ance, an arrangement for such a business on the part of the company having been made.

4. Dec. 24, 1863, Charles S. Pennell, as an owner and agent of the ship "C. S. Pennell," of 975 tons burthen, and then lying in the harbor of Portland, Maine, chartered the whole of the vessel, including the state-rooms in cabin not used by the officers, and deck-rooms not used for the crew or for sails and stores, to Sutton & Co., for a voyage from New York to San Francisco. No cargo was to be received on board except with the written consent of the charterers, and they were to pay "for the charter or freight" on the good and proper discharge of the cargo in San Francisco, $26,500, less two and one-half per cent commission. George M. Melcher was at the time master of the ship, and his primage on the freight money, if earned, would have been $1,325. This charter will be referred to as the San Francisco charter.

5. After the making of this charter the vessel sailed from Portland to New York, and was there put up and advertised by Sutton & Co. as a general ship for San Francisco. That firm at that time represented what was known as the Dispatch Line of San Francisco packets.

6. January 30, while the ship was in New York, loading under her San Francisco charter, and advertised for that voyage, her master chartered her again to the Peruvian government. By the terms of this charter she was to sail from New York on or before June 1, 1864, to San Francisco, and thence proceed, with all convenient dispatch, to Callao, Peru, and from thence, if on inspection she should be found to be well conditioned for the voyage, to the Chincha Islands for a cargo of guano to be taken to Hamburg or Rotterdam. The freight to be paid was at the rate of £4 per ton of 20 cwt. British net weight of guano, subject, however, to a deduction of five shillings per ton if the vessel was not ready in Callao to proceed to Chinchas by December 15. This charter will be referred to as the Rotterdam charter.

7. On the 5th of February, 1864, while the ship was in New York loading, Charles S. Pennell, a part owner, took from The Ocean Company a policy insuring his interest in the ship for $8,000 against war risks, and his interest in the Rotterdam

charter for $8,000 against marine risks on the voyage between New York and the Chinchas. In this policy the duration and locality of the risk was described as "at and from New York, to, at, and from San Francisco, Callao, and the Chinchas."

8. George M. Melcher was at the time owner of one-eighth of the ship, and master. On the 20th March he wrote one Sawyer, his agent at Portland, advising that the ship was about ready to sail, and directing that insurance be effected on his interest as follows:

Homeward charter from Chinchas, insure out, say 1,750

tons, at £4 to £7,000, at currency rate of exchange, $52,400, my

Primage on same

6,550

2,650

500

In the same letter it was said: "I think you had better put 5 or $6,000 more marine risk in case I should lose the ship."

9. Upon the receipt of this letter Sawyer applied to The Ocean Company for a policy upon the Rotterdam charter, primage, and personal effects to San Francisco. In doing so, he exhibited his letter of instructions and explained fully all the circumstances. The risk was accepted and the policy issued March 23, in which the risk was described as follows: "$6,550 on charter; $2,650 on primage; and also $1,500 on property on board ship Charles S. Pennell,' at and from New York to San Francisco.".

·

10. On the same day The Ocean Company insured the master for $3,000 on his interest in the ship during the whole of her voyage, describing the duration and locality of the risk as "at and from New York to, at, and from San Francisco and Chinchas, with usual liberties at Callao, to her port of advice and discharge in Europe."

11. On the same 23d of March the president of The Ocean Company wrote the vice-president of The Sun as follows:

I also enclose returns for registry as follows: $5,000, ship C. S. Pennell,' to San Francisco and Chinchas, war; $5,000 fr. of do. . . . P. S.-I also enclose an additional return for insurance on charter, primage, and property per ship 'C. S. Pennell' to San Francisco only."

The returns enclosed in this letter were as follows:

"To the Sun Mutual Insurance Company:

"Enter on open policy of this company No. 51,564, $5,000 on charter of ship 'Charles S. Pennell' at and from New York to, at, and from San Francisco and Callao to Chinchas.

66

'Rate, three per cent on board.

"New York, March 23d, 1864.

"J. W., V. P. Ocean Ins. Co. "Per G. A. W., Sec'y."

