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knowledge ; and that tbe latter will take the neces-
sary measures, by the employment of competent and
honest agents, to obtain through the ordinary chan-
nels of Intelligence In use in the mercantile world, all
due information as to tbe subject-matter of tbe in-
surance. This condition is not complied with, where
by the fraud or negligence of tbe agent, the party pro-
posing the insurance is kept In ignorance of a nuite-
rial fact, which ought to have been made known to
the underwriter, and through such ignorance falls to
disclose it. It has been said indeed that a party de-
siring to Insure is entitled on paying a corresponding
premium, to insure on tbe terms of receiving compen-
sation in the event of the subject-matter of tbe in-
surance being lost at the time of tbe Insurance, and
that he ought not to be deprived of the advantage
which he has paid to secure, by the misconduct of his
agent. But to this there are two answers : First, that
as we have already pointed out, the Implied condition
on which the underwriter undertakes to insure^not
only that every material fact which Is, but also every
fact which ought to be, in the knowledge of the as-
sured, shall be made known to him— is not fulfilled;
secondly, as was said by the court in Fiieherhert v.
Mather, 1 T. R. 12, where a loss must fall on one of
two innocent parties through the fraud or negligence
of a third. It ought to be borne by the party by whom
the person guilty of fraud or negligence has been
trusted or employed. By thus holding, we shall pre-
vent the tendency to fraudulent concealment on the
part of masters of vessels and agents at a distance in
matters on which they ought to communicate infor-
mation to their prlncipals^as also any tendency on the
part of principals to encourage their servants and
agents so to act.*'

The last authority which it is necessary to refer to
is Stribley v. Imperial Marine Jna. Co., 1 Q. B. Div. 507.
It was an action by the owners of a ship for a total
loss ; and one point raised was, whether the fact that
the captain had not Informed tbe plaintiff, and that
he therefore bad not informed tbe defendants of the
fact that the vessel had encountered a storm and lost
an anchor before tbe policy was effected, vitiated the
policy. It was held that it did not. I understand this
decision as In substance similar to Qladstone v, King,
1 M. & & 85.

The principle on which Fiteherbert v. Mather, 1 T. R.
12, and Gladstone v. King, 1 M. & S. 85, are based has
been much discussed, and as stated by the court in
Proudfoot V. Montejiort, L. R., 2 Q. B. Div. 511, Mr.
Justice Story, in Rugglee v. Qeneral Interest Ins. Co., 4
Mas. 74, declined to follow it. His view however Is
opposed to that of the Supreme Court of the United
States (12 Wheat. 408), and to that of Phillips, $ 549,
and I>uer, and has not been adopted In this country.
It appears to me to be established by the cases to
which 1 have referred, that In order to prevent
fraud and willful ignorance on the part of persons ef-
fecting insurances, no policy can be enforced by an as-
eured who has been deliberately kept in ignorance of
material facts by some one, whose moral If not legal



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434



THE ALBANY LAW JOUENAL.



duty it was to iuform him of them, and who has beeu
kept in such isnoranoe purposely, in order that he
might be able to effect the insurance without disclos-
ing those facts.

The person who allows the assured to effect a policy
under such circumstances as I am now supposing does
not act fairly to the underwriters, and although such
person may owe them no legal duty, the assured can-
not in fairness hold the underwriters to the contract
into which they have in fact entered under these cir-
cumstances. The assured may himself be perfectly
innocent when he effects the insurance ; but as soon
as he is informed of the facts it ceases to be right on
his part to take advantage of the concealment with-
out which that insurance would not have been ef-
fected. In other words, the assured cannot take ad-
vantage of the ignorance in which he has been im-
properly kept by one who ought to have told him the
truth. If it was the legal duty of the person who has
so kept him in ignorance to inform him of the facts
concealed, It is, I think, clearly settled that he cannot
avail himself of his own personal ignorance of them.
But if there is no such legal duty to him, the same
consequence appears to me to follow if there was a
moral duty to tell him the truth. He may exclude all
legal duty to be informed of what has occurred by giv-
ing instructions dispensing with information; and
such instructions may be given for reasons which ex-
clude all inference of fraudulent intent on His part.
But in such a case it appears to me that he cannot en-
force a contract of insurance obtained by such unfair
means as those supposed.

