source: Caselaw Access Project

author: By the Court.—Sedgwick, J.

license: Public Domain

text:
    HERMAN STURM, Plaintiff and Respondent, v. JOHN S. WILLIAMS, Defendant and Appellant.
    L CONTRACT ALTERNATIVE.—ACTS OF PARTIES.—QUESTION FOR THE JURY.
    1. Where the evidence leaves it in doubt, under which alternative the acts were done, and it is material to determine the point, the question must be submitted to the jury.

      H. EVIDENCE. • •
    1. Words accustomed to be used in different senses.
    1. Parol evidence admissible to show the sense in which they are-used in a particular business.....
    2. Acts of Parties ; Questions as to which alternative of a contract. they were done under.
    1. What evidence admissible.

      a. The party to the action who did the act, or caused it to be-done, may be inquired of as to the intent with which it was." • done.
    8. Value, how ascertained when there is no market value.
    1. By reference to the •probaMlities of the case founded on proof of facts which, in the ordinary transaction of business, would affect the mind of a dealer in similar articles in determining the price-to be asked or given.

      a. What facts bear on this question.
    1. The cost of the article to the party claiming its value does. -. ..

      a. In determining such cost , when payment was. made, otherwise than by cash, the value of the article or property so given in payment, may be inquired into. . . .
    2. Auction sales. Where dealers in the article in question-are for the most part furnished with the article from auction sales, the prices given at such sales may be shown. . .

      a. But where the -question .is as to the cost of the-article at a" particular time," the proof must be limited to such sales as took place at or about that time.
    4. Opinions of witnesses.
    1. A dealer in articles that have no market value may give his-opinion as to their value.'
    6. Overvaluation.—Fraudulent.
    1. Estimate made by the plaintiff, being, the assured of the value, of the property given by him in payment for the property,, which was the subject of the insurance, may be given in evi dence.
    2. Actual cost to the assured of the subject of insurance is involved' in the question of fraudulent overvaluation, both when the valuations in the policy is stated to be invoice cost and five percent., and where the valuation is upon a general agreement, irrespective of invoice cost and five per cent.....
    '' 6. Conversations.—Writings.—Entry in books. " "■
    1. One party introducing in evidence apart, the other party is not necessarily entitled to have the whole put in evidence.

      •a. He is only entitled to such other part as will in any way explain or qualify the part first given.

      1. The party objecting to the introduction of apart on the ground that it is but a part, must, to make his objection good, show that there are other parts which bear upon the part offered.

    7. Operation op the mend.
    1. A question which calls for a reflection of the witness upon a . supposed state of facts is properly excluded.
    APPLICATION OF ABOVE PRINCIPLES Insurance marine.
    The plaintiff, in 1867, made application for marine insurance “ on military goods, and merchandise valued at invoice and five per cent, unless otherwise agreed. ” After this application the plaintiff' instructed his broker to have the valuation made at two hundred and thirteen thousand dollars. The broker went to the defendants’ attorneys, and asked them to fix the permanent valuation, and gave the figures at two hundred and thirteen thousand dollars. Nothing further was said. The policy was. issued valuing the goods and merchandise at two hundred and thirteen thousand dollars. The answer, among other defenses, set up fraudulent overvaluation. It appeared on the' trial that the goods had no market value, that plaintiff had paid for a portion of them in Mexican bonds, at sixty cents on the dollar, and that for the most part dealers in the kind of goods insured were furnished by the government at auction sales.
    HELD,
    1. The evidence leaving it doubtful whether the two hundred and thirteen thousand dollars, was proposed as the amount of “invoice, and five per cent.” and as such agreed to by the insurers, or was proposed to fix the valuation independent of what in fact was the amount of 11 invoice and five per cent.” but under the phrase in the application, “unless otherwise agreed,” the defendants had the right to have the question determined by the jury.
    3. Evidence as to the meaning of the words “invoice and five per cent.” according to the usage of underwriters, was admissible.
    8 The plaintiff might be asked if he did not intend the two hundred and thirteen thousand dollars to be what was stated in the application as “invoice cost and five per cent, added.” .

      a. It is relevant to defendant’s claim that the sum was fixed as invoice or first cost, and that it was intentional and tendered with other facts to show a fraud in the valuation.

      Present, Sedgwick, Yah Yoest and Speib, JJ.

      Decided December 9, 1874.
    4. It was proper, on cross-examination, to ask a witness, whose firm dealt in the kind of articles insured, and who sold to plaintiff a part of the goods insured, the following question: “Did you not, because you took bonds in payment, charge forty per cent, more for these goods than their cash value on that account ? ” a. It calls for the opinion of the witness as to cash value of the article.
    6. It was admissible to show the actual value of the Mexican bonds given in payment for some of the insured goods. a. This was an element in ascertaining the prime cost of such insured goods to the plaintiff.
    6. Questions put to the plaintiff on cross-examination, intended to draw from him his estimate of the value of Mexican bonds, were proper.

      a. His belief or opinion as to their value, was at least evidence of the quo animo he made the valuation at two hundred and thirteen thousand dollars, and was relevant to the issue of fraudulent valuation.
    7. It was error to require the plaintiff to put a whole book, written by plaintiff, in evidence, as a condition to permission to read from it all such parts as related to the value of Mexican bonds, in 1867, it not appearing that any other part of the book referred to anything relevant to the issue.
    8. The question as to fraudulent overvaluation in this case materially involved what the actual cost was to the plaintiff even upon the basis that the valuation was not upon invoice cost and five per cent., but upon a general agreement irrespective of that.
    9. It was competent to give evidence of the prices given at auction sales in the year 1867.
    10. The following question was properly overruled. “Would you have taken this risk at the amount of valuation at which it was taken, if you had known that that valuation was based in part on Mexican bonds.”

      a. It does not ask for the effect on the mind of what was said.

      Appeal from judgment entered for plaintiff, and from order denying motion for new trial.
    The complaint is, that, on August 30,1867, for good consideration, the defendant and others, associated in the business of marine insurance, under the name of the United States Lloyds, executed and delivered a policy of insurance, whereby they severally insured the plaintiff, on account of whom it might concern, in case of loss to be paid to him, to the amount of fifteen thousand dollars, on a voyage at and from New York to Vera Cruz, upon a cargo of military goods and merchandise, laden or to be laden on board the schooner Samuel J. Keese, which said cargo was in and by the said policy valued at two hundred and thirteen thousand dollars, in and by which said policy, the said associates of the United States Lloyds did state they had been paid for said insurance four hundred and fifty -dollars. The complaint further set out the risks insured against, and that the defendant was an underwriter, on said policy, for one hundred and ninety-four dollars and sixty-two cents; that the said vessel, while in the prosecution of said voyage, and the said cargo and merchandise laden upon her, about October 13, 1867, by a peril insured against, was totally wrecked and lost.
    The answer, among other things, averred that, before the issuance of said policy, in order to induce the defendant and his associates to consent, the plaintiff represented to them, among other things, that there was merchandise then on board, or to be taken on board the schooner, which was reasonably worth the sum of two hundred and thirteen thousand dollars; and the answer denies that the military or other goods contemplated by the said insurance, and referred to in the policy, were, at the time of the issuance thereof, or afterward, on board or laden on the said schooner; and further denies that the schooner, having on board the goods contemplated by and described in the policy,, or the said goods, was wrecked or lost.
    The answer further avers that it was pretended by the plaintiff that the said schooner, when she left New York, was loaded with a large and Valuable cargo of muskets, revolvers, sabers, knapsacks, accouterments, coal, batteries, ammunition, and other like goods, which were the property of the plaintiff, and had actually cost him over one hundred and ninety-four thousand dollars; that, in fact, the plaintiff was not the owner of said goods ; that the valuations were excessive and fictitious ; that the defendant made the above pretense, with others averred in the answer, with the intent that the cargo of the said schooner should be valued specially for the purpose of insurance, at an extravagant, unfair, and fictitious valuation, and that thereby a large sum, exceeding many times the actual market value of the goods, should be unfairly and fraudulently claimed and obtained from the defendant and his associates, and other underwriters. The an swer, among other things, demands that the policy of insurance may be decreed to have been fraudulently obtained by the plaintiff, and to be void ; and that the valuation may be duly reformed and corrected.
    The reply put in issue all the allegations of the answer tending to set up a Counter-claim, and, among other things, avers that the goods had actually cost him over one hundred and ninety-four thousand dollars ; that the same had-been in good faith and at that cost purchased-by him from Herman Boker & Co., B. F. Mullen, J. T. Ames, and others. The reply further alleges that the plaintiff also admits and asserts that, he paid for a portion of the said cargo in Mexican bonds, so called, at the rate of sixty per cent, of their par value, being their fair and reasonable value at the time.-

      The action was tried by jury. The verdict was for plaintiff.
    Certain exceptions were taken upon the trial. They and the evidence, to which they relate, appear in the opinion of the court.
    A motion was made for a new trial, upon affidavits.

