Central Law Journal St. Louis, October 20, 1923 REFUSAL OF LIABILITY INSUR- In the case of Rumford Falls Paper Co. v. Fidelity & Casualty Co. (92 Me. 574) it appeared that the insurance company had issued to the insured a policy against liability for accident resulting in injuries to or death of any one of the insured's employees, limited to $1,500 for one employee. In case of a claim being made or a suit brought the insurer had full control; the insured being prohibited from settling any claim or suit except at its own expense, or upon written consent of the insurer. An employee of the insured suffered an injury within the terms of the policy, and offered to settle in full for $1,000. This the insurer refused to do, and exercised its exclusive right to defend the suit, "in the name and on behalf of the assured." Upon trial there was a judgment against the insured for $2,500, which it subsequently paid, and brought this action against the insurer to recover the full amount of its loss. It was held that the insurer was liable for only $1,500, the amount to which its liability was limited in the policy. Here the power to decide the question of settlement had been surrendered to the insurance company, and it was only required to exercise good faith in deciding the question. "The defendant company nowhere agrees to settle any judgment, or to indemnify the assured against any judgment that may be recovered against it, beyond the specified limit of $1,500, and the cost of defending the suit. This is clearly the contract which the parties made and the one which they are entitled to have enforced according to its terms." Schmidt v. Travelers Insurance Co. (244 Pa. St. 286) was an action against an insurance company on a policy indemnifying the plaintiff against loss by reason of liability imposed by law upon him for damages on account of bodily injuries accidentally suffered by any person by the maintenance and use of certain automobiles, to recover as damages an amount which the assured was compelled to pay upon a judgment, in excess of the amount it would have had to pay if a settlement had been effected in accordance with an offer made. It was held that a judgment entered for the defendant on demurrer was proper, where it appeared by the statement of claim that the policy provided that "the assured shall not voluntarily assume any liability or settle any claim except at his own cost,' that the insurer "will at its own cost defend against" all suits, and that the insurer "shall not be liable hereunder on account of one person or one accident in excess of the limits of liability applicable thereto as expressed in said declarations, except for the expense incurred by the company in defending suits brought against the assured;" that while the policy was in force an action was brought against the plaintiff to recover for an injury caused by one of his automobiles; that the plaintiff requested the insurer to make a settlement of the claim for an amount in excess of the insurer's liability and offered to contribute the difference; that the insurance company refused to make the settlement and went to trial, which resulted in a judgment in a larger amount against the plaintiff, which it paid; and that the refusal of the insurance company to settle caused a loss to the plaintiff of the difference between the judgment it paid and the insurance money it received less the sum which it was willing to contribute to the settlement proposed. "The insurer was under no obligation to pay in advance of trial and the decision whether to settle or to try was committed to it." In the recent case of Auerbach v. Maryland Casualty Co. (decided July 13, 1923), the New York Court of Appeals held that an automobile accident insurance company whose policy contained the usual standard conditions with respect to investigating accidents and an option to settle or try an action against the insured is not liable for its failure to accept what turned out to have been a favorable offer of compromise. Notwithstanding the insured subsequently suffered judgment greatly in excess of the offer and of his insurance, the liability of the company is limited to the amount stated in the policy, no fraud or neglect on the part of the company being alleged. We quote from the opinion of the Court in the case last cited as follows: "There is nothing in the policy by which the insurance company obligated itself to settle if an opportunity presented itself. It was given the option to settle if it saw fit to do so or to try the action, as it preferred. It, however, was under no legal obligation, either express or implied, to compromise or settle the claims prior to the trial. The plaintiffs when they accepted the policy did so with full knowledge of the fact, if an action were brought, that they surrendered to the insurance company absolute, full and complete control of it, including the settlement or trial. They also knew there was no provision in the policy which obligated the insurance company to pay any amount whatever prior to the rendition of a judgment. The policy was one. indemnifying them 'against loss or liability imposed by law.' The loss or liability here provided for contemplated the liquidation of a claim, if one were. made, by the rendition of a judgment. unless the insurance company saw fit to exercise the option which it had to settle and compromise without a trial. "It is true the insurance company realized prior to the trial that the terms under which a settlement could be had were favorable ones and that the same ought to be accepted. It so advised the plaintiffs in writing. The advice thus given imposed upon it no legal obliga tion to make the settlement. It knew that its liability was limited to $5,000. and while it offered to pay $3,500 towards a settlement that did not impose upon it the obligation to pay the full amount of the policy prior to the trial. The probability that judgments much larger than $6,500 would be recovered was as well known to the plaintiffs as to the insurance company. Each of the parties had full knowledge of all the facts. It is not suggested that the plain tiffs were misled by reason of the sup pression of any of the facts by the insurance company or any fraud practiced upon them by it." NOTES OF IMPORTANT DECISIONS ALL PROPERTY DELIVERED UNDER SINGLE CONTRACT SUBJECT TO LIEN FOR WORK ON ANY PART.