Wells, Fargo & Co. v. Pacific Insurance

By the Court, Crockett, J.:

This action is founded on an open or running marine policy of insurance, whereby the defendant agreed to insure the, plaintiffs in the various sums to be indorsed on the policy, upon treasure, bullion, and bonds laden or to be laden' on seaworthy steamships, steam vessels, or propellers, “ at and from Victoria (B. C.), Portland (O.), Astoria (O.), Los Angeles (Cal.), La Paz, Mazatlan, and Guaymas (Mexico), to San Francisco, or vice versa, San Francisco' to either of the before-mentioned ports or places * * * beginning the adventure upon the said treasure, bullion, and bonds from and immediately following the loading thereof on board the said vessels at ports and places aforesaid, and so shall continue until the said treasure, bullion, and bonds shall be safely landed at ports and places aforesaid; * * * in all cases the agent of Wells, Fargo & Co. to forward to the San Francisco office of Wells, Fargo & Co. advices of the amount of each shipment.” On the left hand margin of the policy is a memorandum, which need not be recited, except one clause thereof, in these words: “ Bisks applicable hereto to be reported to this company for indorsement on the policy as soon as known to the assured.” On the right hand margin is a memorandum in these words: “ This underwriting to cover treasure and bullion shipped by Wells, Fargo & Co.’s Express and at their risk, by reason of their assuming the ■responsibility of insurance thereon.” These are the only-provisions of the policy affecting the present controversy. It appears from the agreed statement of facts that it was the usual custom and course of business between these parties for the local agents of the plaintiffs at the ports of shipment to forward by each steamer on which a shipment was made, to the San Francisco office of the plaintiffs, advices of each shipment, on the receipt of which the plaintiffs sent said advices to the defendant, and the proper indorsements were then made on the policy, in accordance with the advices; that the steamer on which the shipment was made, being the ordinary and most expeditious means of communication between said ports, the advices were necessarily received and indorsements made after the safe arrival (or loss) of the treasure; that the premiums were paid by the plaintiffs after the indorsements, upon monthly statements made up and presented by the defendant. It further appears that in September, 1870, the steamer Continental left Guaymas in a seaworthy condition, for San Francisco, and in the due course of her voyage touched at Mazatlan, where she received and discharged freight and passengers; after which she resumed her voyage, and within a few days thereafter, whilst in the due course of her voyage, was wrecked by perils of the sea, and became, with her cargo, including the treasure hereafter to be mentioned, a total loss; that at Guaymas and Mazatlan the agents of the plaintiffs received for them from various shippers money and treasure "to be carried to San Francisco, which were shipped on the Continental, accompanied with advices in the usual form from the local agents, which advices were lost with the vessel. But duplicate advices were forwarded by the succeeding steamer, and on being received by the plaintiffs were sent to the defendant, and the indorsements made on the policy in accordance therewith. The advices sent from the agent at Mazatlan notified the plaintiffs of a shipment of treasure by the Continental to the amount of six thousand one hundred and fifty-eight dollars only; which sum was duly indorsed on the policy. But it appears from the agreed statement that while the vessel was en route from Guaymas to Mazatlan, one Smith, a messenger for the plaintiffs, and in the due course of his business and employment as such, received from passengers on board the sum of seven thousand three hundred and forty-two dollars and fifty cents, to be by the plaintiffs, as an express company, carried to San Francisco, “ and for which—being duly authorized so to do— he had given to divers shippers receipts in which the safe carriage of said treasure was insured against all peril;” that said messenger had said treasure in his possession on board said steamer during the time she was lying at Mazatlan; and whilst lying at said port other treasure was brought on board by other shippers, and delivered to and received by said messenger to the amount of two thousand six hundred and fifty-seven dollars and fifty cents, to be in like manner transported to San Francisco, and for which he gave similar receipts; that whilst at Mazatlan, with all of said treasure in his possession as messenger on board said steamer, he notified the local agent at that place of his receipt and possession of these sums, amounting in the aggregate to ten thousand dollars, in order that the local agent might embrace that amount in his letter of advice to be sent to the plaintiffs by that steamer; but the local agent forgot and omitted to do so, and included in his letter of advice only the six thousand one hundred and fifty-eight dollars shipped by himself. It further appears that the ten thousand dollars was lost with the steamer, and the plaintiffs have paid to the several shippers the full amount thereof. But the messenger escaped from the wreck, and on his arrival at San Francisco the plaintiffs ascertained from him the foregoing facts in respect to the ten thousand dollars; and thereupon, on delivering to the defendant the duplicate letters of advice above mentioned, verbally notified the defendant of said facts, and that they had learned the same from Smith, and requested that the ten thousand dollars be indorsed on the policy, which request was refused. Subsequently the plaintiffs procured from their local agent at Mazatlan a corrected letter of advice, bearing date as of the day of the shipment on the Continental, and which included the ten thousand dollars; and after serving this on the defendant, again requested that this sum be indorsed on the policy, which request was again refused. This action is brought to enforce payment of the ten thousand dollars, and the only question for consideration is, whether on these facts the defendant is liable on the policy.

