CAPRON v. VAN NOORDEN.

Cited— 8 Pet. 116; 16 How. 340; 19 How. 403, 566, 567; Id. 430, '518; Id. 473 ; 6 How. 39; 4 Biss. 136; 7 Blatchf . 441 ; 1 Abb. U. S. 579 ; Hemp. 434 ; 1 Woods 639 ; 4 Wash. 483; 1 Wood. & M. 406; 3 Wood. & M. 80 ; 1 Sawy. 156. See Ante page 9.

A plaintiff may assign for error the want of juris¬ diction in that court to which he has chosen to re¬ sort.

A party may take advantage of an error in his fa¬ vor, if it be an error of the court.

The courts of the United States have not jurisdic¬ tion unless the record shows that the parties are citizens of different states, or that oneis an alien, &c.

HEAD & AMORY

v. '

THE PROVIDENCE INSURANCE COM¬ PANY.

ERROR to the circuit court of North Caro¬ lina. The proceedings stated Van Noorden to be late of Pitt county, but did not allege Capron, the plaintiff, to be an alien, nor a citi¬ zen of any state, nor the place of his residence.

Upon the general issue, in an action of trespass on the case, a verdict was found for the defend¬ ant, Van Noorden, upon which judgment was rendered.

The writ of error was sued out by Capron, the plaintiff below, who assigned for error, among other things, first, “that the circuit court aforesaid is a court of limited jurisdiction, and that by the record aforesaid it doth not appear, as it ought to have done, that either the said George Capron, or the said Hadrianus Van Noorden, was an alien at the time of the commencement of said suit, or at any other time, or that one of the said parties was at that or any other time, a citizen of the state of North Carolina where the suit was brought, and the other a citizen of another state ; or that they the said George and Hadrianus were, for any cause whatever, per¬ sons within the jurisdiction of the said court, and capable of suing and being sued there.” 127] And, secondly, “ that by the record aforesaid it manifestly appeareth that the said circuit court had not any jurisdiction of the cause aforesaid, nor ought to have held plea thereof or given judgment therein, but ought to have dismissed the same, whereas the said court hath proceeded to final judgment therein.”

Harper, for the plaintiff in error, stated the only question to be whether the plaintiff had a right to assign for error the want of jurisdic¬ tion in that court to which he had chosen to re¬ sort.

It is true, as a general rule, that a man cannot reverse a judgment for error in process or delay, unless he can show that the error was to his dis¬ advantage; but it is also a rule, that he may reverse a judgment for an error of the court, even though it be for his advantage. As if a verdict be found for the debt, damages, and costs, and the judgment be only for the debt

Cranch 2.

If the Insured make a proposition to the under¬ writers to cancel the policy, which proposition is rejected; if the underwriters afterwards assent to the proposition, but before information of such assent reaches the insured, they have notice of the loss of the vessel insured, such proposition and assent do not in law amount to an agreement to cancel the policy.

A corporate body can act only in the manner prescribed by the act of incorporation which gives it existence. It is the mere creature of law, and derives all its powers from the act of incorporation.

THIS was an action on the case brought by the plaintiffs in error, upon two policies of insurance, in the circuit court of the first cir¬ cuit, holden at Providence, in the district of Rhode Island,1 in which action judgment was rendered at April term, 1802, for the plaintiffs in error, upon one of the policies only, viz., that upon the vessel.

*The declaration consisted of four

counts.

tember 12, 1799, by which the defendants in error insured the plaintiffs “ten thousand dol¬ lars on merchandise on board the Spanish brig Nueva Empressa, at and from Malaga to V era Cruz, and at and from thence to her port of discharge in Spain; the property being ship¬ ped in the name of Spaniards, and the assured not appearing as owners in any of the papers,” ‘ ‘ beginning the adventure upon the said mer¬ chandise at Malaga as aforesaid, and to continue during the voyage aforesaid, and until said ves¬ sel shall be arrived and moored at anchor twenty- four hours in safety.”

April 5, 1800, on the vessel, at and from Cuba, to her port of discharge in Spain, by which the defendants insured the plaintiffs the sum of six thousand dollars.

3. A count for money had and received.

pended.

1.— Under the act of congress of February, 13, by which sixteen circuit judges were appointed.

229

128

Supreme Court of the United States.

1804

The defendants pleaded the general issue, and the defense set up at the trial was, that the first policy (viz. on the merchandise) was discharged by a subsequent agreement between the plaintiffs and defendants.

The jury returned the following verdict: “We find on the first count of the plaintiffs’ declaration, that the defendants did not promise in manner and form as set forth in the declara¬ tion. On the second count we find the de¬ fendants did promise in manner and form as set forth in the declaration, and assess damages for the plaintiffs in the sum of fifteen hundred and forty-two dollars and five cents, being the sum due on said policy after deducting the amount of the premium notes due on both said policies with cost.”

A bill of exceptions was taken by the plaint¬ iffs at the trial, which stated that they gave in evi¬ dence a copy of the act of incorporation of the 129] said company, and the two policies of insurance, which were admitted by the defend¬ ants’ counsel to have been duly executed in behalf of the company. That the defendants’ counsel “further agreed and confessed before the said court and jury, that the plaintiffs had interest in the said vessel, called the Nueva Empressa, and the cargo on board the same, to the full amount of the sums assured aforesaid in said policies ; and that the same were captured in and upon the prosecution of the voyage mentioned in said policy, on the first day of August, 1800, and afterwards on the 30th day of said month of August, were condemned by the court of vice-admiralty at St. John’s, New¬ foundland, as prize of war to the officers and crew of the British ship of war called the Pluto, who captured the same as aforesaid, whereby the property insured as aforesaid was utterly lost to the plaintiffs. Whereupon the said defend¬ ants, by their counsel, did contend and in¬ sist before the said court and jury, that the force, effect and obligation of said policy on said cargo, was settled and discharged by a sub¬ sequent agreement, which they alleged;to have been made between the plaintiffs and the said Providence Insurance Company, and thereup¬ on read and gave in evidence to the jury on the trial aforesaid, a certain letter from the said Head & Amory to Nicholas Brown and Thomas' P. Ives, merchants, doing business under the firm of Brown & Ives, bearing date the 21st of August, 1800, which letter was admitted by the plaintiffs,” and is as follows.

Boston, August 21, 1S00. Messrs. Brown & Ives,

Gentlemen:

We have your favor under the 18th inst. The brig Nueva Empressa is still detain¬ ed at the Havanna: having expected a convoy, and the place being closely watched by British cruisers, the master has thought it prudent for all concerned not to proceed to sea ; we have no direct advices from him, but we learn by an American master from thence, that the vessel is very much eaten by the worms, and was so ISO] leaky that great repairs must be made and, perhaps, it will be necessary to reship the effects in some other Spanish bottom. We are about making the attempt to have the voyage terminated at the Havanna, which can only be done by the consent of the officers of the Span¬ ish government there, and that gained by a con- 280

siderable douceur, but before we make this at¬ tempt, we wish to know at what rate we can settle. with the underwriters on the merchan¬ dise ; and if we can make it for our interest, and permission as aforesaid can be obtained, we would terminate the adventure at the Havanna. Some of the concerned have made an agree¬ ment with their underwriters in this town to return twenty-five per cent, and finish the risk on the above conditions, the hazard of her get¬ ting safe to Spain, free from capture, being very great; we wish a conditional permission from our underwriters to end the voyage, if we can effect it, and the rate of premium they will in such case return. We are, &c.

Head & Amory.

The bill of exceptions then states that the de¬ fendants’ counsel further offered and gave in evidence to the jury the following papers.

iffs, dated August 26th, 1800, in which they say, “ Your letter to us on the subject of that vessel ( The Nueva Empressa) was laid before the Insurance Company, and the secretary says, “If Messrs. Head & Amory are disposed to make a settlement and cancel the policies, the directors will agree to return 25 per cent., but they are not disposed to make any conditional agreement. ”

Ives, dated Boston, August 28, 1800, as follows: “We have your favor under the 26th instant. W e note the answer of The Providence Insur¬ ance Company to our proposal ; we are sorry they will not accede to our proposition for mak¬ ing the agreement conditional. On reflection we conclude to accept their offer and cancel our policy, they giving up our note on our pay¬ ing one half the ^amount of the same,

and the risk to cease at the Havanna.”

iffs, dated Providence, September 2d, 1800, which says, “ Your letter to us saying that you would settle the policy on the Spanish brig, on a return of 25 per cent, was shown to the com¬ pany, and we have received the following note.

Providence Insurance Office, Sept. 1, 1800. Gentlemen,

‘ ‘ The Providence Insurance Company will agree to settle both of the policies upon the Spanish brig Nueva Empressa, &c. at the Ha¬ vanna, and to return 25 per cent, upon the first, and 31, 83 1-3 per cent, on the last, but they decline making a partial settlement of one without the other. The premium note for the first policy, say 5,002 dollars and 75 cents, will fall due at bank 12th instant.

“Yours, &c.

“John Mason, Pres’t. “Messrs. Brown & Ives.

“ You will please to give us your instruction. The other company will settle at the same rate, say retain 1 1-2 per cent. ”

Ives, dated Boston, Sept. 3d, 1800, as follows: “We have your favor under the 2d instant, handing us a copy of a. note received from the President of the Providence Insurance Com¬ pany. When we consented to their proposi¬ tion of settling the policy by paying 25 per cent, it was not because it was most agreeable to us. W e wish to make it conditional, as has been done in this town ; and we had a right to

Cranch 2.

131

1804

Head and Amort v. Providence Insurance Co.

suppose when we consented to their terms, the business was settled. If we can succeed with 1 32s] the Spanish government, the policies *on vessel and freight will be withdrawn of course •at the usual custom; but we do not think it right to make one the condition of the other. If we make this settlement, we shall make every •effort by money and interest to have the adven¬ ture terminate at the Havanna, and the sooner we know the better. By the last accounts the vessel was very much eaten by the worms, and wanted very great repairs. This, we hope, will induce them to grant us the permission. The terms we acceded to were very favorable to the company, as it was paying them at the rate of 35 per cent, for the outward premium.”

iffs, dated Providence, September 9tli, 1800, as follows: “Gentlemen, your letter of the 3d instant was laid before the directors of the Prov¬ idence Insurance Company, and they have re¬ turned the following note :

“ September 6th, 1800.

‘ ‘ As there appears to have been a misunder¬ standing in the business as it respects the first propositions of the company, the directors are willing to accede to Messrs. Head & Amory’s proposition (viz.) to settle the policy on the merchandise, at 25 per cent. , although it was their intention and expectation to have both policies included in the settlement. Messrs. Head & Amory will please to forward the pol¬ icy and have it canceled immediately. Premi¬ um note due 12-15 September.

“You will please to govern yourself accord¬ ingly, and we will attend to your wishes.”

A Ives, dated Boston, Sept. 12th, 1800, viz. : “ Gentlemen, this is to acknowledge the receipt

■ of your favor of the 9th instant, containing the note from the directors of the Providence In¬ surance Company. Mr. Head is absent on a journey, he will return on Tuesday or Wednes¬ day next, when your letter will be delivered him.”

Ives, dated Boston, Sept. 17tli, 1800, as fol¬ lows: “ Gentlemen, we have this day seen your 133] letter of the 9th instant containing the propositions of the Insurance Company to can¬ cel the policy on merchandise on board the brig Nueva Empressa at 25 per cent. Previous to •our seeing this letter, intelligence had arrived •of the capture of this vessel, and of course it prevents any further negotiation on that sub¬ ject. This circumstance you may suppose was quite unexpected by us, but unfortunately there is direct proof of it; a Spaniard being now in town who came from Newfoundland, and saw the brig there, being perfectly acquainted with Captain Zevallos, and he knows the vessel and cargo were condemned, and the master has gone to Lisbon.

“ As the office is nowin our debt, we pre¬ sume they will not desire us to pay the note for the premium, but deduct it when the loss is paid. You will of course mention this loss to the office. The news reached town a day or two before the return of our I. Head. We are,” &c.

ferred to in Brown & Ives’s letter of 26th of August, 1800, signed by William H. Mason, secretary of the company.

Cranch 2.

ferred to in Brown & Ives’s of Sept. 2d, signed by John Mason, president of the company, and dated Sept. 1, 1800.

the 6th Sept. 4800, referred to in Brown & Ives’s letter of 9th Sept. 1800, not signed but written in the handwriting of the secretary of said company, and by him delivered at the counting house of Brown & Ives as the answer of the board of directors of said company; all of which notes or letters of the defendants were handed to Brown & Ives by the secretary of the company, and -were answers to the let¬ ters of the plaintiffs.

