This was an action against an Underwriter on a Policy of
Insurance upon the ship Mount Vernon, warranted to be American
property. The ship was captured by a French Privateer, carried into
Porto Rico, and there condemned as prize. The cause was tried at
the present Term; and Shippen, Justice, delivered the following
charge, in which all the material facts and arguments were,
substantially, set forth*.
Shippen, Justice.
On this Policy, the assured has engaged to prove in any Court of
Pennsylvania, that the Mount Vernon was American property; and it
is, also, incumbent on him to prove, that the ship sailed upon the
voyage insured; that she has been captured, and condemned. On the
question of property, the American Register was produced, which
contains
Page 3 U.S.
491, 492
the oath of the Plaintiff, an American Citizen, that he was the
sole owner of the Mount Vernon; and on the other points, there is
full proof of the sailing, capture, and condemnation of the ship.
She is not, however, condemned by the final decree as British
property; nor, indeed, are any of the five causes assigned in the
proceedings, legitimate causes of condemnation.
The Plaintiff was disposed, on general principles, to leave his
cause on this evidence; but, in order to repel the Defendant's
allegation, that the property of the ship, though apparently
American, was, in reality, British, a variety of facts have been
adduced, to explain the nature of a transaction, which occured
between him and Mr. Dunkerson, in relation to a sale and transfer
of the Mount Vernon. The result seems, briefly, to be this: Mr.
Dunkerson was an English gentleman, who came hither with a view to
settle; and, in order to manifest his intention, took an oath of
allegiance to the state of Pennsylvania, though he had not been
long enough in the country to entitle himself to naturalization,
under the act of Congress. Contemplating a circuitous voyage from
America to England, and thence to the East Indies, he applied to
Messrs. Willings & Francis to procure a ship for him; and those
gentlemen agreed absolutely with the Plaintiff for the purchase of
the Mount Vernon, the bill of sale being made out by him, and sent
to them, upon terms of payment precisely ascertained. It then,
however, occurred to Mr. Dunkerson, that as he had not yet acquired
the rights of American citizenship, he could not enjoy the
advantages, which he proposed to derive from his projected voyage.
For, the trade from England to the East Indies is, by the law of
that kingdom, a monopoly; no British subject can, individually,
embark in it, without incurring a forfeiture of his vessel and
cargoe; though it has recently been adjudged in England, that an
American citizen is entitled to carry on the trade, by virtue of
express stipulations in the treaty of amity and commerce between
the United States and Great Britain. Hence, it was deemed
necessary, to enter upon another operation; the bill of sale was
sent back; and a new contract was formed between the parties upon
these principles: that the Plaintiff should remain the owner of the
ship, and as such retain the register, and make the insurance; that
she should, however, be delivered to Mr. Dunkerson, or his agents,
and that Messrs. Willings & Francis should procure a freight
for her on Mr. Dunkerson's account; that the Plaintiff should
empower Mr. Skirrow (a gentleman who failed as a passenger in her)
to assign, and transfer the ship to Mr. Dunkerson in England, on
the 1st of September ensuing, at which time Mr. Dunkerson would be
duly naturalized as an American Citizen;
Page 3 U.S.
491, 493
and that the consideration money should be secured by the notes
of Messrs. Willing & Francis, payable, at all events, in
certain instalments. The essential point in this agreement was,
obviously, therefore, that the property should remain the
Plaintiff's, until the day fixed for the transfer in Europe; and,
accordingly, the Register was continued in his name, and the
present insurance was effected by him, as owner of the ship.
On these facts some important questions arise. It is true, that
the first bill of sale was cancelled and done away; but the
Defendant urges, that there were many subsequent acts of the
parties, which show an absolute change of property, under the
second agreement; particularly, as the ship was delivered to Mr.
Dunkerson, to be loaded for his use; and the consideration money
was payable at all events. A fair and legal contract should,
however, be carried into effect, according to its true intention;
and, whether the form of proceeding is, or is not, strictly
correct, there can be no doubt, that the true intention of this
contract was, to continue the property of the ship in the Plaintiff
for a specified period. If an immediate sale had been contemplated,
the contract, payment of the price, and delivery of the ship,
would, unquestionably, be sufficient to divest the property of the
original owner, and vest it in the purchasor; but if the parties
could legally contract, not for a present sale and transfer, but
for a sale and transfer at a future day, under a Power of Attorney,
to be given for the purpose; and if such is the nature of the
present contract, then the payment and delivery must have relation
to the terms and conditions on which they were made; and of which
the most important was, that the Plaintiff should continue the
owner of the ship, until the 1st of September.