In my opinion, 2 Duer, 647, and 1 Phillips, § 537, are
both right in contending that fraud on the part of the
assured is not essential to discharge the underwriters
on the ground of misrepresentation or concealment.
It is a condition of the contract that there is no mis-
representation or concealment either by the assured or
by any one who ought as a matter of business and
fair dealing to have stated or disclosed the facts to
him or to the underwriter for him.

If this view of the law be correct, it follows that the
plaintiffs cannot recover in this action. The omis-
sion of Murison to tell the plalntiflSs what he knew,
and the remarkable course his firm took of dlscontin-
\iing negotiations themselves, and of putting the
plaintiflls in direct communication with Rose, Thomp-
son, Young & Co. are only to be explained upon the
theory that the plaintiffs were purposely kept in ig-
norance, in order that they might insure on more fa-
vorable terms than they otherwise might have done.
It appears to me to have been clearly Murison's duty
to the plaintiffs to give them the information he had,
so that they might, by disclosing what they knew and
increasing their offer, cover the increased risk. Muri-
son was not a stranger under no obligations to the
plaintiffii. He was employed by them to effect an in-
surance, and whilst so employed he acquired impor-
tant knowledge respecting the ship. I cannot doubt
that it was his duty to disclose this to the plaintlffis,
and not to let them go on to insure in ignorance of
what it was of the utmost imi>ortance they should
know.

The plain tiflSs cannot, in my opinion, obtain any ad-
vantage from this breach of duty to themselves. As
between themselves and the defendant, the plaintiffs
are the persons to suffer from the mistaken view their
own agents tooK o\ their own duty. Their conduct
vitiates this policy, although it was not effected
through them, nor until after their agency had ceased ;
for had it not been for their breach of duty the policy
could never have been effected for the premium which
the plaintiffs paid.

I have not based my judgment on the maxim that
the knowledge of an agent is the knowledge of his



principal, for like the master of the rolls, I distrust
such general expressions, which are quite as likely to
mislead as not. But for the reasons I have stated, the
decision of Day, J., was in my opinion erroneous, and
judgment ought to be entered for the defendant, witb.
costs here and below.

LoPBS, L. J. I have arrived at the same oonclasion
as Lord Justice Liudley, but the case is so important
that I wish to give a separate judgment stating my
reasons.

It is unnecessary to state the facts of this case.
They have been already fully stated, and are undia-
puted. I purpose shortly to state the conclusion at
which I have arrived after much consideration, and
my reasons for that conclusion.

It is clear law that if the policy sued in this aottoa
had been effected through the agents to whom the
material communication was made, and who trap-
pressed it, the assured, thought ignorant of the oom-
munication, could not have recovered from the un-
derwriters, because there had been a concealment of a
material fact by the agent of the assured. The knowl-
edge of the agent in such circumstances would be the
knowledge of the principal— a phrase which I under-
stand to mean that the principal is to be as responsible
for any knowledge of a material fact acquired by his
agent employed to obtain the insurance, as if he had
acquired it himself.

In what does the present case differ from the one
above stated, where the law is clear? It differs only
in this, that here the policy was effected not through
the agent, who had acquired and concealed the infor-
mation in order that his principal might effect an in-
surance upon favorable terms, but through another
ag^nt subsequently employed, who as well as his prin-
cipal was innocent of any previous concealment.

The plaintiffs* contention Is that it is only the con-
cealment of material facts by the agent who effSeccs the
policy that vitiates it, not the concealment by any
other agent. And the learned judge in the court be-
low so held. The question raised seems to be whettier
if an agent employed to effect an insurance purposely
omits to communicate material facts, which came to
his knowledge during his employment (facts which it
was his duty to communicate to his principal), it is a
concealment which will avoid an insurance effected
by an innocent principal through another agent, Ig-
norant of any such concealment. Authority and
principle compel me to answer that question In the af»
flrmative.

