time of Geo. IT, in the second year of whose reign a law passed permitting “mutual debts between the plaintiff and defendant” to be set off, one against the, other. This statute contains no other description as to the nature of the debts, exeepi that they are “mutual” — -whether of equal or superior nature as to their origin — whether the ©ne was on a specialty, and the other on a simple contract, made uo difference, except the word “mutual” must restrain them to debts of the same nature. The courts having so long rejected defences of this description, after the passage of this remedial statute, they restrained its operation as far as practicable, and would permit no debts to be discounted, except of the same grade. The legislature of Great Britain again interposed, and in 8 Geo. II, passed another statute permitting discounts, “notwithstanding they were of different natures.”

*42These two statute* having passed before the separation uf this country from Great Britain, did or did not form a ^ , part of the law of Maryland at the time of the revolution5 jf t^ej <1 icl, who can believe the legislature of this state, in the year 1785, would solemnly have passed an act, which was to have no effect? If they did not, as the construction on those statutes was well known, if no more was intended than was embraced by them, can it be conceived that an intelligent legislature would not have adopted the language of those statutes which were known fully to comprehend those objects? Put the act of 1785 varies materially from those statutes, and therefore the decision on them, by any rational rule, of construction, canuot be solely applied to it.

It has been remarked, that claims, under policies of insurance, as well as claims of every other description, must be uncertain in one sense; that is, whether any claim to any amount exists; if it doth exist, then, and not before, the extent of the claim presents itself. Debts' of every description, whether they arise on specialties or simple contracts, are in the same predicament — the instrument must first be proved, or the contract must be proved, before you can examine into the amount of the claim. Nor does it necessarily follow that the instrument, under which the claim is founded, when proved, must disclose on its face the extent of the claim, or that, when resting on simple contract, the contract, when proved, must produce the same-result.

Even under the English statutes the contract proved is only introductory to the extent of the demand which may be ascertained by evidence not appearing in the contract, and when ascertained, either by confession, or on demurrer to a plea, setting forth such a claim, or by proof, if contested, and in either case is a claim sufficiently certain and ascertained to be deducted from the plaintiff's demand.

In Fletcher vs. Dycke, 2 T. R. 32, the claim arose from not having done certain work within a certain given time, under a contract, stipulating that For each week after the expiration of the stipulated time, a specific sum was to be paid; the time that had expired was necessary to he averred, and if not admitted, must of course have been proved.

In (he case of a simple contract, whether for work and labour done, on a quantum meruit, or goods sold on a qunn-*43turn valebant, the contracts under which the work was done, or the goods sold, must be proved or inferred, and when proved or inferred, yet the extent of the claim rests on other evidence* — the value of the work, or the worth of the goods. In the case of an open policy, that being proved, the loss warranted against being ascertained, what remains more to be done than on the quantum valebant, that is, to ascertain the value oí the goods — in the ope instance sold — in the other insured; and, so far as that ascertainment, surely in the one instance, as well as in the other, the extent of the claim is unliquidated. And yet who can doubt but that a set oil" on the quantum meruit ox valebant, would be allowed.

No reason can be urged why a person who has an uncertain claim, should be permitted to recover from him who bad a certain demand. If any difference ought to be made it should be in favour of that which is certain; for a great length of time might be necessary to ascertain the one, and perhaps it might totally fail for the want of proof, and therefore it might be unreasonable to compel the certain creditor to await the termination of the uncertain demand on. Mm. But if he thinks proper to retain his certain, demand to meet that which is uncertain, why should he be prevented? He ought not to be prevented, unless, the act positively directs it. Recur to that act, and not a word is. to be found on the subject of liquidated or unliquidated claims, or debts .of any description; its language is general, “that in case any suit shall be brought on any judgment, or- on any bond, or other writing sealed by the party, and the defendant shall have any demand or claim against the plaintiff, upon judgment, bond, or other instrument under seal, or upon note, agreement, assumpsit, or account proved, as by this act is allowed the defendant, or otherwise according to law, shall be at liberty to file his account in bar, or plead discount to the plaintiff’s claim, and judgment shall be given for the plaintiff for the sum only which remains due after just discount made; provided the sum which shall remain due, after such discount, be sufficient to support a judgment in the court where the cause may be tried, according to its established jurisdiction; and in all cases of suits upon simple, contracts, the defendant may file an account in bar, or plead discount of any claim he may have against the plaintiff, proved as aforesaid, or otherwise *44proved according to law, which may he of an equal or superior nature to the plaintiff’s claim, and judgment. shall * 1 ° ° be given as aforesaid.”

