United Kingdom House of Lords Decisions

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Cite as: [1779] UKHL 2_Paton_492

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SCOTTISH_HoL_JURY_COURT

Page: 492↓

(1779) 2 Paton 492

CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND.

No. 113.

John Alston, Alexander Elliot, William Colquhoun, and Others, Appellants

v.

Messrs. Colin Campbell & Co., Merchants in Greenock, and John M'Allister, Respondents

House of Lords, 3d March 1779.

Subject_Sale Absolute or Qualified — Insurance — Insurable Interest.—

A party sold a vessel to his creditor, under a vendition ex facie absolute, but, as shewn by the correspondence, was intended as a security for his debt. He thereafter insured the vessel. Held, on her loss, that he had still an insurable interest,—the sale being merely in security.

Richard Caldwell was owner of the ship Frederick, then on a foreign voyage, and being pressed for money by the respondent M'Allister, who was his creditor to a large amount, Caldwell, in order to satisfy him as far as possible, wrote him with certain securities. He says, “The securities I now enclose you are, 1st, A bill of sale of the Snow Frederick,

Page: 493↓

for which I paid at the outset of her present voyage, £700.”

There was also an assignment of her freight home, and of goods sent out with her.

The bill of sale was an absolute transfer of the ship to M'Allister. The advice from the Captain of the vessel at the time was, that she was then at St. Christopher's, and intended to proceed from thence next day to Jamaica; and M'Allister soon after the sale, procured an insurance of the vessel, on the voyage from Jamaica to her port of delivery in Great Britain or Ireland; but did not succeed, on the terms of premium offered, to procure an insurance for the voyage from St. Christopher's to Jamaica.

The other respondents, Colin Campbell and Company, being also creditors of Caldwell, advised Caldwell to insure the vessel on her voyage from St. Christopher's to Jamaica, and, as a security for debt due them, to open the policy in their name. This was done accordingly some weeks after the sale of the vessel to M'Allister.

Dec. 28, 1773. Date of Policy.

The vessel was lost on her voyage from St. Christopher's to Jamaica in August, previously to this policy,—intelligence of which being only received on 17th January 1774.

Nov. 1733.

The present action was brought against the underwriters, for the sum insured on the vessel in Colin Campbell and Company's names. To which the defence stated was, that the vessel having been previously sold by Caldwell to M'Allister, Caldwell had no insurable interest in the ship at the time of effecting the insurance, and therefore could not recover. To this defence, it was answered, that the sale of the ship to M'Allister was merely as a security for the debt due to him by Caldwell, a fact proved by the correspondence between both at the time of entering into the transaction, and adduced in process. M'Allister also put in his claim.

July 9, 1777.

The Lord Ordinary found, “after considering the correspondence between Caldwell and M'Allister produced, finds that it is now unnecessary to resort to the opinion of merchants, as the case must be determined on a rational and legal construction of said correspondence, as relative to the bill of sale or vendition of the ship. Finds, that though the bill of sale is, by its tenor and ex facie an absolute vendition, yet the same is qualified by the relative correspondence of the parties, which imports only a conveyance in security of the ship, and other particulars mentioned in the said correspondence. Finds, notwithstanding this

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conveyance in security, Caldwell continued to have such legal property and interest in the ship, as entitled him to make insurance upon her; therefore alters the former interlocutor, finds the pursuer entitled to recover the insurance money, and decerns.”

Nov. 19, 1777.

Aug. 5, 1778.

Aug. 8, —

On reclaiming petition, the Court adhered. And an interlocutor was afterwards pronounced, preferring Campbell and Company and M'Allister, pari passu to the sum of £800, which, on representation, was adhered to.

Against these interlocutors the present appeal was brought to the House of Lords.

Pleaded for the Appellants.—The policy was void for want of interest, Caldwell having previously sold the vessel to M'Allister, by a vendition ex facie absolute and unqualified. His insurance in name of Colin Campbell and Co. was therefore invalid, and was not recoverable. Nor was the evidence offered to qualify this deed of vendition admissible, because, although the letters were properly authenticated, it was clear they rather confirm the nature of the deed than qualify its import.

Pleaded for the Respondents. The real transaction, as shown from the whole circumstances and evidence adduced, was no more than a security lodged with M'Allister, the value whereof would of course be allowed to Caldwell when made effectual; but till then his demand against Caldwell remained the same. As, therefore, the loss of the ship must have been sustained by Caldwell, an interest subsisted in him sufficient to support the insurance effected. And this even though the benefit should accrue to M'Allister, as involved in the pledge.

After hearing counsel, Lord Mansfield moved to affirm. It was therefore

Ordered and adjudged that the interlocutors be affirmed, with £80 costs.

Counsel: For Appellants, J. Dunning, Gilb. Elliot.
For Respondents, Al. Wedderburn, Ar. Macdonald.

Unreported in Court of Session.

1779