Atlantic Insurance v. Lunar

The demurrer being to the whole bill, it must be overruled if the complainants are entitled to any part of the discovery which they have sought. I am perfectly well satisfied, that much of the discovery prayed, ought not to be compelled; and as to another and large portion of it, I entertain serious doubts of its propriety. There is however, a part of the case made by the bill, to which I think the complainants are entitled to an answer. In placing my de*97cisión upon that part of it. I do not determine whether the residue of the bill is demurrable or otherwise.

The complainants charge that the claim made upon them by the defendant under the policy in question,' is fictitious and fraudulent. That the defendant never possessed the property alleged to have been shipped, and which is covered by the'insurance, or if any, but a small portion of it. That on diligent inquiry at the ports from whence the shipments were made, they have been unable to obtain the slightest trace or information of the property in question, or of the defendant himself. They state facts in their bill, which on the demurrer are to be taken as true, and which render the claim made by the defendant in the suit at law, suspicious and of doubtful authenticity, independent of the allegations which I have mentioned. They aver that the discovery sought in reference to the interest of the defendant, is not only material but necessary to their defence at law. Many of the interrogatories founded upon these allegations, are pertinent to this point of interest in the shipment and its extent; and a full and frank disclosure upon them, will tend to elucidate the fairness and justice of the claim.

The claim being upon a valued policy, it is only necessary for the defendant to prove at law, a substantial interest in a subject corresponding to, and satisfying the description in the policy. (2 Phill. on Ins. 743, and the cases there cited.)

It is not incumbent on him to prove that the whole property was shipped, or that he was the owner of the whole. On the other hand, the insurers may show, that either by mistake or design the whole of the property insured was not put on board; or if it were, that the claimant had an interest in only a part of it; and thus entitle themselves to a proportionate reduction of their liability on the policy. (2 Phill. 12; Wolcott v. Eagle Ins. Co., 4 Pick, 429.) And see Le Pyre v. Farr, (2 Vern. 716.)

The possession of the property by the claimant, (which is evidence of ownership,) and the extent of his interest, are therefore material and important inquiries in the suit at law; and from the nature of the policy, constitute more of the case of the defendants in that suit, than of the plaintiff.

*98This being a mere bill of discovery, it is not necessary for the complainants to show that they cannot otherwise establish their defence at law. 2 Story’s Eq. Jurisp. 701, § 1483; Montague v. Dudman, 2 Ves. Sen. 398, per Lord Hardwicke, and again in Finch v. Finch, id. 492; March v. Davison, 9 Pai. 580, per Walworth, Chancellor.

The prayer for an injunction to stay the proceedings at law, pending the discovery, does not convert this into a bill for relief as well as discovery. (Story’s Eq. Pl. 256, § 316; Hare on Discovery, 14.)

It is objected by the defendant, that the bill seeks a disclosure of the evidence by which the insured intends to prove and maintain his case at law, and that the complainants have no right to this disclosure, it being, in effect, a discovery of their adversary’s title, and not of their own case.

The general rule laid down in the treatises on discovery in equity, limits it to the complainant’s case, and forbids a discovery of the defendant’s evidence, or of the means by which he intends to establish his case. Wigram’s Points on the Law of Disc., 90, 94, 112, and the cases cited. 2 Daniells’ Ch. Pr. 62. Newkirk v. Willets, (2 Caines’ C. in E. 296.)

It is difficult to draw the line of distinction between what constitutes the plaintiff’s case, and what the defendant’s. The matter in question may be common to both, and the rule concedes to the complainant a discovery, directed as evidence to the purpose of attack upon the case of his adversary. (Wigram, 90, § 144.)

Most of the cases on this subject have arisen upon conflicting titles to real estate; and if applicable at all in our practice, are not applicable to the case under consideration. We have seen that the insured may sustain his action on this policy, without proving either his shipment or. its amount, in ex-tenso. Hence, what relates to these facts is common to the case of both of the parties. The general rule to which I have alluded has been much shaken, not only in the treatises, but by adjudged cases. See Hare on Disc., 210, 211; Milford’s Pl., 9. Metcalf v. Harvey, (1 Ves. Sen. 249.)

