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Browsing: Legal Papers of John Adams, Volume 1

Docno: ADMS-05-01-02-0005-0003

Bancroft v. Lee



Docno: ADMS-05-01-02-0005-0003-0001

Editorial Note

On 22 November 1762, Jeremiah Lee, prominent Marblehead ship owner and merchant, obtained a policy of marine insurance upon one half the cargo of the schooner Merrill for a voyage “from Marblehead to any and all the Islands in the West Indies to Windward of St. Croix, St. Thomas, Havannah and Jamaica until the cargo is sold and delivered.” The Merrill was then 79 days out of Marblehead. The eight underwriters, of whom Jonathan Bancroft was one, did not know that on October 17th, while making for Martinique, she had been taken by a Spanish privateer. When Lee subsequently presented his claim for the loss the underwriters refused payment on grounds of fraud. About a year later, the claim was submitted to arbitration in accordance with a provision of the policy. In November 1763 the arbitrators, Foster Hutchinson, John Rowe, and Melatiah Bourne, returned their unanimous report that Bancroft and six of his fellow underwriters, who had agreed to the submission, were liable in the amounts which they had subscribed.1 These seven made payment { 189 } accordingly. The eighth underwriter, William Shillaber, was less tractable. He had not agreed to the arbitration, and Lee was forced to bring suit against him on the policy. In June 1767 Shillaber finally prevailed in an action of review in the Superior Court.2
Thereafter Bancroft and two other underwriters brought actions against Lee, claiming that the policy was void and demanding return of the payments made under it.3 Bancroft's case, in which Adams was of counsel for Lee, provides some useful insights into the conduct of maritime and mercantile affairs. It also raises an interesting problem of the effect of an arbitration proceeding upon subsequent litigation between the same parties and shows bench and bar applying English authority of most recent date to this question.4
Bancroft's declaration in an action on the case in deceit alleged that Lee had induced the underwriting by his deliberate false affirmation that the insurance was a “fair chance,” and that he had knowingly concealed two circumstances which materially altered the risk: (1) that the master's sailing orders had directed him to proceed to “the Island of Martineco (if he could get in there)”; and (2) that Lee, before the policy was written, “had received certain Intelligence that the said Schooner had not arrived at Martineco ... when she had been gone from Marblehead ... by the space of thirty three days.”5 After Lee prevailed in the Inferior Court on a sham demurrer, Bancroft appealed to the Superior Court, where at Ipswich in June 1769, upon waiver of the demurrer, the case was tried to a jury. Document 1 is Adams' memorandum of authorities on the issues presented by the fact that the vessel was actually lost at the time of the underwriting. Since Lee's policy included the words “lost or not lost,” the underwriters were liable unless Lee had sought the insurance with knowledge of the loss. This question was apparently determined adversely to Lee, because the jury found for Bancroft in the amount paid out, plus interest.6
{ 190 }
Lee then obtained a writ of review, which was first brought on for trial in November 1770, but was continued on the withdrawal of a juror.7 In June 1771 at Ipswich the case came on again, but after Bancroft had put in at least a part of his evidence, it was continued on Lee's motion, the ground not appearing.8 Adams' minutes of this phase (Document II) are largely a summary of the testimony. John Lowell, counsel for Bancroft, after expounding authorities in his favor, produced evidence tending to show that the Merrill had in fact sailed for Martinique. He then sought to establish his allegations as to Lee's concealment of knowledge of the vessel's loss and as to his calling the risk a “fair chance.” The question of knowledge turned on the deposition of one Captain Howard, who had returned to Marblehead two weeks prior to the writing of the policy, reporting that he had heard nothing of the Merrill. Did this report amount to “certain intelligence” of her nonarrival, and was it known to Lee or to the underwriters?
The case was brought to trial a third time in November 1771. Here Adams' minutes (Document III) suggest that after Lowell had concluded his case the court on its own motion raised the problem of the effect of the 1763 arbitration report. In any event the jury was again dismissed and the action continued, this time by order of court.9 While Adams may have raised this question himself, it is interesting to note that this was the first occasion on which Foster Hutchinson, newly appointed to the court, had sat on the case, that he was one of the referees in 1763, and that he seemed to take the lead in dealing with the issue.10