I will first deal with the authorities. The eariiest
is FitsherbeH v. Mather, 1 T. R. 12. In that case it
seems to have been held that where the conduct of the
assured was wholly free from blame or suspicion, his
policy was avoided by the concealment and virtual
misrepresentaticm of an agent who had no authority
to procure or direct the insurance. He was the con-
signor and shipper of the goods insured. The judges
thought the letter was a misrepresentation. The court
clearly thought that it was the duty of the agent to
have given information of the loss. The concealment
of the agent was the ground of the decision. The as-
sured was held to be affected by the concealment of au
agent other than an agent employed to obtain an in-
surance.

The next case is Oladatone v. King, 1 M. & 9. 85.
The insurance was on a ship on a specified voyage. It
was made after the risk had commenced, but by its
terms (lost or not lost) it related to their commence-
ment, and covered all prior losses. When the
policy was effected, no such loss was known to the
owners to have occurred ; but a partial loss had in
fact occurred, which the master had neglected to com-
municate, although the Information might have been
given in time to have governed the terms of the inBnl^-



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THE ALBANY LAW JOURNAL.



435



anoe. He had ia fact written to his owners after the
loss had happened, and they were in possession of the
letter when they effected the policy ; bat it contained
no mention of the loss, nor does it appear from the
report that ttiis letter was shown to the onderwritars,
or that any representation was made to them founded
npon its contents. In respect to them the case was
simply that of the concealment of a loss, which was
unknown to the assured, but which their agoat was
bound to communicate, and mi^ht have communi-
cated—and it was so treated by all the judges. It was
for the recovery of the partial loss that the action was
brought, and it was the opinion of the court that the
concealment of the master, although not being fraud-
ulent, it did not operate to avoid the policy, yet ex-
onerated the underwriters from the payment of the
loss. Lord Elleuborough remarked that unless this
rule was adopted the master would be instructed to
remain silent in all similar cases, and then the under-
writers would incur the certainty of being rendered
liable for all antecedent average losses that they could
not prove to have been known to the assured.

These decisions establish that the knowledge of an
agent not authorized to insure mAy be imputed to his
principal, so that his silence shall have the effect of a
concealment avoiding the policy and exonerating the
underwriters from the loss. They seem to me a for^
tiori cases to the present. The master had nothing to
do with the insurance. His knowledge was however
Imputed to the plaintiffis, although he did not commu-
nicate to them what he knew.

Proudfoot V. MonUfiore, L. R., 2 Q. B. Div. 611, is a
comparatively recent case. The plaintiff, in Manches-
ter, employed an agent at Smyrna, who purchased
and shipped for him there a cargo of madder, of which
he advised him on the 12th of January, and forwarded
the shipping documents on the 19th. The ship sailed
on the 23d of that month, and went ashore the same
day, whereby there was a total loss of the cargo.
Next day the agent had intelligence of the loss, and
might have telegraphed the casualty to his princigal
immediately, but refrained on purpose that his prin-
cipal might insure the cargo. On the 26th, whicb was
the earliest post day for England, he announced the
loss to his principal by letter. Meanwhile, before the
arrival of the letter, but after the loss had been posted
in Lloyd's Li^t, the principal effected an insurance on
the cargo. It was held that the policy was void on the
ground of concealment of material facts known to the
agent, and therefore known to the principal. All the
cases, both English and American, were reviewed,
and the judgment of the court, consisting of Cock-
bum, C. J., Blackburn and Shoe, JJ., was delivered
by Oockbum, C. J., and unless that judgment is over-
ruled it is clear that an assured cannot recover on a
policy when he has designedly been kept in ignorance
of material facts by somebody whose duty it was to
communicate them. The chief justice in his judg-
ment says (p. 519) : '* There was no fraud or undue
concealment by the plaintiff" (the assured) ** of a ma-
terial fact within his personal knowledge. On the
other band, it is clear that the fact of the loss of the
vessel might have been communicated to him by Rees
by means of the telegraph, but was purposely kept
back by the agent, for the fraudulent purpose of ena-
bling the plaintiff to insure. We think it clear, look-
ing to the position of Rees, as agent to purchase and
ship tbe cargo for the plaintiff, that it was his duty to
communicate to his principal the disaster which had
happened to tbe cargo; and looking to the now gen-
eral use of the electric telegraph, in matters of mer-
cantile interest, between agents and their employers,
we think it was the duty of the agent to communicate
with bis employers by this speedier means of commu-
oioation.'' Further on the chief justice says (p. 621) :



