The defendants, an insurance company in the city of New York, desired to extend their business to the insurance of cotton shipped upon the Chattahooche river, from the upper portions of the river to Appalachicola, in the State of Florida. To accomplish this purpose, in the month *Page 173 of October, 1852, they appointed the firm of J. Day Co. their agents, the said firm then being engaged in the mercantile and insurance business at Appalachicola. The mode of transacting this insurance business at Appalachicola differed from the ordinary mode, for the reason that the arrival of any particular boat at the various places on the river could not be known in advance, and shipments were made by good boats, as they offered themselves, and for the reason that the mails were slow and irregular, and cottons shipped to a house at Appalachicola usually reached that city by the same vessel which brought advices of their shipment. Hence had arisen a custom which, in 1852 and for many years before that time, had become an established usage and course of business, by which the insurance business at this place was transacted, substantially in this wise: Persons engaged in receiving consignments of cotton at that place, obtained from the insurer a certificate of insurance, expressed to cover shipments of cotton from various points on the river, to the holder of such certificate at Appalachicola. The holder kept a book in which he entered, as received, all shipments of the description specified in the certificate, with the values and requisite particulars, and after the end of each month he exhibited such pass-book to the insurer and had the premium fixed. The fact of shipment was rarely known to the consignee or to the insurer, before the termination of the risk. This course of business was well known at Apalachicola, and to the various parties effecting insurance with the defendant, and to J. Day Co. To enable their agents to carry on the desired insurance business, the defendants, in November, 1852, issued to them, and in their name, an open policy of marine insurance numbered 784 for $250,000. A certificate of the renewal of this policy, and an additional policy for $250,000, numbered 993, were issued to said J. Day Co. in November, 1853. At the time of delivering the policy number 784 to J. Day Co., the defendants also delivered to them, to be used in their insurance agency, a large number of certificates, one of which was delivered by Day Co. to the plaintiff, and is in the following words: *Page 174
"UNION MUTUAL INSURANCE COMPANY OF NEW YORK.
F.S. LATHROP, President; JOHN S. TAPPAN, Vice-Pres.; FERDINAND STAGG, Secretary.
Certificate No. 1.
APPALACHICOLA, Nov. 15, 1852.
Entered this date on policy No. 784, issued by the Union Mutual Insurance Company of the city of New York, sundry amounts per indorsements made in book accompanying this certificate by J. Day Co., on account ofSum insured. sundry parties whose names appear on book, $____ ____ payable in case of loss to S.H. Hartshorne, on cotton shipped per good steamboats, from points on the Chattachooche river to Appalachicola, and consigned to S.H. Hartshorne, valued as per indorsements made in book by J. Day Co., on board the ____ ____, ______ ______ $____ ____ master, at and from ____ ____ to ____ ____, including prem. time of sailing ______; bills of lading, dated rate.
Sum insured. The said S.H. Hartshorne, therefore, is Premium, $____ insured by the said Union Mutual Insurance Company, lost or not lost, for the said sum of Certificate. per indorsement ______ dollars as above. $___________ Binding. J. DAY CO.
APPALACHICOLA, 15 Nov., 1852.
Please pay to S.H. Hartshorne, or order, such sums or amount as may in case of loss become due on the above insurance of ____ ____ dollars, in the same manner as if a separate policy had been issued in his favor.
J. DAY CO.
F.S. LATHROP, Esq., President Union Mutual Insurance Company, N Y
This certificate, as issued to the plaintiff, was pasted into his pass-book, and, at the time of issuing the certificate, Day Co. made the following entry in the pass-book:
To cover all cotton shipped by or for ac't of the following parties, valuation per bale annexed to each name: *Page 175
Roberts Locke, from Eufaula, valued at $50 per bale. L.F. Stour, do do do J.M. Morrison, do do do D. Morris, Georgetown, do do L.J. Leaird, Eufaula, $45 do Harrison Goodwin, do at invoice valuation. J.M. Hamilton Co., do $50 per bale.
On the 15th of November, 1853, J. Day Co. wrote on the original certificate issued to Hartshorne a renewal of the policy from November 15th, 1853, to July 1st, 1854, and signed the same. At the same time they gave a renewal of the certificate issued to them, to extend to the same period. Further entries were made from time to time increasing and decreasing the valuation of the cotton.
At the time of appointing J. Day Co. their agents, and as a part of the means by which they made such appointment, the defendants wrote to them a long and explicit letter of instructions upon the subject of the business to be undertaken, and the manner in which it should be transacted. In this letter, among other things, it was said that "these policies are granted in the form presented, for the purpose of enabling you to take risks for other parties under the same, and the certificates are to be used as evidence for the assured; that the certificates described by them are covered by the policy in your hands, and are considered by us in fact as representing a policy issued by the company itself, subject to all the conditions of the same, and in case of loss payable in like manner."
On the 3d day of February, 1854, the boat Alabama, while descending the Chattahooche river, and having on board cotton to the extent of one hundred and eighty-four bales, valued at $9,200, consigned to the plaintiff on account of the persons named in his certificate, was destroyed by fire, together with her cargo. Proofs of loss were properly made and served upon the defendants, and, upon their refusal to pay, this action was brought, demanding the issuing of a formal policy and payment of the amount due.