After this continuance Adams and Jonathan Sewall, who with Lowell was of counsel for Bancroft, entered into a stipulation to the effect that if the court found that the report (which had not been pleaded) could be admitted in evidence under the general issue, and found that, if admissible, the report was a bar to Bancroft's action, then Bancroft would default. In June 1772 the court found the report admissible and once again ordered a continuance, doubtless for argument on the second point.11 At Salem in { 191 } November 1772, according to William Wetmore's minutes (Document V), Hutchinson disqualified himself, and, with the other referees, gave evidence concerning the arbitration proceedings. Their testimony as minuted by Adams (Document IV) shows that the questions of the Merrill's actual destination and Lee's knowledge of her apparent non arrival had been raised at the hearing in 1763. The court had at first held that the award without more was not a bar, but on this showing they found that the action could not be maintained, applying the doctrine known today as collateral estoppel.12 A jury which had been empaneled was dismissed, and Bancroft's default was entered in accordance with the agreement.13
1. See the papers in the case, including the policy with the arbitration agreement and report on the verso in SF 131791, 132239. As to Lee, who in dying of a chill contracted while evading the British at Lexington became surely the first politician to give his life in the patriot cause, see 2 JA, Diary and Autobiography 61, 172; Samuel Roads, Jr, The History and Traditions of Marblehead 113–114, 351 (Boston, 1880); compare Oliver, Origin and Progress 120.
2. Lee v. Shillaber, Min. Bk. 77, SCJ Salem, Oct. 1764, N–2; Min. Bk. 85, SCJ Ipswich, June 1767, N–14. SF 131138, 131503.
3. The other actions were Crowningshield v. Lee, No. 11, and Goodhue v. Lee. In the Crowningshield case JA was also of counsel for Lee. In Goodhue's case JA has left us no minutes, but the Minute Book of the Superior Court indicates that he was of counsel for Goodhue on the appeal, in which the latter obtained a verdict. Lee v. Goodhue, Min. Bk. 85, SCJ Ipswich, June 1770, N–4. While this change of allegiance may not have been inconsistent with the legal ethics of the time, there is evidence to suggest that it is actually a clerical error. At the trial of the case in the Inferior Court, John Lowell, who had been counsel for Bancroft and Crowningshield, was Goodhue's lawyer, and William Pynchon, who had been Lee's counsel in the other actions, represented him in this one. SF 131923.
4. The first edition of 1 Wilson, note 35 3 below, did not appear until 1770. 2 Burrow, note 36 4 below, was first published in 1766, with a second edition in 1771. See 1 Sweet and Maxwell, Legal Bibliography 294, 310.
5. See the declaration in SF 131791, 132239.
6. Min. Bk. 85, SCJ Ipswich, June 1769, N–1. The pleadings and judgment in the Inferior Court, Salem, Dec. 1768, are in SF 131791, 132239.
7. Min. Bk. 85, SCJ Ipswich, June 1770, N–5; Min. Bk. 93, SCJ Salem, Nov. 1770, C–10. Withdrawal of a juror was a means of continuing, or terminating short of judgment, an action in which a jury had been empaneled. It was generally done with consent of all the parties, but, at least in later practice, might be done on the motion of one party on grounds of surprise and the like. The practice also might be allowed where the jury, upon deliberation, could not reach a verdict. See Wood, Institute of the Laws of England 600; cases collected in annotation, 48 L.R.A. 432 (1900). The reason for its use here and the distinction between this practice and the later continuance (note 8 below) are not known.
8. Min. Bk. 93, SCJ Ipswich, June 1771, C–9.
9. Min. Bk. 93, SCJ Salem, Nov. 1771, C–7.
10. Hutchinson first took his seat on the court at the Aug. 1771 term in Suffolk County, although he had been appointed in March. SCJ Rec. 1771, fol. 207. See 2 JA, Diary and Autobiography 39.
11. Min. Bk. 93, SCJ Ipswich, June 1772, C–4. See the stipulation in JA 's hand and the order (on the wrapper) in SF 132239. The decision to admit the report under the general issue seems in accord with authority. See 1 Chitty, Pleading 486–487; compare 4 Bacon, Abridgment 60–65.
12. See the opinions in Doc. V. The present case is distinguishable from Moses v. Macferlan, note 36 4 below, because the issues here not only were available to the underwriters, but were raised and determined. For cases in which an award was held to bar the action of the original plaintiff on the same cause of action, see Matthew Bacon, The Compleat Arbitrator 245–249 (London, 2d edn., 1744). The Harvard Law School's copy of this work is inscribed “J. Lowell, 1765.”
13. Min. Bk. 93, SCJ Salem, Nov. 1772, C–4. SCJ Rec. 1772, fol. 189.

