Mercantile Mutual Insurance v. State Mutual Fire & Marine Insurance

The plaintiffs, having risks on the ship Great Republic, her cargo, and freight, in 1853, applied to the defendants for re-insurance. Their application was in writing, and in the following terms :

*322“ Re-insurance is wanted by the Mercantile Mutual Insurance Company for $-on cargo, on board of the ship Great

Republic, at and from New York to Liverpool, ex. 50,000, not to ex. 15,000. This policy is to be subject to such risks, valuations, and conditions as are or may be taken by the Mercantile Insurance Company, and payments of loss to be made at the same time. New York, Dec. 1st, 1853.”

This insurance the defendants agreed to make, and signified their engagement to do so by writing at the bottom of the paper the word “binding,” and signing the memorandum thus made, “ M. & P., agents State Mutual,” (M. & P. being the initials of the names of the agents of the defendants, through whom the contract was made,) and to this they acknowledge themselves bound.

It appeared on the trial that the plaintiffs had insured less than $50,000 on the cargo of the ship, but that they had risks also on the freight, and on the ship herself, which, added to the amount they had on the cargo, amounted to $65,000 and more.

The question in this case is, what did the defendants insure ? The meaning of the application, in several particulars in which it was ambiguous, was proved or admitted by the parties. Reinsurance was conceded to mean insurance to the plaintiffs of risks they might have, and “ ex. 50,000 not to ex. 15,000,” was admitted or proved to mean substantially “ on the excess of risks plaintiffs might have over $50,000, not to exceed $15,000.” The application was therefore in substance for insurance to the plaintiffs of such risks as they had taken or might take, over and above the sum of $50,000, the amount of such re-insurance not to exceed, in any event, the sum of $15,000. The defendants therefore engaged to insure to the plaintiffs such sums as they had insured, or should insure to others, above the sum of $50,000, until such excess should amount to $15,000, but beyond that sum they did not agree, in any case, to become liable. The insurance, by the defendants, it is also conceded, was limited to cargo, and no claim is made that they insured any thing on the ship or freight. About these matters there was no controversy. The plaintiffs, however, claim that in ascertaining *323what amount of risk they had, and how much, and whether any thing over $50,000, so as to determine whether the insurance by the defendants attached, and if so, to what extent, the whole of the plaintiffs’ risks on vessel, freight and cargo, are to be taken into the account, and that the insurance of the defendants attached when the plaintiffs’ risks on all these together exceeded that sum. Whereas, the defendants insist that their engagement was only to insure the excess the plaintiffs might have over $50,000, on cargo alone, that alone being the subject of the application, and nothing else being suggested, either in terms or by implication, as the subject of the risks of the plaintiffs, in reference to the amount of which they contracted for re-insurance; and that any insurance the plaintiffs might have made on the ship or freight is not to be taken into account in ascertaining the extent of their risk, with a view to determining what amount of insurance, if any, the defendants made.

As the defendants’ contract was an undertaking to make the insurance applied for, the extent and effect of that contract must depend chiefly on the terms and meaning of the application, which thus becomes all important in the inquiry what the contract was. The part of the paper which controls in respect to this, explained as it was by evidence and admissions on the trial, reads substantially as follows : “ Re-insurance is wanted by the Mercantile Mutual Insurance Company for $-on cargo, on board of the ship Great Republic, at and from Hew York to Liverpool, on the excess of insurance which plaintiffs may have over $50,000, not exceeding $15,000.” When the risks insured by the plaintiffs should exceed $50,000, the defendants were asked to re-insure that excess to a certain extent—that is, until it (the excess) should amount to $15,000 ; beyond which sum they were not asked to insure or become liable, however much the risks of the plaintiffs above the $50,000 might exceed that sum.