The bill of exceptions also states, that it was proved by the testimony of Mr. Brown, of the house of Brown & Ives, that he delivered the plaintiffs’ letter of the 3d of Sept. 1800, to the secretary of said company at their office on the 4th of Sept. That the board of directors did not meet of course until the meeting of the 6t.h, when the said note bears date. That the fol¬ lowing day (that *is the 7th) was Sun-

day. That Brown went from Providence into the country in the afternoon of the 6th, and continued absent from Providence until 10 o’clock in the forenoon of Monday the 8th; when he returned and received the same note of the 6th, which had been left at the counting house as before mentioned, and that he for¬ warded the same to the plaintiffs on the next post day, as is stated in Brown & Ives’s letter of Sept. 9th, and that it went in the mail, and came in due course to the hands of the plaint¬ iffs’ clerk, at their usual place of doing busi¬ ness on the 10th or 11th of Sept.

It further states that Richard Jackson, Jun. of Providence, president of another marine in¬ surance company, was also sworn as a witness and testified “that in effecting insurance, or settling a policy, or making any adjustment or agreement about insurance, the assent of the parties to doing a thing, was in all respects as binding on the parties as the thing done, ac¬ cording to the usage and practice among under¬ writers.

The bill of exceptions then proceeded as fol¬ lows : ‘ ‘ The above correspondence was offered by the defendants as evidence of a proposal on the part of the plaintiffs acceded to by the de¬ fendants, and it was contended by the defend¬ ants’ counsel that the effect of the said corre¬ spondence, accompanied with the testimony of the said Nicholas Brown, and of the said Rich¬ ard Jackson, jun. as aforesaid, was a good de¬ fence against the plaintiffs’ claim on the policy on the cargo. And the said plaintiffs did, by their counsel, object to the admittance of said papers purporting to be notes or letters from the said Providence Insurance Company as evi¬ dence of any proposal or agreement on their part ; more especially to the said note of the 6th of Sept., 1800; by reason that the said Provi¬ dence Insurance Company could not make any agreement but by an instrument made and signed by the president of said company, or some other person specially appointed to sign the same according to the provisions of the act aforesaid. Also that no evidence was given of any record or entry in the books or papers of the said Providence Insurance Company rela’- tive to the said supposed agreement.

231

135

Supreme Court op tiie United States.

1804

135] “The counsel for the plaintiffs did also contend and insist before the said court and jury, that the said Head & Amory were not hound, or obliged, by the letters signed by them as aforesaid, to discharge the said policy on the said cargo, and that the same policy, notwithstanding the letters aforesaid, was in full force and effect.

“ But the said court, notwithstanding all the objections aforesaid, did admit and allow the said notes and letters from the said Brown & Ives, and the said Providence Insurance Com¬ pany, in manner aforesaid, to be given in evi¬ dence to the said jury on the trial aforesaid.

“ And the said honorable John Lowell, chief judge of said court, who alone addressed the jury in the said cause, did then and there declare and deliver, as the opinion of the court, to the jury aforesaid, that the said correspond¬ ence of the parties contained in the letters and notes aforesaid, according to the usage of mer¬ chants and underwriters, did import an agree¬ ment on the part of the plaintiffs to settle and discharge the said policy on the cargo on the terms proposed and acceded to in said corre¬ spondence ; and that, in the opinion of the court, nothing remained to be done, after the said note of the 6th of September, 1800, to discharge the said policy, but that the same ought to be considered as settled and terminated in conse¬ quence of the plaintiffs’ proposal, and the sub¬ sequent agreement thereto on the part of the defendants, as contained in said correspondence.

“The said chief judge further stated to the jury, that if they concurred with the court in this opinion, above expressed, on the legal ef¬ fect of said correspondence, and other evidence adduced as aforesaid, they ought to find for the defendants on the first count in the plaintiffs’ declaration, and for the plaintiffs on the second count for the damages therein demanded, de¬ ducting the premium notes. But if the jury were of opinion that anything further remained to be done after the said note of the 6th of Sept, to close and complete the contract pro¬ posed on the part of the plaintiffs for canceling 136] said policy, then they ought to find for the plaintiffs on the first and second counts in said declaration.

“ The reduction of the said premium note by the jury was done by consent of parties.

“ And the said jury then and there gave their verdict for the plaintiffs only on the second count in said declaration, and assessed the de¬ fendants in damages fifteen hundred and forty- two dollars and five cents, the said jury, by the consent of parties, first deducting from the damages on the said second count, and which were not disputed, the amount of the premium notes, and which deduction was made by con¬ sent of the parties; and as to the said first count on the said policy upon the said cargo, the jury found that the defendant’s did not promise; all which was in consequence of the evidence ad¬ mitted as aforesaid, against the objections of the plaintiffs, and from the direction given to

the jury by the honorable court aforesaid.” Whereupon the plaintiffs excepted to the said evidence, and to the opinion and direction of the court given as aforesaid. 1

The case was now argued by J. Q. Adams, of Massachusetts, and Mason, attorney for the District of Columbia, on behalf of the plaintiffs, in error; and by Hunter, of Rhode Island, and Martin, attorney general of Maryland, for the defendants.

Adams, for the plaintiffs in error.

The errors assigned are,

*1. That judgment was given for the

defendants, on the first count, when it ought to have been given for the plaintiffs.

exceptions ought not to have been admitted.

jury that the evidence proved no contract of the plaintiffs to discharge the first policy.

it should have been given, not in this, but an¬ other action.

altogether erroneous.

The first and last of these assignments of er¬ ror, being of a general nature, will be noticed only so far as to submit to the court a question arising from the face of the proceedings, and which cannot come 'within the purview of the three intermediate and specific assignments.

The declaration consists of four counts; two upon the policies; the third for money had and received; the fourth for money paid, laid out and expended.

There is but one issue (the general issue) joined upon the four counts. The verdict finds for the defendants upon the first count; for the plaintiffs upon the second, and says nothing of the two others.

A part of the issue only is, therefore, found by the verdict.

We shall not make this a subject of argu¬ ment, but merely read one or two authorities in point. Trials per pais, 63. ‘ ‘ If upon an issue

all the matter be not fully inquired, a venire' facias de now shall issue.” ' In the same book, p. 287. “A verdict that finds part of the issue, and finding nothing for the rest, is insufficient for the whole, because they have not tried the whole issue wherewith they are charged.” 1 Inst. 227t. a.

*The M error assigned is, that the

evidence referred to in the bill of exceptions- ought not to have been admitted.

The grounds upon which we support this al¬ legation depend in some degree upon the state of the cause when this evidence was offered.

It appears from the bill of exceptions that the plaintiffs had then substantially proved their demand upon both the policies. ’ The contract, the interest, the loss, were all proved, and the claim of the plaintiffs was in the same condition upon both.

The evidence of the defendants excepted to

1.— The circuit court was holden by Lowell, Chief Judge, and Bourne, Assistant Judge. The bill of exceptions was dated April 7th, 1802, and was sealed only by Judge Bourne, who annexed to it the fol¬ lowing- certificate :

. I, Benjamin Bourne, one of the aforenamed jus¬ tices, do hereby certify, that the exceptions con¬ tained in the foregoing bill were made at the trial

232

of the said cause, and then substantially reduced to writing. And after the form was settled as aforesaid, and agreed to by the honorable John Lowell, chief judge of the said court, but before he put his seal thereto, he died.

Witness my hand and seal this 30th June, A. D.

„ .. _ (g

Crancli 2.

1804

Head and Amory v. Providence Insurance Co.

138

was produced to prove a subsequent agreement of the parties to discharge the obligation of the policy upon the cargo.

This evidence ought not to have been ad¬ mitted,

parol agreement.

the acts of a corporation.

point of law.

The whole mass of this evidence consisting, 1st. Of letters from the plaintiffs to Messrs. Brown & Ives; 2d. Of notes purporting to be acts of the defendants; 3d. Of the testimony of Mr. Brown; and, 4th. Of that of Richard Jackson, president of another Insurance Com¬ pany in Providence, was combined together to prove one point ; a contract of the plaintiffs to discharge the contested policy. If, therefore, any part of it was improper, the whole was so.

1. Parol evidence.

It is not denied that there are cases in which evidence of a parol agreement may be admitted to discharge the obligations of a written con¬ tract ; but as this is a deviation from a very gen- 139* ] eral and important principle of Maw, it has never been done but where it was necessary to prevent fraud on the part of the party claim¬ ing the benefit of the written contract, and where the parol ageeement has Ibeen executed. There is no instance where an executory parol contract, or mere mutual promises, have been allowed to discharge the obligation of a written executed contract.

2. Acts of the corporation.

By the rules of the common law the acts of a corporation can be proved only by instruments under their seal. By the charter and constitu¬ tion of the Providence Insurance Company, they are authorized to make policies and other instruments under the signature of their presi¬ dent, countersigned by their secretary. In the evidence excepted against, there are three let¬ ters or notes which were admitted as proofs of the company’s acts, neither of which is authen¬ ticated either by their seal, which alone could make them valid at common law, or by the double 'signature of the president and secretary, as required by the charter and constitution of the company. One of them is signed by the president alone; one by the secretary alone, and the third is not signed at all.

The reasons upon which these rules are founded, appear in 1 Bl. Com. 475. 6 Viner.

268, 287, 288. Kyd on Corporations, 1, 4,49, 450, 259, 268.

3. As to Richard Jackson’s. testimony. .

This was the most exceptionable testimony

admitted, because it was evidently to a point of law, and not to fact. Usage is -in its nature matter of fact. But whether the fact of usage be binding is in its nature a point of law. This testimony seems to have been the hinge, upon which the whole cause turned; and it is the more important as it was the ground upon which the court below adopted it as law. It is all abstract proposition; large and liberal in¬ deed; but altogether principle, without refer¬ ence to any fact. Among underwriters, says he, promise is in all respects as binding as per¬ formance. 1 Bl. Com. 75, 76.

140] The third assignment of error is, that

Cranch 2.

the court should have directed the jury that the evidence proved no contract of the plaintiffs.

As this point embraces most essentially the merits of the controversy, it is proper to exam¬ ine the particular nature of the transaction.

What was the ultimate object of the parties?

On the part of the plaintiffs it was to cancel the policy, on certain conditions.

On the part’ of the defendants the intention was different in every one of their notes; but still the ultimate object of cancelling was con¬ tained in all. From the tenor of the whole- correspondence there is no evidence of an in¬ tention by either of the parties to make a con¬ tract for canceling the policies. On both sides it was meant to consummate the thing, and not to make a new bargain for discharging that, which existed.

In the first letter of the plaintiffs there is, in¬ deed, an inquiry whether the defendants would make a conditional contract, to depend upon the contingency of their obtaining leave from the Spanish government at the Havanna to ter¬ minate the adventure there; where they sup¬ posed the vessel still to be. But this was ex¬ plicitly denied by the defendants; and this de¬ nial itself serves strongly to show that they were determined not to leave the business in the unsettled state of a new contract; but either to adhere to that which existed, or to- finish the business in the usual and obvious way, by canceling the instrument in which it was contained.

The whole transaction, therefore, must be considered in the light of a negotiation ; mere communications between the parties which could be consummated on one side only by canceling the policy ; and on the other by giv¬ ing up the premium notes.

A circumstance which further corroborates this view of the thing is, that neither of the parties ever indicated a time for finishing the business. Had it been in the *contem-

plation of either to make a bargain for dis¬ charging the existing obligations between them, this would naturally have been one of the most important points to be settled. For until they had agreed upon the time when their new reciprocal obligations should commence, what would have been their situation? The policy was in the hands of the plaintiffs ; the note was in possession of the defendants ; and both were negotiable instruments. It is expressly laid down in the books that mutual promises must be made at the same time. Until the new bar¬ gain was completed the defendants were bound by the risks of the policy ; and it would have been very material to both parties to fix the moment when their obligation to these risks should cease.

Let us go further and inquire, if these papers, can be construed into a mutual engagement, when they became so.

The first letter of the plaintiffs contained only an inquiry, and manifested a desire to set¬ tle conditionally one of the policies.

The note of the defendants in answer, con¬ tained in the letter of Brown & lyes of 26th August, refuses to make a conditional settle¬ ment; but offers to cancel the policies, retain¬ ing 25 per cent, of the premium upon both.

Let it here be remarked, that although the defendants made this offer, supposing it hot-

233

141

Supreme Court of the United States.