In Glascott v. The Copper Miners’ Company, (11 Simons’ *99R., 305,) the bill stated an action at law against the complainant for the recovery of a sum of money alleged to be due under a special contract. It averred that there was no such contract, that it was fictitious, that the company were not in fact the vendors of the ore sold by the alleged contract, and that the defendants had books and papers by which the matters charged in the bill would appear. The bill did not ask a discovery of any matters to support a case intended to be made by the complainant by way of defence to the action, but of matters to defeat the case necessary to be made by the company to sustain their action. On demurrer to the bill, it was argued for the defendants, that the object was to discover their case as plaintiffs at law, that the allegation was that there was no such contract, and the answer to the bill was, that if they did not prove their case at law, they would be nonsuited. Vice-Chancellor Shadwell overruled the demurrer, and held that a defendant at law may file a bill of discovery, not only to sustain his defence to the action, but to rebut the evidence in support of it. And in Coombe v. The Corporation of London, (1 Younge & Coll. New Cases in Ch., 631, Sir Knight Bruce’s decisions,) it was held, that in order to protect the defendant from a discovery of a document relating to the subject in dispute, it is not sufficient that it should be evidence of his title, or which he intends, or is entitled to use, in support of his case. It must contain no matter supporting the complainant’s title or his case, or impeaching the defence, and the defendant must aver by his answer that the document does contain no such matter. (And see Colls v. Stevens, 7 London Jurist Rep., 54, decided Jan. 21, 1843, by the Vice-Chancellor of England.) Mr. Wigram(a) himself concedes in his Treatise, page 92, note e, that where the complainant suggests that the plaintiff at law has no title, this must be answered.

It is not necessary to go so far as the two very recent cases just cited at large, in order to maintain the discovery sought here, to the extent which I have designated.

The case of Glyn v. Soares and the Queen of Portugal, (1 *100Y. & Coll., Exch. R, 644, 653,) is quite analogous in the application of the discovery to the action at law ; and Janson v. Solarte, next cited, is a full authority to the extent to which I go here. In Glyn v. Soares, the complainant had accepted bills of exchange on a loan to Don Miguel while King of Portugal, for which Portuguese bonds were issued. On the Queen’s expelling Miguel, her adherents obtained possession of one set of the bills which had been sent to his treasurer, procured the latter to indorse them, and sent them to England to collect; at the same time repudiating the bonds. The acceptors were sued on the bills, in the name of Soares, the Queen’s agent. They then filed a bill of discovery, setting forth that the Queen obtained the possession of the bills by fraud and without consideration, that the indorsement of Miguel’s treasurer was procured by duress, &c., and that the Queen had no title to the bills. The bill in equity prayed a discovery of the matters charged, in aid of the defence at law.

On demurrer to the bill, one of the two principal questions was, whether a discovery of such matters would be granted by the court. It was also urged that the facts alleged in the bill did not show a defence at law. The court held that the discovery was proper. That they would not decide whether' the matters of the discovery sought, were or were not a defence at law. That if it were a case of reasonable doubt, the discovery must go on ; and that, it was at least a case of doubt whether on the facts alleged, the acceptors could be charged with the bills of exchange in the Queen’s hands. It had been decided previously by Lord Thurlow, in The Bishop of London v. Eyre & Fitch, (1 Bro. Ch. C. 96,) that the want of materiality was not a ground of demurrer to a bill of discovery.

McIntyre v. Mancius, (16 Johns. 592 in error,) was in some respects, similar to Glyn v. Soares, and was decided in the same way.

