
    Cassa Marittima v. Phenix Ins. Co.
    
      (Supreme Court, General Term, First Department.
    
    December 31,1890.)
    Maritime Insurance—Loans on Vessel—Insurable Interest.
    The plaintiff, advancing a loan on a vessel and its freight, took from the defendant a policy of insurance protecting it from any loss it might sustain from loss of the vessel from the dangers of the sea. The plaintiff also took from the master an instrument securing the loan on the vessel and its freight earnings, and providing, among other things, that the owner or master should not take any other advances upon the vessel or its earnings at the port of loading, but that, if they did, they should be bound to return the present loan to the plaintiff, even though the vessel should be lost. The master violated this provision by procuring other advances at the port of loading. The vessel was lost. Held that, such subsequent loan being procured by the master without the knowledge or consent of the plaintiff, its insurable interest in the vessel and freight was not impaired by reason of the violation of said provision, and that it might proceed against the master or owner or against the defendant upon the policy of insurance at its election.
    Appeal from trial term.
    Action by the Cassa Marittima against the Phenix Insurance Company on a policy of insurance; there was judgment for plaintiff and defendant appeals. Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
    
      Edward P. Lyon, for appellant. Edward K. Jones, for respondent.
   Daniels, J.

The recovery herein is for the amount of a loan made by the plaintiff, a corporation existing and doing business in the city of Naples, in the kingdom of Italy, to the master' of the vessel Buoni Amici, for the payment of which her freight was hypothecated as well as the vessel herself. The loan was made at Pensacola, in Florida, where the vessel was then lying, that being a foreign port, and she being an Italian craft. When the loan was .made the agent of the plaintiff took from her master the following instrument:

“Pensacola, Fla., August 31, 1880. £400.

“Fifteen days after arrival at the port of destination, River Plata, or other .intermediate port at which shall end the voyage of my vessel, denominated Buoni Amici, I promise to pay to the order of the Cassa Marittima, of Naples, the sum of four hundred pounds sterling, value received, in cash, as a loan on freight for the last expenses necessary to the undertaking of the voyage from Pensacola to River Plata; and I hereby assign therefor, to the said Cassa Marittima, enough of the present freight to cover the sum of the above loan, with power to collect when due, and I hereby hypothecate ship and freight for repayment of said loan, with priority over every other credit; and in case of total loss the amount received as loan shall not be paid back; and I accept all the conditions set down in the regulations of the Cassa Marittima relating to loans on freight, of which I received a copy. B. Quartine.”

Among the stipulations or regulations accompanying and made a part of it, that numbered 15 is the only one important to be specially considered in the determination of this appeal. By that regulation it was declared that the owner or captain shall not take any other advances upon the same freight at the port of loading, or in such case hold themselves bound to return the pres-sent loan, even though the vessel be lost. The master did in fact violate this regulation by obtaining a further loan before the commencement of the voyage, upon a similar hypothecation, amounting to the sum of $1,100. But that loan w'as made without the knowledge, privity, or consent of the plaintiff. After these loans had been made the defendant made and delivered to F. Dassoir, for account of whom it might concern, its policy of insurance, “on advances against captain’s draft upon the freight of all kinds of lawful goods and merchandise laden, or to be laden, on board the good bark Buoni Amici.” The vessel subsequently proceeded upon her voyage, but before reaching its termination she was so much damaged by perils of the sea as to render it necessary to make the nearest port, and she w'as taken to Port Eads, in the state of Louisiana, where by a survey it was found that she had been so badly damaged as to be unfit to continue her voyage. It was thereupon ended, the cargo discharged, and the vessel sold. Notice thereof, and proof of loss, was served upon the defendant, which refused to pay on account of the violation of this fifteenth regulation by the making of the second loan while the vessel laid at Pensacola, and before the commencement of her voyage. It is, without doubt, essential to the right of the plaintiff to recover on the policy that it should be authorized to resort to the freight for the reimbursement of the loan, and that this authority should continue unimpaired; for without that there would be no insurable interest in the plaintiff. And that right depended upon the fact that payment could alone be secured by the earning of the freight, through the delivery of the cargo at its port of destination. But, as the making of the second loan was without the plaintiff’s knowledge or consent, this right or interest was not defeated by it. The lien or right was created by the loan and the instrument subscribed by the master. It thereby became vested in the plaintiff, and the master was incapable of divesting it by any act or wrong on his part, short of satisfaction of the debt. .The fifteenth regulation did not of itself defeat the interest or lien of .the plaintiffs in the event of a subsequent loan. It did no more than to entitle the lender to proceed against the owner and master for the recovery of the loan, in case it elected so to do. It was in no sense made obligatory that it should abandon its lied upon or interest in the freight, if a violation of this regulation should take place by the act alone of the master. The most that was done was to provide another remedy, which the plaintiff was at liberty to follow or not as it elected. It did not elect to accept that remedy, and, in its effort to secure it for the defendant’s benefit by a suit in Italy against the owners, it was in fact defeated. But, to indemnify itself, the plaintiff has asserted and relied upon the continuance of an insurable interest in itself, arising out of the terms upon which the loan was made; and that it was entitled to do, for this right could only be avoided by its own consent or surrender, or a release or satisfaction having the same effect. McKnight v. Dunlop, 5 N. Y. 537, 544. The wrong of the master, unsanctioned and unapproved by the plaintiff, it is clear on principle, as well as authority, could not be attended with that result. Conard v. Insurance Co., 1 Pet. 386, 437; The Virgin, 8 Pet. 588, 553. In the cases of Stainbanh v. Kenning, 11 C. B. 51, and Stainbanh v. Shepard, 13 C. B. 418, no maritime lien or interest whatever was at any time created, and no hypothecation of the ship or freight took place. And for that reason they maintain no principle which would turn the ■ plaintiff over to the master and owner personally for indemnity, while in this instance that lien or interest was regularly and legally secured. The Draco, 2 Sum. 157. And it was not, and could not be, displaced or contravened by' the wrong of the master, who in no manner represented or acted for the plaintiff. If it be admitted that it gave the plaintiff another ground of action, it was not bound to resort to it, but it could insist still upon the security, which in good faith had been created and provided for it. The Hunter, 1 Ware, 251. There was no concealment or misrepresentation on the part of the plaintiff or its agent, affecting its right to resort to the policy for indemnity after the loss of the vessel; neither was there any breach of warranty established. That is not claimed to have arisen, unless it was created by the final and second loan. But no assurance was given that it should not be made; neither did the policy contain anything prohibiting it, as long as it was without the knowledge or assent of the plaintiff. The most that was done by the fifteenth regulation was that, if such a loan were made, the plaintiff might then resort to the master and owner personally to recover its money. It was a privilege secured to it, not a remedy which it was obliged to adopt. No warranty whatever to this effect appears by the policy. And that fact seems fatal to its existence; for it has been held that a warranty, whose breach produces a loss of the insurance, should appear on the face of the policy. It must be evident in terms or from necessary construction, (Insurance Co., v. Cotheal, 7 Wend. 73, 80;) and neither has here been established, (Owens v. Insurance Co., 56 N. Y. 565, 572, 573; Vilas v. Insurance Co., 72 N. Y. 590.) Upon no other ground was any defense presented to the plaintiff’s action. But its right to recover was legally maintained, and the judgment should be affirmed, with costs. All concur.  