I have stated a portion only of the facts of the case, as they appear upon the voluminous papers before us. Enough, *Page 176 however, is given to present the two principal questions upon which the defendant's rely.
The first objection urged by the defendant on this appeal relates to the agency of J. Day Co. It is urged that Day Co. had no authority from the defendants to conduct the business of insurance in the manner they did; that risks should only have been taken while they were pending, and that the system adopted by Day Co., of receiving a statement from the insured of the risks assumed during the previous month, after the goods had arrived in safety or after they had been lost, and then paying premiums or demanding compensation, was not within the contemplation of the parties or the scope of the agents' authority.
This objection is one of fact rather than of law, and in that view is not properly before this court. We sit to review decisions of law only, while the appeal upon questions of fact is limited to the courts below. The question whether upon the facts found by the court a contract of insurance did legally exist, is a question of law, which we may properly consider.
I will, however, examine both of the propositions presented.
It is found as a fact by the court below that Day Co. were the agents of the defendants for the transaction of an insurance business at Appalachicola. It is further found that the system of insurance adopted by them was and for many years had been the universally received mode of insurance at that place. Indeed, from the necessities of the case, it would have been scarcely possible to have carried on the business of insurance there in any other manner. It is said by the defendant's counsel that this circumstance would not justify a departure from the agents' instructions; that if he could not insure in accordance with his instructions he should have declined to insure at all. Nothing can be more true than the principle thus asserted, and as between the agent and his principal it would be conclusive. Here, however, the owners or consignees of the cotton, who made their contract with the defendants through their agent, call upon them to respond in fulfillment of their part of the contract, and other considerations intervene. *Page 177
That the business as conducted was known to and approved by the defendants, is quite clear. In the first place they were bound as marine insurers to know the customs of the place, and are assumed in law to know them, and to have made their contracts in reference to them. (1 Phil., p. 43, ed. of 1840.
In the next place, their agents knew the custom and had practiced upon it for years. In a controversy between the defendants and Day Co., they might question the effect of this knowledge, but in a suit with a third party, the knowledge of Day is the knowledge of the company, and binds them absolutely.
I am strongly inclined to the belief, also, that the defendants in fact knew of this mode of insurance, and were content with it while it was profitable. Much of the correspondence, before the loss occurred, contains expressions assuming the existence of this practice, but it is not so explicit in its language as to be beyond doubt. The letter of Day Co., to the defendants, of March 6th, 1854, in explaining the loss, states with particularity the mode of insurance adopted. In their answer of March 21st, the defendants' president finds no fault with this practice, and makes no allusion to it. The refusal to pay is placed upon the ground that the prior insurances had absorbed the whole amount of the policy, of $250,000, and that its vitality was exhausted. Again, in their letter of April 1st, 1854, the detail is repeated by Day Co., at greater length. In replying to this letter, the president of the defendants still makes no complaint of that practice, but informs them that "our views remain unchanged and that we must insist that no part of the shipments by steamers Eagle or Alabama are covered by this office."
Surprise is expressed by the company at the amount of insurance upon the cargo of a single vessel, and disapprobation. No complaint, however, is made, and no surprise expressed, that the returns were made and the premiums paid in the manner stated. I am of the opinion, from the evidence and the findings, that the practice was understood by the company, that it was not disapproved by them until *Page 178 the occurrence of losses made it for their interest to repudiate it. This they cannot be permitted to do. Having enjoyed the good things belonging to the adventure, they cannot escape from the evil things necessarily connected with it. For nearly a year and a half, they received large monthly premiums based upon this precise mode of insurance, which they have never offered to return to the plaintiff or the other parties paying them, but still retain and enjoy. Now that a loss has occurred, they must respond in damages, according to the terms of the same contract.
The certificate issued to the plaintiff in October, 1852, was an open policy, to cover the cotton shipped to him from the points and the persons named. It was by its terms continuous, and was renewed by the certificate issued in October, 1853. The losses by the Alabama, on the 3d of February, 1854, came within its terms. Although not within the precise terms of the defendants' instructions, I do not perceive that it was in violation of any instruction, and I have endeavored to show, that if such had been the case the defendants cannot now make the objection. I see no reason, therefore, for disturbing the judgment upon the first ground urged by the defendants.
The defendants also insist that they are not liable to the plaintiff, for the reason that, before the inception of the present risk, the insurance opened by the policy to J. Day Co. was fully taken up, and that there was no space or opportunity for further insurance under the same. The defendants claim the same result, upon the facts, whether the insurance is restricted to the original policy, No. 784, or the policy 993 be treated as an extension of it, or the additional issue of $250,000 be included. In other words, they insist that before the incurring of the present risk, more than $750,000 had been taken up on these policies and this extension. The plaintiff insists that this amount of insurance should be reduced by the sum of $78,748, for which J. Day Co. had issued certificates to themselves, under the policy No. 784. These certificates he claims are void, inasmuch as J. Day Co., being the agents for the defendants, and bound to give *Page 179 to them the benefit of their skill and sagacity in making bargains for insurance, could not, by becoming themselves the assured, place themselves in a position where their private interests were in hostility to their duty to the defendants. To this effect, in general terms, are N.Y. Central Ins. Co. v.National Protection Ins. Co. (4 Kern., 85); Bentley v.Columbia Ins. Co. (17 N.Y., 421), and those insurances, to the amount of $78,748, were held to be void by the judge who tried the case.