The only objects for enquiry, then, are 1st. Whether the
contract was a fair one; and 2nd. Whether it was a lawful one. That
it was a fair contract has not been denied: But, it has been
contended, to be an illegal contract, violating the positive
provisions of an Act of Congress; as well as militating against the
duties of a neutral nation, by affording a ready cover to the
property of a belligerent power. The Registering Act is expressed
in such strong terms, that when it was first read, we thought it
decisive upon the case; for, it seemed generally to require, an
oath, 'that there is no subject, or citizen, of any foreign prince
of state, directly, or indirectly, by way of trust, confidence, or
otherwise, interested in the ship, or vessel, or in the profits, or
issued thereof.' 1 Vol. p. 134. s. 4. Swift's Edit. But, upon
examining the Act, we found, that this oath was only exacted,
'where an owner resides in a foreign country, in the capacity of a
consul of the United
Page 3 U.S.
491, 494
States, or as an agent for, and a partner in, a house, or
copartnership, consisting of citizens of the United States.' Ibid.
The terms of the provision do not, therefore, embrace the present
case, the case of an American citizen, residing and registering his
vessel in an American port; and its policy may reasonably be
confined to Americans resident abroad, who are so much exposed to
the temptation of covering belligerent property, and so little
exposed to the dangers of detection*.
Considering all the circumstances, therefore, it does not appear
to us, that there was an actual sale; and, if a future sale was
only intended, we have no right to contradict, or modify, the
contract of the parties. But while this opinion is expressed, it
cannot be denied, that there are strong facts in support of the
defence. Mr. Dunkerson would have been the absolute, unqualified,
owner of the ship, under the first bill of sale; and even under the
subsequent agreement, he obtained possession of her, loaded her,
received the freight, and exercised other acts of superintendance
and ownership. Though the Plaintiff effected the insurance, he was
reimbursed the premium; and though he issued the sailing orders to
the captain, it is said to have been done at the instance of Mr.
Dunkerson. On the weight of these facts, therefore, the jury must
decide: And if, after all, you should think, that there was an
actual and immediate sale to Mr. Dunkerson, an alien, there must be
a verdict for the Defendant, notwithstanding the register and oath
of the Plaintiff; which are prima facie, but not conclusive,
evidence of the American property of the ship.
But another question has been agitated in the cause, which is
entitled to consideration. It was insisted, that an underwriter is
discharged from the obligations of the policy, if any thing
material to the risque is not disclosed to him at the time of
effecting the insurance. Though there was an attempt to encounter
this position, by evidence of the general notoriety of
Page 3 U.S.
491, 495
the contract between the Plaintiff and Mr. Dunkerson; yet that
circumstance is too vague to be construed into notice either to the
Defendant, or the Insurance Broker. Notice, however, is a matter of
fact; but whether notice is necessary, is partly a matter of fact,
and partly a matter of law. Now, the Plaintiff warranted the ship
to be an American bottom, which of itself superseded, in our
opinion, the necessity of making any communication on the subject
of the property. But, still, if, in the opinion of the Jury, a
knowledge of the circumstances that were suppressed, would have
induced the insurer to demand a higher premium, or to refuse
altogether to underwrite, it will be sufficient, on commercial
principles, to invalidate the policy. A respectable witness (an
underwriter) has declared, however, that a disclosure of these
circumstances would not have prevented his underwriting the risque
at the same premium.
If, upon the whole, the contract was a fair one, with a view to
a lawful purpose, a voyage to India; and not with a view to aid one
Belligerent power at the expence of another, by a fradulent cover
of property (which would certainly be fatal to the Plaintiff's
demand) we think that the ship remained an American bottom, at the
time of the capture and condemnation; and, therefore, that the
verdict should be in favor of the Plaintiff.
But if there was an actual and immediate sale of the ship to Mr.
Dunkerson; or if there was any concealment which ought to
invalidate the policy; we think the verdict should be in favor of
the Defendant.
Verdict for the Plaintiff.
Footnotes
[
Footnote *] The Chief Justice, who
had presided at the opening, was obliged, by indisposition, to be
absent during the rest, of the trial.
[
Footnote *] The Judge did not
expressly refer in his charge to another section of the Registering
Act, which was cited by the Defendant's Counsel, as proof that the
vessel was forfeited, if the sale was an absolute one. The words of
the section are: 'That if any ship or vessel, heretofore
registered, or which shall hereafter be registered, as a ship or
vessel of the United States, shall be sold or transferred, in whole
or in part, by way of trust, confidence, or otherwise, to a
subject, or citizen, of any foreign Prince, or State, and such sale
or transfer shall not be made known, in manner herein before
directed, such ship or vessel, together with her tackle, apparel,
and furniture, shall be forfeited.' 2 Vol. p. 148. s. 16. Swift's
Edit. I presume, the Judge, having adopted the reasoning of the
Plaintiff's Counsel, that there was no actual and immediate sale
and transfer of the Mount Vernon, or, in other words, that the
contract was executory, not executed, did not think the section
applicable to the present case. For the manner of making known the
sale and transfer here alluded to, See sect. 7. p. 137.
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