As the courts have adjudged that their jurisdiction remained, without regard to the sum found due, on all contracts not expressly found to be within the act limiting the jurisdiction, the proviso in the act of 1785, ch. 46, s. 7,-it is said, roust restrain the general expression in the enacting part of that act, and confine it to such contracts, the jurisdiction over which depended on the amount of the claim. In construing every instrument of writing the whole must be taken together, and no interpretation, if possible tobe avoided, should be given, that tends to render any of the provisions nugatory, much less the whole of them; and we have seen, that restraining the words of the act of 3785, so as to exclude the discounts in question, would make the general and comprehensive expression of that act useless, by limiting the right to discount to those cases that had been provided for by the statutes of George, or by the act of this state passed in 3729, ch. 20, s. 5. If, therefore, we were driven to the necessity of excluding all effect to any part of the act of 1785, the proviso must yield to the enacting part, and not it to the proviso. But in giving the opinion which has been pronounced, no such dilemma presents itself. For if the jurisdiction of the court on some. contracts depends on the sum found due, and on others the authority remains to adjudicate without regard to the sum, then it follows, that on all such contracts, where the jurisdiction rested on the sum due after the discounts made, if those discounts reduced the claim below the-jurisdiction, the judgment must be for the defendant; but where the contract, on which the suit was brought, was of a different description, there the plaintitf must have judgment for the sum due, without regard to the amount. And whether the contract sued on was of the one description or the other, must be determined by the court, as it has to da in ail cases where the sum found due by a jury, or otherwise, is under the ordinary limits.

By a liberal and extensive construction of the act, the object and policy of the law is advanced by enlarging the description of those claims against which discounts were to be admissible; and if it is not just to permit one man to recover a sum of money from another, to whom he is *45bable, for a libe sum, so is justice promoted by extending the power of discount. For if the right to discount does not exist, then it is in the power of a person who has a claim, to transfer that claim, and enable the transferrce to rerover the sum due, notwithstanding he, from whom the claim was obtained, never could have forced a payment of the money! for in his hands, cither at law or in equity, it 'must have been subject to all demands on contract against him. whether those demands arose on contracts even ber tween the same, or other persons. But it the defendant is not permitted at law to discount, neither could he, it is apprehended, 'nave redress in equity, where the claim has! been transferred to a third person, who had no notice at the time he received the assignment. A more striking instance of the injustice of restraining discounts cannot be conceived, than the case now before the court presents.The underwriters having fixed, ascertained, and just claims on the assured, must notwithstanding be compelled to pay the money to his assignees, when the assignor him— self could never have coerced the payment; for against him, most assuredly, at equity, relief might have been. obtained, and the one demand set off against the other. By permitting the discounts at law hir> assignees wil', as they ought, stand iri his place, and be liable to the same objections against the payment of the money that might have been made against their assignor.

The Court concurred in the opinions of the County Court in the fir at and fourth bills of exceptions, am5, dissented from that jn the third bill of exceptions. The second bill of exceptions having been taken by the plaintiff below, did not come under the consideration of the court

dissented from the opinion given by this court on the third bill of exceptions.

JXJBGJÍEKT REVERSED, AND PK.CCSYDSXBO .MfASPE?»,