      Treadwell Cleveland, attorney, and Joseph H. Choate, of counsel for appellant,
    among other things, urged;—I. By reference to the application for the insurance, it will be seen that it originally read: “Loss, if any, payable to him for $15,000 on military goods and merchandise, valued at invoice and 5 per cent., unless otherwise agreed.” The words “invoice and 5 per cent, unless otherwise agreed” were afterward stricken out, and the figures “$213,000” written above them. Concerning the making of the contract of insurance, “and its subsequent alteration,” the testimony of Mr. Cox, the attorney in fact of the defendant, and the person who accepted the risk, is to the effect that, on August 30, 1867, Mr. Tooker, the agent of Sturm, presented the application for insurance, reading, “invoice and 5 per cent, unless otherwise agreed upon,” and for twenty thousand dollars, and that it was then made binding in that form and in currency. That there was never any new contract between the defendant and the plaintiff, except that the amount of the insurance was reduced from twenty thousand dollars to fifteen thousand dollars; that subsequently Tooker came on to close the application, and gave those figures as the exact amount of the valuation. Tooker, plaintiff’s agent, says that when the two hundred and thirteen thousand dollars was written in, and the words “invoice and 5 per cent., unless otherwise agreed,” stricken out, he had an interview with Mr. Cox, and said he wanted to fix the permanent valuation. The following questions were asked and excluded, the defendant’s counsel excepting. To the plaintiff:
    Q. The two hundred and thirteen thousand dollars was intended by you, in the making of the insurance, to be what was first stated in these applications as invoice cost, was it not, and five per cent, added ?
    The court then said: “I shall hold, as matter of law, that this original application, which required invoice and five per cent., was subsequently changed to the valuation of $213,000 by the agreement of all the parties, and that this was a change which suppressed the original application.” To this ruling, defendant’s counsel excepted.
    Q. What difference did you intend, if any, between the invoice cost and five per cent., as it was first written in the application, and two hundred and thirteen thousand dollars, as it afterward appeared there ?
    It is submitted that the court was here clearly in error in holding, “as a matter of law,” what was the legal effect of the testimony of persons who had not yet been called as witnesses. And what good reason can be suggested why the defendant should not be allowed to show, by the plaintiff himself, that the change in the application was not, in reality, a change of substance, but only a change of correlative terms. That any misrepresentation, which is relied upon, of a material fact, whether made by mistake or design, renders void the contract of insurance, is too plain for argument or authority. The defendant alleges, in his answer, that there was this very misrepresentation, viz.: in the value of the cargo; and the application for the insurance having been put in evidence, it was proposed to show, by the plaintiff, that he first applied for insurance upon the cost of the cargo, and five per cent, added, and that the change to two hundred and thirteen thousand dollars was a representation that this cost and five per cent, was two hundred and thirteen thousand dollars. This is to the very substance of the issue on this point.
    II. These questions were asked Mr. Cox, and excluded, under exception:
    Q. Was there ever any agreement between you that the valuation should be at anything else than the invoice cost and five per cent ?
    Q. What is the usual course of business after the presentation of the application, and until the making out of the policy, in reference to any alteration of the application, or in reference to getting in the exact amount of the insurance, as first made ?
    Q. What, in the usage of underwriting, is the meaning of the term “invoice cost and five per cent, added?”
    Q. State what the usage among underwriters is, as to an application being first made in general terms, and a subsequent exact statement of the amount substituted?
    To Mr. Tooker:
    Q. What happened then ?
    A. I asked them to fix the permanent valuation. I said I wanted to fix the permanent valuation.
    Q. What figures did you give them ?
    A. Two hundred and thirteen thousand dollars.
    Q. Valuation of what?
    The court erred in excluding this evidence. Mr. Cox was the agent of the defendant in accepting the risk, and an expert in marine insurance. The contract had been made binding by him at “invoice and 5 per cent.,” a technical term in his business, the legal import of which is not fixed. The defendant was entitled to proof of the meaning of this technical phrase, and of its use among underwriters, and of its use at this occasion. By the ruling of the court this was prevented, and under a defense of fraud in the inception of the contract, the defendant was not allowed to show what positive representations were made to him ; and claiming that this was not a valued policy, he was prohibited from showing what the agreement was. Nor was he allowed to, prove false representations as to the cost of the property; or, in other words, to show that, instead of taking the risk, or say one-sixteenth of the subject-matter of insurance, he was taking the risk on one-half of it. Moreover, viewing the policy as a valued one, the defendant had the right to lay the foundation for the proof of overvaluation, and to show that “$213,000” was but a return of particulars of the “invoice and 5 per cent.” It is submitted that a valued policy is void if fraudulently made in any respect; and that the valuation is conclusive only in those cases where there is no fraud or imposition (Lewis v. Eagle Ins. Co., 10 Gray, 508; Clark v. Ocean Ins. Co., 16 Pick. 295).
    ' III. It will be convenient to classify the exceptions • to rejections of evidence offered by the defendant to prove gross fraud in the valuation of the goods, under three heads, (it). As to overvaluation of goods when sold for bonds. Under this head, the court excluded evidence designed to show that one of the vendors who sold a portion of the insured goods to plaintiff charged forty per cent, more than the cash value, because he took bonds in payment, also evidence designed to show that a vendor who had sold military goods to plaintiff, in 1867, took his pay in Mexican bonds, which bonds he sold in the market from eighteen to twenty-two cents on the dollar, having effected said sale before he fixed the price for the goods sold plaintiff. (5) As to the overvaluation of the bonds: Under this head the court excluded a line of questions as to the value of Mexican bonds, in 1866. Also excluded the following question put to the plaintiff. “Did you estimate a Mexican bond to be worth sixty cents on the dollar, at that time ? ” And also overruled an offer to read in evidence all such parts of a certain pamphlet written by plaintiff, as related to the value of Mexican bonds, in New York, in 1867, unless defendant’s counsel would put the whole book in evidence, ip) As to overvaluation of the goods, irrespective of whether they were paid for in cash or bonds. The witness Hartley was asked :
    Q. What was the average price brought for knapsacks at auction sales by the government in the city of New York during those periods of time? [1866 to 1868. ] Excluded.
    Q. Did knapsacks, at those sales to which I have referred, sell at the price of from five to thirty cents ? Excluded.
    Q. How about haversacks—what did they bring at those sales ? Excluded.
    Q. Did they bring as low as twelve cents? Excluded.
    It is submitted that the court erred in these various rulings. The question of a fictitious invoice or valuation being the issue, and more than half of this valuation consisting of goods purchased for bonds at sixty, the defendant offers to show, by the witness who sold the goods for bonds, that he charged forty per cent, more than the cash market value, on that account. Whether “invoice and five per cent.” be correlative in this case with two hundred and thirteen thousand dollars, the defendant has the right to attack the two hundred and thirteen thousand dollars on the ground of fraud, and what can be more material to the issue of fraud than the proof that half the valuation was increased forty per cent, over the cash market value? This evidence is equally admissible on the ground of gross overvaluation. It was one of the issues in this case, the value of these bonds ; the answer alleges twenty cents—the reply sixty cents. On what theory, then, was the defendant not allowed to ask the plaintiff at what he estimated a Mexican bond to be worth at that time, nor allowed to show by the plaintiff that these bonds were in reality not worth sixty cents, as he had sworn they were, but only ten to twenty cents ? Again, to prove by Sturm himself through means of his own published statements, that the valuation of two hundred and thirteen thousand dollars, one-half made up-of bonds, was false, and that he knew that it was false-at the time he gave it to the underwriter, was, on all reasonable or legal grounds, in the highest degree relevant and material; evidence on both these latter points would also have gone to the jury as impeaching; his credibility. The testimony of the broker Shreeve was clearly admissible to show the market value of the commodity exchanged for the goods. That there is no-regular market price for military goods, appears from the case. In this light, the question to Hartly, as to-the average price on auction sales, it is submitted is entirely competent.
    IV. Tooker, Sturm’s agent for effecting the insurance, swears that Sturm did.not disclose to him, nor-he to the defendant, that the valuation was in great measure based upon Mexican bonds. Mr. Cox, the attorney in fact of underwriter, was then asked this-question: “ Would you have taken this risk at the amount and valuation at which it was taken, if you had known that valuation was based in part on Mexican, bonds ? ” (Excluded under exception.) One of the defenses in this case was the withholding of material facts. Why was it not competent to show that had the-facts been disclosed, the risk would not have been underwritten ? That any concealment of a material fact is-sufficient to avoid the policy must be conceded. The facts of the invoice being based in large part on Mexican bonds, and failure to disclose this are also admitted. To show that this concealment had its effect upon the-underwriter was the best method of proving its materiality.
    V. Receipts for the cargo purporting to have been-signed by the mate were admitted, so far as they were evidence of the receipt of cases. Thev were objected to-as immaterial and as mere hearsay, and as no evidence against the defendant.

