66 CHAPTER III. OF THE CONSTRUCTION OF SEA-POLICIES. SECT. The principles of construc tion applic able to sea policies are the same as those applied to other mer cantile contracts. Evidence of usage. 55. THE principles which govern the construction of seapolicies do not vary from those applicable to all other mercantile instruments. The language of sea-policies is frequently indeterminate, ambiguous, or technical. When this is so, parol evidence, as in the case of other contracts, is admissible to explain it. The language of sea-policies is also frequently incomplete as an expression of the meaning of the parties, because it is employed, and is understood so to be, with reference to the usages of trade (a): in this latter class of cases (and they are very numerous) the meaning of the contract embodied in a sea-policy may, nay must, be explained by parol evidence of those usages, a knowledge of which in such cases forms the only available key to the real intention of the parties (b). In this class of cases, even where the language of the policy is on the face of it unambiguous, yet, as without reference to the usage, the mere terms employed would not be a complete expression of the mind and intention of the contracting parties, evidence of usage, if not repugnant to the express terms of the instrument, is always admitted to show what the true nature (a) I.e., as Judge Duer very correctly expresses it, "not of trade in the largest sense of the word, but of that export and import trade which is conducted by navigation." 1 Duer, 180. (b) Mason v. Skurray (1780), 1 Marsh, 226; 1 Park, 253. of the contract, as mutually understood by the parties, really Sect. 55. was. In such cases, in the language of Lord Mansfield, "the question is, whether the usage has not explained the generality of the words. If it has, every man who contracts under a usage does it as if the point of usage were inserted in the contract in terms" (c). 56. From the frequency, probably, of such cases as those just referred to in this branch of the law, a notion appears at one time to have prevailed (favoured unquestionably by certain 66 6 'policies of insurance, even where "the words are plain;' and Buller, "J., in Long v. Allen, ibid. 276: "In policies of insurance in par"ticular, a great latitude of con"struction as to usage has been "admitted;' and again (which is "the strongest expression on the "subject to be found in the books): "Usage not only explains but con❝trols the policy.' Judge Duer "considers Buller, J., strictly accu"rate in the use of the word control, "which, as he truly states, does "not necessarily imply to contradict: "The distinction made by the ""learned judge between explaining "' and controlling really does exist. "Where the words to be inter or This note is retained by the pre- 1 Sect. 56. reported expressions of the earlier judges) that sea-policies were not amenable to the rules of construction generally applicable to all other mercantile contracts, but were to be interpreted so as to carry out the assumed intentions of the parties, even though repugnant to the terms in which their intentions purported to be expressed on the face of the instrument itself. This notion is now discarded as erroneous (d). Parol evidence, whether of usage or otherwise, can in no case be admitted to contradict or materially vary the plain and express terms of a sea-policy (e); it can only be admitted either to explain those terms where technical or ambiguous, or to modify and add to them where they are plainly employed with reference to some usage of trade, and without such reference would, accordingly, be incomplete as an expression of the mind of the parties contracting: in such cases the Courts may resort to any means of interpreting the policy so as to effectuate the real intention of the parties, which may be supplied either by the rules of the common law, the general usages of trade, or the particular circumstances of the case (f). (d) Weston v. Emes (1808), 1 Taunt. 115. (e) The case, however, of Universo Ins. Co. of Milan v. The Merchants' Marine Ins. Co., [1897] 1 Q. B. 205; 2 Q. B. 93, is difficult to reconcile with this rule. (f) See 1 Emerigon, c. i. s. 5, p. 17; and c. ii. pp. 55, 56; see the judgment of Lord Denman in Trueman v. Loder (1840), 11 A. & E. 589; and that of Story, J., in The Schooner Reeside, 2 Sumn. 567; see also the admirable remarks of Mr. Chancellor Kent (Com. iii. p. 260, n. (f)); and especially the two very able and elaborate chapters of Judge Duer (1 Duer, 158-311). "The meaning of the rule excluding parol evidence is, that such evidence shall never be received to show the intention of the parties to have been directly opposite to that which their language expresses, or substantially different from any meaning which the words they have used upon any construction will admit or convey; but there are cases in which the language of a policy, in entire consistency with the rules of law, may be interpreted in different senses, or with a