-The case of Berlet v. Lehigh Valley Silk Mills (C. C. A. 3rd Cir.), 287 Fed. 769, holds that, where there was a separate contract for each of the five loads of silk delivered to a lien claimant for throwing, the throwster acquired a separate lien on each lot, which was lost when that lot was wholly returned; but if all the property was delivered under a single contract, though the deliveries took place at different times, the lien attached to all the property undelivered for all work done on it and on the property wholly delivered. In this respect the court said: "The throwing was done under a 'general' or 'continuing agreement,' and not under separate agreements for each lot. The Lehigh Mills alleged in the answer that the parties entered into 'general agreement,' and pursuant thereto the Globe Mills from time to time, as set out in the answer, shipped raw silk, which the Lehigh Mills threw. This is admitted in the receiver's reply. Mr. Max Stein, president and manager of the Globe Mills, with whom the agreement was made, testified that no other arrangement' was made than this so-called 'general agreement.' If there was a separate contract for each of the five lots, the throwster acquired a sepa rate lien on each lot, which was lost, however, when that lot of silk was wholly returned. But where property is delivered under a single contract, to have work done thereon which adds to its value, it makes no difference that deliveries take place at different times. The lien attaches to all the property undelivered for all work done on it and on the property already delivered. Morgan v. Congdon, 4 N. Y. 552. Wiles Laundering Co. v. Hahlo, 105 N. Y. 234, 11 N. E. 500, 59 Am. Rep. 496. Was the 'agreement' between the parties in this such as brings it within this last-named principle of law? There was no observed agreement as to quality to be shipped, and consequently to be thrown. There was no time limit during which the agreement was to run. The price had to be fixed on each lot when sent. There was no continuing contract for either party could stop at any time. It seems to us exceedingly doubtful that there was a general or single contract conferring a common-law lien. Neither party was bound to anything." EMPLOYEE RERAILING CAR BLOCKING INTERSTATE COMMERCE IS ENGAGED IN THAT COMMERCE.-An interstate railway company's employee, who was injured while assisting in rerailing a derailed car, which was blocking the movement of cars in interstate commerce, was employed in interstate commerce, within the meaning of the Federal Employers' Liability Act, giving a right of recovery against the carrier for injury to an employee while so employed, although his primary object may have been to replace the car on the railway tracks rather than to clear them for interstate traffic. Shaffer v. Western Maryland R. Co., W. Va., 116 S. E. 749, This case is very like the case of Southern Ry. Co., v. Puckett, 244 U. S. 571, 37 Sup. Ct. 703, 61 L. Ed. 1321, Ann. Cas. 1918B, 69. Plaintiff there was engaged in inspecting cars which had been put in an interstate train; he had inspected about 25, and, while waiting for 12 others to be placed in the train, a collision occurred between other cars of defendant and several tracks of defendant in the railway yards nearby became blocked by the wreckage. One of defendant's employees, O'Berry, was caught and pinned beneath a car. Obeying the printed rules of the company, Puckett went to O'Berry's assistance. He was there instructed by a superior to go and get a "jack" to assist in raising the car so as to extricate O'Berry and clear the tracks of the wreckage. While carrying some blocks for this purpose, plaintiff stumbled over some large clinkers on the roadway near the track and was seriously injured. The court held that while his primary object may have been to rescue O'Berry, yet his act was the first step in clearing the tracks; that his work facilitated interstate transportation, and consequenly he was, when injured, engaged in interstate commerce. THE WANING SIGNIFICANCE OF THE "SEAL."