struction of the point. Usage of Lloyd's as to paying losses under warranty "to be free of mort jettison," only cognisant of it. mortality and binds those A Liverpool house, through the agency of a London Of the conbroker, effected a policy, at Lloyd's, on horses "warranted free policy. of jettison and mortality," from Liverpool to Jamaica. In Cases illustrathe course of the voyage a violent storm came on, during tive of this which the horses broke down the partitions that separated them, and three of them were kicked to death; the underwriters refused to make good this loss, on the ground, that, on policies containing this warranty, it was contrary to the usage of Lloyd's to pay any loss for mortality on live stock, occurring in the course of the voyage, except where the ship was lost before arrival. The facts of the case were stated in the form of a special verdict, which set out the custom at Lloyd's, as proved at the trial, but did not contain any finding that the plaintiff was cognisant of such usage. The court, under these circumstances, held that the plaintiff was not bound by the usage: it was not found to be a general usage of the whole trade in the city of London; and therefore, in order to render it binding on the plaintiff, it ought to have been distinctly found that he was cognisant of it. (w) Had the evidence at the trial shown that the plaintiff was in the habit of effecting policies at Lloyd's, that, the court said, would have warranted the special verdict in finding that he had knowledge of the usage in question. By the general usage of the law mercantile, the insurance broker is considered as debtor to the underwriter for the premiums, while the underwriter is debtor to the assured for the loss (r): a custom, however, has long prevailed at Lloyd's, and is well known to all who transact business there, that the insurance brokers settle with the underwriters according to the state of their accounts with them, in which accounts the broker is made the debtor to the underwriter for all premiums on any policies effected by him with such underwriter, no matter on whose account; and the underwriter, in the same way, is made debtor to the broker for all losses, as between the underwriter and the broker; - such settlement on Usage of settling losses Lloyd's as to on account, is only binding under the same conditions. (w) Gabay v. Lloyd, 3 B. & Cr. 793. (x) Per Lord Tenterden, in Bartlett v. Pentland, 10 B. & Cr. 780. Of the con struction of the policy. With regard to as to bind them even to a mode of adjustment contrary to the true principles of Maritime Law in the abstract. account is considered as payment according to the custom of Lloyd's; whether it is also to be so considered as between the underwriter and the assured, depends upon the question whether the assured can fairly be presumed, from all the circumstances of the case, to have been cognisant of the usage. If he be himself resident in London, or has for a considerable length of time been in the habit of employing insurance brokers to effect policies for him at Lloyd's, then the reasonable presumption is that he was aware of the usage, and will be bound by it: if, on the other hand, he was not resident in London, and cannot be shown to have been for any length of time in the habit of effecting insurances at Lloyd's, the reasonable presumption will be the other way, and he will not be bound by the usage. (y) So, strong, however, has the binding force of a usage at Lloyd's been considered with regard to all those in the habit of transacting business there, that in one case it was even admitted to prove a mode of adjustment inconsistent with the true principles of Marine Insurance as a contract of indemnity. Thus, where in an open policy on freight the assured contended that he was entitled, in case of a total loss, to recover the amount of the gross freight without any reduction; and to establish this right called witnesses of thirty or forty years' experience at Lloyd's, who stated that, though open policies on freight were rare, yet the uniform custom of settling losses upon them had been to pay the assured the amount of the gross freight (z), the court admitted the evidence, although they allowed that the practice seemed inconsistent with the true principles of indemnity. (a) (y) See the cases of Bartlett v. Pentland, 10 B. & Cr. 760. Scott v. Irving, 1 B. & Ad. 605. Stewart v. Aberdein, 4 Mees. & Wels. 211. (2) Defendant also called witnesses, nearly equal in number and experience, who stated that they were not aware of the existence of the usage, as sworn to by plaintiff's witnesses. See Report, p. 62. (a) Palmer v. Blackburn, 1 Bingh. p. 61; in this case, Ch. J. Dallas doubted, but Park J., and Burroughs J., the other two members of the court then present, were clear that the evidence had been rightly admitted. It 66 usage is But no evidence can be admitted of an usage which is at direct variance with the plain words of the policy: only admissible to explain what is doubtful; it is never admissible to contradict what is plain." Thus, where a policy was in the common form upon the ship, that is, "the body, tackle, apparel, ordnance, munition, boat, and other furniture of the ship called the Thames," Lord Lyndhurst would not admit evidence of an usage at Lloyd's, that boats slung on the ship's quarter were not protected by such policy (b); on the same ground, in a case, where it appeared that oil had been lost by leakage, caused by the violent labouring of the ship in a cross sea, Lord Denman refused to admit evidence of a usage of Lloyd's to the effect, that unless the cargo was shifted, or the casks damaged, underwriters were not liable for any extent of leakage, however caused, as a loss by the perils of the seas. (c) His lordship told the jury to consider for themselves whether, in their opinion, the