The principal points relied upon by the defense are: First—That by the terms of the policy the defendant is not liable for treasure or bullion except “ from and immediately following the loading thereof on board the said vessel ” at one of the enumerated ports; and it is claimed that this treasure was not loaded on the Continental, in the sense of the policy, at either of the said ports. Second—That one of the conditions of the policy is, that “in all cases the agent of Wells, Fargo & Co. shall forward to the San Francisco office of Wells, Fargo & Co. advices of the amount of each shipment;” and it is insisted that this condition was not complied with in respect to the ten thousand dollars. The argument is that this provision has the force and effect of an express warranty on the part of the assured, and that without a performance of it the liability of the defendant under the policy never attached.

In construing policies of insurance, Courts are governed by the same general rules which are applicable to other instruments, and effect is to be given to the intention of the parties, to be ascertained by the same method which is employed in the interpretation of other written contracts. Eotwithstanding the numerous technical phrases which are usually inserted in policies, and the peculiar language in which they are generally couched, they are, after all, only written contracts, to he interpreted by the same rules which apply to other contracts, and to be enforced according to the intention of the parties. Applying these rules to this policy, the first inquiry is, what was intended by the provision that the adventure was to begin from and immediately after the “ loading ” of the treasure on board the vessel at one of. the enumerated ports? In order to comply with this condition, was it essential that the treasure should have been actually placed on board at one of these ports, or was it sufficient that it was already on board when the véssel arrived in port, and continued on board until she departed on her voyage? Similar clauses are generally inserted in marine policies, and have been frequently considered by the Courts. In Murray v. The Columbian Insurance Company, 11 John. 301, the policy was “ at and from Cagliari to St. Petersburg * * * upon all kinds of goods and merchandise laden or to be laden on board the good American ship Eolia, beginning the adventure upon the said goods and merchandise from and immediately following the loading thereof on board the said vessel at Cagliari.” It appeared that on arriving at Cagliari the vessel had still on board a portion of the outward cargo, and also merchandise put on board at Messina. On her arrival at Cagliari the cargo was hoisted out of the hold and restowed, but no new cargo was taken on hoard except a quantity of salt. The Court held that the policy did not attach to any portion of the cargo except the salt taken on board at Cagliari. In its opinion, the Court says it has “ been solemnly determined, on different occasions, by this Court, as well as the Courts of England, that in policies like the present the insurance attaches only on the cargo taken on board at the port where the venture is to begin.”

In commenting on this case, Phillips, in his Treatise on Insurance, says: “But if, in this case, the goods had been landed upon a wharf) and then taken on hoard again, there seems to be no ground to doubt of this being a ‘ loading ’ within the terms of the policy.” (Sec. 939.) Some of the English cases also hold that a partial unloading of the cargo, and then putting it on board again, will not constitute a “loading ” at the port of departure on the voyage covered by the policy. (Spitta v. Woodman, 2 Taunt. 416; 16 East. 188, n.) In another ease of a similar character, and which/ was decided in the same way, the Court puts its decision partly on the ground that a partial unloading and reloading of the cargo, at the port of departure on the voyage insured against, is not a “ loading ” at that port within the terms of the policy, because it could not be known whether the goods had been damaged on their previous transit, before the commencement of the risk insured against. (Homeyer v. Lushington, 15 East. 46.) But in a later case, where enough of the cargo had been unloaded to enable the Custom House officers to examine the whole, and it was then again placed on board, Lord Ellen borough held this to be a “loading ” at that port, within the policy. He said: “ The period of time from which the responsibility of the underwriter is to commence as to goods, and to which the policy refers for that purpose, is as well fixed by this partial unloading and reloading at Landscrona, as by a more perfect and entire reshipment there; it is sufficient for supplying a date, which is the only object of the reference in question.” (Nonnen v. Reid, 16 East. 176.) In commenting on this rule, in Bell v. Harp son, 16 East. 240, the same eminent Judge said that “ a very strict, and certainly a construction not to be favored, and still less to be extended, was adopted in Spitta v. Woodman. If there be anything to indicate that a prior loading was contemplated by the parties, it will release the case from that strict construction.” In Richardson v. Garstain, 5 B. & Ad. 650, the rule we are commenting upon is adverted to “ as strict and to be relaxed when there is anything in the policy to satisfy the Court that the policy was intended to cover goods previously on board.” The same proposition, substantially, is announced in Robinson v. French, 4 East. 140.