1804

torned on tlie intimations of the plaintiffs’ first letter, yet it was founded upon a gross mistake of the insurance company, not only as to those intimations, hut as to the state of the two policies at that time. They have in their third note ex¬ pressly declared that their intention and expec¬ tation in the first was to cancel both the poli- •cies ; and on the same terms.

The first policy was for 10,000' dollars on the cargo of the vessel, on a double voyage, from Malaga to Vera Cruz, and from thence back to Spain ; at a premium of 50 per cent. The out¬ ward voyage insured by this instrument had been safely performed. The return voyage had •commenced ; and in its progress the vessel had 142*] been ^driven into the Havanna, where the plaintiffs supposed she still remained.

The second policy was for 6,000 dollars on the vessel, made after the plaintiffs knew she was at the Havanna. It was for a single voy¬ age, at and from the Havanna to Europe, and the premium was at 33-1 per cent.

On the first policy the outward voyage was completed, and the homeward voyage had commenced. No apportionment of the pre¬ mium was possible. The plaintiffs could not ■cancel the contract but with the consent of the defendants; and the terms upon which they naturally and reasonably wished to settle were to give the defendants one-half of the amount of the premium . as a compensation for the risk they had incurred.

On the second policy the risk had barely com¬ menced, as they supposed. Their intention was, if they could obtain permission from the govern¬ ment at the Havanna, to break up the voyage, and terminate the adventure there. Had they done so they might have withdrawn the policy, and obtained a restoration of the whole pre¬ mium, with the customary deduction of half per cent.

For this they did not want the consent of the defendants ; it was their right so to do.

This circumstance is important in two points of view.

First. It laid the foundation of the mistake of the plaintiffs in their answer to this offer of the defendants; and of all the subsequent mistakes and differences between the parties.

It is impossible to suppose that the defendants meant to trifle with the plaintiffs. They intended to make a serious offer ; and the fairest construc¬ tion is, that they made it without attending to the subject matter; without looking into their own records to see the different situation of the two policies; and without adverting to the plaintiffs’ letter, which expressly limited the negotiation to the policy on the cargo.

1 43] In the second place, it furnishes a violent presumption that the defendants had at the time no idea that they were engaged in (he serious and deliberate employment of making a •contract; a contract, too, which they now con¬ tend must dissolve an instrument so serious in its nature, so forcible in its operation, so various in its details, so precise and specific in all its con¬ ditions, and so minute and discriminative in the effect of all its stipulations, as a policy of insur¬ ance. An individual underwriter, when he pledges himself by his signature to indemnify a merchant for the numerous and deplorable ca¬ lamities to which navigation is liable, must feel himself bound by all the ties of duty to himself 234

and liis fellow creatures, to act with caution, and with a knowledge of the right he acquires, and of the duty he incurs. A corporation, by their essential character and constitution, are under obligations of a still higher nature to do nothing inconsiderately. They are a delibera¬ tive body. The members who act in their behalf, bind not only themselves but their associates. They are responsible not only to themselves and their families, but to the public, to the legisla- ture under whose sanction their proceedings are regulated, and to their country, which is inter¬ ested in the accuracy of their transactions. Is it, then, possible to suppose that such a body should have conceived themselves performing solemnly one of the acts for which they were intrusted with all the powers and attributes of a corporation, when they accomplished it with such utter ignorance of the whole subject upon which they were engaged ; with such gross neg¬ ligence as in the eye of the law is equivalent to fraud? For the honor of the defendants we hope not.

But the present inquiry is, at what time this supposed solemn contract to discharge a perfect claim to indemnity took place ; and certainly, if the defendants did consider themselves as con¬ tracting, this, at least, is not the time when the obligation of the parties took effect. The real offer to settle both policies on the same terms was certainly such as the defendants ought not to have made ; and such as the plaintiff's could not accept. Indeed its absurdity furnishes a full apology for the mistake of the plaintiffs which appears in their reply of the 28th of August, and in which they manifest their acceptance of what *they supposed the offer to be. That is,

to settle one policy ; the policy on the merchan¬ dise. But in accepting it the plaintiffs add con¬ ditions, and there is no evidence that these con¬ ditions were ever assented to by the defendants. It is clear, therefore, that no agreement binding upon the parties can be found at the date of this letter of the plaintiffs. Here was a mere mis¬ take.

This mistake on the part of the plaintiffs was very natural. They either did not perceive the

at the end of the word policy, in the answer of the defendants communicated in the letter of Brown & Ives ; or if they did, they might well suppose it was an error in the copy, especially as that is not the usual orthography of the plu¬ ral of Mie word policy. They might have taken it for a comma, or a careless. stroke of the pen, but could not suppose that it contained the whole substance of the defendants’ offer.

Hitherto, then, there is nothing like a con¬ tract. There was nothing but mistake on both sides.

The next of these papers is the second letter signed by the president of the Insurance Com¬ pany, dated September 1, directed to Brown & Ives, and inclosed by them in their letter to the plaintiffs of 2d September.

This makes a proposal entirely new. That the company will agree to settle both the poli¬ cies at the Havanna, and return 25 per cent, on the first, and 31, 83 1-3 per cent, on the last, but they decline making a partial settlement of one without the other. This note, as well as the former, evidently shows that the company had no idea of having agreed to anything. In both they say they will agree, necessarily implying a

Cranch 2

1804

Head and Amort v. Providence Insurance Co. 144

farther act on their part to complete the settle¬ ment, even if their offers had been accepted.

We come now to the plaintiffs’ letter of Sep¬ tember 3, which, in the opinion of the learned and lamented judge who tried the cause, con¬ tained a proposal to the defendants, which, by their acceptance on the 6th, became a complete contract between the parties, and by the custom of merchants and underwriters, sufficient of it¬ self to dissolve the policy. With the utmost deference for his opinion, and the highest re¬ spect for his memory, we apprehend there was 145 ] error both in regard to his idea of this letter, and of the operation of the laws of insur¬ ance in this particular. In the first part of this letter, it is true, the expressions imply a strong degree of disappointment on the part of the plaintiffs at finding the directors had receded from what the plaintiffs had supposed was their first offer. But in the second part they explicitly decline the last offer of the company. They ■say that if they can succeed with the Spanish government, the policies on vessel and freight will of course be withdrawn at the usual custom. But they will not make one the condition of the •other. And in the next sentence, they most unequivocally show that they had abandoned all idea of holding the defendants to their supposed offer, and were only desirous of having it made in reality. “If we make this settlement,” “the sooner we know the better.” “The terms we acceded to were very favorable to the compa¬ ny.” Each of these expressions indicates that they considered the former transactions as given up ; and that they had no idea of binding them¬ selves to a settlement, before they could know whether the defendants would agree to make ■one.

Let us now consider the force and effect of the unsigned note of the 6tli of September. The opinion of the court below, as expressed in the bill of exceptions is, that after this note nothing remained to be done; but that the policy was ■settled and discharged.

What says the note?

It begins by acknowledging that there had been a misunderstanding in the business, as re¬ spected the first propositions of the company, and by admitting that this misunderstanding was justly imputable to them; for it makes that the inducement upon which the directors ex¬ press their willingness to accede to the plaint¬ iffs’ propositions. It does not say the directors have acceded, nor even that they do accede, but they are willing to accede. And to what proposition ? To settle the policy on the mer¬ chandise at 25 per cent. Nothing is said ab®ut when or where the risk should cease ; nor about taking up the note on the payment of one-half. Is this the language proper for the final comple¬ tion of a solemn bargain? They were willing to accede to a proposition; they go on to specify 146 ] that proposition, and in specifying it they leave out half the particulars, especially that important one which the proposition con¬ tained, the cessation of the risk.

It may be said this is scrutinizing with hyper¬ critical nicety the expressions of a loose note, the terms of which were not so accurately weighed; and which was not drawn up b}r a special pleader. But it may be asked, is it just, rational, or proper, that such unguarded imma¬ ture notes as this should, by the solemn sanc-

Cranch 2.

tion of law, be adjudged to be of a force and obligation paramount to that of a policy of in¬ surance ; an instrument, in the printed parts of which, there is scarcely the cross of a t, or the dot of an i, but has had its comment and its adjudication. Lord Mansfield has observed that the merchants seldom introduce a written clause into a policy, but it ends in a lawsuit. And we are now told by Mr. Jackson that a succession of blunders, under the name of an assent of parties, is to overthrow the whole force and ef¬ fect of an important instrument, which has gone through the crucible of three hundred years’ experience.

The parties never could intend that these in¬ considerate, shapeless approximations to a settle¬ ment, should of themselves operate as a final settlement.

At the close of this note it is said, “ Messrs. Head & Armory will please to send the policy immediately to be canceled,” and after it, “pre¬ mium note due 12-15 September.” If nothing remained to be done, why were the directors so anxious to have the policy sent immediately to be settled? Why were they so accurate and precise in noting both the day and the day of grace when the note would become due? Why, but because they were sensible, that the most important part of the business still remained to be done? Why, but because they were con¬ scious that the plaintiffs still had their option, either to send the policy to be canceled, or to pay the note at its day of payment. Loose as these notes are ; hasty and inartificial as their language is, some meaning must be given to their contents; and when we see the defend¬ ants so solicitous to have the policy canceled, and so punctilious to mark the days of payment for the note, we can give their words no possi¬ ble construction, importing on their part that the policy was settled; that nothing remained to be done.

*We are still seeking for the time

when this supposed contract of dissolution took effect. By all the laws in the world but those of Mr. Jackson, mutual promises are consider¬ ations of each other.

Both parties must be bound to the perform¬ ance of their respective promises. One prom¬ ise cannot be binding and the other remain in¬ valid. To find this time we have sought in vain through the whole corrrespondence of the parties. It is equally vain to seek it in the opin¬ ion of the court, which is, that nothing re¬ mained to be done after the said note of the 6th September, 1800. Here also is a want of pre¬ cision in conveying the idea of time, and it is a defect which lies in the nature of the thing. The words “after the said note of the 6th of September,” are not a designation of time. Had the court said after the signing of the note, (and as we conceive, all the promises of the company ought by their charter to be signed,) the time would have been fixed at the date of the signature. But this they could not say; the note is unsigned. Had the court said, af¬ ter the writing of the note; then the engage¬ ment of the company would have been con¬ tracted, not by the note of the directors, but by the hand-writing of the clerk. Had the court said after the delivery of this note, the question would recur, delivery to whom? And to whom could it be but to the plaintiffs? This would

235

Supreme Court of the United States.

1804

147

doubtless liave altered the state of the question; for if the reciprocal engagements were binding only from the time of delivery, or notice of this note, then they' were dissolved by an ex¬ ternal event before they were formed. The whole superstructure had crumbled to atoms. For the plaintiffs had received information of the loss of the vessel and cargo. I say dissolved before they were formed; and the absurdity of the expression is only the genuine mirror of the impossibility of the thing.

The meaning of the court must have been, that the note of the directors on the 6th of Sep¬ tember, constituted the assent of the company, as they considered the plaintiffs’ letter of the 3d September as proof of their assent. The plaintiffs, then, must be considered as having made their promise on the 3d, when they wrote their letter; and the correspondent prom¬ ise of the defendants as having been made on the 6th by the note of the directors. If so, the plaintiffs were bound from the 3d, and the de¬ fendants from the 6th, of September.

148] The promises were not made at the same time ; both parties were not equally bound ; for one was bound three days sooner than the other. Will it be said that the offer and the acceptance must be considered as one transac¬ tion, because it was impossible it should be completed at once, the parties residing more than forty miles distant from each other? This is an additional proof that the consummation of the thing, the canceling of the policy, and the taking up of the note, was, and alone could be, the intent of the parties, and until that was ef¬ fected the original instruments must, in the nature of things, retain all their validity.

Consider how unequal the situation of the parties was if the plaintiffs were bound on the 3d and the defendants only on the 6th. From the moment the plaintiffs became obli¬ gated by the new engagement, the risk of the policy was transferred from the defendants to them; yet their obligation to pay the whole premium note had not ceased; nor could it cease until the defendants had decided whether they would accept or reject the offer. On the other hand, the defendants, from the 3d of September, .must have been de facto released from all the risks of the policy, and at the same time entitled to recover the whole of the premium note from the plaintiffs. During all this interval, the plaintiffs must have been at once liable to all the risks of the policy, and to the payment of the whole premium, while the defendants were discharged from 1 ne risk and entitled to the premium. Is there any measure of equal justice, or common equity, which can sanction such a state of things as this?