damage to the oil was in fact caused by the perils of the seas. "It may be very convenient," said his Lordship, "for the underwriters to have such a general rule, and for the commercial world to submit to it; but if they mean thereby to control the effect of a plain instrument, they should introduce its terms into the policy." (d) §44. RULE III. Where the sense of the words and expressions used in a policy is either ambiguous or obscure on the face of the instrument, or is made so by proof of extrinsic circumstances, parol evidence is admissible to explain by usage their meaning in the given case. The words and phrases employed in policies may be obscure in themselves, as when they are entirely technical and local, so as to be quite unintelligible to the generality of persons, without explanation: in this case, the ambiguity as to their is not stated in the case, but may be fairly inferred from it, that the policy was effected with a party well conver sant with the general course of business at Lloyd's. (b) Blackett v. Royal Exch. Comp., 2 Cr. & Jer. 244. (c) Crofts v. Marshall, 7 Carr, & Payne, 597. (d) Ibid. p. 607. Of the con struction of the policy. Of terms used in an applied or secondary sense. Instances of meaning arises upon merely reading them as they stand in the instrument; in other words, is patent on the face of it. So again, although the words employed may have an ordinary meaning which is sufficiently intelligible to people not engaged in the business to which they relate; yet if they have also another meaning when employed by those engaged in that business, and the circumstances of the case show that such secondary or less general sense must have been that in which they were used in the particular instrument whose meaning is sought to be ascertained, parol evidence must be equally resorted to in this, as in the former case, to explain the real meaning of the contract, by showing the sense in which the parties meant it to be understood. Several instances of the application of this rule have arisen of this rule in in the construction of the memorandum, by which the under the application the construc tion of the words con tained in the common me morandum. writers exempt themselves from liability on certain perishable articles: thus, evidence of usage has been admitted to show that the term corn, as used in the memorandum, is meant to comprehend every sort of grain, and also beans and peas (e) and malt (ƒ); but that it does not include rice (g): while the term salt has been held not to include saltpetre. (h) Upon the same principle, in the United States, where the memorandum contained the exception of roots, it was held that the word as used in the memorandum must be confined in its application to perishable roots, such as beets and other garden roots; and therefore that sarsaparilla, being a dry hard root and not liable to decay, was not included in the memorandum. (i) So, in a policy on furs, it was held that the word skins in the memorandum should not exempt the underwriter from liability to an average loss on bear skins ; it being shown that such skins were chiefly valuable as furs. (j) (e) Mason v. Skurray, Park on Ins. (f) Moody v. Surridge, ibid. (h) By Mr. J. Wilson, in Journu (i) † Coit v. Columbrian Ins. Comp., 7 Johnson's New York Rep. 385. N. B. The words of the memorandum in this case were "roots and all other articles of a perishable nature," so that the very language of the clause formed a clue to its construction. (j) † Astor v. Union Ins. Comp., 7 Cowen's Rep. 202. policy. Meaning of the clause "with or without letters of marque." A vessel was insured "either with or without letters of Of the conmarque,” the intention of course being to have the liberty of struction of the using it, but to what extent, whether solely in acting on the defensive, or in giving chase, or in cruising generally, were questions not settled by the obvious and general import of the words: Lord Ellenborough said, "it may be material to ascertain in what manner parties to contracts containing this form of words have acted upon them in former instances, and whether they have obtained, as between the assured and assurers, any known and definite import." (k) The risk on ship and goods is often specified to begin and end from their arrival, sailing from, or loading at one port, until their arrival or safe discharge at another port: in these cases the meaning in which the word port is used in the policy must be ascertained by admitting parol evidence to show what meaning and extent, in the general understanding of the mercantile world, is attached to the word port as applied to the place where, by the policy, the risk is made to begin or end (1); and, although the mercantile sense attached to the term may give the port in question a greater or a less extent than its legal or political limits, yet the mercantile sense, and not the legal import of the word, shall prevail. Thus, although Llanelly is, legally speaking, considered to be a part of the port of Carmarthen, and Bridport of the port of Lyme Regis, yet neither were considered to be so within the meaning of the words "port of Carmarthen" and "port of Lyme Regis," in a policy of insurance; those words meaning, in a mercantile sense, "the town and port of Lyme Regis, and "the town and port of Carmarthen.” (m) So, again, where words descriptive of seas or countries have acquired a sense among mercantile men differing from their common geographical import, parol evidence of the meaning put upon them by the mercantile world is admissible, to show the sense put on them by the parties to the policy. (k) Parr v. Anderson, 6 East, 207. (1) Constable v. Noble, 2 Taunt. 408. Payne v. Hutchinson, ibid. 405, in notis. & Ald. 460. Brown v. Tayleur, 4 Ad. (m) Constable v. Noble, 2 Taunt. Cockey v. Atkinson, 3 B. 403. Meaning of word "port." |