Janson v. Solarte, (2 Younge & Collyer R. 127. 132,) is parallel to the case at bar. The underwriters at Lloyd’s had effected policies on certain goods and doubloons alleged to have been shipped at Bordeaux, and the vessel was lost eleven days after she sailed. An action had been brought on the policies in the *101name of Solarte. The interest in the shipment was averred to be in Santemarie & Santos, partners at Bordeaux. The bill charged that the whole case made in support of the action at law was false, that no such property had been purchased or shipped by the assured; that it was pretended that a great portion of the goods, which in all were valued at 175,000 francs, were paid for in bills of the assured, whereas their house was then in bad credit, and could not have procured credit on their bills for 10,000 francs. The object of this suit was to ascertain the truth of the alleged purpose and shipment, and the bill contained many minute inquiries as to the time and manner of the purchases, and the names of the several vendors and consignees.

Santos having answered very fully, and Santemarie having died, as was supposed, a motion was made to dissolve the injunction. The motion was refused. No objection appears to have been made to the complainants right to the discovery. Subsequently the complainants were permitted to amend their bill by stating other circumstances impeaching the claim on the policies, and founding further inquiries in regard to the purchase and shipment. The principal argument was on the extent to which those inquiries might be pushed. Lord Abinger, in his judgment, says—“ Nothing is more difficult to ascertain, “ and nothing more dangerous, than to limit the right of under- “ writers to discovery. It has been considered at all times and “ in all countries, that in cases of this nature the underwriters 11 are entitled not only to a discovery of all the circumstances at- “ tending the original contract, but to the whole history of the “ adventure and loss”

The case of The New York Fire Ins. Co. v. Delavan, (8 Paige, 419,) cited by the defendant, was a bill for relief as well as discovery, and was certainly anomalous. If, in that case, after a suit on the policy, the insurers had filed a simple bill of discovery, asking for a statement of the invoices of the goods which the assured had, and from whom they were purchased, and other disclosures as to the property on hand at the time of the loss, the bill would have been sustained.

In Lane v. Slebbins, (9 Paige, 622,) where the discovery was *102refused, the complainant alleged no ground of defence which was to be sustained thereby. It was in that respect a mere fishing bill, like Newkirk v. Willett, (2 C. C. in E., 296,) before cited.

Another objection urged by the defendant is, that the discovery sought is in answer to charges, which if true, would subject him to a criminal prosecution.

Thus, 1. The charge of a joint interest, and a combination with Barstow, to sink the vessel to defraud the underwriters, an offence which, by the laws of the United States, subjects the guilty parties to ten years imprisonment. (Act of March 3, 1825, ch. 276, § 23. 3 Story’s Laws of the U. S. 2006.)

2. The shipment of the specie and bullion is shown to have been contraband, and a violation of the revenue laws of the places from whence it was shipped, and the bill shows that by those laws, smuggling was punishable with penalties and forfeitures.

3. Again, the combination between Barstow and the defendant to defraud the complainants, stated in the bill, if truly set forth, was in part transacted here, and is by our laws punishable as a conspiracy, irrespective of the act of Congress. (2 Rev. Stat. 691, § 8.)

This objection is not applicable to the portion of the bill on which I proceed. The discovery as to the extent of the defendant’s shipment and interest, has no reference to the alleged barratry. And it has no necessary connection with either the smuggling the property, or the conspiracy to defraud the underwriters. This should appear affirmatively, to exempt the defendant from a discovery. (The Bishop of London v. Eyre & Fitch, 1 Bro. Ch. C. 96; Wolf v. Wolf, 2 Harr. and Gill. 382.)

If the objection is tenable as to any part of the multiform discovery sought by the bill, and as to this I need not now express an opinion, the defendant will avail himself of it when he comes to put in his answer; he will then have an opportunity of averring those circumstances of law and fact which may be requisite to furnish the excuse for omitting to answer. And the court can then decide more advisedly upon the propriety of compelling the discovery. ‘

*103I will dispose of this demurrer by overruling it with costs, hut without prejudice to the defendant’s objecting in his answer to making a discovery as to any portion of the matters of the bill other than those relative to his interest in the property insured and its shipment, with the same effect as if the objection were taken by demurrer or plea. The order may define to what extent the discovery as to interest and the shipment is made imperative by the decision.

Decree accordingly.