But this is not all. From the moment when the plaintiffs sent their letter of the 3d Septem¬ ber to the post office, their promise was out of their power. According to this system of jus¬ tice, they had no longer the right or the power to retract from this offer. Their word and their property were pledged; yet the defend¬ ants retained the right of adhering to the policy and the premium, or of dissolving them on the terms of the offer. The plaintiffs were entirely at their mercy. The policy, it is true, re¬ mained in their hands uncancelcd, but it had lost all its force and effect. The unsigned note of the secretary, like the gliost of paper money 236

in M’Fingal, had turned it back to rags again. But this was unknown to the *plaint- [*141> iff.s ; and before they knew it they had received information of the loss, and had acquired a perfect right to indemnity.

Hitherto the argument has proceeded upon the supposition that the plaintiffs’ letter did really contain a certain proposal, and the un¬ signed note an acceptance of that proposal. It has been endeavored to prove that, even ad¬ mitting this, they did not constitute an agree¬ ment sufficient to dissolve the policy. The necessity of fixing a time when the mutual en¬ gagements of the parties could take effect must be obvious. The necessity of notice to both, parties, that the new engagement had supersed¬ ed that of the policy, must be equally clear. But neither the time nor the notice can be found, until after the perfect right to the indemnity secured by the policy was vested in the plaintiffs.

Let us now consider the subject in another point of view. One of the principal reasons which must always give a contract, written and signed with deliberate solemnity, a more powerful sanction than a verbal agreement is its superior certainty. There is no instrument reduced to a greater degree of certainty than a policy of in¬ surance. It is a general maxim of law, as well as an obvious dictate of reason, that every con¬ tract requires the same power to effect its dissolution as to effect its creation. The whole system of law founded upon the statute of frauds is built upon a principle that a con¬ tract in writing, and signed by the party con¬ tracting the engagement, is more forcible and binding in its nature, than an engagement verbally made, or agreed to, without being reduced to that form. " The circuit court seems to have been of opinion that this supposed agreement of the parties was something more than a parol agreement ; and indeed it did pass, whatever it w-as, in the form of letters and notes. But if certainty is one of the characters of a written contract, this was far from possessing- that requisite.

A written agreement, in contemplation of law, as well as in the common understanding of man¬ kind, must be a paper containing the whole meaning of the parties, and signed by them, or at least by one of them. When the contract is altogether executory, containing merely promise for promise, it seems equally to require the sig¬ nature & of both. A policy of insurance,

for instance, is signed only by one of the parties, but that is because its existence depends upon performance by the other. It commences only by*the payment of the premium. It is difficult to conceive how a contract which must be pick¬ ed out piecemeal from nine or ten letters and notes, and spliced by the verbal testimony of two witnesses in open court, can be considered as a written agreement.

If, however, these papers could be grappled and dovetailed into an agreement, as between individuals, we ask whether this can be done when one of the parties is a corporation aggre¬ gate ? By the principles of the common law, the promises of a corporation can be authenticated only by a record, or by their seal. By the char¬ ter of the Providence Insurance Company, the signature of their president and secretary are necessary to give validity to their policies, and other instruments. The act of the company,

Cranch 2.

150

1804

Head and Amory y. Providence Insurance Co.

which constituted, as we are told, their assent to the propositions of the plaintiffs, was done at a weekly meeting of the directors. Yet of this act (in their own view higher in its nature than the act of making a policy) no record was made ; no instruments delivered to the plaintiffs, or ever drawn up, excepting this note of the secre¬ tary, unsigned, undirected, and not even indic¬ ative of the subject to which it relates, other¬ wise than in the general terms of ‘ ‘ the busi¬ ness.”

If the intelligence received by the plaintiffs on the 14th of September had been, not that the vessel was lost, but that she had arrived safe in Spain, would the defendants have been content¬ ed with half the premium ? They must now say so to support their present ground ; but they would then have discovered that while the policy remained uncanceled, and the premium note in their hands, something did remain to be done. They would have called upon the plaint¬ iffs for payment of the whole note, and if pay¬ ment had been refused, would have sued them. What defense could the present plaintiffs have had against their action ? Could they have pro¬ duced all this mass of evidence on their side ? Would not the company then have said, we never meant to consider these as the final trans¬ actions, and you knew it; we never entered so much as a minute of them on our records ; we never did an act to authenticate them as all our acts must be authenticated ; we considered our- 151*] ^selves bound until the policy should be canceled. You knew we could not be bound by a written agreement, unless signed and countersigned as our charter requires, and you shall not produce in evidence, to discharge the debt you justly owe us, these notes, which we purposely made irregular, to prevent your sup¬ posing they could dissolve the force of a previous contract. Surely the court would have admit¬ ted the weight of these objections.

They would not have suffered such shapeless nothings as these notes, to be shown as the form¬ al release of a corporation. The defendants might have added that the notes themselves did not fully meet the propositions of the plaintiffs. It is true, they agreed to settle the policy at 25 per cent, but they had not promised to deliver up the note. The plaintiffs, therefore, could not have produced those papers to prove the promise of the defendants, and of course there was no consideration for the bargain; and the defendants would have said it was little less than fraud, if the plaintiffs, after the arrival of their vessel had attempted by such means to evade the payment of half the premium note. The subject has been presented in this light to en¬ force the objection against these papers, as evidence of the acts of a corporation. In point of equity, the case is infinitely stronger on the side of the plaintiffs than it would have been on the side of the defendants. If it was an agree¬ ment at all, the defendants were not bound by it until three days later than the plaintiffs, and when the 'company bound themselves, it was with the full knowledge that the plaintiffs were bound too. The defendants did not remain from the 3d to the 17th of September without knowing whether the agreement was made or not.

It has thus been endeavored to prove that this transaction was not, and could not possibly

Cranch 2.

be, an agreement between the parties, of force and effect, to dissolve the obligations of the policy.

to act, and not to promise ; to cancel, and not to make an agreement for canceling.

too loosely on both sides, and especially on that of the company, to show any intention to make a bargain, paramount in force to the policy.

*3. Because it is impossible to fix any

one time, or even any one day, upon which the agreement became binding on both parties.

operation was altogether unequal upon the two parties ; all the benefit being on one side, and all the burden on the other.

an agreement ; one of the parties being a corpora¬ tion; and no authentication of its assent being given.

In opposition to all this, what is said? That in agreements about insurance, the assent of the parties to the doing of a thing, is in all respects as binding as the thing done.

As we apprehend the fallacy, upon which the defendants prevailed in this cause before the circuit court, lies in this opinion of Mr. Jackson, we shall examine it with some atten¬ tion, and hope to show that, in its only possible application to this cause, it is a great mistake; that in the most punctilious court of honor it would not be true; and that, instead of accord¬ ing with the usage and practice of underwriters, it is in direct opposition to the whole system of insurance law.

In the first place, the assent of the parties to the doing of a thing must be founded upon a certain state of things and relations between the parties at the time when the assent is given. If before the thing is done, that state of things is totally changed by external events, the basis of the agreement has failed, and the assent of parties cannot bind them as much as the thing done.

I write to Mr. Jackson, “ Sir, your word is as good as your deed ; so is mine. I have a ship at Newport that I wish to sell for ten thousand dollars, will you buy it? If so, I will execute the bill of sale, and you shall pay me the money.” Mr. Jackson answers me, “I will buy your ship on the terms you propose.” After Mr. Jackson has written this letter, and before I receive it, my ship is burnt. Is there any court of honor which will say, because his word is as good as his deed, that he is bound to take my bill of sale of a ship which no longer ^exists, when he gave me his word to

take my bill of sale of a ship which did exist? Is their any court of equity which would decree that I should make the conveyance, and that he should pay me the money? Examine to this point 5 Viner, 509, 505, 514-, 517, 526.

Let us now apply the principle to cases of in¬ surance. Mr. Jackson’s testimony is, that this assent of parties to the doing of a thing is as binding as the thing done, in effecting insur¬ ance, as much as in discharging a policy.

Let us suppose that this whole negotiation between the parties had been, not to cancel, but to make a policy.

The plaintiffs’ first letter to Brown & Ives would have said, we want insurance for 10,000

237

153

Supreme Court of the United States.

1804

dollars done on tlie brig at and from the Ila- vanna to Spain. Tlie same risk has been insured here at 25 per cent. ; what can you do it for at the Providence Insurance Company? They say, “ we will insure 'on the brig and cargo at 25 per cent, but not conditionally. The plaint¬ iffs mistake this for an offer to insure on the brig alone, and write “we accept this offer, and will send a premium note in due time.” On receiving this, the defendants find there has been a mistake. They make a new offer to in¬ sure the brig at 25 per cent, and the cargo at an¬ other premium. The plaintiffs, on receiving this, say, “we thought the matter settled; we have insured on the cargo elsewhere ; we say again we want insurance on the brig. If we make this insurance we shall order the brig to sail at once, and the sooner we know the better.” This is exactly their letter of the 3d September, only supposing it was a policy to be made, and not a policy to be discharged.

On the 6th of September, the directors say,

‘ ‘ as there appears to have been a misunder¬ standing, we are willing to make insurance on the brig alone at 25 per cent, though we meant, and expected, to insure both brig and cargo. Messrs. H. and A. will please to send their pre¬ mium note immediately and we will have the policy made. ”

Now put the case on both sides. Before the 154*] plaintiffs ^receive this note they have had information that their vessel, which they sup¬ posed at the Havanna, had sailed and was safe¬ ly arrived in Spain. Before that insurance, to which both parties had assented, could be done, there wTas no insurance to do. Will any one say that the defendants could, in such a case, have recovered from the plaintiffs the premium of a policy never made, merely because it had been agreed to be made? In what form of ac¬ tion either at law or in equity, could they have called upon the plaintiffs to pay a premium up¬ on an adventure known to be terminated before the risk could be incurred? •

Again. Suppose that before the plaintiffs receive this note, they have had information that the vessel had sailed and was lost, what would the defendants have said if the plaintiffs had written them thus: “ Gentlemen, the ves¬ sel you have agreed to insure is lost, we have never paid you the premium, nor even given a note for it; but the assent of the parties to the doing a thing is as binding as the thing done ; pay us 10,000 dollars for our loss.” Would not the defendants have justly replied, “you have never paid or secured to us our premium. Before the transaction could be completed you knew your vessel to be lost. IIow can you call upon us for an indemnity we never under¬ took?”

The assent of the parties is so far from plac¬ ing an agreement about insurance out of the reach of external events, that it does not, even in numerous instances, prevent the parties them¬ selves from retracting. The contract of insur¬ ance is perhaps of all others that of which the obligation most forcibly depends upon perform¬ ance, in contradistinction to mere assent. To evince this, I will refer to a very ingenius writer upon the subject. Miller, 110, 383, J$4, 531f.

I have dwelt so entirely upon this third as¬ signment of error, which appears to me to em¬ brace the vitals of the cause, that I have noth- 238

ing left to say upon the fourth, which is, that if thd evidence did prove a contract, it ought not to. have been produced in this, but another action.

*As to the objections of form; the in- .

complete verdict of the jury, the inadmissibility of the evidence, the incapacity of a corporation to contract, but by instruments peculiarly authen¬ ticated, and the insufficiency of this defense to meet this action ; without feeling myself author¬ ized to abandon them, I hope I have wasted no time in maintaining them. But the plaintiffs in this action are not only my clients, they are my friends. Their letters subsequent to the time when the dispute arose, very explicitly declare that they considered the whole pro¬ ceedings as mere communications, and that they never considered themselves or the com¬ pany as discharged from the obligations of the policy, and of the premium note. I have there¬ fore been anxious to show that upon principles of law, of justice, of equity and of honor, their opinion was well founded; that the policy was not discharged; that they were and still are en¬ titled to the indemnity, which they had pur¬ chased with so heavy a premium ; and of course that there was error in the proceedings and judgment of the circuit court. If the object of the parties, to cancel conditionally the policy, was never completed, if the company, by their egregious mistake in the first instance, and by their dilatory proceedings in the last, wTere the real cause why it was never completed, it seems to me they have no reason to pre¬ tend that the plaintiffs ought to be bound by an unfinished project of settlement which cannot be carried into effect without discarding the most established rules of law, and the most un¬ equivocal dictates of equity.

Hunter, contra.

The question is, was there a bargain made? Does the correspondence prove an agreement?

The objection to the form of the verdict is cured by the act of congress of 24th September,

1789. Vol. 1, p. 72, | 32.

tract because it is not under the corporate seal, nor signed by the president, and countersigned by the secretary.