Docno: ADMS-05-01-02-0005-0003-0002

Author: Adams, John
Date: 1769-06

Adams' Notes of Authorities1

Essex Superior Court, Ipswich, June 1769

Bancroft vs. Lee.
Bac. 3. 599.2 Tit. Merchant. “Where a Policy is a perfect Cheat as where a Person, having certain Intelligence that a Ship is lost, insures so much, this shall not bind the Insurer.”
Molloy. B. 2, c. 7, §5, bottom.3 “A Merchant having a doubtful Account of his Ship, insures her, without acquainting the Insurers of her danger; Chancery relieved against the Policy of this fraudulent Insurance.”
Ditto. “If the Party, that caused the Assurance to be made saw the ship was lost, 4 or had certain Intelligence, such subscription will not oblige, the same being accounted a mere fraud.”
But Yet,
Molloy. B. 2, c. 7, §5. “Those Assurances are most dangerous when these Words are inserted 'lost or not lost'; which is commonly done when a ship hath been long missing and no Tidings can be had, the Premio (especially in Time of War) will run very high, sometimes { 192 } 30 or 40 per Cent, and though it happens at the Time that the subscription is made, the ship is cast away, yet the Assurers must answer.”
1. In JA 's hand. Adams Papers, Microfilms, Reel No. 185.
2. 3 Bacon, Abridgment 599. Quotation marks supplied. Italics are JA 's.
3. Charles Molloy, De Jure Maritimo et Navali 289 (London, 8th edn., 1744). Quotation marks supplied. Italics are JA 's.
4. The original reads “wreckt,” rather than “was lost.”