The defendants do not claim that at the time of issuing the original certificate to the plaintiff, the amount of policy 784 was exhausted, and it appears, in the evidence, that this was the first certificate issued to the defendants' agents. Neither is it claimed that the whole amount of the policies and the renewals had been taken up when the renewal certificate was issued to the plaintiff, in November, 1853. But returns were subsequently made to the agents, from time to time, of insurances thereafter applied to certificates then issued, which, in the aggregate, absorbed more than the entire amount of the policies and their renewals. The judge trying the cause decided that, if there was an aggregate limit of $750,000 upon the power of J. Day Co. to assume risks, which could affect the plaintiff in this action, when the certificate of renewal was issued to the plaintiff, then all definite risks entered subsequently to the renewal of November, 1853, and all entries of risks arising under general certificates issued after that date, should be excluded from the computation of risks, under such supposed limit, as between the plaintiff and the defendants in this action.
I concur in this statement of the law. The certificate issued to the plaintiff was, in effect, an open, continuous policy, and, at it appears from their original letter of instructions, this was the precise effect that the defendants intended to give it.
They say that "these certificates are to be used as evidence that risks described by them are covered by the policy in your hands, and are considered by us in fact as representing a policy issued by the company itself, subject to all the conditions of the same, and in case of loss payable in like *Page 180 manner." They say further in the same document, "we have not named a limit on the marine policy, knowing the great difficulty you would have in fixing an amount, with the parties for whom you would be called upon to insure, but it is our wish," etc. On the margin of the policy to J. Day Co., was written as follows: "Messrs. J. Day Co., are authorized to settle and compromise all losses, where, in their discretion, they may consider it their interest to do so, without waiting for instruction from the company. * * * This policy to be deemed continuous, unless otherwise directed by either party, thirty days' notice being given to the assured, to enable the risks, * * * etc., to terminate."
Under this ample authority and intelligent explanation of its effect, J. Day Co., in November, 1852, issued to the plaintiff a certificate that he was insured according to the indorsements made and to be made by Day Co., in a certain book accompanying the certificate, for cotton shipped to the plaintiff on account of the persons whose names were mentioned in the book; and it was therein declared that the plaintiff was insured according to the indorsements, lost or not lost. In November, 1853, this certificate was renewed to the plaintiff until July 1, 1854, and upon the same terms.
We have here an open policy issued by the defendants to the plaintiff, that is, the value of the goods insured is not ascertained and declared in the policy, but the same is to be subsequently ascertained, as occasion shall require. We have also a policy which according to its terms is to be deemed continuous until the first day of July, 1854. In other words, the power of the guaranty given is not to be deemed exhausted by any one or more consignments in favor of the parties named in the pass-book, but the same is to be kept in force as a valid policy, for all the consignments by all the parties named, until July 1st, 1854. The policy is to be continuous, that is, unbroken, drawn out and extended over all the subjects matter, until July 1st, 1854. It covers shipments by the individuals named for every boat that should descend the river and for any amounts of cotton owned by them. It can be continuous in no other way. It *Page 181 is either exhausted by a single shipment, which is not claimed, or it is continuous and unbroken. I can see no middle ground.
It is said that this may increase the amount of the defendant's liability greatly beyond the sum intended. That question may arise, if a claim is made by some party, whose insurance is beyond the amount prescribed in the original policy or its extension. It would be premature to discuss it now, inasmuch as it is conceded that the plaintiff's claim, at the time the certificate was issued, was within the limit. His claim comes in as of that date, and cuts off those arising under later certificates, should that result be necessary to the enforcement of his claim. It is not impossible that, by the peculiar form of transacting the business at Appalachicola, the defendants may have made themselves liable for a larger amount of insurance than they had contemplated. However this may be, it is clear that the certificate to the plaintiff took effect on the 15th of November, 1853, when the renewal was made. There was no other time when it could take effect. It could not be when the risks were reported, for that was always after the risk had terminated. It could not have been when the goods were put on board the steamboats. This would involve greater embarrassment than the other alternative. It would be impossible for an assured to know whether his claim was good until an account was taken of what had been done by every party to whom a certificate had been issued. Day Co. would never understand their own position, and above all a first applicant might have his insurance, which was good when he took it, rendered void by a shipment by some other holder of a subsequent certificate, of which he was ignorant, but whose goods were actually put on board before those of the first holder. Such a construction cannot be maintained. The ruling of the judge who tried the cause, and the affirmance thereof by the General Term, are correct, and the judgment appealed from should be affirmed.
All concur except PORTER, J., who expressed no opinion.
Affirmed. *Page 182