If the intention of the parties is clear, and the substance of the agreement has been re¬ duced to writing, it is sufficient,

*The doctrine that a corporation can- [*15G not act "but by its seal, may answer for the transactions of bishops, deans and chapters, ab¬ bots and monks, but, according to modern de¬ cisions, does not apply to mercantile corpora¬ tions, and mercantile transactions. 2 Bac. Abr. 13, Gicittim’s edition. The bank of England, the East India Company, and similar corpora¬ tions may, by an agent, make promissory notes, draw and accept bills of exchange, and make all kinds of contracts and promises, like natural persons. It will be presumed that the author¬ ity so given to the agent is matter of record, or under the corporate seal.

The Providence Insurance Company are, by their charter, empowered to make policies, and other instruments without seal. The second section declares “that all policies of assurance and other instruments made and signed by the president of said company, or any other officer thereof, according to the ordinances, by-laws,

C ranch 2,

1804

156-

Head and Amory y. Providence Insurance Co.

and regulations of said company, or of their board of directors, shall be good and effectual in law, to bind and oblige the said company to the performance thereof in manner as set forth in the constitution of said company hereinafter recited and ratified.”

The fifth article of their constitution provides, that “ The directors shall meet statedly pnce in every week, and at such other times as the pres¬ ident, or board of directors shall think neces¬ sary. The president, with two directors in ro¬ tation, shall assemble daily at the insurance office for the dispatch of business, agreeably to the rules and regulations of the general meet¬ ing of stockholders, and of the board of direc¬ tors.” “ The president, with the two drectors in rotation, shall have full power and author¬ ity, in behalf of the company, to make insur¬ ances upon vessels and property laden therein.” “ And all policies thereon shall be subscribed by the president, as president of the Provi¬ dence Insurance Company, and countersigned by the secretary; and the president and com¬ mittee of attending directors shall ascertain and agree for the premiums, and the security of the payment thereof, as they shall think proper. ”

‘ ‘ All losses arising on any policy, subscribed as aforesaid, shall be adjusted by the president and board of directors.”

157] If the great object of their institution may be accomplished without seal, a fortiori maybe the means for attaining that object; omne majiM continet in se minus. The provision in the charter that they might make policies and other instruments without seal was introduced for their ease and benefit; but it would be of no advantage to them if all their preliminary acts must still be under the corporate seal.

always apply to mercantile instruments. A charter party may be dissolved by parol. Ab¬ bott on Shipping, 260. And less solemnity is required in dissolving than in completing a mercantile contract. However strict the rule may be at law in other cases, yet it does not prevail in equity; and in questions of insur¬ ance, which is a. contract founded upon broad, equitable principles, courts of common law are bound by the same rules of decision as courts of equity. Park, 3.

But in the present case the agreement to dis¬ solve the policy was made by the same author¬ ity which made the policy. By the constitution of the company, the president and two direc¬ tors have power to make insurance; and the agreement to dissolve was also by the president and directors. The note of the 6th of Septem¬ ber was in the hand-writing of the secretary, who was acknowledged by both parties, as. the au¬ thorized agent of the company to signify their assent, and was by him delivered to Brown & Ives, the authorized agents of the plaintiffs. It contains the names of the directors, and pur¬ ports to be by their authority ; and although the authority of the secretary does not appear, to be under the corporate seal, or on record, yet it is to be presumed that he was so appointed. Thus in the case of Rex v. Bigg, 3 P. Wms. 4.19, which was an indictment for erasing an indorsement from a note of the bank of England signed by one Adams, their cashier, it was contended that it was not a note of the bank, because not under the corporate seal, and the jury found

Cranch 2.

that Adams was not authorized by the bank under their seal to sign notes for them, but was ■intrusted and employed by them for that pur¬ pose. Upon that indictment the prisoner was convicted; which shows that even in a capital case it *was held that a corporation ag-

gregate may act* by an agent although not au¬ thorized under the corporate seal.

But' the plaintiffs have, by their bill of ex¬ ceptions, admitted the note of the 6tli of Sep¬ tember. to be the answer of the company to their letter of the 3d, and therefore cannot now deny the authority of the secretary. Esp. Rep. Neal v. Irvin.

If the defendants had insisted upon the whole premium, this correspondence would have been a complete defense for the plaintiffs.

It is not necessary that the note should have been signed. Their charter authorizes the company to contract without signature. Sig¬ nature is required only to policies and other in¬ struments. It is not contended that this cor¬ respondence can be called an instrument, and yet it may be evidence of a contract. Even under the statute of frauds, which requires a note in writing signed by the party charged, it is not necessary that the signature should be at the bottom of the note. -It is sufficient if the name of the party be written by him in any part of it. 1 Powell on Contracts, 286.

It has been said that mutual promises must be made at the same time, or both will be nuda pacta. This is true, but not applicable to the case. In making an agreement it is not neces¬ sary that the proposition on one part, and the assent on the other, should be both made at the same time. The assent may be either preced¬ ent, concomitant, or subsequent. 1 Poicell, 131.

parties was not to contract, but to act; that there was no agreement, and that the corre¬ spondence amounts only to an incomplete ne¬ gotiation for canceling the policy.

Nothing more is necessary to make an agree¬ ment or contract than the assent of both par¬ ties. In this case the plaintiffs requested, and the defendants gave their assent. The assent of the plaintiffs was precedent, and required noth¬ ing more to be done on their part. When the defendants assented to the proposition of the plaintiffs, the *bargain was closed, and

neither could retract. Nothing more was neces¬ sary to be done; or if any thing remained it was only what ought to be done according to the agreement, and, therefore, it is to be con¬ sidered as if done.

If notice was necessary, it was given to Brown & Ives, the agents of the plaintiffs, and from that time at least, the bargain was fin¬ ished.

There is no objection in the record to the testi¬ mony of Mr. Jackson. It was only evidence of the usage and custom of underwriters in this country; and it is every days practice to produce witnesses as to the custom of mer¬ chants, and the usages of trade. 3 Keb. 444, Stanley v. Ayles. 2 Stra. 1000, Lumley v. Palmer. Abbott, 133, 140.

As to the citations from Millar, they apply only to the commencement of a contract of in¬ surance, nof to its dissolution; and we hope our case is to be decided by English law, and not by Scotch metaphysics.

239

159

Supreme Court of the United States.

1804

But even if we go to the civil law, here was the precise form of Roman stipulation. Pro- mittis‘1 Promitto. Spondes ? Rpondeo.

Martin, on the same side.

The question is, what, was excepted to on the trial?

The letter of 21st of August, which was the beginning of the correspondence, was admitted by the plaintiffs to be read. The other letters were in answer, and were only a continuation •of the correspondence, and therefore were properly admitted by the court. There is no objection, in the bill of exceptions, to Mr. Jackson’s testimony. He was examined only to the usage of insurance companies, and as to the manner in .which such agreements are con¬ sidered among underwriters. That this is usual appears from the case of Henkle v. Roy, Ex. Assurance Company, 1 Vez. 317, which case also states the principle, that equity will con¬ sider that as done, which ought to be done. In mercantile cases the rule of law is the same as that of equity. 5 T. R. 229, Tooke v. Hottng- worlh; Butter’s opinion.

1 60] Brown & Ives were the agents of the plaintiffs, and are to be considered as the plaint¬ iffs themselves.

The words of the note of September 6th are not in the future tense, as has been alleged, but in the present. ‘They are, ‘ ‘ The directors are willing.”

The last words of the note, mentioning the time when the premium note would become due, are relied upon. But they prove nothing, because at all events the plaintiffs were bound to provide for half of that note, and therefore it was proper to give them that information.

The words of the learned judge who tried the cause, are that “nothing remained to be done after the said note of the 6tli of September, 1800, to discharge said policy; but that the same ought to be considered as settled and ter¬ minated in consequence of the plaintiffs’ pro¬ posal and subsequent agreement thereto on the part of the defendants, as contained in said cor¬ respondence.”

We admit that notice of accepting a contract must be in reasonable time. But the rule re¬ specting bills of exchange, as to the shortest possible time, does not apply. It was the duty of Brown & Ives to have had some person at their counting house to receive the answer and transmit it to the plaintiffs; and the absence of Mr. Brown cannot be imputed as laches to the defendants.

The time when the contract was complete was when the note of the 6th was delivered at the counting house of Brown & Ives.

The effect of that note was to discharge the plaintiffs from one-half of the premium note, and if the vessel had arrived safe, the defend¬ ants could have recovered only the other half.

Pothier, in his Treatise on Obligations, col. 1., p. J, 5, defines an agreement to be “ the as¬ sent of two or more persons, to form an engage¬ ment between them, or to dissolve or modify one already formed. Duorum cel plurium in idem placitum consensus.” “ A contract in- 161] cludes a concurrence of the will of two persons at least, one of whom makes, and the other accepts, the promise.” Jn the pres¬ ent case the assent of the plaintiffs is proved by their continued anxiety and wish to have 240

that done which the defendants a.t length agreed to do.

Mason, in reply.

The question upon the merits of this case is very simple. Does the evidence prove a con¬ tract to cancel this policy ; or does it only prove a negotiation on foot, with a view to that sub¬ ject, not terminated?

We hold the latter.

Brown & Ives were not the agents of the plaintiffs, but only the instruments of com¬ munication. They had no power to contract, and the defendants knew it. As well may the postman who carries the letter be called an agent.

The plaintiffs’ letter of 21st of August con¬ tains no proposition, but merely asks for one.

The first offer is made in the note of 26th of August, signed by the secretary.

The letter of the plaintiffs of the 28th accepts what they mistook for the real offer. But the reply of the president, of September 1st, cor¬ rects the mistake and makes a new offer, and rejects the terms contemplated by the plaintiffs. Here, then, the thing ends. Did the plaintiffs’ letter of the 3d renew the proposition? It con¬ tains no proposition; nor does it authorize Brown & Ives to make one. It is merely a let¬ ter of complaint.

They say “if we make this settlement,” thereby clearly showing that they reserved to themselves an option to renew the negotiation or not, as they should judge proper. The worm-eaten state of the ship is alleged as the reason for their hope that the Spanish govern¬ ment would permit them to terminate the voy¬ age at the Havanna; *not that the de-

fendants would permit them to cancel the policy.

Suppose, then, the letter of the 3d of Sep¬ tember as out of the question, would the note of the 6th make a contract, the former negotia¬ tion having ended? The renewal, or acceding by the defendants to a proposition which they had before refused, and which the plaintiffs considered as rejected did not revive the propo¬ sition of the plaintiffs, (if such it may be called,) contained in their letter of the 28th of August ; and they could not be bound without a new assent.

The case is analogous to that of Cooke c. Ox¬ ley, 3 Term Rep. 653, where Oxley having pro¬ posed to sell to Cooke, 266 hogsheads of tobac¬ co, at h certain price, gave him a certain time, at his request, to determine whether he would buy them or not. Cooke, within the time, de¬ termined, to buy them, and gave notice thereof to Oxley; yet Oxley was held not liable in an action for not delivering them; for Cooke not being bound by the original contract, there was no consideration to bind Oxley.

Thus far on the effect of these communica¬ tions as between man and man. We shall now endeavor to show that the defendants have done nothing in the course of this negotiation which was binding on them, and, therefore, the plaintiffs cannot be bound on their part.

It is not pretended that a simple contract can¬ not be dissolved by a parol agreement ; but we say it must be such a parol agreement as will bind both parties.

The note of the 6th is neither an act, nor a declaration of the company. All the powers of

Cranch 2.

162

1804

Head and Amory v. Providence Insurance Co.

;i corporation aggregate are derived either from the common law, or from statute law. By the statute the seal is dispensed with, but other solemnities are substituted, with which they must comply. They can act as a corporate body only in the mode prescribed. There is no law or by-law which gives authenticity to such a note. The president and directors may speak as natural persons, and say what they will do in their corporate capacity, but they cannot bind the corporation but. by the means • 1 63] provided by law. They may make preliminary arrangements, but they can con¬ clude nothing. That this was their own under¬ standing, is evident by their not having made any record of these transactions upon their books, and leaving everything upon this loose, unsigned, note of their secretary.

It has been said that there was no exception to the testimony of Mr. Jackson ; but the fact is not so. The words of the bill of excep¬ tions are, “whereupon the counsel for the said Head & Amory did except to the aforesaid evidence,” which includes the whole evidence ■offered on the part of the defendants.

Customs are of two kinds; general and spe¬ cial. The latter only are the proper subjects of . oral proof ; but then they must be proved by facts, and not by opinions. In this case the testimony was not as to fact or opinion, but as to the law. 2 Burr. 1216, 1220, Edie v. E. 1. Company.

February 25th. Marshall, Ch. •/. , deliv¬ ered the opinion of the Court.

This is a declaration on a policy of insur¬ ance, and the only question in the case is, whether the policy was vacated by a subse¬ quent agreement between the parties. This question depends entirely on the legal opera¬ tion of certain written communications between them, which appear in the record.