Docno: ADMS-05-01-02-0005-0003-0003

Author: Adams, John
Date: 1771-06

Adams' Minutes of the Trial1

Essex Superior Court, Ipswich, June 1771

Lee vs. Bancroft. Ipswich June 1771.
Lowell. Cun. 173. Concealment of Intelligence, a Fraud. Each Party ought to know all the Circumstances.2
178.–179. 184.3
79 days from G[ordon's] sailing to the Insurance,4 which was a good Chance to have heard of her Arrival at any Part of the W. Indies.
J. Pedricks Deposition. Gordons Protest. Jab. Harlow's Deposition.5
Captn. Jos. Howard. 6 Arrived from M[artinique] 7th. Novr. Saild, 7. Octr. Frenchman arrived from Guadaloupe. Deposition vid.
Mr. Shillibeare.7 I asked whether the Vessells were in Time or { 193 } whether the Chances were fair. A few days after Mr. Hooper8 came into the office and enquired if Lee said nothing of his having a Chance. Then he has taken you in, &c. From 20 to 26 or 27 days a common Chance.9 I would not have wrote under 50 Per Cent. I did not know there was such a Man as C[aptain] Howard. Never heard of his going to the W. Indies. I have been Master, but never was strictly bound up.
C. Hodges. 3 Vessells together.10 Dont remember any Questions put to him. No dispute—all seemd fair. Hooper came in and said We were taken in. Somebody said We should have looked to our Title. Never knew a Policy underwrote without enquiring when the Vessell sail'd. Something said in the office about the Vessells being over[set] before she sail'd. At the Time when Lee was in the Office and Cabbit11 present talking with Lee. It appeared to me to be in Time and a customary Praemium. One said she was fair, in season, in Time. They often take it from the 1st. underwriter [who] enquires the Circumstances. Those that follow sometimes take it for granted.
Jos. Hodges. 12 Lee wrote the Minutes himself. Cabbit said fair Chances I suppose. Yes. I Asked how long those Vessells had been out. Lee made a Pause. Lee said the 1st. Advice will give an Account of 2 of em. And it did. 2 were taken. I relyed upon Lees Honour that he would not put in an unfair Chance. 30 days a Chance. I did not know of the Arrival of Howard. I would not have wrote upon any Consideration. Dont remember Powers13 being mentiond. Fellows not mentiond that I remember. Many Vessells at that time had long Passages. Knew Howard was an [Eastern?] Master. But should not have thought to enquire W. India News of him.
Jona. Gardiner Junr. Nothing said of Howards Arrival. I did not know of it. Coll. Lee once scratched his Name out once and said he { 194 } never took desperate Chances, and never put in unfair ones. A Man of Character declaring it is a fair Chance is generally satisfactory.
Jona. Ropes Junr. I underwrote for Pedrick, and was a good Mind to take £20 more for Lee but did not. I did not know of Howards Arrival. I knew when she sailed. But it might be because, We must write on all 3 or none. The Risque not so great when a Number, as on one. Dont know that ever I underwrote first without enquiring when the Vessell sailed, and the Circumstances.
George Dodge. 14 C[ol.] Lee said fair Chances. I had underwrote upon Gordon before, and did not know of Howards Arrival. I have made several Voyages in 14 Weeks. Hoopers News was received in the Office with surprise, and uneasiness.
Warwick Palfry. She might have returned and made her Voyage in 79 days. I knew a Vessell that performed 3 Voyages [nearly?] in 10 Weeks and 3 or 4 days.
Saml. Ward. Lee said he never put a Vessell in out of Time and never took a desperate Chance.
Gordons Sailing Orders.15
1. In JA 's hand. Adams Papers, Microfilms, Reel No. 185.
2. Timothy Cunningham, The Law of Bills of Exchange, Promissory Notes, Bank Notes, and Insurance 174 (London, 3d edn., 1766). The language here was drawn from two cases in which the facts favored the insurers rather more than in the instant case. See De Costa v. Scandret, 2 P. Wms. 170, 24 Eng. Rep. 686 (Ch. 1723) (Insured had heard that ship looking like his was taken); Seaman v. Fonereau, 2 Str. 1183, 93 Eng. Rep. 1115 (K.B. 1743) (Insured had intelligence that vessel had been leaky and was lost sight of just before a hard gale).
3. That is, Cunningham, Bills of Exchange 178–179, 184, citing Rooke v. Thurmond (unreported, K.B. 1743) (Dictum that policy void if insurers could prove that insured knew that another vessel, which sailed from Carolina ten days after the insured vessel, arrived in England seven days before the underwriting); Green v. Bowden (unreported, K.B. 1759) (Policy void where insured had informed insurers that his ship, which was lost on 25 Aug. between Naples and Leghorn, had been safe in Naples on 8 Aug., when in fact she had been safe there on the 3d).
4. That is, 79 days from 4 Sept., the date on which the master, Nicholas Gordon, sailed from Marblehead, until 22 Nov., the date of the underwriting.
5. The deposition of Joseph Pedrick, owner of the other half of the enterprise; the protest of the master, Nicholas Gordon, on the loss of the Merrill; and the deposition of Jabez Harlow, master of the vessel which finally brought Gordon and his crew home, may be found in SF 132239. This evidence supports the allegation that the master's orders were to proceed to Martinique. For relevant portions of the protest and other evidence on this question, see No. 11.
6. Captain Howard's deposition, “Sworn in Court, June 19, 1771,” states in part that
“About 14 days before I left Martineco one Monsr. Misinaire arrived there from Guadeloupe of whom I inquired if any vessels was there belonging to Marblehead or Salem. ... As to vessels he told me there was none belonging to Ither of those places. ... When I arrived at Marblehead I was inquired News of by Sundry persons and at Salem when I Entered but can't Remember any persons Particularly. I heard no news of Capt. Nichols Gordon belonging to Marblehead from the time I left it to my return [3 Nov. 1762].” SF 132239.
7. William Shillaber, the underwriter whose successful defense to Lee's action started the litigation. See note 2 above. Shillaber's deposition of 3 Nov. 1770, with some further details of the underwriting and of the conversation with Hooper, is in SF 132239.
8. Robert “King” Hooper, Marblehead's wealthiest merchant, and Lee's brother-in-law, Roads, History of Marblehead 350, 354; Stark, Loyalists of Mass. 222–223.
9. That is, a chance to have heard news of the vessel's safe arrival. Here the “Chance” was 34 days, the interval between the departure of the Merrill from Marblehead on 4 Sept. and Howard's departure from Martinique.
10. Presumably John Hodges (the “C” standing for “Captain”), whose deposition in the file of Goodhue v. Lee indicates that he was present in the insurance office at the time of the underwriting. SF 131923. Lee insured two other vessels with the Merrill. See Shillaber's testimony, text at note 24 7 above.
11. Josiah Cabot, one of the underwriters.
12. Joseph Hodges, one of the underwriters.
13. Another Marblehead captain who departed in one of Robert Hooper's vessels at about the same time that the Merrill sailed. See Shillaber's deposition, cited in No. 11, note 7 3 .
14. One of the underwriters.
15. Gordon's orders are in SF 132239. In his deposition, sworn in court in Nov. 1770, also in SF 132239, he contradicted their impact. See the relevant parts of each as set out in JA 's minutes in No. 11.

