Wilkes v. The People's Fire Insurance Company

Wilkes v. The People’s Fire Insurance Company. The sale, to an alien, of a vessel enrolled under the act of Congress of 1831, to regulate the foreign and coasting trade on the northern, northeastern and northwestern frontiers, but not licensed, does not work her forfeiture. The mortgagor of a vessel, with covenant for payment, and to insure for the benefit of the mortgagee, has an insurable interest, which is not destroyed by a subsequent forfeiture for violation of the act of 1831. Whether the insurer could, in any case, avail himself, as a defence, of a forfeiture to the United States, subsequent to a contract valid when made, Querre. The case of Fontaine v. Phoenix Insurance Company (11 John., 297), questioned in this respect. Appeal from the Superior Court of Buffalo. Action on a marine policy on the steamer Chapin. The defence set up in the answer was, that, although the title in form was vested in the plaintiff, yet that, in fact, he had no insurable interest in the steamer, either at the date of the policy or of the loss; that, previous to the insurance, she had been registered under the act of Congress of December 31, 1792; that, subsequent to such registry, she had been sold to one James P. Fortier, an unnaturalized alien, and on such sale the title was taken in the name of the plaintiff in order to preserve the character of the steamer as an American vessel, but to hold the same for the benefit of Fortier, the real owner; that such sale and transfer was not made known to the proper officers, as required by the act of Congress, and thereby the steamer was forfeited to the United States, so that the plaintiff could have no insurable interest in her. The trial was before Mr. Justice Clinton, a jury being waived. The plaintiff proved a bill of sale of the steamer to himself from her former owner, dated September 13, 1856. It was proved that the sale was negotiated by James P. For-tier ; that part of the consideration was paid by him, and a mortgage of the vessel was executed by the plaintiff to the vendor to secure the remainder, which contained a personal covenant of the plaintiff for payment. It was proved that the purchase was made for Fortier, who was the real party in interest, and subsequently controlled the vessel and received its earnings. The plaintiff also proved the execution by himself, previous to the insurance, of a mortgage of the vessel to Fortier to secure money lent, the mortgage containing a covenant to insure the vessel and keep the policies assigned to Fortier as collateral security, and authorizing Fortier, in case of the plaintiff’s default, to effect insurance himself, and that the expense thereof should be secured by the mortgage. It appeared, on the trial, that the vessel was never registered, but was enrolled under the act of Congress of 1793, and the act of 1831, to regulate the foreign and coasting trade on the northern, northeastern and northwestern frontiers; and she did not appear to have ever had a license. Judgment was ordered for the plaintiff, which having been affirmed at general term,, the defendant appealed to this court. The case was submitted on printed arguments. William W. Mann, for the appellant John Ganson, for the respondent. [MAJORITY — Allen, J.] Allen, J. The allegation in the answer in this case is, that before the time of issuing the policy, the steamer had been registered as a vessel of the United States, pursuant to the provisions of the act of Congress of December 31,1792, and that she was, subsequent to such registry and insuring, sold by her then owner to Fortier, who was an alien; and that the title was fraudulently taken in the name of plaintiff, who had at the time no insurable interest. The evidence entirely fails to prove a registry, but, on the contrary, shows that the steamer was an enrolled vessel. The enrollment did not authorize her to engage in the coasting or foreign trade. A license was necessary for that, in addition to the enrollment. She had, therefore, no certificate of registry; and, of course, could not surrender any. But it is insisted that she was forfeited under the 2d, 6th, and 32d sections of the act of 18th February, 1793. The certificate of enrollment, produced on the trial, shows that she was enrolled, as well under the act of 4.793 as under the act “ to regulate the foreign and coasting trade, on the northern, northeastern and northwestern frontiers of the United States, and for other purposes,” passed March 2, 1831. That act provides, in its 3d section, that vessels of the United States, navigating the waters on those frontiers, otherwise than by sea, “ shall be enrolled and licensed in such form as may be prescribed by the Secretary of the Treasury, which enrollment and license shall authorize any such boat, ship, or other vessel to be employed either in the coasting or foreign trade, and no certificate of registry shall be required for vessels so employed on said frontiers.” Then follows this proviso: “ That such boat, sloop, or vessel shall be, in every other respect, liable to the rules, regulations and penalties now in force relating to registered vessels on our northern, northeastern and northwestern frontiers.” A construction has been given to this proviso, in the case of the Black Hawk (unreported decision of Judge Couk-LIKTG, in the District Court of the United States for the Northern District of New York), where it was decided that a vessel, enrolled and licensed under the act of 1831, is “ not the less a licensed vessel because she has become entitled to the privileges of a registered vesseland it was adjudicated that the sale itself forfeited the vessel under the ,32d section of the act of 1793. Assuming, then, that the case might fall within the provisions of the sections claimed, it is proper, for a moment, to examine the allegations in the.answer, and the facts proved. The 6th section' declares, that “ after the last day of May (then) next, every ship or vessel found trading, without being enrolled or licensed, shall he forfeited,” &c., under certain provisions in the section enumerated. The answer does not allege, nor is there any proof in the case,.that the steamer was “found trading” in articles such as the section forbids. • The 32d section enacts “that if any licensed ship or vessel shall be transferred, in whole or in part, to any person who is not, at the time of such transfer, a citizen of and resident within the United States, or if any such ship or vessel shall be employed in any other trade than that for which she is licensed, or shall be found with a forged or altered license, or one granted for any other ship or vessel, every such ship or vessel, with her tackle, apparel and furniture, and the cargo found on board of her, shall he forfeited’’ The only allegations in the answer are, that the steamer was registered and that she was transferred to an alien—entirely different from the proof. The answer, perhaps, might have been amended so as to conform the proofs to it; but then it would not have been sufficient. There is no proof that the steamer was employed in any other trade than that for which she was licensed. There is no averment or proof that she was even licensed. There is no forfeiture declared for transferring an enrolled vessel. At all events, at the time of the insurance, the plaintiff had clearly an insurable interest. The sale was on the 13th, and the insurance on the 18th of September. The vessel was not forfeited, if at all, until the lapse of seven days after the sale, and then by reason of the failure to surrender her certificate, if within the United States, as it does not appear she was, at the time of the sale. It cannot be answered to this position that the plaintiff had not an insurable interest at the time of the loss. The vessel, if forfeited, would be still subject to the mortgages; and plaintiff had an interest to that amount, as he had warranted to keep her insured. (17 N. Y., 404.) It is said that if we should hold the vessel forfeited, we are controlled by the case of Fontaine v. The Phoenix Insurance Company (11 John., 297), as to the point that the defendant may avail itself of the forfeiture, if there was one, by way of defence. The section declares the vessel forfeited, it is true; but I am not able to see the justice of permitting a third party to set it up to defeat a fair contract on its part, the consideration for which it has been allowed to receive and appropriate. It is not necessary, however, to pass upon this point, and I forbear further comment upon that case. Judgment should be affirmed. All the judges concurring, Judgment affirmed.