      Man & Parsons, attorneys, and John E. Parsons, of counsel for respondent,
    among other things, urged; —I. On September 18, 1867, the goods being then on board, and the “Keese” ready to sail, Mr. Tooker changed the application so as to read: “On military goods and merchandise, valued at $213,000and the policy was issued accordingly. The defendants called Mr. Tooker as a witness, and he stated that nothing was said at the time the valuation was changed. The defendant sought to show, by evidence of the intention of the parties, that, in either form, the valuation was designed to have the same legal effect; or, in other words, that the policy should read as if, instead of valuing the goods at two hundred and thirteen thousand dollars, it valued them at invoice and five per cent. This was properly excluded. (1) All that preceded the policy was merged in it. (2) The language-of the policy is perfectly clear: “ the said goods and merchandise hereby insured, are valued at $213,000.” Parol testimony was not admissible to vary or explain the contract. (3) The complaint alleged, and the answer admitted that the policy was a valued policy, and that the valuation was two hundred and thirteen thousand dollars, and not five per cent, over the invoiced cost. The defendant was permitted to prove everything that took place when the insurance was effected and what was excluded was evidence of intention, and of the usage of underwriters to vary the clearly-expressed terms of the policy. Usage is inadmissible for any such purpose, and especially the usage of a particular class not assumed or proved to be known generally, or to be known to the plaintiff.
    II. Many of the questions on the general subject of the value of Mexican bonds, the objections to which were sustained, were incompetent in form. The de- ' fendants were not prevented from proving the value of the goods. They did not propose to do this ; but, some ■of the goods having been purchased for Mexican bonds, to shift the issue to a contest over the value of such bonds. This was inadmissible. (1) The question was of the value of the goods; a fixed, determinate matter, ¡susceptible of exact proof. The defendants, in the end, were forced to examine witnesses upon the point, and so showed that there was no difficulty in proving what the value of the goods was. The jury found, on this testimony, that there was no fraudulent overvaluation. The value of the goods was neither more nor less, from the fact that some had been purchased for Mexican bonds, or that the sellers had taken such bonds at one price or another. It appeared that there was no market value for Mexican bonds ; and the object of the defend- ’ •ants was to prove specific transactions in such bonds, •with a view to create a false impression of the value of " the goods. Both. Judge Fbeedmar and Judge Jores, in the cases tried before them, held that, properly, the issue was the value of the goods; and that, whatever was such value, it was immaterial what was the value ■of the bonds for which some of such goods had been' purchased. (2) For this reason, the pamphlet of the' plaintiff was inadmissible. The ruling of the Court, iñ reference to this pamphlet, was, however, correct upon' other grounds. The defendants claimed the right to introduce only parts of it. The plaintiff assented that the whole should be received, the plaintiff thus having the right to read such portions as the court deemed material and' relevant; but this the defendants declined. (3) It appeared that there had been government sales of military goods prior to the purchase of those in ques-. tion ; and the defendants attempted to prove prices at such sales. Their own witnesses showed that the purchases at such sales were by a combination, or pool, formed to prevent competition ; and the rule is clear, that a party can not show value by evidence of specific transactions, but must do so by the testimony of experts on the subject.
    III. The charge of Judge Freedmaw was much moro favorable to the defendants than was their right. He directed the jury that the defendants were entitled to their verdict, if the jury came to the conclusion that the captain and mariners ought to have continued on board and endeavored to bring the “Keese” into port, and that they would have succeeded in doing so had they made the attempt; or, in other words, in accordance with the 23rd, 24th, and 25th requests of the defendants, that the plaintiff was not entitled to recover if the vessel was unnecessarily abandoned, or was lost in consequence of the negligence of the captain. The rule is just the reverse (See Draper v. Commercial Ins. Co., 4 Duer, 234, 239 ; and numerous other cases cited on the brief in the action against the Atlantic Insurance Company). The court was correct in declining to •charge the 30th of the defendants’ requests: that if the vessel and the goods were lost by the willful act of the master, and he was part owner, it was not a loss by barratry, nor by the perils of the sea, and that the plaintiff could not recover. This will scarcely be contended for by the appellants. Jones v. Nicholson (26 Eng. L. & Eq. 542), is a recent case establishing the rule to be just the reverse (See 1 Pars, on Mar. Ins. 571). The issue of fraudulent overvaluation was left, in a manner the most liberal to the defendants, to the jury; and their verdict conclusively exonerates the plaintiff from all imputation of unfair conduct.
    IY. The rulings of the court on the introduction of ■evidence were all correct. The receipts, and the bills of lading, were properly received in evidence, not as •establishing the truth of their contents, but as part of the testimony of the witnesses to show the number of cases received. They were a part of the transaction, and supplemented the testimony of the witnesses (Cole-v. Jessup, 10 N. Y. 96). They were also admissible as part of the proofs of loss, the court expressly limiting-their effect.
   By the Court.—Sedgwick, J.

The insurance in this case, was made by a valued policy. The policy contains the clause, “the said goods and merchandise-hereby insured are valued at two hundred and thirteen thousand dollars.”

The valuation of a policy is deemed to be the result of an agreement between the insurer and insured, which liquidates the amount of the indemnity, which the insured is entitled to have, in case of loss. This agreement may be invalidated by the insurer, if his assent be procured, by material misrepresentation, fraudulently made. It is unnecessary to determine on this appeal that it may be avoided by anything less.' The answer substantially avers that the insured acted fraudulently in procuring the valuation in the policy.

It appeared that the policy was issued upon an application made by the insured, through his broker, to-which the insurer had assented. By the terms of the-application, the insurance was to be “on military goods and merchandise, valued at invoice and five percent. unless otherwise agreed.” This clearly provided that at all events the policy was to be valued, but the-amount of the valuation was not specified. The amount, was either to be the subject of a future agreement, orín case such agreement was not made, the amount was^ to be “invoice and five per cent.”

After this application was made and agreed to, the-plaintiff instructed his broker to have the valuation-made at two hundred and thirteen thousand dollars.. The broker testified that he went to defendant’s attorneys and asked them “to fix the permanent valuation,”' :and gave the figures two hundred and thirteen thousand •dollars. It would appear that this was done for the purpose of having the policy immediately thereafter issued. The broker took the application, and making a line with the pen through the words “ invoice and five percent, unless otherwise agreed,” wrote above them “$213,000.” Nothing further was said according to a construction of the testimony most favorable to the plaintiff. The policy was then made out in its present form.