Docno: ADMS-05-01-02-0005-0003-0004

Author: Adams, John
Date: 1771-11

Adams' Minutes of the Argument1

Essex Superior Court, Salem, November 1771

Salem. Novr. 1771. Lee vs. Bancroft.
Lowell. 24 or 25 days a Chance. Passages from 17 to 25.
Vessell in Time. A fair Chance. Did not mention how long she had been out, nor Howards arrival.
C[ol.] Lees Character so respectable, and Knowledge so perfect, that “a fair Chance” &c. from him would preclude all Enquiry.
1764 Jany. 28. Receipt for Money.2
Judge Hutch[inson] mentiond a Case in Wilson3 that the Court { 195 } will not sustain an Action when the Policy is or has been under Refference. But the Clause in the Policy, that it shall be left to Arbitration, shall not preclude an Action.
Moses vs. Macfarlan. Burrows. Vol. 2d. 1009.4 Money paid upon a Risque deemed to be fair.
1. In JA 's hand. Adams Papers, Microfilms, Reel No. 185.
2. That is, Lee's receipt to Bancroft for £20 paid out on the loss of the Merrill, in SF 132239.
3. Kill v. Hollister, 1 Wils. K.B. 129, 95 Eng. Rep. 532 (1746). The case held that an action lay on the policy since there had been no reference and none was pending.
4. Moses v. Macferlan, 2 Burr. 1005, 97 Eng. Rep. 676 (K.B. 1760). In this famous case the defendant had recovered against the plaintiff in the Court of Conscience upon notes indorsed by the plaintiff under an agreement that the defendant would not hold him liable on them. The latter court refused to hear evidence of the agreement, and the plaintiff brought an action at law in assumpsit for money had and received to recover the sums thereby awarded. While Lord Mansfield's decision that the action lies on the implied promise is the point for which the case is best known, the defendant had also argued that there could be no recovery of money awarded by the judgment of a court of competent jurisdiction. Mansfield held that the action was not inconsistent with the prior judgment because the Court of Conscience had properly concluded that the agreement was not before it. In the process he enlarged upon the theme that a new action could always be brought to attack a judgment on a ground that was not available as a defense against that judgment. The phrase noted by JA , which is from that portion of the opinion, appears in the following passage: “Suppose a Man recovers upon a Policy for a Ship presumed to be lost, which afterwards comes Home;—Or upon the Life of a Man presumed to be dead, who afterwards appears;—Or upon a Representation of a Risque deemed to be fair, which comes out afterwards to be grossly fraudulent.” 2 Burr. 1009–1010. As to the case, see C. H. S. Fifoot, Lord Mansfield 141–157 (Oxford, 1936).