Messrs. Head & Amory, of Boston, had ob¬ tained insurance through their correspondents, Messrs. Brown & Ives, of Providence, on the cargo of the Spanish brig, the Nueva Empressa, at and from Malaga to Vera Cruz, and at and from thence to her port of discharge in Spain. An insurance was afterwards obtained on the brig, at and from Cuba, (she having been chased into the Havanna by British cruisers,) to her port of delivery in Spain.

The vessel having been detained in port, closely watched by cruisers till she was worm- eaten, Head & Amory became desirous of termin- 104] ating their risk at the Havanna, which could only be effected by permission of the government at that place, which was not to be obtained but with considerable expense. They therefore applied to the insurance company, through their correspondents, Brown & Ives, by a letter dated Boston, the 21st. August, 1800, to know whether a conditional permission could be obtained from the underwriters, to terminate the voyage at the Havanna, provided the con¬ sent of the government could be obtained ; and if so, on what terms that conditional permission would be granted.

The underwriters refused to make any con¬ ditional agreement, but offered to vacate both policies on terms mentioned in a letter signed by their president. Misunderstanding the letter as a proposition for vacating the policy on the cargo only, the terms proposed were acceded I Cranch 2. Vol. 2.

to, and a letter was written from Head & Amory to Browm & Ives, declaring their ac¬ ceptance of the proposition, understood to be made by the insurance company, in such a manner as very clearly to show the mistake under which _ is was written. On seeing this letter, the misapprehension of the parties was discovered and explained, and the agreement considered as not being made ; at. the same time a new proposition was made for settling both policies. To this letter, declining absolutely any agreement respecting either policy singly, and proposing specific terms on which they would settle both. Head & Amory returned an answer dated the 3d of September, 1800, which was adressed to Brown & Ives, and is in these words. (See ante, p. 131.)

This letter was laid by Brown & Ives before the company, and their secretary returned the following note without a signature.

(See the note of September 6th, 1800, ante, p. 132.)

This note was forwarded by Brown & Ives to Messrs. Head & Amory, but before they re¬ ceived it, intelligence came to hand that the Nueva Empressa had sailed from the Havanna, and had been captured, and was condemned as a prize,' late in the month of August. Head & Amory, therefore, insisted on their policy.

*Every thing respecting the delays

in the communications is laid out of the case, because they do not appear to the court in any manner to affect it.

Richard Jackson, the president of another marine insurance company, was also examined, and testified that in effecting insurance, or settling a policy, or making any adjustment or agreement about insurance, the assent of the parties to doing a. thing was in all respects as binding on the parties, as the thing done, ac¬ cording to the usage and practice among under¬ writers.

Upon this testimony, the court instructed the jury that the agreement to cancel the policy for the cargo was fully proved, and they ought to find for the defendants on that count. The jury accordingly found for the defendants, and the plaintiffs have sued out a writ of error to bring the cause into this court.

The opinion and instructions of the judges of the circuit court to the jury are said to be erroneous, because.

The communications which have been cited do not import a contract. They were negotia¬ tions preparatory to an agreement, but not an agreement itself.

The letter of the 3d of September, certainly manifests some degree of disappointment, at finding that the agreement supposed to have been concluded had not really been made; and also proves their opinion that the negotiation was not absolutely broken off, but was yet pending. “If we make this settlement,” say they, “ we shall make every effort by money and interest to have the adventure terminated at the Havanna, and the sooner we know the better.” “ The terms we acceded to were very favorable to the company, as it was paying them at the rate of 35 per cent, for the outward premium.”

Yet the letter contains no direction to make any specific propositions to the company, and may be construed either as a mere inquiry

16 241

1(55

Supreme Court of the United States.

1804

whether the company would cancel the policy for the. insurance on the cargo singly, on the terms which had before been understood. to have been offered,- or as a new and positive proposition, the acceptance of which would complete the contract.

1 66] It is also very questionable whether the unsigned note delivered by the secretary is such an acceptance as to form, when taken with the letter of the 3d of September, an absolute agree¬ ment obligatory on the company.

It is a general rule that a corporation can only act in the manner prescribed by law. When its agents do not clothe their proceed¬ ings with those solemnities which are required by the incorporating act, to enable them to bind the company, the informality of the trans¬ action, as has been very properly urged at the bar, is itself conducive to the opinion, that such act was rather considered as manifesting the terms on which they were willing to bind the company, as negotiations preparatory to a conclusive agreement, than as a contract obli¬ gatory on both parties.

The communications stated in the record, lead to an event which might have been so readily completed, that it might have been, and probably was, supposed unnecessary to pass through the previous solemnities of a contract binding themselves to do that which, if really the wish of both parties, might so speedily be accomplished; so short a space of time was requisite to have the policy delivered up and canceled, that the forms of completing a con¬ tract to cancel it might have deemed useless. On this account, and on account of the known incapacities of a body corporate to act or speak but in the manner prescribed by law, it may well be doubted whether communications which between individuals would really constitute an agreement, were viewed by the parties' before the court in any other light, than as ascertain¬ ing the terms on which a contract might be formed.

This course of reasoning relative to the in¬ tent of the parties, is plainly founded on the idea that the note of the 6th of September is, in its legal operation, a mere informal paper, which may perhaps amount to notice of an act, if such act was really performed, but which is not in itself an act of any legal obligation on the company. That if the proposition con¬ tained in the letter of the 3d of September had been regularly accepted, this note might pos- 167] sibly have been considered as notice of that acceptance, but is not in itself an accept¬ ance. If this idea be incorrect, so is the reason¬ ing founded on it. If it be correct, then it follows, that no contract was made, because the proposition of the 3d of September, if it really was one, was not accepted by the com¬ pany before it was withdrawn by Head & Amory. This leads us to inquire,

Whether the unsigned note of the 6th of September be a corporate act obligatory on the company?

Without ascribing to this body, which, in its corporate capacity, is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the com¬ mon law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it, to derive all its 242

powers from that act, and to be capable of ex¬ erting its faculties only in the manner which that act authorizes.

To this source of its being, then, we must recur to ascertain its powers, and to determine whether it can complete a contract by such communications as are in this record.

The act, after incorporating the stockholders, by the name of The Providence Insurance Com¬ pany, and enabling them to perform by that name those things which are necessary for a corporate body, proceeds to define the manner in which those things are to be performed. Their manner of acting is thus defined: “ Be it further enacted, that all policies of assurance and other instruments, made and signed by the president of the said company, or any other officer thereof, according to the ordinances, by¬ laws and regulations of the said company, or of their board of directors, shall be good and effectual in law, to bind and oblige the said company to the performance thereof, in man¬ ner as set forth in the constitution of the said company, hereinafter recited and ratified.”

An instrument, then, to bind the company must be signed by the president, or some other officer, according to the ordinances, by-laws and regulations of the company or board of direct-* ors.

A contract varying a policy is as much[ 168 an instrument as the policy itself, and, there¬ fore, can only be executed in the mannnr pre¬ scribed by law. The force of the policy might indeed have been terminated by actually can¬ celing it, but a contract to cancel it is as solemn an act as a contract to make it, and to become the act of the company must be executed ac¬ cording to the forms in which by law they are enabled to act.

The original constitution of the company, which is engrafted into the act of incorporation does not aid the defendants. That agreement does not appear to dispense with the solemnities which the law is supposed to require. It de¬ mands the additional circumstance that a policy should be countersigned by the secretary.

It appears to the Court, that an act not per¬ formed according to the requisites of the law cannot be considered as the act of the company, in a case relating to the formation or dissolu¬ tion of a policy.

If the testimony of Mr. Jackson is to be un- derstqpd as stating that an assent to the forma¬ tion or dissolution of a policy, if manifested ac¬ cording to the forms required by law, is as bind¬ ing as the actual performance of the act agreed to be done, it is probable that the practice he alludes to is correct. But if he mean to say that this assent may be manifested by parol, the practice cannot receive the sanction of this Court. It would be to dispense with the for¬ malities required by law for valuable purposes, and to enable these artificial bodies to act, and to contract, in a manner essentially different from that prescribed for them by the legislature.

Nor do the cases which have been cited by the gentlemen of the bar appear to the court to apply in principle to this.

An individual has an original capacity to contract and bind himself in such manner as he pleases. For the general security of society, however, from frauds and perjuries, this gen¬ eral power is restricted, and he is disabled from

Cranch 2.

Little et al. v.

making certain contracts by parol. This dis¬ abling act has received constructions which take 160] out of its operation several cases not within the mischief, but which might very possibly be demanded within the strict letter of the law, He who acts hy another acts for him¬ self. He who authorizes another to make a writing for him, makes it himself; but with these bodies which have only a legal existence, it is otherwise. The act of incorporation is to them an enabling act; it gives them all the pow¬ er they possess ; it enables them to contract, and when it prescribes to them a mode of contract¬ ing, they must observe that mode, or the in¬ struments no more creates a contract than if the body had never been incorporated.

_ It is, then, the opinion of this Court, that the circuit court erred in directing the jury that the communications contained in the record in this case amounted to a contract obligatory on the parties, and, therefore, the judgment must be reversed, and the cause remanded for a new trial.

Chase, J. I concur with my brethern as to the operation of the testimony given by the Providence Insurance Company in evidence to the jury, and that it created no legal obligation on the company ; but I am also of opinion that the testimony given by them in evidence was inadmissible, and that the circuit court ought not to have permitted the same to have been given in evidence to the jury.

The judgment of reversal was as follows, viz:

This cause came on to be heard on the trans¬ cript of the record of the circuit court, and was argued by counsel ; on consideration where¬ of, the Court is of opinion, that there is error in the proceedings and judgment of the said cir¬ cuit court in this, that the court gave it in charge to the jury, that the several written pa¬ pers in the record contained, and the testimony of Richard Jackson, in the said record also stated, did in law amount to full proof of a con¬ tract entered into between the plaintiffs and defendants, which was obligatory on both par¬ ties ; whereas it is the opinion of this court, that the instruments of writing and testimony afore¬ said, do not in law amount to a contract. It is 1 7 O] therefore considered by the Court, that the judgment aforesaid be, for this cause, reversed and annulled, and that the cause be remanded to the said circuit court to be again tried, with direction that the testimony, in the said record contained, does not amount to evi¬ dence of a contract concluded between the par¬ ties and that the defendants do pay to the plaint¬ iffs their costs.

Cited.— 12 Wheat. 68, 98, 101; 10 Pet. 380 (n) ; 13 Pet. 587; 6 How. 322; Id. 337; 9 Id. 181; 21 Id. 144; 3 Wall. 669; 4 Biss. 41; 5 Bank. Reg. 106; 5 McLean 197; 3 Wood. & M. 112; 6 Otto 316; 9 Id. 115.

LITTLE et al. v. BARREME et al.

A commander of a ship of war of the United States, in obeying his instructions from the Presi¬ dent of the United States, acts at his peril. If those instructions are not strictly warranted by law, he is answerable in damages to any person injured by their execution.

The act of the 9th of February, 1799, did not au¬ thorize the seizure upon the high seas of any vessel sailing from a French port; and orders of the Pres- I

Cranch 2.

Barreme et al. leg

ident of the United States could not justify such a seizure.

Qm. whether probable cause will excuse from damages ?

ON the 2d of December, 1799, the Danish brigantine Flying Fisli was captured, near the island of Hispaniola, by the United States frigates Boston and General Greene, upon sus¬ picion of violating the act of Congress, usually termed the non-intercourse law, passed on the 9th of February, 1799, vol. 4,p. 244, by the 1st section of which it is enacted, “ That from and after the first day of March next no ship or ves¬ sel owned, hired or employed, wholly or in part, by any person resident within the United States, and which shall depart therefrom, shall be allowed to proceed directly, or from any intermediate port or place, to any port or place within the territory of the French republic, or the dependencies thereof, or to any place in the West Indies, or elsewhere under the acknowl¬ edged government of France, or shall be em¬ ployed in any traffic or commerce with or f<V any person, resident within the jurisdiction or under the. authority of the French republic. And if any ship or vessel, in any voyage there¬ after commencing, and before her return within the United States, shall be voluntarily carried or suffered to proceed to any French port, or place as aforesaid, or shall be employed as afore¬ said contrary to the intent hereof, every such ship or vessel, together with her cargo, shall be forfeited ; and shall accrue, the one-half to the use of the United States, and the other half to the use of any person or persons, citizens of the United States, who will inform and prosecute for the same; and shall be liable to be seized, and may be prosecuted and condemned, in any circuit or district court of the United States, which shall be holden within or for the district where the seizure shall be made.”