-In the case of Van Ingen v. Belmont et al., it is held, in substance, that an undisclosed principal may sue or be sued on a contract affecting real estate, entered into under seal through the instrumentality of an agent or dummy, and Mr. Justice McCook decreed that defendants be directed to specifically perform a contract to purchase real property entered into by them, as undisclosed principals, through an agent, though the contract was under seal. With the other questions in the case we are not particularly concerned, but it is very significant to note that the learned Court was disposed to minimize the importance of the "seal." In an able article published in 1915 entitled, "The Magic of the Private Seal," Mr. Justice Crane, now a judge of the Court of Appeals, pointed out the decreasing importance of the presence of a seal (15 Col. L. R., 24). In the case of Harris v. Shorall (230 N. Y. 343) Judge Pound, writing for the Court of Appeals, pointed out that "much of the old value and high nature of the seal has been lost," saying in part: * * In New York the solemnity of a seal has been much diminished. At common law it was conclusive evidence of a consideration; under the Code of Civil Procedure (sec. 840 on an executory instrument it is presumptive evidence only. The mere writing of the letters 'L. S.' opposite a signature is a sufficient private seal (General Construction Law, Cons. Laws, ch. 22, sec. 44), and the sealing of a contract is as often a mere circumstance as a deliberate solemn act and deed. When so much of the old value and high nature of the seal has been lost, the Court should not be tenacious to preserve one of its minor incidents for the sake of the rule, but should rather strive to give effect to the real agreement of the parties." In his epoch-making book, "The Nature of the Judicial Process," Judge Cardozo approved the dicta of Judge Pound in the case last cited, saying, at pp. 155-156: "It is another rule of the common law that a parol agreement, though subsequently made, is ineffective to vary or discharge a contract under seal. In days when seals counted for a good deal, there may have been some reason in this recognition of a mystical solemnity. In our day, when the perfunctory initials 'L. S.' have replaced the heraldic devices, the law is conscious of its own absurdity when it preserves the rubrics of a vanished era. Judges have made worthy, if shamefaced, efforts, while giving lip service to the rule, to riddle it with exceptions and by distinctions reduce it to a shadow. A recent case suggests that timidity, and not reverence, has postponed the hour of dissolution. The law will have cause for gratitude to the deliverer who will strike the fatal blow." The same point of view was taken by Mr. Justice Crospsey in Lagumis v. Gerard (116 Misc., 472), in which the learned Court disregarded the ancient rule that an undisclosed principal may not be held liable upon a sealed instrument, and practically cast in limbo the time-worn doctrine applicable during an era when there was "a mystical solemnity" attached to the seal which is entirely absent today. Mr. Justice McCook deserves the congratulations of the profession for giving the coup de grace to an outworn doctrine, unsuited to modern conditions, and it is earnestly to be hoped that his views will be followed and adopted by the courts in this and other jurisdictions.-New York Law Journal. RECENT DECISIONS IN THE BRITISH COURTS A difficult question that not infrequently arises is where a contract has been partially unfulfilled, is the whole contract at an end, or in lawyer's phrase, is the contract severable? The case of Campania Cantabrica v. Angle American Oil Co. The Times, July 4, 1923, seems to have been a good illustration of this position. A charter party provided that it should remain in force for eight consecutive voyages. During the first two voyages it was proved that the ship was unseaworthy, but she was then repaired and made seaworthy. It was held that the contract was severable for the purpose of assessing damages and the charterers were found entitled to damages for any losses incurred owing to unseaworthiness in the first two voyages. But the repair of the ship had thereafter made her seaworthy, so that since the warranty was of a continuing nature and therefore capable of being complied with at a later stage, there was no breach such as justified total repudiation of the contract. Again as to the matter of assessing damages, in a recent decision of the Court of Session, The Vitruvia, 1923 S. L. T. 401, the law as to the law principles determining the ascertainment of damage was expounded with some fullness and precision and we are glad to be able to give our readers a resume of the law on this important subject. The liability of the wrongdoing shipowner for the consequences of his wrongful act is determined by the extent to which the injury occasioned to the pursuer was a natural and probable consequence of that act. A ship is a thing by the use of which money may be earned, and if the effect of the injury is to detain the ship, then the injurer is liable both in the expenses of the detention and the amount of the profit lost. In the "Argentino" (14 A. C. 519 at p. 523) Lord Herschell said: "I think the damages which flow directly and naturally or in the ordinary course of things from the wrongful act cannot be regarded as too remote. The loss of the use of a vessel and of the earning which would ordinarily be derived from its use during the time it is under repair and therefore not available for trading purposes is certainly damage which directly and naturally flows from a collision." This principle has been frequently applied. It was applied by Sir Francis Jeune in the "Kate" ([1899], P. 165), where the learned President laid it down that the general principle which governs the assessment of damage is "restitutio in integrum qualified by the condition that the damage sought to be recov ered must not be too remote." This is the doctrine which has been applied in the case of the "Vitruvia." It appeared from the evidence that on December 16th, 1919, a chain of charter-parties had been arranged for the "Vitruvia." Further charter-parties were entered into on April 12th, 1920, and June 25th, 1920, and on