After summing up all the decisions on this point the result is thus stated in Phillips on Insurance (Sec. 989): “From all these cases it is not easy to determine the construction of a policy, in which the risk is to commence on the loading of the goods at a port named. If it be considered a warranty that the goods shall be loaded at such port, the Courts seem, in some of the above cases, to have departed from the usual construction of express warranties. But if these words are to be considered as merely description, having at most the force of a representation, they will not affect the contract if the policy provides any other way of ascertaininx the time when the risk commences. These discrepant decisions certainly do not coincide in support of any general proposition. That to which they seem to be the nearest approximation, and which may be adopted without a departure from any general principle, is, that this specification of the terminus a quo, unless it appear by the policy to be intended as a warranty of the loading at the designated place, is to be taken as mere recital, description, or intention, or expectation, being at most an implied representation of the loading, and is to be construed accordingly.” The author further adds: '“There is no need of resorting to the doctrine of warranty to provide for the case of aggravation of the risk by reason of the cargo not being put on board at the place named, which is mentioned in some cases, since that comes appropriately within the doctrine of representation and concealment.” Testing the policy under consideration by these rules, we think the clause which provides that the adventure is to begin “from and immediately following the loading ” of the treasure on board at one of the enumerated ports is not to be construed as a warranty, but, in the language of Mr. Phillips, “as mere recital, description, or intention, or expectation ” that the treasure was to be shipped from the enumerated ports. We arrive at this conclusion from the policy itself and from the agreed statement of facts. It was known to the defendant that the plaintiffs were engaged in the business of common carriers of treasure by their express between San Francisco and Guaymas and the intermediate ports; and the agreed facts leave little room for doubt that it was also aware that the treasure, whilst on board, was to be in the care and custody of the plaintiff’s messenger, who was authorized to receive treasure for transportation from passengers on board, en route between San Francisco and the enumerated ports. But leaving this fact out of view, enough appears on the face of the policy to indicate clearly that the “loading” in a strict sense at one of the specified ports was not intended as a warranty. From the very nature of the transactions to which the policy relates it cannot be reasonably inferred that if treasure was received on board at some other place than one of those designated, and was carried on the vessel, in the custody of the messenger, into one of the specified ports, en route for San Francisco, the policy was not intended then to attach, unless the treasure was put over the vessel’s side and again placed on board. It cannot be denied that if this had been done at Mazatlan, with the treasure received by the messenger, it would have been a “loading ” at that port, within the very letter of the policy. But the parties contemplated no such idle and useless act as a condition on which the risk was to commence. We have not the least doubt that the risk was intended to commence when the treasure was actually on board at one of the specified ports, in the possession of the plaintiff’s messenger for transportation, whether it was first taken on board at that port or at some other place in the course of the voyage. The rule of law is that policies are to be construed liberally in favor of the assured. (Rolker v. Great Western Ins. Co., 3 Keys, 23.) But to hold that this treasure was not “ loaded ” on board at Mazatlan in the sense of the policy, would be to sacrifice the substance to the shadow and to defeat the rights of the assured by a strict and over-technical construction at variance with the plain intention of the parties, to be deduced from the nature of the transactions to which the policy relates.

