Le Roy v. United Insurance

Thompson, J.

delivered the opinion of the court. The objection raised by the defendants’ counsel, against a recovery as for a total loss, is, that the vessel had on board a certificate of origin from the French consul, and that the defendants were not informed of this document. It is said to have been a false paper, and the efficient cause of the condemnation.

The French consul certifies, that agreeably to the papers and documents, presented to him by William Bayard, the hides in question were purchased and exported from Montevideo, prior to the capture of that place by the English. And, according to the finding of the jury, the purchase of the hides, the lading them on board, and the payment of the export duties, all happened while Montevideo was in possession of the Spaniards; and these were the most essential acts in the process of exportation, as far as related to the belligerent policy, on the subject of such colonial trade. It may, therefore, be questionable, whether this certificate of origin ought to be considered as false. But admitting it not to be strictly true, there was no evidence of any mala fides in the plaintiffs. The jury have not found any fraud in *353them, in respect to the contents or concealment of the paper. Independent, however, of these considerations, a conclusive answer to the objection is, that it is found by the jury that such a certificate was a usual and customary document on board of American vessels, bound to France and Holland; and one required by decrees of those countries to insure an entry. It was, then, a paper not necessary to have been formally disclosed, because the insurer must have known it would be on board.

It is not to be supposed they were ignorant of this course, and of this necessity. The assured may be innocently silent as to those things which the underwriter ought to know. (Park, 183.) The insurer, in estimating the price at which he is willing to take the risk, must have under his consideration, the nature of the voyage to be performed, and the usual course and manner of conducting it. Every thing done in the usual course is presumed to have been foreseen, and in contemplation, at the time he engaged. He takes the risk upon a supposition that what is usual and necessary will be done. (1 Burr. 348.) The underwriters are chargeable with the knowledge of this document being on board, and so took the risk of the consequences of it upon themselves. If this document exposed the subject to loss, by means of one belligerent, the want of it would equally have exposed the property to loss from another. It is always a question how far the want of disclosure of a paper, admitting it to be intentionally a false one, was material to the risk. This was the doctrine in Barnwell v. Church. (1 Caines’ Rep. 217.) It is a well settled rule, in the law of insurance, that matters which are presumed to lie equally in the knowledge of both parties need not be disclosed. (3 Burr. 1605. Doug. 238. and Mayne v. Walter, Park, 196.) There was no breach of warranty in the present case. The plaintiff did not undertake to xvarrant against the consequences of the importation of *354the hides from Montevideo, any further than that they themselves were not the importers. We cannot, there" fore, see any substantial objection to a recovery for a total loss. And the remaining question is, upon what principles shall the loss be computed ?

In the case of Mumford v. Broome, (1 Johns. Cas. 120.) decided in this court, it is said to be a settled rule, that in an open policy on goods, the invoice price is the value which, upon a total loss, the insured is . entitled to recover. That this affords not only an equitable but a certain rule, not influenced by the fluctuations of value which subsequent circumstances may produce.' The invoice price, as here understood, is evidently the prime cost, this being a fixed and certain criterion, which is the reason assigned for the rule. And besides, it appears from the case, that at the time of effecting the insurance, an account stating the price at which the goods had been purchased, was exhibited to the underwriters, for the purpose of showing the interest intended to be insured. Although an invoice, strictly speaking, may be a document transmitted from the shipper to his factor or consignee, containing the particulars and prices of the goods, shipped; and when understood in this sense, and made out without regard to the prime cost of the articles, it might be- objectionable as a rule of evidence by which to estimate the value of the subject; yet invoice is sometimes used and understood, as containing an account of the prime cost of the articles specified. Thus, in Marshall it is said, the loss is estimated according to the prime cost, that is, th,e invoice price. ■ And in Magens (vol. 1. p. 37.) it is laid down, that the invoice of the cost is the rule by which the loss is to be computed. (Burns, on Ins. 158.) It is, in the opinion of the court, unnecessary here to establish any general rule on the subject. Whatever the rule ought to be, we think, in the case before us, in computing the loss, the hideá must be estimated at ten cents per pound, that being the prime cost. And *355'& is peculiarly fit and reasonable to adopt this as the price here, because it will be a complete indemnity to the assured, and as the hides were not only purchased for the express purpose of exportation, but never were landed, being purchased and transhipped at the quarantine ground. An inquiry into their real value, or market price, must, therefore, be attended with some degree of uncertainty. The prime cost of the goods might not, in many cases, be a just rule of computation, as where they were not purchased with a view to an immediate exportation, and had remained on hand for a considera^ ble length of time. But in matters of commerce, the plainest and simplest rules are always the best. And I should incline to think that, generally speaking, the prime cost would be the best rule by which to test the value of the subject. The prime cost is commonly the market price of the article. And as the shipment, in the usual course of business, is made soon after the purchase, the prime cost is, ordinarily, the real value of the subject. In a valued policy, the value inserted is always • understood to be the fair amount of the prime cost of the goods. When the insurance is, bona jide, meant as an indemnity, it must be taken that the value was so fixed as that the insured might, in case of loss, have an indemnity and no more. (Candy’s Marsh. 288, 289.)

In the case of Lewis v. Rucker, (2 Burr. 1167.) Lord Mansfield seems to consider prime cost and value in the policy as importing the same thing. He says, that in case of a total loss, the prime cost of the property insured, or the value mentioned in the policy, must be paid by the underwriter. And again, the prime cost, that is, the value of the thing insured at the outset, is what the underwriter has to pay. (Marshall, 288, 289.) There seems to be no good reason why the same rule should not prevail, in computing the loss on an open policy ; and that the value of the goods, at the outset, or commencement of the risk, together with the customary *356charges, should not be the sum the underwriter ought to pay. It becomes, then, in a great measure, a question as to the rule of evidence by which this is to be ascertained. And the prime cost, especially where the goods are purchased for exportation, appears to me to be the plainest and simplest rule, and less exceptionable than an inquiry into' the market price of the articles. This is fluctuating, and always more or less uncertain. The former rule will always indemnify the assured; and the result of an inquiry, according to the latter, will depend npon the opinion of a jury, formed, perhaps, from the clashing testimony of witnesses.

Without intending, however, to lay down any general rule, we adopt prime cost as the principle upon which, in this case, the loss must be computed, and according to which, by the verdict of the jury, the plaintiff is entitled to judgment for 11,376 dollars and 85 cents.

Judgment accordingly.