Cranston and others against The Philadelphia Insurance Company

Cranston and others against The Philadelphia Insurance Company. 1813 Philadelphia, Monday, July 12. An agent who effects insurance for his principal, and becomes answerable for the premium, has a pen upon the pohey, so long as he retains it; but if he delivers it up, his hen is gone; and although the underwriters are intitled todeduet the premium, it unpaid, from the loss, ^en^heha^no equity to stand, in their place, payment out of the loss' ^ An agent who effects insurance for his principal, and becomes an- r | ^HIS was a scire facias against the defendants, as garnishees of Nicholas Duff,\ in which a case was stated for the opinion of the Court, in substance as follows: On the 20th of September 1802, Nicholas Duff as principaj an¿ George BarnwelL as surety, entered into a bond at r 7 ° 1 J 1 the custom house of New Tori, for duties, amounting to 596 d0Hars 73 cents, payable in six months, which Barnwell * * % / ■** . , . paid on the 10th 01 May 1803, with interest, making 601 dollars 68 cents. _ _ . > Dujfs being owner of the brig Betsy, chartered her for a voyage from New York to cape Francois. The vessel sailed ' ° ' r . - on the 25th of September 1803, to bring home a cargo, but returnec^to New York on the 5th of December 1803, without earning freight. In'the month of September 1803, Duff agreed to effect insurance on the Betseu and her freight upon the above voyage, and to assign the policies to Barnwell as a ^or payment of the above debt. After this agreement, Duff directed the plaintiffs to effect insurance on the Betsy and her freight in Philadelphia. The insurance was accordingly effected in the names of the plaintiffs on the 21st of October 1803, and the plaintiffs gave their note for the premium of both policies, amounting to 372 dollars, payable at four months, which note they paid to the defendants on the 25th of February 1804. One of the plaintiffs in November 1803 forwarded the policies to another in in New York, who ■ delivered them to Duff about the 7th of December 1803. On the 12th of December 1803, Barnzvell sent the policy on freight indorsed in blank by Duff, to W, MiClure and Co., with other documents, and directed those gentlemen to demand payment as for a total loss, which was accordingly done on the 13th of December 1803. Duff became insolvent, applied for the benefit of the insolvent laws, and made a general assignment of his property about the 6th of January 1804. The plaintiffs issued a foreign attachment'against Duff, for the said debt, on the 9th of January 1804, which was served the same day on the defendants; and on executing a writ of inquiry, the verdict found due to them 447 dollars 12 cents, on the 25th of July 1807.' The questions submitted, were, 1. Whether there was legal evidence of the debts due from Duff to Barnwell, and Jones and Clinch, or either of them, and of a bona fide assignment of the policy? (This was wholly a question of fact, depending on documents exhibited, which embraced the case of Jones and Clinch as well as Barnwell, but which are of no importance.) 2. Whether the plaintiffs were intitled in law or equity to be repaid the premium out of the fund in the hands of the defendants? If the plaintiffs were entitled to recover, the Court were to fix the amount; if not, then judgment to be for the defendants. Dallas for the plaintiffs, argued in support of their claim on the following grounds. 1. Because the plaintiffs had an equitable lien on the fund in the defendants’ hands, which Duff’s assignment to Barnwell could not discharge; their money having produced the fund, and Barnwell having no equity to take the fruit, without paying the cost of it. 2. Because the policy provided, that in case of loás, the premium should be deducted, if not previously paid; and the plaintiffs being the sureties of Duff, and having paid the note to the defendants, were intitled in equity to the security which the defendants had under the agreement in the policy, according to Miller v. Ord . The defendants being in-titled to deduct both premiums from the loss on the freight policy, the plaintiffs-had an equity to the same extent. 3. Because it appeared from the dates that there was an agreement in September 1803, between Duff and Barnwell, that Duff should effect insurance, and assign the policy; and the order being given after, and in pursuance of, that agreement, the plaintiffs must be considered as agents of Barnwell, though Duff’s name was used, Barnwell being the party in interest; and therefore they had the sanie equity against Barnwell as they could have had against Duff. Rawle for the defendants, denied the right of the plaintiffs: 1. Because this being a foreign attachment, they could recover no more than was Duff’s on the 9th of January *8°4? Pfior to which time he had not only assigned to Bamwell, but to general assignees; and further at the date of the attachment, nothing was due to them, as they had not then paid the note. 2. Because they had neither lien nor equity. ,. , ...... , .. . As to lien, they surrendered it, by giving up the policy, and trusting Duff personally. As to equity, they could have none against Barnwell, who was a bona fide assignee without notice, and never in any way pledged himself for the premium, or induced the plaintiffs to trust Duff. Nor could they claim to take the place of the defendants as to the premium, because the premium being paid, the defendants were not intitled to deduct any thing. The plaintiffs by their foreign attachment came in as representing Duff, and not under any right which they had individually in the money due by the defendants. 2 Binn. 382. [MAJORITY — Tilghman C. J.] Tilghman C. J. Two questions are submitted to the Court on the case stated. 1st, Whether there is legal evidence of debts due from Duff to Barnwell, and Jones and Clinch, or either of them, and a bona fide assignment of the policy. 2d, Whether the plaintiffs are intitled in law or equity, to be repaid the premiums out of the funds in the hands of the defendants? 1. Upon an examination of the depositions and documents exhibited in the cause, I am of opinion that there is legal evidence of debts due from Duff to Barnwell, and to Jones and Clinch, and also of a bona fide assignment of the policy. 2. It appears that the plaintiffs procured insurances to be effected on the brig Betsey and her freight, as the agents of Duff, and knew nothing of Barnwell in the business. They passed their own note for the premiums of insurance, for which they undoubtedly had a lien on the policies as long as they retained them. But having given them up, they gave up their lien; because, although the insurances were made in their names, yet being for the benefit of Duff, it was competent to Duff to support actions against the insurers in his own name. Thus stands the case at law, and it is the same in equity, because there can be no equity against the assignees of the policies, who are purchasers for a valuable consideration without notice of any interfering claim. But it is said, that the defendants have a right to deduct the amount of the premiums before they pay the loss, by the express terms of the policies, and that the plaintiffs who have paid the premium have a right to put themselves in the place of the defendants, and deduct their amount against the assignees of the policy. The plaintiffs are in a hard situation, but I am afraid it is too late to resort to a remedy of this kind; because the premiums being paid, there is nothing to deduct, and th giving up of the policies, the payment of the note for the premiums, and the prosecuting of an attachment, being all the acts of the plaintiffs, they must abide by the consequences. After all, their case is not uncommon; they trusted to their friend Duff and gave up the staff which they held in their own hands. I can see no principle of law or equity by which the fund in the hands of the defendants can be made liable to the plaintiffs’ demand, and am therefore of opinion that Judgment should be entered for the defendants. Yeates J. and Brackenridge J. concurred. Judgment for defendants.