''That if an agent whose duty it is in the ordinary
course of business to communicate information to his
principal as to the state of a ship and cargo, omits to
discharge such duty, and the owner, In the absence of
information as to any fact material to be communi-
cated to the underwriter, effects an insurance, such in-
surance will be void on the ground of concealment or
misrepresentation.*' Then come these very important
words: ^The insurer is entitled to assume, as the
basis of the contract between him and the assured,
that the latter will communicate to him every mate-
rial fact of which the assured has, or in the ordinary
course of business ought to have, knowledge, and that
the latter will take the necessary measures by the em-
ployment of competent and honest agents to obtain
through the ordinary channels of intelligence in use
in the mercantile world all due Information as to the
subject-matter of the insurance. This condition is not
complied with when by the fraud or negligence of the
agent, the pai*ty proposing the insurance is kept in ig-
norance of a material fact which ought to have been
made known to the underwriter, and through such
ignorance fails to disclose it." The case we are now
considering is a much stronger case than Proudfoot v.
MoiiUJiore, L. R., 2 Q. B. Div. 511, for here the agent,
who designedly withheld material information, was
at the time employed by the assured to effect an in-
surance.

The case of StrUfley v. Imperial Marine In8, Co., 1
Q. B. Div. 507, does not appear to me to carry the mat-
ter beyond the cases already cited.

Tbe authorities therefore support the conclusion at
which I have arrived.

I fail however to see why in principle there should
be any distinction between the case where the insur-
ance is effected by the agent who obtained the infor-
mation, and when it is effected bj another agent em-
ployed about the insurance.

In both cases the assured, by a suppression of what
ought to have been communicated to him, obtains an
insurance which he would not otherwise have got.
The underwriters are as much misled In the one case
as the other. In both cases there is misconduct on
the part of the agent of the assured; in both cases
the underwriters are free from blame. It seems to
me unjust and against public policy that a person, •
through whose agent's fault the mischief has hap-
pened, should profit to the detriment of those who are
in no way in fault.

On the ground of the implied contract between the
parties, I am of opinion too that the defendant is en-
titled to succeed. The concealment by an agent who
is bound to give the intelligence violates the under-
taking on which the contract is founded, in the same
way as a similar concealment by a principal. The un-
derwriter has a right to believe, when he accepts the
risk, that he is placed in possession of all the informa-
tion which the assured himself has, or which it was
the duty of any agent of his ' to communicate. The
underwriter does not intend to insure risks concealed
by some agent employed to obtain an insurance, who
ought to have communicated them to his principal,
any more than he does risks concealed by the agent
actually effecting the insurance, or concealed by the
principal himself.

It is admitted that freedom from misrepresentation
or concealment is a condition precedent to the right
of the assured to insist on the performance of the
contract, so that on a failure of the performance of
the condition the assured cannot enforce the contract ;
but it is insisted also that If the misrepresentation or
concealment is by an agent, it does not vitiate the
policy where the principal is innocent, unless the
agent be tbe agent employed to effect the insurance.
I cannot accede to that. I think there must be a free-



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486



THE ALBANY LAW JOURNAL.



dom from misrepresentation or ooncealmeiit, not only
so far as the agent by or through whom the polioj is
effeoted is oonoemed, bat in respect of anj agent em-
ployed by the assured to obtain the policy, whose
duty it was to communicate material facts to bis prin-
cipal.

Any more limited construction, to my mind, would
be against public policy, against principle, contrary to
authority, and would tend to encourage fraud and
collusion in transactions where uberrima fides is es-
sential.

The appeal, in my opinion, must be allowed.

Appeal aUotoed.

Lord Esher, M. R., dissented.



ORIMINAL LA W - EVIDENCE^PRI80NBR8 TS8T1-
MONY AT CORONEieS Ilf QUEST.

NEW YORK CX)nBT OF APPEALS. OOT. 6^ 1888.