Without now adverting to considerations peculiar to •contracts of insurance, it appears to me a correct position, that the facts that have been stated, leave -doubtful whether the amount named as the proposed permanent valuation by the broker, was proposed as :the amount of ‘£ invoice and five per cent.,” and as such agreed to by the insured, or was proposed to fix the ■valuation independent of what in fact was the amount of “invoice and five per cent.,” but under the phrase of the application “ unless otherwise agreed.” In naming two hundred and thirteen thousand dollars the broker had acted as he was instructed by the plaintiff. In -these instructions the plaintiff had said nothing as to .the mode in which the valuation was to be made. The broker had said nothing on that subject in his interview with the witness. Apart from naming a sum as permanent valuation nothing was said which indicated that an agreement was about to be made independent of “ invoice and five per cent.” If the parties intended to insert the amount of “invoice and five per cent.” in the policy as the value, a sum for that purpose would have to be named, or at least it was appropriate and usual that it should be named. Therefore, the naming of the sum only, as the amount of permanent valuation, is not decisive evidence of the intention •of the parties. Although the broker struck out of the application “invoice and five per cent, unless otherwise agreed upon,” that was not done to make a néw and.' independent contract, but was under the application as. it was made at first. At any rate, this is not certain one way or the other, as a matter of law.

The defendant had a right to take the verdict of the jury as to which was the correct construction of the-evidence, and to urge that as matter of fact the naming of two hundred and thirteen thousand dollars was-under the provision that the value was to be “invoice- and five per cent.” and was a representation, therefore, that that amount was “invoice andfive per cent.”(Simar v. Canaday, 53 N. Y. 298). If this representation was-untrue to the knowledge of the plaintiff, and the defendant acted upon it, the valuation was not binding-upon the defendant.

It was necessary to inquire what did .“ invoice and. five per cent.” mean. Literally it means, after supplying the word price or cost as understood, the amount: stated as price or cost in the invoice of the goods, and would imply the existence of a paper properly called an invoice. The word is used, however, to denote-other meanings. As is often the case in the use of words, the word invoice is sometimes used to designate things of which it is the frequent accompaniment or-evidence. An invoice accompanies goods, and states price or cost. Consequently an invoice of goods sometimes means the goods themselves, and invoice price or-cost sometimes means the prime price or cost of goods, although there is no invoice in fact. On the trial, therefore, the defendant had a right to show in what particular manner those words were used in the business of underwriting (1 Greenl. Ev. § 292, and note 8). They were employed in a transaction between an insurer and an insurance broker. The defendant, on the trial, put. questions to the witnesses on the subject, for the purpose of proving, as was stated, that the words meant. among insurers first cost or prime cost, irrespective of the existence of an invoice.

If these views are sound, we are obliged to sustain two exceptions upon the trial taken by the appellants. The first was to overruling the question put by defendant’s counsel to the attorney of defendant in his insurance business. “State what, in the usage of underwriters, is the meaning of the term ‘ invoice cost and five per cent, added.’ ” The second was to overruling the question put by defendant’s counsel to the-plaintiff, when a witness. “ The $213,000 was intended by you, in the making of the insurance, to be what was first stated in their application as invoice cost, was it not, and five per cent, added ?” The plaintiff had instructed his broker to have the permanent valuation fixed at two hundred and thirteen thousand dollars. If the broker, although unwittingly, had that done as ' stating the invoice or prime cost, the plaintiff’s design or purpose to cause him to do it was relevant to the-claim made by the defendant: 1st, that the sum was fixed at invoice or first cost; 2nd, that this was intentional and tended with other facts to show a fraud in the valuation.

There were other exceptions, that relate to attempts on the trial, by the defendant, to give evidence as to fraudulent overvaluation. The subjects of insurance were military goods, so-called, viz.: muskets, sabres, knapsacks, haversacks, pistols, shot, ammunition and infantry accouterments. The plaintiff had procured, them in 1867. By the testimony these did not have a market value. Our government was the principal source of supply. It would seem that they were such as were on hand at the end of the rebellion. The business was not of a kind that led to general competition. Prices given or demanded, depended upon the circumstances peculiar to the single instances of the sales and. purchasers. In such case value is to be ascertained by reference to the probabilities of the case (Sedgw. on Dam. 5 ed., p. 310, note 1), founded upon proof of facts, which in the ordinary transaction, of business, would affect the mind of a dealer in similar articles, in determining a price to be asked or given. And if the opinion of a witness, familiar with the market, can be given as to market value, it should seem clear that a dealer in articles that have no market value, can give his opinion as to value. Hot only would the jury have 'the facts which they should consider in determining value, but the aid of a skilled person in combining the isolated facts and in applying them practically to the point of inquiry.

A witness whose firm dealt in the kind of articles insured, which firm had sold a part of the goods insured to the plaintiff, amounting to thirty-nine thousand dollars ■ of the valuation, was asked by defendants’ counsel on cross-examination, “Did you not, because you took bonds in payment, charge forty per cent, more for those goods than their cash value, on that account ? ’ ’ An ob - jection to this question was sustained. This in effect called for the opinion of the witness, as to what was the cash value of the articles. The tendency of the question to elicit this, was not lessened, because the question suggested that the reason for charging forty per cent, more was that payment was to be made in bonds. If the witness had answered yes, the rest was matter of figuring. On cross-examination, the form of the question was not objectionable. In the absence of a market value, the cash value as called for from the witness was competent on the question of values, and the inquiry as to value was relevant to the defense of overvaluation fraudulently procured.

One of the facts the jury may consider in estimating - the value of articles that have no market value, is the cost of it to the party claiming the value/ Where a party to an action has given a price for goods, it is in the nature of an admission by him, as to its value.

In Smith v. Griffith (3 Hill, 338), Nelson, Ch. J., said, “Though the price paid by the plaintiff was not conclusive upon him, as he might have been fortunate enough to buy under the fair market value, yet it was some evidence of that market value, and might well have been taken into the account with the other testimony.” Judge Co wen said, “ The plaintiff was a party to the price, and virtually conceded that the net value of the trees was no more than he gave. It should have been received as high evidence, that they were really worth no more in New York” (Wells v. Kelsey, 38 Barb. 242, approved on that point in 37 N. Y. 143). Even on the question of market value, much more in the absence of a market value, was the cost of the goods insured to the plaintiff, evidence against him, of value.

On the trial, it appeared from a statement made by the plaintiff, of the first cost, that of the total first cost one hundred and ninety-four thousand seven hundred and ninety dollars, a part—one hundred and five thousand one hundred and eighty-two dollars—had been bought for bonds at sixty cents on the dollar. Thus the cost to the plaintiff, was not any number of dollars, but a number of Mexican bonds. In order that the jury might make a use of this relevant fact, it was necessary that the value of these bonds should appear in testimony, in the currency of this country. In this way alone could they compare this species of evidence as to value with the valuation of the policy, to determine whether there had been a misrepresentation as to invoice cost, if the valuation was intended to be that, or a gross overvaluation, if the plantiffs position was correct, that the valuation was made independent of invoice cost. Gross overvaluation was properly to be weighed on the issue of fraudulent overvaluation.

The plaintiff, being a witness in his own behalf, was asked on cross-examination by defendant’s counsel,. “Did you estimate a Mexican bond to be worth sixty cents on the dollar at that time?” Other questions were asked, tending to draw from him what was his estimate of the value of Mexican bonds. These were objected to, and were overruled on the ground that they did not tend to show the market value of the insured merchandise. It had appeared that the Mexican bonds had no market value, and that the witness was an agent of the Mexican government, had dealt largely in the bonds, and was acquainted with the facts that determined the actual value of the bonds. The plaintiff’s statement of the cost being evidence against himself of value, his belief or opinion, as to the value of Mexican bonds, was at least evidence of the quo animo he made the valuation at two hundred and thirteen thousand dollars through his broker. It was relevant to the issue of fraudulent valuation. I therefore think that the exceptions to the ruling upon questions of this class must be sustained.

