HEAD AMORY v. THE PROVIDENCE INSURANCE COMPANY

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.

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

3. That the court ought to have directed the jury that the evidence proved no contract of the plaintiffs to discharge the first policy

4. That if the evidence did prove a contract, it should have been given, not in this, but another action.

5. That the judgment and proceedings were altogether erroneous.

The first and last of these assignments of error, 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 argument, 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 novo 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. 227. (a) The 2d 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 allegation 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, 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 admitted,

1. Because it was all evidence of a supposed parol agreement.

2. Because part of it was given as proof of the acts of a corporation.

3. Because another part was testimony to a 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 Company 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 contract; but as this is a deviation from a very general and important principle of law, it has never been done but where it was necessary to prevent fraud on the part of the party claiming the benefit of the written contract, and where the parol agreement has been 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 constitution of the Providence Insurance Company, they are authorised to make policies and other instruments under the signature of their President, countersigned by their Secretary. In the evidence excepted against there are three letters or notes which were admitted as proofs of the Company's acts, neither of which is authenticated 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, 449, 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 indeed; but altogether principle, without reference to any fact. Among underwriters, says he, promise is in all respects as binding as performance. 1 Bl. Com. 75, 76.

The third assignment of error is, that 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 examine 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 contained in all. From the tenor of the whole correspondence there is no evidence of an intention by either of the parties to make a contract for cancelling 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 indeed 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 terminate the adventure there; where they supposed the vessel still to be. But this was explicitly denied by the defendants; and this denial itself serves strongly to shew 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 cancelling 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 cancelling the policy; and on the other by giving 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 contemplation of either to make a bargain for discharging 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 bargain 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 settle conditionally one of the policies.

The note of the defendants in answer, contained in the letter of Brown and Ives of 26th August, refuses to make a conditional settlement; but offers to cancel the policies, retaining 25 per cent of the premium upon both.

Let it here be remarked, that although the defendants made this offer, supposing it bottomed on the intimations of the plaintiffs' first letter, yet it was founded upon a gross mistake of the Insurance Company, not only as to those intimations, but as to the state of the two policies at that time. They have in their third note expressly declared that their intention and expectation in the first was to cancel both the policies; 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 outward voyage insured by this instrument had been safely performed. The return voyage had commenced; and in its progress the vessel had 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 voyage, at and from the Havanna to Europe, and the premium was at 33 1-3 per cent.

On the first policy the outward voyage was completed, and the homeward voyage had commenced. No apportionment of the premium 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 risque they had incurred.

On the second policy the risque had barely commenced, as they supposed. Their intention was if they could obtain permission from the government 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 premium; 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 construction 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.

In the second place, it furnishes a violent presumption that the defendants had at the time no idea that they were engaged in the serious and deliberate employment of making a contract — a contract too, which the now contend 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 conditions, and so minute and discriminative in the effect of all its stipulations, as a policy of insurance. An individual underwriter when he pledges himself by his signature to indemnify a merchant for the numerous and deplorable calamities to which navigation is liable, must feel himself bound by all the ties of duty to himself and his fellow creature, 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 deliberative 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 legislature under whose sanction their proceedings are regulated, and to their country which is interested 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 entrusted 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 negligence as in the eye of the law is equivalent to fraud? For the honour 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 contracting, 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 plaintiffs 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 merchandize. But in accepting it the plaintiffs add conditions, and there is no evidence that these conditions 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 mistake.

This mistake on the part of the plaintiffs was very natural. They either did not perceive the s 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 plural of the 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 contract. There was nothing but mistake on both sides.

The next of these papers is the second letter signed by the president of the Insurance Company, 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 policies 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 shews that the Company had no idea of having agreed to any thing. In both they say they will agree, necessarily implying a farther act on their part to complete the settlement, even if their offers had been accepted.