the evidence the Court had, no doubt, that, fitted with tanks as the "Vitruvia" was, she would have had no difficulty in obtaining continuous employment during the year 1920 at the high freight then prevailing. She was damaged in January, 1920, in collision and it was proved at the trial that the vessel would have been at sea earning profit for the plaintiffs, if she had not been damaged by the collision and detained for twenty-two days to effect the necessary repairs. The agreed rate of profit of £531:10:5 per day was a high figure and reflected only the very large profits which shipowners were apparently able to earn at that time. As regards oncost charges, the figure was adjusted at £127:10:per day. The total for these two items reached the large figures of £11,693:8:10 and £2805 respectively. The dock dues, pilotage charges, etc., amount in toto to £244:19:6. As the plaintiffs would have had to incur charges of this nature in connection with some other repairs which they instructed independently of the collision repairs, they debited themselves with one-half of this sum and charged the defenders with the balance. The Court thought this was a very reasonable proposal, and adopted it. Judgment was accordingly given against the defendants for £16,030:13:11. The burden of proving loss due to detention is, of course, on plaintiffs and in this case they seem to have effectually discharged that burden. There was a point in the case, too, which illustrates that it is the duty of the person who incurs damage to lessen the damage as much as possible. After the collision the "Vitruvia" was surveyed and while she was lying in dock in the beginning of February the problem which the collision presented to her managers was one of some difficulty. Substantial repairs were necessary, but labor was scarce and conditions in the yards difficult. On the other hand, the "Vitruvia" was seaworthy and capable of fulfilling the chain of valuable charters which she had recently entered into, and her managers were being urged to deliver. The cancelling date of the charters, viz., March 15th, 1920, was approaching. In these circumstances the Court considered the managers of the "Vitruvia" were right in deciding to postpone the execution of the collision repairs until after the charters were implemented, when they had reason to anticipate that labor would be more plentiful and labor conditions somewhat improved. It is obvious that had the ship's managers not taken this course their ultimate claim against defenders might have been very much greater. In Brightman & Co. v. Born, 39 T. L. R. 607, a ship chartered for the River Plata was stated to be loaded at a certain rate otherwise demurrage to be paid by the charterers, but if the cargo could not be loaded by reason of inter alia obstructions on the railways, no claim for demurrage was to be made by the shipowners, and in the case of prohibition of the export of grain, the charter was to be null and void. The ship was loaded at Rosario with wheat, and delay was caused by the export of wheat being temporarily prohibited by the Argentine Government and by a "Ca'canny movement of men on the Central Argentine Railway. On a claim for demurrage it was held that since wheat could have been obtained from places on railways not affected by the Ca'canny movement, or could have been loaded from store and since although the export of wheat had been prohibited, the charterers could have shipped maize, the charter-party contemplated a cargo of "wheat maize or rye"-the above-mentioned delays afforded no defense. Whether a man has contracted as principal or only as an agent is a question that must be decided on the construction of the particular documents as a whole. The description of the man and his capacity in the body of the document and the form of his signature are the most material matters to be considered. It has hitherto been difficult to deduce from the decided cases any general rule of construction, as these cases were very conflicting. Consequently in shipping practice, for instance, the advice was usually given, that an agent wishing to protect himself from personal liability should state in the body of the charter, that it was made by him as agent for the charterer or shipowner and sign it “as agent for" (charterer or shipowner as might be the case). If he did that he could not be sued on the charter unless he did not disclose his principal. It has now at length been decided by the House of Lords (Universal Steam Navigation Co. v. McKelvie & Co., W. N. 1923, page 146) that where one signs a contract "as agent" for another, he is to be taken to contract as agent and is not personally liable, even though in the body of the contract he purports to be the principal. Of course, if there is no suggestion in the body of the contract that he is in fact principal, the signature “as agent" is conclusive. The difficulty arises when he starts as principal and signs as agent, or conversely when he starts as agent and then signs his own name without qualification. The former case occurred in Lennard v. Robinson, 5 E. & B. 125, where in a charterparty "R. & F. of London, Merchants," were treated in the body of the document as principals and then signed "as agents for," etc., and where it was held that the body of the document prevailed and that the signature "as agent" merely indicated the relationship of the signer to his own principal and did not affect the liability which he has as principal contracted to the other party to the contract. The converse case occurred in Gadd v. Houghton, |