*And by the 5th section it is enacted,

‘ ‘ That it shall be lawful for the President of the United States to give instructions to the commanders of the public armed ships of the United States, to stop and examine any ship oi*, vessel of the United States on thehigh seas, which there may be reason to suspect to be engaged in any traffic or commerce contrary to the true tenor hereof; and if, upon examination, it shall ap¬ pear that such ship or vessel is bound or sailing to any port or place within the territory of the French republic, or her dependencies, contrary to the intent of this act, it shall be the duty of the commander of such public armed vessel to seize every such ship or vessel engaged in such illicit commerce, and send the same to the near¬ est port in the United States; and every such ship or vessel, thus bound or sailing to any such port or place, shall, upon due proof thereof, be liable to the like penalties and forfeitures as are provided in and by the first section of this act.”

The instructions given in consequence of this section, bear date the 12th of March, 1799, and are as follows:

Sir — Herewith you will receive an act of ' Congress further to suspend the commercial in • tercourse between the United States and France, and the dependencies thereof, the whole of which requires your attention. But it is the command of the President that you consider particularly the fifth section as part of your instructions, and govern yourself accordingly.

243

171

Supreme Court of the United States.

1804

‘ ‘ A proper discharge of the important duties enjoined on you, arising out of this act, will re¬ quire the exercise of a sound and impartial judgment. You are-not only to do all that in you lies to prevent all intercourse, whether di¬ rect or circuitous, between the ports of the Unit¬ ed States and those of France and her depen¬ dencies, in cases where the vessels or cargoes are apparently, as well as really, American, and protected by American papers only; but you are to be vigilant that vessels or cargoes really American, but covered by Danish or other for¬ eign papers, and bound to or from French ports, do not escape you.

1 72] “ Whenever, on just suspicion, you

send a vessel into port to be dealt with accord¬ ing to the aforementioned law, besides sending with her all her papers, send all the evidence you can obtain to support your suspicions, and effect her condemnation :

“ At the same time that you are thus atten¬ tive to fulfil the objects of the law, you are to b5 extremely careful not to harass or injure the trade of foreign nations with whom we are at peace, nor the fair trade of our own citizens. ”

In the district court of Massachusetts, the vessel and cargo were ordered to be restored, without damages or costs. Upon the question of damages, the honorable Judge Lowmll de¬ livered the following opinion.

‘ ‘ This libel is founded on the statutes of the United States, made to suspend the commercial intercourse between the United States and France, and the dependencies thereof. The libellants not having produced sufficient proof to bring this vessel and cargo so far within the provisions of these statutes as to incur a forfeit¬ ure thereof, the same has been decreed to be delivered to the claimants.

‘ ‘ The question remaining to be decided is, whether the claimants are entitled to damages, which they suggest to have arisen to them, or those for whom they claim, by the capture and detention.

‘ ‘ The facts which appear and are material to this question are, that the vessel was owned, and her cargo, by Samuel Goodman, a Prus¬ sian by birth, but now an inhabitant of the Danish island of St. Thomas ; that the master was born in, and is now of, the same island, but for several years had been employed in ves¬ sels of citizens of the United States, and sailed out of our ports; that he speaks our language perfectly, in the accent of an American, and has the appearance of being one. The mate is a citizen of the United States, born here, and having always continued such. The rest of the seamen are Englishmen, Portuguese and Negroes. The supercargo a Frenchman. The 1 7 3] vessel had carried a cargo of provis¬ ions and drygoods from St. Thomas’s to Jere- mie, and was returning thither, loaded with coffee when captured. That during the chase by the American frigates, the master threw overboard the log-book, and certain other papers. That there was on board a protest signed by the master, supercargo and several seamen, in which they declared that the vessel had been bound from St. Thomas’s to Port-au- Prince, and was compelled by Rigaud’s vessels to go into Jeremie, which was false and totally unfounded; and that, after the capture, the master inquired of his seamen whether they 244

would stand by him respecting this pretense.

“ That the statutes of the United States pro¬ hibiting intercourse with France and its de¬ pendencies had been long before known at St. Thomas’s, and that it had been since a common practice there to cover American property for the purpose of eluding the law.

“If a war of a common nature had existed between the United States and France, no ques¬ tion would be made but the false papers found on board, the destruction of the log-book and other paper, would be a sufficient excuse for the capture, detention and consequent damages. It is only to be considered whether the same principles, as they respect neutrals, are to be ap¬ plied to this case.

“My mind has found much difficulty in set¬ tling this question. It is one altogether new to me, and arises from the peculiar imperfect war existing at this time between the United States and France. I have embraced an opin¬ ion with much diffidence, and am happy that it may be revised in the superior courts of the United States.

“ On what principles is the right of belliger¬ ent powers to examine neutral vessels and the duty of neutrals to furnish their ship with proper papers, and to avoid such conduct as may give cause to suspect they are other than they pretend to be, founded? Do they not necessarily result from a compromise of their respective rights in a state of war? Neither of the belligerent ^powers have

an original and perfect right to capture the property of neutrals, but they have a right, un¬ less restrained by treaty, however disguised or covered by the aid of neutrals. 1 It is a breach of neutrality to attempt to defeat this right. The practice of nations, therefore, for many ages has been, on the one hand to exercise, and on the other to prevent, this examination, and to establish a principle that neutral vessels shall be furnished with the usual documents to prove their neutral state ; shall destroy none of their papers, nor shall carry false papers, under the hazard of being exposed to every inconvenience resulting from capture, examination and deten¬ tion; except the eventual condemnation of the property ; and even this, by some writers, has been held to be lawful, and enforced by some great maritime powers. Every maritime nation must be involved in the war on the side of one or the qther of the belligerent powers, but from the establishment of these principles. It is not the edicts, statutes or regulations of any partic¬ ular nation which confer these rights, or im¬ pose these duties. They are the result of com¬ mon practice, long existing, often recognized, and founded on pacific principles. Whenever a state of war exists, these rights and duties exist.

“It does not appear to me to be material what is the nature of the war, general or limit¬ ed. Nothing can be required of neutrals but to avoid duplicity. Sufficient notice to neu¬ trals of the existing state of hostilities is all that is necessary to attach to them the duties, and to belligerent nations the rights, resulting from

I.— It is believed that there has been an error in copying this passage. It is, however, printed ver¬ batim from the transcript of the record. The words to be supplied probably are, “to search for and seize the property of their enemies ” to be in¬ serted after the word “ treaty.”

Cranch 2.

174

Little et al. v. Barreme et al.

1804

a state of war. This notice is given in differ¬ ent ways, by proclamations, heralds, statutes published, and even by the mere existence of hostilities for a length of time. As the island of St. Thomas, being a dependency of a neutral nation, situated near the dependencies of the belligerent power with whom the United States had prohibited intercourse, and having had long and full knowledge of the state of things, its 1 7 5] inhabitants were, as I conceive, bound not to interfere or attempt to defeat the mea¬ sures taken by our government in their lim¬ ited war. We find, however, that these at¬ tempts have been frequent; that American ves¬ sels have, in many instances, been covered in that island, and the trade which our govern¬ ment has interdicted has been thus carried on. It behooved, then, those of its inhabitants who would avoid the inconveniences of restraint to act with openness, and avoid fraud and its ap¬ pearances.

‘‘This construction of the state in which the United States are, (although I am of opinion that, abstractedly from other considerations, it would give them the rights of belligerent pow¬ ers,) places the neutral powers in no new pre¬ dicament, nor imposes the necessity of any new documents, or other conduct than they were obliged to from the pre-existing state of war between most of the great naval powers.

“ On the whole, I am of opinion that no damages are to be paid the claimants for the capture and detention, and do so decree, and that each party bear their own costs.”

From this decree the claimants appealed to the circuit court, where it was reversed, and 8,504 dollars damages were given.

The following is the decree of the circuit court.

“This court having fully heard the parties on the said appeal, finds the facts stated in the said decree to be true, and that the said Little had instructions from the President of the United States, on which the action in the said libel is founded, a copy of which instructions is on file. And it further appearing that the said brigantine and her cargo were Danish, and neutral property, and that the said George Little knew that the said brig at the time of the said capture wms bound and sailing from Jeremie to St. Thomas’s, a Danish and neutral port, and not to any French port ; this court is of opinion that although Captain Little had a right to stop and examine the said brig, in 176 ] case of suspecting her to be engaged in any commerce contrary to the act of the 9th of February, 1799, yet that he was not warranted by law to capture and send her to a port of the United States. That it was at his risk and peril if the property was neutral ; and that a probable cause to suspect the vessel and cargo American will not, in such case, excuse a capture and sending to port.

“ It is, therefore, considered, adjudged, and decreed by this court, that the said decree respecting damages and costs be, and it is here¬ by reversed, and that the said claimants re¬ cover their damages and costs.”

The damages being assessed by assessors ap¬ pointed by the court, a final sentence was pro¬ nounced, from which the captors appealed to this court.

The cause was argued at December term, Cranch 2.

1801, _ by Dexter, for the appellants, and by Martin and Mason, for the claimants.

February 27. Marshall, Ch. now de¬ livered the opinion of the Court.

The Flying Fish, a Danish vessel, having on board Danish ,and neutral property, was cap¬ tured on the 2d of December, 1799, on a voy¬ age from Jeremie to St. Thomas’s, by the United States frigate Boston, commanded by Captain Little, and brought into the port of Boston, where she was libelled as an American vessel that had violated the non-intercourse law.

The judge before whom the cause was tried, directed a restoration of the vessel and cargo as neutral property, but refused to award damages for the capture and detention, be¬ cause, in his opinion, there was probable cause to suspect the vessel to be American.

On an appeal to the circuit court this sen¬ tence was reversed, because the Flying Fish was on a voyage from, not to, a French port, and was, therefore, had she even been an American vessel, not liable to capture on the high seas.

*During the hostilities between the

United States and France, an act for the sus¬ pension of all intercourse between the two nations was annually passed. That under which the Flying Fish was condemned, de¬ clared every vessel owned, hired or employed, wholly or in part, by an American, which should be employed in any traffic or commerce with or for any person resident within the jurisdiction, or under the authority, of the French Republic, to be forfeited together with her cargo ; the one half to accrue to the United States, and the other to any person or persons, citizens of the United States, who will inform and prosecute for the same.

The 5th section of this act authorizes the President of the United States to instruct the commanders of armed vessels “to stop and examine any ship or vessel of the United States on the high seas, which there may be reason to suspect to be engaged in any traffic or commerce contrary to the true tenor of the act, and if upon examination it should appear that such ship or vessel is bound, or sailing to, any port or place within the territory of the French republic or her dependencies, it. is ren¬ dered lawful to seize such vessel, and send her into the United States for adjudication.

It is by no means clear that the President of the United States, whose high duty it is to “.take care that the laws be faithfully ex¬ ecuted,” and who is commander in chief of the armies and navies of the United States, might not, without any special authority for that purpose, in the then existing state of things, have empowered the offi¬ cers commanding the armed vessels of the United States, to seize and send into port for adjudication, American vessels which were for¬ feited by being engaged in this illicit com¬ merce. But when if is observed that the gen¬ eral clause of the first section of the “act, which declares that such vessels may be seized, and may be prosecuted in any district or cir¬ cuit court, which shall be holden within or for the district where the seizure shall be made,” obviously contemplates a seizure within the United States ; and that the 5th section gives

245

177

Supreme Court of

a special authority to seize on the high seas, and limits that authority to the seizure of vessels hound, or sailing to, a French port, the legis- 178 ] lature seems, to have prescribed that the manner in which this law shall be carried into execution, was to exclude a seizure of any( vessel not hound to a French port. Of conse¬ quence, however strong the circumstances might he, which induced Captain Little to sus¬ pect the Flying Fish to he an American vessel, they could not excuse the detention of her, since he would not have been authorized to detain her had she been really American.

It was so obvious, that if only vessels sailing to a French port could be seized on the high seas, that the law would he very often evaded, that this act of Congress appears to have re¬ ceived a different construction from the ex¬ ecutive of the United States; a construction much better calculated to give it effect.