We come now to the plaintiffs' letter of September 3d, which in the opinion of the learned and lamented judge who tried the cause, contained 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 itself to dissolve the policy. With the utmost deference for his opinion, and the highest respect for his memory, we apprehend there was error both in regard to his idea of this letter, and of the operation of the laws of insurance 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 policy's on vessels and freight will of course be withdrawn at the usual custom. But they will not make on the condition of the other. And in the next sentence, they most unequivocally shew 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 favourable to the company." Each of these expressions indicates that they considered the former transactions as given up; and that they had no idea of binding themselves 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 6th 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 respected 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 express their willingness to accede to the plaintiffs' 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 merchandize at 25 per cent. Nothing is said about 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 completion of a solemn bargain? They were willing to accede to a proposition; they go on to specify that proposition, and in specifying it they leave out half the particulars, especially that important one which the proposition contained, the cessation of the risk.

It may be said that this is scrutinizing with hypercritical nicety the expressions of a loose note, the terms of which were not so accurately weighed; and which was not drawn up by a special pleader. But it may be asked, is it just, rational, or proper that such unguarded immature notes as this, should by the solemn sanction of law be adjudged to be of a force and obligation paramount to that of a policy of insurance; 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 law suit. 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 effect of an important instrument, which has gone through the crucible of three hundred years' experience.

The parties never could intend that these inconsiderate, shapeless approximations to a settlement, should of themselves operate as a final settlement.

At the close of this note it is said, " Messrs. Head "Amory will please to send the policy immediately to be cancelled," and after it, "premium note due 12-15 Sept." 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 nothing 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 conscious that the plaintiffs still had their option, either to send the policy to be cancelled, 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 defendants so solicitous to have the policy cancelled, and so punctilious to mark the days of payment for the note, we can give their words no possible 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 considerations of each other.

Both parties must be bound to the performance of their respective promises. One promise cannot be binding and the other remain invalid. To find this time we have sought in vain, through the whole correspondence of the parties. It is equally vain to seek it in the opinion of the court, which is, that nothing remained to be done after the said note of the 6th September, 1800. Here also is a want of precision 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, after the writing of the note; then the engagement of the company would have been contracted, 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 doubtless have 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 external 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 September 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 promise 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 defendants from the 6th of September.

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 transaction, 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 cancelling of the policy, and the taking up of the note, was, and alone could be, the intent of the parties and until that was effected 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 obligated 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 the 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 September to the post-office, their promise was out of their power. According to this system of justice, they had no longer the right or the power to retract from this offer. Their word and their property were pledged; yet the defendants 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, remained in their hands uncancelled, but it had lost all its force and effect. The unsigned note of the secretary, like the ghost of paper money in M'Fingal, had turned it back to rags again. But this was unknown to the plaintiffs; 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 unsigned note an acceptance of that proposal. It has been endeavoured to prove that even admitting this, they did not constitute an agreement sufficient to dissolve the policy. The necessity of fixing a time when the mutual engagements of the parties could take effect must be obvious. The necessity of notice to both parties, that the new engagement had superseded 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 insurance. It is a general maxim of law, as well as an obvious dictate of reason, that every contract 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 the principle that a contract in writing, and signed by the party contracting 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 was, 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 mankind, 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 signature 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 picked 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 dove-tailed into an agreement, as between individuals, we ask whether this can be done when one of the parties is a corporation aggregate? 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 charter 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 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 secretary, unsigned, undirected, and not even indicative of the subject to which it relates, otherwise than in the general terms of " the business."

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 contented 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 uncancelled and the premium note in their hands, something did remain to be done. They would have called upon the plaintiffs for payment of the whole note, and if payment had been refused, would have sued them. What defence could the present plaintiffs have had against their action? Could they have produced all this mass of evidence on their side? Would not the company then have said, we never meant to consider these as the final transactions, 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 ourselves bound until the policy should be cancelled. 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 supposing they could dissolve the force of a previous contract. Surely the court would have admitted the weight of these objections.

They would not have suffered such shapeless nothings as these notes, to be shewn as the formal 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 these papers to prove the promise of the defendant, 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 enforce 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 agreement 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 endeavoured to prove that this transaction was not, and could not possibly be an agreement between the parties, of force and effect to dissolve the obligations of the policy.