While the plaintiff was under cross-examination a pamphlet was shown to him by defendant’s counsel, entitled “The Republic of Mexico and its American Creditors,” by Herman Sturm. The defendant’s counsel offered to read in evidence all the parts of this book that related to the value of Mexican bonds in 1867. The plaintiff’s counsel stated he had no objection to the book coming in evidence, but objected to parts of it being put in, and the court excluded the evidence offered, unless the whole book was put in evidence. The subject of the value of the bonds, and the plaintiff’s estimate of that value, was, as we have seen, material. It did not appear, and there was no presumption, that the other parts of the book, not offered by defendant’s counsel, referred to anything relevant to the issue. The defendant’s counsel ■ therefore offered all of the book presumptively that properly could be admitted. In Rouse v. Whited (25 N. Y. 173), it was considered as undisputed that a party has not a right to prove all that he said at the same time or in the same conversation (the other side having given part of what he said), solely because the further or other statements were made at the same time or in the same conversation. The rule was approved that when part of a conversation has been given in evidence, any other or further part might be given, which would in any way explain or qualify the part first given (Garey v. Nicholson, 24 Wend. 353). If the defendant’s counsel had offered, what then appeared to be but a part of the declarations as to the value of the bonds, the plaintiff might have successfully objected that all that related to it should primarily be given in evidence ; but it was sought to force the defendant to offer in evidence, parts of the book, that did not appear to be relevant. I am of opinion, that the exceptions taken on this subject should be sustained. Of course, the times referred to should not be remote from the time of the transaction investigated.

Apparently, from the printed case, the plaintiff took the position that for the purpose of determining whether or not there had been a fraudulent overvaluation the value stated in the policy was to be compared with the market value. I think the testimony clearly showed there was no market value, so that the plaintiff’s position must be changed to a comparison with actual value at time of shipment. I think, however, that the comparison should be, between the value stated in the policy and what the plaintiff could in a proper case have recovered upon an open policy. It perhaps may not be an universal and absolute rule in this State that upon an open policy, the insured shall only recover the invoice cost or prime cost (which in Leroy v. United Ins. Co., 7 Johns. 343, are deemed to be equivalent), besides the proper expenses, but there seems to be no doubt that the invoice cost or prime cost is prima facie evidence of the market value or real value (Grahn v. Broom, 1 Johns. Cas. 120; Suydam v. Marine Ins. Co., 1 Johns. 181; Leroy v. United Ins. Co., 7 Id. 343; 1 Pars. Mar. Ins. 246, 247, 248, and notes). For this reason, the question made upon the trial as to fraudulent overvaluation, materially involved what the actual cost was to the plaintiff, even upon the basis that the valuation was not upon invoice cost and five per cent., but upon a general agreement irrespective of that.

Upon the general proof that, for the most part, the dealers in the kind of goods insured were furnished by the government at auction sales, I think it was competent to show what prices were given at those auction sales for goods of the same character as those insured, and for this purpose to designate them by the names given to them in the evidence from plaintiff or in his statement to the insurance companies. The “average prices ” were asked for. A particular objection would have required that this form be changed to inquire for the details of the prices. The defendant called for the average prices during the years from 1866 to 1868. I think he was properly limited to the year 1867, in which the sales to plaintiff were made. If there were any special reasons that justified the defendant in asking as to the years 1866 and 1868, they should have been shown in the first place.

The defendant’s counsel asked of defendant’s agent in making the insurance, “Would you have taken this risk, at the amount and valuation at which it was taken, if you had known that valuation was based in part on Mexican bonds ?” This would have called out a reflection of the witness upon a supposed state of facts. It did not ask for the actual effect on his mind of what was said by plaintiff ’ s broker. It was properly overruled (Newell v. Doty, 33 N. Y. 83).

The receipts for the cargo by the mate, were allow ed in evidence by the court, who limited their effect to tending to prove the fact of shipment of somethirg, but not of what was shipped. There was in this nothing that may be successfully excepted to by the defendant.

For the reasons stated, I am of opinion that the judgment should be reversed, and a new trial granted, with costs to the appellant to abide the event. And also, that the motion for a new trial made upon the minutes of the judge, should have been granted, and that the order denying that motion should be reversed, with costs to appellant to abide the event.

Van Vorst and Speir, JJ., concurred.


author: By the Court.—Speir, J.

text:
    HERMAN FUNKE and others, Plaintiffs and Respondents, v. THE ORIENT MUTUAL INSURANCE COMPANY, impleaded, Appellant and Defendant.
    I. CONTRACT.—ALTERNATIVE.—QUESTION AS TO UNDER WHICH CLAUSE CERTAIN ACTS WERE DONE.
    1. Evidence, what is admissible.

      a. When at the time the act was done by one of the parties, and. permitted to be done and accepted by the other, nothing was said as to under which alternative the act was done, the party permitting and accepting the act, may testify as to the object of the act.

      Before Sedgwick, Van Voest and Speir, JJ.

      Decided December 9, 1874.
    (This case also holds some of the points decided in the case of Sturm c. Atlantic Mutual Ins. Go. {ante, 281), and Sturm v. Williams {ante, 825), which points are indicated in the headnotes to these cases by a double **)
    An appeal from a' judgment entered for the plaintiffs against the defendants, The Orient Mutual Insurance Company, December 27, 1870, for eighteen thousand one hundred and forty-two dollars and thirty-six cents, upon a verdict and from an order denying a motion for a new trial.
    This action was brought for an alleged marine loss upon a policy of the Orient Mutual Insurance Company, issued on September 5, 1867, to the defendant, Herman Sturm, at and from New York to Vera Crhz, upon all kinds of lawful goods and merchandise, specifying military goods, and merchandise free of claim for particular average, but liable for a total loss of a part, if amounting to five per cent., valued at two hundred and thirteen thousand dollars, laden, or to be laden- on board the schooner u Samuel T. KeeseV
    The Keese left the city of New York on September 18, 1867, with a cargo of military goods and merchandise, and on October 13, following, was lost in the Gulf of Mexico.
    The case was tried by a court and jury. The exceptions taken at the trial, and the evidence to which they relate, so far as deemed necessary to be considered, appear in the opinion.

      Samuel E. Lyon and Alex. Hamilton, Jr., of counsel for appellant,
    among other things, urgedI. The defendants were entitled to the evidence excluded, and the learned judge erred in excluding it. The offer was to show by an expert in marine insurance the technical meaning of the words “invoice and five per cent.” when inserted in a marine policy, and that when these words were changed to a new sum upon the application of the insured, such given sum, by the usage aud understanding of underwriters, represented the cost price of the goods with five per cent, added. It will be convenient under this point to present the several questions involved in this exception. (1) The rejection of this ■evidence shut out proof of a false representation in a material part of the contract, to wit: as to the cost of the property upon which the risk was asked, which proof the defendant was entitled to introduce (2 Pars. Maritime Law, 153, 283; Hodgson v. Marine Ins. Co. of Alexandria, 5 Cranch, 113 ; Kane v. Com. Ins. Co., 8 Johns. 181; Whitney v. American Ins. Co., 3 Cow. 219; Par. Mar. Ins. (3 Phillips ed.) 255; Leroy v. Un. Ins. Co., 7 Johns. 354 ; Haven v. Gray, 12 Mass. 76; Hamilton v. Mendes, 2 Burr. 1213 ; 15 B. Monr. L. & E. 9 ; Clark v. Ocean Ins. Co., 16 Pick. 295 ; Walcot v. Eagle Ins. Co., 4 Pick. 436 ; Gardner v. Columbia Ins. Co., 2 Craneh Cir. Ct., 550; Hersey v. Merrimack Co. Mutual Fire Ins. Co., 7 Foster (N. H.) 155; Ocean Ins. Co. v. Field, 2 Story Cir. Ct. 77; Pars. on Mar. L. 153, 283, 274 ; Molus v. Hayworth, 10 M. & W. 155; Tatten v. Wade, 18 C. B. 371; Sibbald v. Hill, 2 Dow. P. C. 263, 5 Hill, 191). (2) Indeterminate words may be properly explained and limited by parol evidence (1 Duer on Ins. 170, 175; Sleight v. Hartshorne, 2 Johns. 531; Hone v. Mutual Ins. Co., 1 Sandf. 150).