PBOP7.K V. MONDON.*

Defendant was an Italian laborer, haying an imperfect under-
standing of the'EngUsh language . He was under arrest ,
without warrant, charged with murder. A coroner*8 in-
. ^uest was being held. The prisoner was taken by the
iherUf , in whose custody he was, and whose power he
could not resist, before the ooroner*s Inquest then tsa-
gaged in an Investigation against himself. He did not go
there Tolantarily . He was sworn by theooroner as a wit-
ness: was without ooan8el,and without means to employ
counsel. He was not informed that he could not be com-
pelled to be a witness against himself, nor that he need not
give an answer which would tend to criminate himself.

H«Id, that the prisoner's attendance before the coroner was
compulsory, and the testimony taken was involuntary and
inadmissible under the Constitution.

APPEAL from judgment of General Term, Fourth
Department, affirming a judgment and conviction
of defendant of murder In the first degree. The opin-
ion states the case.

fi. Clay HaXU for appellant.

Eugene E. Sheldon^ for respondent.

RapaiiLO, J. The appellant was conrioted at a court
of oyer and terminer, held in Herkimer county, in May,
188ft, of the crime of murder in the first degree, for
killing one John Wishart, and was sentenced to death.
On appeal to the Supreme Court, the conviction was
affirmed at a General Term, held in Syracuse, in No-
vember, 1885. Boardmau and Hardin, JJ., delivered
opinions for affirmance, and Foliet, J., delivered a dis-
senting opinion. The case now comes before as on
appeal from the judgment of affirmance.

Numerous exceptions were taken at the trial, and
after a careful examination we concur in the conclu-
sion reached by the Supreme Court as to all of the
points raised on behalf of the appellant, except the
one upon which the learned judges who heard the case
at General Term differed tn opinion, and we shall
therefore confine our discussion to that point.

The question in difference was the admissibility in
evidence upon the trial of the prisoner of statements
alleged to have been made by him on his examination
under oath at the coroner's inquest held upon the body
of the deceased after it had been found, which was a
considerable time subsequent to the killing. The evi-
dence connecting him with the crime, aside from his
alleged confession to members of his family, and af-
terward to the officer having him in custody, was cir-
cumstantial, but no question as to its sufficiency arises
here. After the finding of the body of the deceased

* BeverslBg 88 Hun, 188.



the defendant was arrested, without warrant, aa the
suspected murderer. While he was thus in coatody
the coroner impanelled a jury and held an inqueat,
and the defendant was called as a witness before the
inquest, and was examined by the district attorney
and by the coroner. The prisoner was an ignonuit
Italian laborer, unfamiliar with the English langaan^
He was unattended by counsel, and it does not appear
that he was in any manner informed of his rights, or
that he was not bound to answer questions tending to
criminate him. He was twice examined ; on the first
occasion the examination was taken by questions pot
either by the district attorney or by the coroner,
and the result written down by the coroner, who
then read the evidence over to him, line by line, and
asked him if he understood it, and If it was the truth*
and he said It was, and the coroner then re-swore him
to the deposition.

The coroner testifies that he came to the condaaion
that the defendant did not understand English weU
enough to be examined ; that on taking the evidence,
which was signed by him, no interpreter was used ;
that the interpretor was used on a subsequent day ;
that the defendant made no corrections or suggeetiona
while the deposition was being read to him ; that he
(the coroner) became satisfied, after taking defend-
ant's testimony on the first day, that it ought to be
taken through an interpreter, and thought they might
get It a little better and a little fuller.

The court thereupon reserved its decision as to the
admissibility of evidence until the opening of the court
on the following day.

The coroner was then asked various questions aa to
what the defendant had stated at the coroner's inquest
as to his having been on the ground where the body of
deceased was found ; as to when he had last seen the
deceased alive ; as to where deceased was then going;
whether he was alone; as to the whereabouts of the
defendant on the day the deceased disappeared ; aa to
threats made by deceased to have the defendant ar-
rested for marrying the daughter of deceased while
having another wife living; as to disputes between de-
ceased and defendant on that subject, and other quee-
tions tending to establish the theory of the proeeon-
tion as to the motive of the defendant In committing
the murder. Some of the statements of the prisoner
on his examination, as testified to by the coroner, con-
firmed the theory of the prosecution as to the hostile
feeling between the prisoner and the deceased, and
the quarrels which had taken place between thero, but



Online LibraryAmerican Missionary AssociationAlbany law journal → online text (page 130 of 156)