modification which, though not express, is implied in such cases parol evidence may be admitted to determine the construction that, following the intention, ought to be adopted. The admission of such evidence varies the construction of the contract, but does not contradict or vary the agreement embodied in the policy; on the con v. French. "The same rule of construction," said Lord Ellenborough, Sect. 56. "which applies to other instruments applies equally to this, Rule as laid down by Lord viz., that it is to be construed according to the sense and Ellenborough meaning, as collected in the first place from the terms used in in Robertson it, which terms are to be understood in their plain, ordinary, and popular sense, unless they have generally, in respect to the subject-matter, as by the known usage of trade or the like, acquired a peculiar sense, distinct from the popular sense of the same words, or unless the context evidently points out that they must in the particular instance, and in order to effectuate the immediate intention of the parties, be understood in some other special and peculiar sense (g). "A contract of insurance," said Erle, C. J., "is a commercial instrument, and is to be construed, like all others, so as to give effect to the intention of the parties, and that intention is to be gathered from the words of the instrument interpreted by the surrounding circumstances. If the words are clear, the proper effect is to be given to them; if the words are capable of more interpretations than one, the judge, with the aid of the jury and of the surrounding circumstances, is to put the true construction upon the contract" (h). 57. The following are some of the more prominent rules of construction that appear to have been acted upon by our Courts in the interpretation of sea-policies. settled usage part of the I. Every usage of a particular branch of maritime trade I. Every wellwhich is so well settled, or so generally known, that all persons of trade is engaged in that trade may fairly be taken as contracting with prima facie reference to it, is considered to form part of every sea-policy, policy. designed to protect risks in such trade, unless the express terms of the policy decisively repel the inference (i). Nor trary, it establishes its true meaning." 1 Duer, 176, 177. The present editors, while retaining this note, conceive that their criticisms on the preceding note apply, to some extent at least, here also. (g) Robertson v. French (1803), 4 East, 135. These words were cited (h) Carr v. Montefiore (Ex. Ch. (i) See, where in case of a fire policy on a ship, an alleged usage Sect. 57. need any evidence be given in such cases that the usage has been communicated to the underwriter; for, as Lord Mansfield says, "every underwriter is presumed to be acquainted with the usage of the particular trade he insures; and if he does not know it, he ought to inform himself" (j). The description of the voyage in the policy, he says, in another case, “is an express reference to the usual manner of making it, as much as if every circumstance were mentioned" on the face of the instrument. "What is usually done by such a ship, on such a cargo, in such a voyage, is understood to be referred to in every policy, and to make a part of it as much as if it was expressed" (k). Parol agreement insuffi cient to Evidence of usage in these and the like cases does not vary the terms of the policy; but, as it is expressed by Lord Lyndhurst, merely "introduces matter upon which the policy is silent" (1). It appears that an established usage, which is not expressly excluded by the terms of the written contract, cannot be exclude estab- excluded by parol agreement (m); a fortiori it seems to follow that a representation by an assured of an intention to vary from a usage, whether such representation amount to an agreement or not, cannot be binding on the underwriter if not made part of the written contract (n). lished usage. China trade. 58. The following cases illustrate the application of these principles: It having been the universal custom for many was not permitted to extend the risks, Pearson v. Commercial Union Ass. Co. (1873), L. R. 8 C. P. 548; 1 A. C. 498. The usage in this case was merely collateral to, and not necessarily connected with, the adventure insured. (j) Lord Mansfield in Noble v. (k) Lord Mansfield in Pelly v. 341. (1) Blackett v. Royal Exch. Ass. Co. (1832), 2 Cr. & Jer. 249. (m) See Fawkes v. Lamb (1862), 31 L. J. Q. B. 98. Arnould (2nd ed. p. 577), Phillips (vol. i. s. 594), Parsons (vol. i. p. 432), and Duer (vol. ii. p. 608) state the contrary, but, as Mr. MacLachlan observes, without any judicial authority in support of their view. See Mr. MacLachlan's remarks in the 6th ed. of this work, pp. 541, 542. In Burgess v. Wickham (1863), 33 L. J. Q. B. at p. 23, Cockburn, C. J., did indeed express an opinion to the contrary, but Blackburn, J., at p. 28, strongly affirmed the view in our text. (n) See Leduc v. Ward (1888), 20 Q. B. D. 475. |