1. Because the object of the negotiation was to act, and not to promise; to cancel, and not to make an agreement for cancelling.

2. Because the business was transacted much too loosely on both sides, and especially on that of the company, to shew 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.

4. Because if understood as an agreement, its operation was altogether unequal upon the two parties; all the benefit being on one side, and all the burthen on the other.

5. Because in point of form it could not be an agreement; one of the parties being a corporation; 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 attention, and hope to shew that, in its only possible application to this cause, it is a great mistake; that in the most punctilious court of honour it would not be true; and that, instead of according 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 honour 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 there 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 insurance. 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 insurance, as much as in discharging a policy.

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

The plaintiffs' first letter to Brown and Ives would have said, we want insurance for 10,000 dollars done on the brig at and from the Havanna to Spain. The 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 plaintiffs 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 insure the brig at 25 per cent, and the cargo at another 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 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 misunderstanding, 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 premium note immediately and we will have the policy made."

Now put the case on both sides. — Before the plaintiffs receive this note they have had information that their vessel, which they supposed at the Havanna, had sailed and was safely arrived in Spain. Before that insurance, to which both parties had assented, could be done, there was 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 action either at law or in equity could they have called upon the plaintiffs to pay a premium upon 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 vessel 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 of 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. How can you call upon us for an indemnity we never undertook?"

The assent of the parties is so far from placing an agreement about insurance out of the reach of external events, that it does not, even in numerous instances, prevent the parties themselves from retracting. The contract of insurance is perhaps of all others that of which the obligation most forcibly depends upon performance, in contradistinction to mere assent. To evince this, I will refer to a very ingenious writer upon the subject. — Millar, 110, 383, 434, 534.

I have dwelt so entirely upon this third assignment of error, which appears to me to embrace the vitals of the cause, that I have nothing left to say upon the fourth, which is that if the evidence did prove a contract, it ought not to have been produced in this, but another action.

As to the objections of form; the incomplete verdict of the jury — the inadmissibility of the evidence — the incapacity of a corporation to contract, but by instruments peculiarly authenticated, and the insufficiency of this defence to meet this action; — without feeling myself authorised 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 proceedings as mere communications, and that they never considered themselves or the company as discharged from the obligations of the policy, and of the premium note. I have therefore been anxious to shew that upon principles of law, of justice, of equity and of honour, their opinion was well founded; — that the policy was not discharged — that they were and still are entitled to the indemnity, which they had purchased 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, were the real cause why it was never completed, it seems to me they have no reason to pretend 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 unequivocal 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.

1. It is objected that there can be no contract, 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 reduced to writing, it is sufficient.

The doctrine that a corporation cannot act but by its seal, may answer for the transactions of Bishops, Deans, and Chapters, Abbots and Monks, but according to modern decisions, does not apply to mercantile corporations, and mercantile transactions. — 2 Bac. Ab. 13. Gwillim's Edition. The bank of England, the East-India company, and similar corporations 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 authority 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, bye-laws, "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 herein after recited and ratified."

The 5th article of their constitution provides, that "The directors shall meet statedly once in every week, "and at such other times as the president, or board of "directors, shall think necessary. The president with "two directors in rotation shall assemble daily at the insurance "office for the dispatch of business, agreeably "to the rules and regulations of the general meeting of "stockholders, and of the board of directors." " The " president with the two directors in rotation, shall have " full power and authority, in behalf of the company, to " make insurances upon vessels and property laden therein." "And all policies thereon shall be subscribed by " the president, as president of the Providence Insurance "Company, and countersigned by the secretary; and "the president and committee 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."

If the great object of their institution may be accomplished without seal, a fortiori may the means for attaining that object; omne majus continet inte 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.