To ascertain whether the risks assumed by the plaintiffs exceeded the point at which the defendants’ risks were to commence, the first step must be to decide the principal point in controversy; that is, what kinds or classes of risks are to be *324taken into account in making the calculation, and whether we are to include the risks the plaintiffs had assumed on the ship and freight, as well as those on the cargo, or to exclude them ■and calculate only what they had assumed on the cargo. As above remarked, this depends entirely on the terms of the application, which are given substantially above. With the explanations made,, it amounts to an application by the plaintiffs for re-insurance to them on cargo on board of said ship, of the risks they should take over the $50,000, and under $65,000. The application does' not state expressly on what property the $50,000 of risks are to be, and we are left to ascertain the meaning of it in this respect by construction. And first, what does appear in the papers ?- It is plainly and confessedly an application for re-insurance on cargo alone. Cargo, then, is the great subject of the application. It is the only thing of which re-insurance is asked. It is mentioned in the early part of the paper, in the same sentence in which the sum from which the insurance is to take effect, and the amount to which it is to extend, are stated; and there is not apparently any change from that subject to any other, as it proceeds from the request for re-insurance to state the point at which it is desired that the re-insurance should commence.

We are not to infer a change from one subject to another or others, without some necessity, or at least authority, for such an inference. It is much more natural that the latter part of the sentence should refer to the same subject as the part earlier and immediately contiguous to it does. I see no cause to suppose that the subject of the risks of the plaintiffs spoken of, is other than the subject of which they ask the re-insurance, nor do I see room or opportunity to supply any other subject as being the one referred to in speaking of the risks of the plaintiffs than that which is referred to in the earlier but immediately contiguous part of the sentence. The defendants undertake to re-insure the plaintiffs on cargo of the Great Republic, and to commence their re-insurance at the point when the risks of the plaintiffs begin to exceed $50,000. Can these risks of the plaintiffs mean risks on any *325thing else than that of which re-insurance is asked, especially when no other subject of insurance appears to have been under consideration between the parties ?

If there be an ambiguity apparent on the face of this paper, parol evidence may be admitted to explain it. If the subject matter of the risks of the plaintiffs referred to, is not expressed and is not ascertainable from what is expressed in the paper, “ ex necessitate,” it must be ascertained, if at all, from other evidence than that contained in the paper, and to that end such evidence is admissible. It is only in such a case, however, that extraneous evidence is admissible,and if no such ambiguity is apparent, evidence aliunde to show the meaning of the parties, cannot be admitted; for to admit it would be to contravene a well settled rule of'law, which forbids that such evidence should be allowed to vary the terms of a written contract. Is there such ambiguity in this paper, that the attentive reader does not perceive, or is left in serious doubt, what property is referred to as being the subject of insurance by the plaintiffs ? And, first, what property is spoken of in the context ? What property constitutes the theme of the writing? As we have seen, the subject of reinsurance is plainly the cargo, and nothing else. And what other thing or subject is spoken of? The freight? Mo, it is not named in the paper at all. The ship? Mo, she is not spoken of. Mothing is said of her. Her name is mentioned, to be sure, in designating the particular cargo referred to. The cargo is said to be on board of her. She is thus mentioned incidentally in describing the subject (a subject other than herself) for which re-insurance is wanted; and in no other manner, and indeed, on no other occasion throughout the paper. Be-insurance is wanted * * * * * on cargo on board the ship Great Bepublic * * * * on the excess of risks which the plaintiffs may have over $50,000, to an amount not exceeding $15,000.

Omitting, of the application, the parts which are unimportant to this inquiry, and supplying certain ellipses, agreed on as proper to be supplied, the paper reads substantially as above. Does the attentive reader feel doubtful as to what is intended as the subject of the plaintiffs’ risks of $50,000? Does he *326doubt whether the point in the plaintiffs’ risks at which the defendants’ re-insurance is to commence, namely, $50,000, does not mean that point in their risks on property other than is mentioned in the paper ? Is he in doubt whether the ship is not the subject? or the freight? or whether the ship, freight and cargo, all three, are not meant ? I am unable to perceive any reason or opportunity for such doubt, and I therefore exclude the evidence.

On the cargo alone it is admitted that the plaintiffs had not, and did not at any time have, $50,000 of insurance; and as there was no excess on which the defendants’ policy could attach, they were not liable, and judgment must be for the defendants.

Peabody, Justice.]