A copy of this act was transmitted by the Secretary of the Navy, to the captains of the armed vessels, who were ordered to consider the 5th section as a part of their instructions. The same letter contained the following clause :

‘ ‘ A proper discharge of the important duties enjoined on you, arising out of this act, will require the exercise of a sound and an impar¬ tial judgment. You are not only to do all that in you lies to prevent all intercourse, whether direct or circuitous, between the ports of the United States and those of France or her de¬ pendencies, where the vessels are apparently as well as really American, and protected by American papers only, but you are to be vigi¬ lant that vessels or cargoes really American, but covered by Danish or other foreign papers, and bound to or from French ports, do not escape you. ”

These orders given by the executive under the construction of the act of Congress made by the department to which its execution was assigned, enjoin the seizure of American ves¬ sels sailing from a French Port. Is the officer who obeys them liable for damages sustained by this misconstruction of the act, or will his orders excuse him? If his instructions afford him no protection, then the law must take its course, and he must pay such damages as are legally awarded against him ; if they excuse an act not otherwise excusable, it would then be necessary to inquire whether this is a case in 1 7 9] which the probable cause which ex¬ isted to induce a suspicion that the vessel was American, would excuse the captor from dam¬ ages when the vessel appeared in fact to be neutral.

1 confess the first bias of my mind was very strong in favor of the opinion that though the instructions of the executive could not give a right, they might yet excuse from damages. I was much inclined to think that a distinction ought to be taken between acts of civil and those of military officers; and between proceed¬ ings within the body of the country and those on the high seas. That implicit obedience which military men usually pay to the orders of their superiors, which indeed is indispensably necessary to every military system, appeared to me strongly to imply the principle that those orders, if not to perform a prohibited act, ought to justify the person whose general duty it is to obey them, and who is placed by the laws of 24 ti

the United States. 1804

his country in a situation which in general re¬ quired that he should obey them. I was strongly inclined to think that where, in consequence of orders from the legitimate authority, a vessel, is seized with pure intention, the claim of the in¬ jured party for damages would be against that government from which the orders proceeded, and would be a proper subject for negotiation. But I have been convinced that I was mistaken, and I have receded from this first opinion. I acquiesce in that of my brethren, which is, that the instructions cannot change the nature, of the transaction, or legalize an act which, with¬ out those instructions, would have been a plain trespass.

It becomes, therefore, unnecessary to inquire whether the probable cause afforded by the conduct of the Flying Fish to suspect her of being an American wTould excuse Captain Little from damages for having seized and sent her into port, since, had she been an American, the seizure would have been unlawful ?

Captain Little, then, must be answerable in damages to the owner of this neutral vessel, and as the account taken by order of the circuit court is not objectionable on its face, and has not been excepted to by counsel before the proper tribunal, this court can receive no ob¬ jection to it.

There appears, then, to be no error in the judgment of the circuit court, and it must be affirmed with costs.

Distinguished — 3 Cranch C. C. 400, 401.

Cited— 4 How. 149 ; 1 Mason 103 ; 3 Mason 123 ; 2 Cranch C. C. 545 ; 4 Cliff. 411. .

*DUNLOP & CO. v. BALL.

To induce a presumption of payment from the age of a bond, 20 years must have elapsed exclusive of the period of the plaintiff’s disability.

Legal impediments to the recovery of British debts existed in Virginia until the year 1793.

THIS was a writ of error to the circuit court of the District of Columbia, sitting in Alex¬ andria. The only question in the case arose upon the following bill of exceptions :

“ In this case the plaintiffs were admitted to be, and always to have been, British subjects, residing in Great Britain, and the defendant to be, and. have been, a native and always a citi¬ zen of (Tie now state of Virginia, and this suit was commenced on the day of , in

the year 1802. The debt was contracted in 1773, in Virginia, at which time the bond was executed on which the suit was brought. It was also admitted that the plaintiffs had an agent authorized to collect their debts, so far as the plaintiffs could authorize the same to be collected, during the whole time from the date of the bond to this day ; which agent resided in the county in which the defendant lived ; also open war subsisted between Great Britain and Virginia, from the 19th day of April, 1775, un¬ til September, 1783.

“Further to repel the presumption of pay¬ ment, the plaintiffs produced the following acts of the general assembly of Virginia upon the subject of British debts contracted before the peace, which acts are in the words following:” (Here were inserted the acts dated in March,

Cranch 2.

180

Dunlop &

lw85, and Dec. 1787; May, 1781, and Nov. 1781 ;) “And the fourth article of the treaty of peace of 1 1 83, and the 6th article of the treaty •of peace of 1794, between Great Britain and the L1 nited btcites. Tlie plaintiffs also gave evi- dence that William Wilson, their agent, deliv¬ ered over the bond to William Hunter, Jim. in 1776, to be collected, at which time he (Will¬ iam Wilson) went to Europe. And when he returned, in 1784, he received back the bond from W. Hunter. Some time after the year 1789, he delivered the said bond to James John¬ son for collection, who returned it, and neither of those persons stated that the money, or any part, was collected; that Johnson died in 1797.

Whereupon the counsel for the defendant prayed the court to instruct tlie jury, that from the length of time they ought to presume pay¬ ment of the aforesaid bond. Upon which the court instructed the jury that from the 1 8 1] length/)f time stated in the facts above •agreed on, the bond, in law, is presumed satis¬ fied, unless they should find from the evidence that interest was paid on the bond within 20 years from the 5tli of September, 1775, (the time of the last payment,) or that a suit or de¬ mand was made on the said bond within 20 years from the last-mentioned time, exclusive {in both cases) of five years, five months, and twenty days, taken out of tlie act of limita¬ tions.

To which opinion of the Court the plaintiffs, by their counsel, except, &c.

Tlie defendant relied on tlie plea of payment, -and on the length of time to support it,

E. .1. Lee, for the plaintiffs in error, relied principally upon the legal impediments which •existed in Virginia, to repel the presumption ■arising from tlie lapse of time.

He contended that the rule that tlie lapse of 20 years shall induce a presumption of payment of a bond, is not an absolute and arbitrary rule, but at most is only prima facie evidence, and induces nothing more than a presumption.

Any circumstances which can reasonably ac¬ count for the delay of tlie plaintiffs in prose¬ cuting tlieir right, without supposing the bond to be satisfied, may be given in evidence to de¬ stroy that presumption.

From the year 1774 to 1791, the plaintiffs were incapacitated to maintain a suit, and to recover the money by legal process.

The first impediment was caused by the ex¬ piration of the fee bill on the 12th of Decem¬ ber, 1774, whereby the courts of justice were shut against all persons. This impediment was general, and continued until the commence¬ ment of the war, on the 19th of April, 1775.

From this period until the peace, in Septem¬ ber, 1783, the state of war prevented British subjects from bringing suits in our courts, if no •other impediment had existed. The first act of assembly of Virginia, applying to British cred¬ itors in particular, is that passed in October, 182*] 1777, sequestering ^British property, and suspending executions, until the further order of the legislature, in all cases where a British subject was plaintiff, and a citizen of the commonwealth defendant. Chancery re- rixal of Laws, p. 6J.

The 2d act of impediment is that of Novem¬ ber, 1781, c. 22, s. 3, p. 147, to suspend execu¬ tions in certain cases.

C'ranch 2.

Co. v. Ball.

The 3d is the act of May, 1782, c. 44, s. 2, p. 165, to repeal so much of a former act as sus¬ pends the issuing executions upon certain judg¬ ments until December, 1783.

The 4th is the act of October, 1782, to amend an act entitled ^m act to repeal so much of a former act as suspends the issuing of execu¬ tions on certain judgments until December,

The 5th is the act of December, 1783, c. 45, p. 182, to revive and continue in force the sev¬ eral acts of assembly for suspending the issuing of executions on certain judgments until De cember, 1783, p. 218. This last act expired in July, 1784.

If the legal impediments had ceased in the year 1784 with the expiration of this act, we should still have been in time with our suit : for it is brought within twenty years from that time. But these impediments did not cease at that period, but were still continued by the acts of 1785 and 1787.

In addition to these legal impediments, creat¬ ed by the acts of the legislature, were the deci¬ sions of juries and courts of law who supported the plea in bar that the plaintiff was a British subject for several years afterwards.

The report of the commissioners under -the 6th art. of the treaty with Great Britain men¬ tions a number of cases decided in the courts of Virginia to that effect, from which two only are supposed necessary to be cited.

The first is the case of Warwick’s Administra¬ tors v. Gaskins, in Lancaster county, upon the plea that the testator was a British subject; the suit was dismissed in March, 1788.

*The next case is that of Gibson, Bun-

aldson & Hamilton, plaintiffs, against Bannis¬ ter's Executors, defendants, in Prince George’s county, August , 1791, in which the plea that the •plaintiffs were British subjects was sustained.

The fact is notorious that it was the general opinion of the inhabitants of the state, and of juries, that a British debt could not be recover¬ ed. This is acknowledged to be the case in Mr. Chancellor Wythe’s report of the case of Page v. Braxton, p. 127, in the year 1793, which was the first in which it had been decided in any of the superior courts that a British debt was re¬ coverable.

Marshall, Oh. J. There can be no doubt of this fact. The only difficulty is, to show that it requires 20 years after the removal of the im¬ pediments, to create the presumption of pay¬ ment. It may be a doubt, whether the same time after the removal of the impediments is necessary to raise the presumption, as if the bond had borne date at the time of such re¬ moval.

Swann, for the defendant, contended, that the time between the 19th of April, 1775, and Sept. 1783, being deducted from the age of the bond when put in suit, the residue being about 20 years and 6 months, should be considered as the lapse of time which was to induce the presump¬ tion that the disability of the plaintiff ceased on the ratification of the treaty of peace. There are no cases decided in the superior courts of Virginia, in which the plea of disability of the plaintiff, as being a British subject, has been al¬ lowed since the peace. The cases cited are coun¬ ty court cases, and do not appear in the record. They are facts which this court cannot notice.

247

183

Supreme Court op the United States.

1804

But if we travel out of the record, other cases may he cited from other counties, in which con¬ trary decisions have taken place. It is a fact that in Fairfax county, where the defendant always resided, British debts could always be recovered since the year 1783. If the cases cited against us are admitted to rebut the presumption, this fact is equally strong, and ought to be ad¬ mitted to support it.

Lee, in reply. Although it was stipulated by

the treaty *that all legal impediments to the recovery of debts should be removed, yet that did not alter the existing state of things. The obnoxious laws remained in full force in practice. The fact was, that the legal impedi¬ ments were not removed. We are not now to consider wliat the law ought to have been, but what it was in practice. For if the impossibil¬ ity of recovering the debt still remained, it de¬ stroyed all presumption arising from the lapse of time.

February 38. Marshall, Oh. J. , delivered the opinion of the Court. The only circumstance which could create a question in this case is, that 30 years had not elapsed, exclusive of the period during which the plaintiffs were under a legal disability to recover, before the action was brought.

The principle, upon which the presumption of payment arises from the lapse of time, is a reasonable principle, and may be rebutted by any facts which destroy the reason of the rule.

That no presumption could arise during a state of war, in which the plaintiff was an alien enemy, is too clear to admit of doubt. But it is not so clear that, upon a bond so old as this, the same length of time after the removal of the disability is necessary to raise the presumption, as would be required if the bond had borne date at the time of such removal.

It appears, from the decisions of the courts of Virginia, from the pleas in bar in the federal courts, and particularly from the observations of the Chancellor of Virginia, in the case cited, that it was the general understanding of the in¬ habitants of that state, that British debts could not be recovered: And, until the year 1793, there was no decision of the superior courts that such debts were recoverable.

The only question is, whether, in case of an old debt, the same time is required to raise the presumption, as in the case of a debt accruing since the impediments have been removed.

In such a case it is not easy to establish a new

rule, and *tlie Court think it best to ad¬ here to the old decisions, that twenty years must have elapsed exclusive of the period of the plaintiff’s disability ; and are of opinion that the circuit court erred in directing the jury that pay¬ ment ought to be presumed.

The judgment of the Court is entered upon the minutes in the following terms :

The Court having heard the arguments of counsel, and maturely considered the same, is of opinion (and do adjudge, order, and decree accordingly) that the circuit court erred in in¬ structing the jury, ‘ ‘ that from the length of time, they were to presume the bond, in the record mentioned, to be satisfied, unless they should find, from the evidence, that interest was paid on the bond within twenty years from the 5th of September, 1775, the time of the last pay¬ ment,) or that a suit or demand was made on 248

said bond within twenty years from the last mentioned time, exclusive, in both cases, of five years,, five months, and twenty days, taken out of the act of limitations there being circum¬ stances in this case which oppose the presump¬ tion which would have arisen from the length of time which has elapsed since the date of the- bond.

And this Court doth further adjudge, order, and decree, that this cause be remanded to the said circuit court, to be there tried, with direc¬ tions that there is no presumption of payment of the said bond, as directed by the said circuit court.

Cited— 8 Pet. 420 ; 4 McLean 284.