      Charles M. Da Costa, of counsel for respondent,
    among other things, urged ;—I. The difference between an open policy and a valued policy, in point of effect, is that, in case of loss under the former, the assured ■must prove the actual value of the subject of insurance; ■but under a valued policy he need never do so, the valuation in the policy being conclusive between' the-parties, except in case of fraud, and the burden of establishing the fraud rests on the insurer (1 Arn. Mar. Ins., ed. 1872, § 285 ; 2 Phil. Ins., Id. 1182-83, 1187; Whitney v. American Ins. Co., 3 Cow. 210; and this case was unanimously affirmed by the Court of Errors, in 5 Cow. 712 ; Pleasants v. Maryland Ins. Co., 8 Cranch, 56 ; Gardiner v. Columbia Ins. Co., 2 Cranch, C. Ct. 473; Alsop v. Commercial Ins. Co., 1 Sumn. 451; Coolidge v. Gloucester Ins. Co., 15 Mass. 341; Shaw v. Felton, 2 East, 109; Barker v. Janson, Law Rep. 3 Com. Pleas, 303 ; North of England Ins. Asso. v. Armstrong, Law Rep. 5 Q. B. 244; Irvine v. Manning, 1 H. of L. Cas. 287). Overvaluation is, at best, only a circumstance from which a jury may infer fraud. It is not fraud in itself; and it is the peculiar province-of the jury to determine such question (Cases supra; 1 Pars. Mar. Ins. 262 ; Clark v. Ocean M. I. Co., 16 Pick. 289; Robinson v. Manufacturers’ Ins. Co., 1 Metc. 146). So, too, on a valued policy of profits, as profits, the assured need never prove that profits would have resulted; the law presuming that, had the goods-arrived safely, and where intended, the insured would, have made the profits, and then the policy comes in. and determines the amount of those profits (1 Pars. Mar. Ins. 281; Patapsco Ins. Co. v. Coulter, 3 Pet. 222). The assured, moreover is not obliged to insure-the profits, qua profits, but may cover the same by a valuation of his "goods (Pars. Mar. Ins. 258; Holbrook v. Brown, 2 Mass. 280).
    II. As to the exceptions to the admission or rejection of evidence. (1) The offer to prove, by the witness on the stand, the price at which he had sold certain muskets to Gen. Sturm,—ilnot the muskets included in this action, ’ ’—was properly overruled. Such proof was clearly irrelevant to any possible issue-in this case. (2) It was improper to attempt to cross-examine the witness as to the contents of a paper not yet in evidence,—especially a paper produced by the cross-examining counsel (See 50 N. Y. 423-24; 49 Id. 577-81; Bellinger v. People, 8 Wend. 595-98; 1 Greenl. on Ev. §§ 463-65). (3; The various offers to prove, by witnesses, either the value of Mexican bonds, or the amount of bonds they took in exchange for the sale of military goods and ammunitions, or the alleged written declaration of Gen. Sturm with reference to the value of such bonds, were properly rejected, for it was but an attempt to prove the value of a certain commodity which parties were willing to take in exchange for other commodities. That is no way to establish market value. Market value is ascertainable and provable in an entirely different way. The error in the attempt so to prove it is apparent, because, in the taking of such exchanged commodities, there of necessity enter elements unknown to the law in the determination of an actual market value, to wit: the judgment, information, or speculative turn of mind of the person who receives such exchanged commodities. It must be remembered, too, that for the consigned goods, which are the ones specially involved in the case at bar, no bonds of any kind were given, nor for such other goods as appear, by the list introduced in evidence by the defendants, to have been paid for in cash; and those goods which appear to have been paid for in bonds, were on the list as furnished by Gen. Sturm to the Atlantic Insurance Company, and by the present defendant introduced in evidence, stated to be paid for in such bonds, at sixty cents on the dollar, a fact nowhere contradicted and impeached, and a rate fixed by the Mexican government itself. (4) The exception to the rejection of the auction sales was not well taken, {a) The time alluded to is too indefinite. It referred to any time in the year 1867. (5) It did not suggest that the alleged government sale had taken place in the of Mew York, ■(c) What the government sells property for is no criterion of its fair market value,—the more especially as it appeared, by both the defendants’ and plaintiff’s witnesses, that such sales were always at auction, and in very, very large quantities, (d) Nor did it appear that the knapsacks inquired about were of the same ■quality as the knapsacks in question. (5) Whatever the policy as originally issued may have contained, it was subsequently, on September 23, by consent of parties, changed to “valued at $213,000.” It certainly ■can not require any evidence to show what the expression in the policy, “the said goods and merchandise hereby insured are valued at $213,000,” means.. It is respectfully submitted that it would be very difficult to cite any principle of law, or any authority which would uphold an offer of proof as to what such words meant. Such proof was also offered on the ground of the alleged usage of the underwriters. Usage, however, is never admissible, unless it be known to both parties; and the offer only was that such usage was well known to the insurance companies, and not' to persons seeking insurance. But irrespective of that, usage, though admissible to explain what is doubtful, is never admissible to contradict what is plain (The Reeside, 2 Sumn. 569; Blackett v. Royal Exch. Ins. Co., 2 Crompt. & Jerv. 244; 1 Smith Lead. Cas. (6 Am. Ed.), 677, 680, et seq.).

   By the Court.—Speir, J.

The company sets up in the answer that Herman Sturm, at the time he applied for the policy, made representations as to the value and character of the cargo, which were false and fraudulent, to induce the company to make the insurance, and that the policy was issued by it on the strength of such representations. That the valuation of said goods made by Sturm or his agents were ficti-, ■tious and .excessive, and that the. representations as to the prices paid by him for said goods, referred to pretended sales at nominally fictitious and illusory prices.

Other questions raised by the pleadings were discussed at length on the argument which I do not propose to examine, as I am forced to the conclusion that the question whether the company is entitled to a new trial, must turn upon the averments of fraudulent representations, in the inception of the contract in making false statements as to the character and value of the cargo. That issue was directly presented to the court and becomes the primary and most important subject of investigation, lying at the foundation of the plaintiff’s right to recover under his contract of insurance. The application as presented and accepted was made on August 30, 1867, by Johnson & Higgins, as agents of Herman Sturm, on account of whom it may concern ; loss, if any, payable to him, for fifteen thousand dollars, on military goods and merchandise “ valued at invoice and 5 per cent., unless otherwise agreed.” The application was accepted and the policy was made out and dated on September 5, 1867. Subsequently on September 23, upon the request of Sturm’s agent and with the assent of the company the words in the policy “ Invoice and>jive per cent, unless otherwise agreed ’ ’ which then stood in the application were erased, and instead thereof the words and figures 11 at $213,000” inserted, so that the application after such erasure and interlineation read “valued at $213,000 ” instead of * ‘ valued at invoice and 5 per cent, unless -otherwise agreed.”

The Orient Mutual Insurance Company then proceeded to show the purpose of making this alteration. The vice-president whose signature was attached to the application stated on his examination “ That the basis on which he took the original contract as to value was invoice and five per cent.,” and “ That the policy was made out as the application read originally, that is '■Invoice and 5 per cent? and that was subsequently-altered so as to ascertain what this invoice and 5 percent. meant in money.”

Thus far it does not appear that any objection was; made to this testimony, and I think it was proper. It is a statement of object of the change made in the-application and in the policy, and the character of the-contract entered into by the company. If the insurer-permitted the alteration to be made in the policy as-fixing the value of the invoice with the five per cent, added in money, and believed and understood that it was what Sturm’s agent asked for, and if the plaintiff’s-agent intended to effect a change in the contract under the phrase “unless otherwise agreed,” and meant that the sum of two hundred and thirteen thousand dollars was the absolute value irrespective of invoice price, it seems to me an important question is presented which should be determined by the jury. A valued policy is defined to be “the agreed estimate and valuation which the parties have agreed upon as the value of the property.” As the case then stood at the trial, the estimate and valuation of the property to be insured had not been agreed upon by the parties, and the contract can not be enforced unless the minds of both have assented to its terms.