"To the Sun Mutual Insurance Company:

"Enter on open policy of this company No. 51,564, war risk only, $5,000 on ship Chas. S. Pennell,' at and from New York, to, at, and from San Francisco to Callao to Chinchas.

"Rate, three per cent on board. "New York, March 23d, 1864.

"J. W., V. P. Ocean Ins. Co. "Per G. A. W., Sec'y."

"To the Sun Mutual Insurance Company:

"Enter on open policy of this company No. 51,564, $6,550 on charter, $2,650 on primage, and $1,500 on property, on board ship 'Chas. S. Pennell,' at and from New York to San Francisco, including war risk.

"Rate, six per cent on board. "New York, March 23d, 1864.

"J. W., V. P. Ocean Ins. Co. "Per G. A. W., Sec'y."

The first and second of these returns were for reinsurance on the risks taken for Charles S. Pennell, and the last on account of the risks taken in favor of the master on the Rotterdam charter and personal property on board, from New York to San Francisco. The risk on the vessel, taken in favor of the master at the same time, was not reported to The Sun Company.

12. Upon the receipt of this letter, with its enclosures, the

president of The Sun Company wrote The Ocean Company, under date of March 24, as follows:

"Your favor of the 23d inst. is received, . ... and returns as stated. Those . . . on charter per Chas. S. Pennell,' $10,700, in conformity thereto. For the marine risk per Chas. S. Pennell' to San Francisco, thence to Callao & Chinchas, our regular tariff rate is four and one-half per cent; the war risk is worth the same but we propose to enter for both marine and war on $5,000 for four per

cent."

18. To this the president of The Ocean Company replied, under date March 26, as follows:

"Your favor of the 24th inst. is received. I think, really, considering that you have the risk on charter, primage, and property to San Francisco at full rates, you should take the war and marine to San Francisco and Chinchas on 'C. S. Pennell' at six per cent, as there is or will be but little risk in the Pacific after leaving San Francisco. I can have both risks taken at less than these rates."

14. In response to this the vice-president of The Sun wrote, under date of March 28, as follows:

...

"Your favor of the 26th inst. is received with a return, which is entered in conformity thereto, as have also been the returns of the 23d inst., per ship 'C. S. Pennell.""

15. The indorsement of these returns upon the open policy was as follows:

16. At the time these returns were made and accepted The Sun Company had actual knowledge of the San Francisco charter, and had taken risks on cargo shipped on board the vessel to San Francisco under it.

17. When the returns were made by The Ocean Company to The Sun for acceptance and indorsement, no special mention was made of the Rotterdam charter, and no information was given The Sun Company of what had transpired between The Ocean Company and the agent of the master when the insurance was effected. No allusion was made to the letter of the master to his agent, which was shown the president of The Ocean in connection with the application to that company, and The Sun Company had no other knowledge of the exist ence of the Rotterdam charter than such as is to be inferred from the correspondence which preceded the acceptance of the

risk.

18. Both the president of The Ocean Company and the vicepresident of The Sun Company are dead. The first-named died in July, 1869, and the last some time before Jan. 1, 1867.

19. The ship sailed from New York to San Francisco about the 1st of April, 1864, having on board a full cargo under the San Francisco charter. Having met with a disaster on the voyage, she put into Rio Janeiro, where she was condemned and sold, and the voyage broken up.

20. The loss under the risk taken in favor of Charles S. Pennell, both on the ship and Rotterdam charter, was paid by The Sun Company without objection, Oct. 23, 1865, and May 5, 1866.

21. In due time after the loss occurred, the master filed with The Ocean Company his proofs under his policy on account of the Rotterdam charter and his primage thereon. These proofs were promptly forwarded by The Ocean Company to The Sun, and no objections to their form were ever made. Payment was refused by The Sun Company on the ground that the master was over insured, and also upon the ground that the ship had been fraudulently cast away, and The Ocean Company was advised not to pay the claim on that account.

22. Pursuant to this advice, payment was refused by The Ocean Company, and, in October, 1866, Melcher, the master, commenced suit upon his policy in the courts of Maine.

23. Of the commencement of this suit notice was immediately given The Sun Company by The Ocean Company, and The Sun Company interested itself in the preparation for de