In considering the second point made by the defendant, it will be necessary to construe, in connection with other provisions of the policy, the clause which requires “in all cases the agent of Wells, Fargo & Co. to forward to the San Francisco office of Wells, Fargo & Co. advices of the amount of such shipment.” The policy does not require these advices to be forwarded, nor in any manner delivered to the insurance company. On the contrary, another clause provides how the information was to be given to the defendant of the amount of the shipment—“ risks applicable hereto to be reported to this company for indorsement on the policy as soon as known to the assured.” It was the duty of the plaintiffs under this clause to report to the defendant the amount of the shipment as soon as the fact was made “known” to them, by whatever method the information was obtained. They were not to be at liberty to await advices from their agent, provided the fact came to their knowledge earlier and through a different channel. The clause requiring advices from the agent was doubtless intended in some degree for the benefit of the insurance company, to enable it to guard against fraud or mistake as to the fact, date, and amount of the shipment. It was apparently inserted for the purpose of affording evidence on these points in case a controversy-should arise, either before or after the indorsement, as to the fact, date, or amount of the shipment. But it was not a condition precedent without the performance of which the plaintiffs could in no event nor under any circumstances become entitled to the indorsement. If it had been so intended, the policy would have provided that the advices or duplicates thereof should be forwarded or delivered to the underwriter, and that the indorsement should correspond with the advices. But so far from this, the policy fails to provide that the advices were even to be shown to the defendant prior to the indorsement; but requires the plaintiffs to report the shipment for indorsement “ as soon as known ” to them, omitting any reference to the advices as the source of the information. If the forwarding of the advices by the agent is to be deemed an express warranty on the part of the assured, as contended by the defendant, then it must have been strictly and even literally performed, before the right to demand the indorsement accrued. Even an overwhelming necessity, an accident against which no degree of vigilance could have guarded, a force which was irresistible, would not have excused its performance. In Pawson v. Watson, Cowp. 785, Lord Mansfield says: “A warranty must be strictly performed; nothing tantamount will do.” In Blackhurst v. Cockell, 3 Term. 360, Mr. Justice Bulles, said: “It is a matter of indifference whether the thing warranted be material or not; but it must be literally complied with.” In De Hahn v. Hartley, 1 Term. 343, Mr. Justice Ashhurst said: “The very meaning of a warranty is, to preclude all question whether it has been substantially complied with; it must be literally.” In Newcastle Fire Insurance Company v. Macmorran, 3 Dow. Parl. Cas. 255, Lord Eldon said: “When a thing is warranted, it must be exactly what it is stated to be.” See, also, Phillips on Insurance, Sec. 3762. It is clear, therefore, that if the provision under discussion is to be deemed an express warranty, it must have been strictly performed, to entitle the plaintiffs to an indorsement of the ten thousand dollars on the policy. Treated in that light, they would not have been entitled to the indorsement, even though the treasure had been shipped by the agent in the most, formal manner at Mazatlan, but before preparing his advices he had suddenly died or been disabled; nor even though some other person, having knowledge of the fact, had sent the advices of his own accord. In the case supposed, if the treasure had arrived safely at its destination, the defendant, on this theory, would not have been entitled to demand the premium on it, nor the plaintiffs to recover its value, if it had been lost. In other words, it would not have been protected by the policy, as the risk had never attached. Construing the whole policy, according to what we think was the intention and understanding of the parties, and considering the nature of the transactions to which the policy related, we are satisfied it was not Contemplated that the forwarding of advices by the agent should be deemed a condition precedent, without a strict performance of which a right to demand an indorsement by the one party, or the payment of premiums by the other, would not accrue.

The only remaining point made by the defendant is, that the loss having already occurred, and become known to the parties before the indorsement was demanded, the defendant was under no obligation to assume a loss which was known to have already happened. If this theory be correct, the plaintiffs were under no obligation to report for indorsement shipments which had already arrived safely, nor to pay the premiums thereon. Such a construction would practically nullify the policy in respect to shipments from the Mexican ports named therein. The agreed statement shows that the usual and most expeditious method of forwarding advices from those ports was by the steamer on which the treasure was shipped; and if the plaintiffs were not bound to report for indorsement, nor to pay premiums on shipments which had already arrived, nor the defendant to pay losses known to have occurred before the indorsement was demanded, it results that the policy was a nullity in respect to shipments from these ports, and imposed no obligation on either party. But the parties have themselves interpreted the contract in this respect. The agreed statement shows that it was the practice of the plaintiffs to pay, and of the defendant to receive, premiums on shipments which had already arrived, and it ought not now to be permitted to escape liability for a loss, on the ground that the loss was known to have occurred before the indorsement was demanded.

Judgment reversed, and cause remanded, with an order to the Court below to enter a judgment for the plaintiffs on the agreed statement' of facts. •

Mr. Justice Belcher did not express an opinion.

Case Details

Case Name: Wells, Fargo & Co. v. Pacific Insurance

Court Name: California Supreme Court

Date Published: Jul 1, 1872

Citation: 44 Cal. 397

Docket Number: No. 2,991

Court Abbreviation: Cal.