After the question “what is the meaning of the words invoice and jive per cent, as understood by underwriters,” had been ruled out by the court; the attention of the witness was recalled to the original application and, to the policy by the counsel who offered to show “that the phrase Invoice and five per cent.” was but the general expression for the sum in figures, subsequently ascertained and presented by the assured, was a mere alternative expression to fix the amount of the words invoice and five per cent., and ascertain the exact amount, and the words “invoice and five per cent, in the true meaning as used in the policy, refer to the actual cash value or cost price of the property in the port of New York.” This offer was rejected. Nor was the defendant permitted to show either what the words Invoice and five per cent.” meant in the application and policy by the universal custom of underwriters, experts and dealers in marine insurance, or that the figures two hundred and thirteen thousand dollars inserted in the policy on September 23,1867, were but the alternative and equivalent of the words “ Invoice and five per cent ,” thus making •definite and exact the same amount as indicated by invoice and five per cent.

To determine the propriety of this line of examination and the right of the defendant to the information •called for, reference should be had, I think, to the context of the subject-matter then before the court, and the circumstances under which the phrase was used. Nothing had taken place between the parties relating to the insurance applied for during the interval of about two weeks when the application was made and accepted on the basis claimed in it, up to the time the alteration relating to the value of the property was effected. Nor does it appear that any words passed between them on the subject, except the request and the assent. The policy had remained in the possession of the ■company executed and ready for delivery. The issue of a fraudulent representation of value in the inception of the contract, was directly presented to the court by the company for judicial examination, and the evidence ■offered unerringly pointed to it, and the question is, •could the court take from the jury the right to determine that issue. The officer acting for the company had accepted the terms proposed, and in confidence relying upon the risk taken under his already executed policy for goods valued at invoice and five per cent, might very well be thrown off his guard by the unexpected substitution of a gross sum in place of a. valuation at invoice at five per cent. The circumstances may have had a direct tendency to entrap the-company into an unfortunate snare, laid for the unsuspecting underwriter when the application was first-made, to him. I say this may have been the fact. The rejection' of this proof closed the door against the-admission, on the part of the defendants, of evidence of a false representation as to the cost of the property upon which the risk was asked. It was claimed by the-plaintiff, and the court ruled that the change was not made for the purpose stated by the witness-who acted for the company, but was a valuation in. dependent and under the clause “unless otherwise-agreed.”

What then, in this connection, did the phrase. “ Invoice and five per cent.” mean ? The authorities, I. think, give a meaning to the word invoice, taken almost literally from its derivative origin. Thence the ■ value of the goods named in the invoice is the prime cost of the property at the port of shipment, and in commerce it is a written statement of merchandise-shipped or sent to a purchaser, consignee, factor, &c., with the prices or charges annexed. The word is also-often used among business men as the sum at which, the holder of goods estimates them to be worth to him,, including therein the original cost, advances in such original cost and charges. If the prime cost was what was understood, then the words “invoice and five percent.” would mean that the sum of two hundred and. thirteen thousand dollars was the amount of that prime-cost with five per cent, added. It would then be a. representation that the prime cost with five per cent, added was two hundred and thirteen thousand dollars, and the company could show that it was a fraudulent representation of the price and that they could. only be liable for the actual cost of the goods, and five per cent, added to cover charges, freight, &c.

The defendants, therefore, had the right to show the-import of the phrase among underwriters, experts and dealers in marine insurance. The witness was shown to be an expert in marine insurance of long standing and in good repute. The phrase was used in a transaction between an insurer and the plaintiff’s agent, who made it his business to procure insurance for others.

The principle of admitting parol evidence in exposition of that which is written is that the court may be placed in regard to the surrounding circumstances as nearly as possible in the situation of the party whose written language is to be interpreted. The question is, what did the person thus circumstanced mean by the-language he has employed (1 Greenl. on Ev. § 295, a). In 1 Duer on Ins. 170, it is said “Upon an attentive examination of the cases in relation to other contracts as. well as that of insurance, we shall see no reason to doubt the truth that all indeterminate words in a policy for the same reason as the words ‘a,t’ and ‘freight’ may be properly explained and limited by parol evidence, when the nature of the evidence is to designate-with certainty the subject to which the parties intended to refer.”

The consideration of the question of false representation as to the value of the cargo so directly raised by the testimony before admitted without objection “that the alteration was made to ascertain what this invoice and five per cent, meant in money,” was wholly withdrawn from the jury, without ascertaining whether that testimony was true or false.

The plaintiff’s claim that neither in the application or policy as originally made, was there any representation that the amount insured was invoice and five per cent. ; that in both the cargo was valued at invoice and five per cent, and that, therefore, there was in both a valuation of the property insured, but no representation of the amount. I am unable to see that this statement admitting its truth solves the difficulty, or presents an answer to the objection. Admitting that the cargo was valued at invoice and five per cent., the defendants’ position is that when the plaintiff fixes that value at •two hundred and thirteen thousand dollars, the amount is grossly overvalued, and that he can show the fraudulent representation by proving that the prime cost of the invoice with the five per cent, added, does not amount to more than twenty thousand dollars as set up in his answer. The objection tersely expressed is that fertile purpose of proving fraud, the ruling of the court .shuts the defense off from showing the amount of those .overcharges in the invoice which was the true measure .of the risk taken by the defendant, and not a valuation •independent of that measure. In what other way can the question of fraudulent representation be raised. •The facts proposed to be proven in this case, as will hereafter be seen, if admitted, would go to the jury, and it belongs to them to say whether they are sufficient to ..establish the defendants’ allegation of fraud or overvaluation, or not.

Had the plaintiff, in the first instance, applied for ■an insurance upon an agreed sum, and the policy had been strictly a “ valued policy,” I think the evidence should have been admitted. It will not be denied that in a valued policy a gross overvaluation of the property sought to be insured, could be shown by the defendants. To lay the foundation of this proof, they were entitled to show that the first representation was not modified by the second, but in effect made more explicit and definite, viz.: That by the change of ¡expressions, the representation was specific as to the ,cost of the goods with five per cent, added, and that the ¡same was actually two hundred and thirteen thousand dollars. Judge Parsons says; “In a valued policy, the agreed valuation is final and conclusive upon both, parties, subject to certain rules and principles, among those if made fraudulent in any respect, and that though an overvaluation is not of itself necessarily proof of fraud, yet if gross and excessive, fraud may be inferred.” The defendants, therefore, were entitled to the evidence to show that by the usage or understanding of underwriters, the insertion of the sum of two hundred and thirteen thousand dollars in the policy in the place of “invoice and five per cent,” was a repetition of the original representations that the risk applied for was upon the cost of the property, bringing it within the principle that a valued policy is void if it is made fraudulently in any respect. In Lewis v. Rucker (2 Bur. 1171,) Lord Mansfield lays down, I think, the true principles on this subject. “The only effect of the valuation is fixing the amout of the prime cost, just as if the parties admitted it at the trial, but in every argument, and for every purpose it must be taken that the value was fixed in such a manner as that the insured meant only to have an indemnity. If it be undervalued, the merchant himself stands insurer for the surplus. If it be much overvalued, it must be done with a bad view ; with some view to a fraudulent loss” (Forbes v. Aspinwall, 13 East, 1811; Wolcott v. Eagle Ins. Co., 4 Pick. 431). These cases go to the point that the valuation in a policy is to fix by agreement between the parties an estimate upon the subject insured, •and to supersede the necessity of proving the actual value by specifying a sum as the amount of that value, and that in fixing the amount of that sum, if the assured keep fairly within the principle of insurance, which is merely to obtain an indemnity, he will never go beyond the first cost in the case of goods, adding thereto only the premium and commission. The summing up of the whole very clear and able opinion of Mr. Justice Thompson, in Le Roy v. United States Insurance Co. (7 Johns., 343), is to the effect that when the representation is made upon the basis of cost, then the party is entitled to show in all cases what the actual cost was. He sáys “ this rule affords not only an equitable but a certain rule not influenced by the fluctuations of value which subsequent circumstances may produce. The invoice price as here understood, is evidently the prime cost, this being a fixed and certain criterion which is the reason assigned for the rule.”