2. As to the rule eo ligamine c. it does not always apply to mercantile instruments. A charter party may be dissolved by parol. Abbot 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 insurance, 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 dissolve the policy was made by the same authority which made the policy. By the constitution of the Company the President and two Directors have power to make insurance; and the agreement to dissolve was also by the President and Directors. The note of the 6th of September was in the hand writing of the Secretary, who was acknowledged by both parties as the authorised agent of the Company to signify their assent, and was by him delivered to Brown Ives, the authorised agents of the plaintiffs. It contains the names of the Directors, and purports 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. Williams 419, 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 that Adams was not authorised by the bank under their seal to sign notes for them, but was entrusted and employed by them for that purpose. Upon that indictment the prisoner was convicted; which shews that even in a capital case it was held that a Corporation aggregate may act by an agent although not authorised under the corporate seal.

But the plaintiffs have, by their bill of exceptions, admitted the note of the 6th of September, to be the answer of the Company to their letter of the 3d, and therefore cannot new deny the authority of the Secretary. — Espinasse's Reports, Neal v. Irvin.

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

It is not necessary that the note should have been signed. Their charter authorises the Company to contract without signature. Signature is required only to policies and other instruments. It is not contended that this correspondence 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 Powel on Contracts, 236.

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 necessary 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 precedent, concomitant, or subsequent. 1 Powell, 131.

3. It is objected that the intention of the parties was not to contract, but to act; that there was no agreement, and that the correspondence amounts only to an incomplete negotiation for cancelling the policy.

Nothing more is necessary to make an agreement or contract than the assent of both parties. In this case the plaintiffs requested and the defendants gave their assent. The assent of the plaintiffs was precedent, and required nothing 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 necessary 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 considered 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 finished.

There is no objection in the record to the testimony of Mr. Jackson. It was only evidence of the usage and custom of underwriters in this country; and it is every day's practice to produce witnesses as to the custom of merchants, and the usages of trade. 3 Keb. 444. Stanley v. Ayles. — 2 Strange. 1000. Lumley v. Palmer. — Abbot, 133, 140.

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

But even if we go to the Civil law, here was the precise form of a Roman stipulation. Promittis? Promitto. — Spondes? Spondeo.

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 considered 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 consider 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. Hollingworth; Buller's opinion. Brown Ives were the agents of the plaintiffs, and are to be considered as the plaintiffs 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 6th of September, 1800, to discharge said "policy; but that the same ought to be considered as "settled and terminated in consequence of the plaintiffs' "proposal and the subsequent agreement thereto on the "part of the defendants, as contained in said correspondence."

We admit that notice of accepting a contract must be in reasonable time. But the rule respecting 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 defendants could have recovered only the other half.

Pothier, in his treatise on Obligations, vol. 1. p. 4 5, defines an agreement to be "the assent of two or "more persons, to form an engagement between them, "or to dissolve or modify one already formed. Duorum " vel plurium in idem placitum consensus." "A contract "includes a concurrence of the will of two persons at "least, one of whom makes, and the other accepts the "promise." In the present case the assent of the plaintiffs is proved by their continued anxiety and wish to have that done which the defendants at length agreed to do.

Mason, in reply.

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

We hold the latter.

Brown Ives were not the agents of the plaintiffs, but only the instruments of communication. 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 contains 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 28th accepts what they mistook for the real offer. But the reply of the President, of September 1 st corrects 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 contains no proposition; nor does it authorise Brown Ives to make one. It is merely a letter of complaint.

They say " if WE make this settlement," thereby clearly shewing 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 government would permit them to terminate the voyage at the Havanna; not that the defendants would permit them to cancel the policy.

Suppose then the letter of the 3d of September as out of the question, would the note of the 6th make a contract, the former negotiation 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 proposition 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 analagous to that of Cooke v. Oxley, 3 T.R. 653. where Oxley having proposed to sell to Cooke 266 hogsheads of tobacco at a certain price, gave him a certain time, at his request, to determine whether he would buy them or not. Cooke, within the time, determined 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 communications as between man and man. We shall now endeavour to shew 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 cannot 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 a 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 byelaw 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 provided by law. They may make preliminary arrangements, but they can conclude nothing. That this was their own understanding is evident by their not having made any record of these transactions upon their books, and leaving every thing 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 exceptions 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 special. The latter only are the proper subject 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.I. Company.