If the foregoing views, relating to the peculiar circumstances under which this contract of insurance was made by the parties, be sound, it becomes important to examine some of the exceptions taken to the rulings on the trial, as the evidence offered was intended to show fraudulent overvaluation.

The plaintiff procured, in 1867, muskets, sabres, knapsacks, haversacks, pistols, shot, ammunition, and, infantry accoutrements, which were insured by him, and are set forth in the statement of cost of cargo of schooner “Samuel T. Keese,” in the case. These goods were in the possession of our government at the end of the civil war, and the government was glad to dispose of them to purchasers who desired this peculiar kind of goods. The character of the articles was such as to invite but little competition. It is quite evident from the case, that these military goods are exceptional, in not having any regular market value. Demand and prices are subject to the fluctuations always attending the peaceful or warlike condition of the country. The inquiry did not relate to single sales, but to average prices at auction sales, about the time the property was purchased. It will not be contended that, because there was no market value for those articles, the defendant should not be permitted to give the best evidence of value he could ; otherwise it wquld be impossible to interpose the defense of a fraudulent representation of value. The offer to show that the actual cost of these goods was different and less, and in some instances less by one-third than the prices charged in the “statement of cost” presented on the trial, was ruled out by the court. Nor was the defendant allowed to prove what was actually paid for a portion of the goods, or what goods of this description were actually selling for in the open market.

The question, “How much beyond their cash value did you charge, because you received bonds in payment at sixty cents on the dollar?” was objected to and sustained. The subject inquired about was a part of the invoice of the goods insured, and a part of those which were entered in a “statement of cost of cargo of schooner Samuel T. Keese” put in evidence. The object obviously sought was, to discover how much beyond the cash value the witness charged for the articles in the invoice sold by him to Sturm, in consideration of his receiving bonds in payment, at sixty cents on the dollar. The importance to the defendant, of this evidence, will appear by the item of ten thousand knapsacks, which the witness had sold Sturm on September 13, at three dollars and ten cents, for bonds at sixty cents,—carried out, thirty one thousand dollars. The plaintiff, Fuhke, testified that he sold Sturm ten thousand knapsacks on September 13, 1867, and they are charged, in the statement of cost, at three dollars and ten cents,—bonds at sixty cents,—thirty-one thousand dollars. The witness was asked: “What price did you receive for them?” This was not allowed. The offer was then made, as evidence of value, to prove that the witness paid for these knapsacks eighteen and three-quarter cents apiece, and not permitted. The witness, Sturm, had testified what this statement was. “It is a statement,” he says, “of the cargo of the Samuel T. Keese, and its cost to me, furnished by me to Mr. Hand, I believe, for the insurance company.” He further says that the statement contains a list of goods purchased by him for the bonds of the Republic of Mexico, and they were taken by him at the rate of sixty cents on the dollar. The witness, Sturm, was the alleged owner of the cargo of the Keese, which he had represented to the underwriters to have cost two hundred and thirteen thousand dollars. He had testified, on the trial, that the actual cost of the cargo, as stated by him in his affidavit annexed to the statement of cost, was one hundred and ninety-four thousand dollars; and of this sum, over sixty per cenb had been purchased with Mexican bonds, at sixty cents on the dollar. The defendant offered to show, by Sturm himself, that this statement was fraudulent; and also, as impeaching his credit with the jury, that he had made public representations, at and prior to the time when he bought these goods, that the bonds were not only not worth sixty cents on the dollar, but had hardly any money value; that, under instructions from the Mexican government, he had to sell them at the nominal sum of sixty cents; and that he had published this in a pamphlet, and distributed the publication. This was not permitted.

The offer was also made to show by the witness Hartley, that in 1867, he sold military goods to Sturm, for Mexican bonds, which bonds he sold in the market at from eighteen to twenty-two cents on the dollar, having effected such sale before he established the price at which he sold the goods to General Sturm, and he also offered to show that the witness sold the Mexican bonds which he received from Sturm, in exchange for goods, at between eighteen and twenty-two cents on the dollar, in 1867, all of which wa,s not permitted. In 3 Phillips on Evidence, it is said “ In valued policies, if the loss bé total, the assured must only prove that his interest is not merely colorable. But where the property is greatly overvalued, the insurance will be wholly void.” If the overvaluation be bona fide and innocent, the policy is good, if fraudulent, it is void.”

Applying the principles last cited in Phillips, it appearing that a chief part of the “invoice,” which the author speaks of as “prime cost,” is composed of goods not purchased for cash, but for something else stated at the time at four times its market value, does it not become pertinent and material evidence on the ground of gross overvaluation, leaving out of view in this connection the question of false representation % If then the evidence was material and competent, at least the question, whether the property was greatly overvalued, should have been left to the jury. I think the judgment should be reversed, and a new trial granted, with costs to the appellant, to abide the event.

It will follow from the conclusions we have announced that the motion for a new trial on the minutes should have been granted, and the order that was made, is reversed with costs, to appellant, to abide event.

Sedgwick and Van Yorst, JJ., concurred.


text:
    WILLIAM J. STEWART and Others, Plaintiffs and Respondents, v. SARAH JAMES, Impleaded, &c., Defendant and Appellant.
    Before Sedgwick and Speie, JJ.

      Decided December 9, 1874.
    I. Supplemental complaint to continue an action by ob against THE SUCCESSOBS IN INTEREST OF A DECEASED PARTY.
    1. Such complaint can not be served without have of the court first obtained, upon proper notice to the opposite party.

      a. Special term decision {ante, p. 56), reversed.
    2. A motion to set aside such a complaint so served, is proper, and should be granted.
    Appeal from order denying a motion to set aside a supplemental complaint.
    Two of the original plaintiffs died after the action was begun. A year elapsed from their death. A supplemental complaint alleging such death, and that others named therein had succeeded to the interests of the deceased plaintiffs, was, without leave of the court first obtained therefor, served upon the defendants for the purpose of reviving the action in the .name of such successors in interest.
    The defendant James thereupon made a motion that the supplemental complaint be set aside for “irregularity, in this, that no order of the court has ever been made or served allowing the same, and also upon the merits, or for such other order or relief as the court shall deem just.”
    This motion was denied, and the present appeal is taken from the order denying the motion.

      Mr. J. L. Egbert, of counsel for appellants.

      Mr. A. R. Dyett, of counsel for respondents.
   By the Court.—Sedgwick, J.

The substance of the question before us is whether, under section 121 of the Code, an action can be revived, on a supplemental complaint, without leave of the court first obtained. As an original question, we would agree with the learned judge who decided, below, that it might. We think, however, that Beach v. Reynolds (53 N. Y. 1), requires us to come to another conclusion. The court of appeals, in the first proposition announced by it, implies, if it does not explicitly say, that an application to the court is necessary, under section 121, in all cases where the representatives of a deceased party desire to continue the action. That court further affirms the order, for the reasons assigned by Judge Talcott. That learned judge, apart from his general reasoning, specifies that it was the intention of the Code to put the supplemental complaint of section 121 in the same category with the supplemental complaint of the Code especially provided for in section 177, and- that the former could not be filed without a motion asking leave to do so.

The respondents ask that, if the court come to the -conclusion already indicated, they have, by a modification of the order appealed from, leave to file, nunc pro tunc, an order allowing them to file a supplemental complaint. This would not be proper, for the reason that, as yet, the defendant has had no opportunity of setting before the court the facts on which she may rely to convince the court that its discretion should not be exercised in favor of allowing a supplemental complaint to be served.

The order appealed from should be reversed, with •costs.

Speir, J., concurred.