Docno: ADMS-05-01-02-0005-0003-0005

Author: Adams, John
Date: 1772-11

Adams' Minutes of the Argument1

Essex Superior Court, Salem, November 1772

Lee. vs. Bancroft.
Lowell. 25 days a Chance.
Judge Hutchinson. The Underwriters charged Lee with concealing some Circumstances—the Arrival of a Vessell—but I cant recollect all the Particulars. The Arbitrators agreed. An Account of a Vessell and I think it was Howard, and Col. Lee told 'em it was possible she might be gone to some other Island. The main dispute whether she was gone to Martinico or some other Island. Heard something about Pedrick but cant say whether his Deposition was before us.
Mr. Rowe. 2 Cabot and Crowningshield.3 No Evidence from Pedrick. They thought L[ee] had not said what was necessary, that he had concealed something which he should have communicated. The { 196 } Underwriter[s] thought she was bound first to Martinico, and they complaind that she went to some other Island.
Mr. Bourn. The Objection was that Lee had concealed Howards Arrival. Howard I know very well. The other Matter was spoke off, his being bound to one Island and going to another. I am not positive it was considerd.
1. In JA 's hand. Adams Papers, Microfilms, Reel No. 185.
2. John Rowe notes in his diary under date of 2 Nov. 1772, that “I attended Mr. John Adams this morning about Colo. Lee's affair.” Rowe, Letters and Diary 235.
3. John Crowningshield, one of the underwriters. See No. 11.

Docno: ADMS-05-01-02-0005-0003-0006

Author: Wetmore, William
Date: 1772-11

Wetmore's Minutes of the Argument1

Essex Superior Court, Salem, November 1772

Lee—Bancroft. Review. Some Terms agon the parties agreed (Nov. 1771) to make 2 questions—1. Whether the reference to Rowe &ca. can be given in Evidence, and if not2
Objected to Judge Hutchinson that he had sat in the Cause as referee. Answerd that the same will lie in reviews and new hearings but J[udge] Hut[chinson] then utterly refused to Judge in the Cause. Then Two of the other 3 Judges (there being but 4. in Court) determined the award to be no barr.
The Court determind that the Plaintiff B[ancroft] shoud not be admitted to offer evidence of any fraud not mentioned in the declaration and therefore the former referees must be the proper persons to settle the facts of fraud laid before them and any previous to their award. Quin[cy] alledges that3 [] was not laid before referees.
2. That the affair of the joint Orders being altered was not laid before them.
Low[el]l: 1. Query is this award a barr to the action and it must appear that the party must be heard in Person or by attorney and Ban[croft] was not there either way. Answered that plaintiff consented becaus he paid the Money in consequence of the award.
Cushing. 4
{ 197 }
As to the new evidence. I think this supposed that it's not sufficient to set aside the award.
Ropes. As to the intelligence of arrival its not clear to me that it was laid before the ref[eree]s. I think the Matters submitted I think 'em the same as now complained of.
And as to Plaintiffs Consent to the award I agree with Bro[ther] Cushing.
J[ustice] Oliver. It appears that there was sufficient time to have produced all the Evidence needful before the referees and for this and other Reasons mentioned the action is not maint[aina]ble and according to Parties agreement made before the [review] Ban must be defaulted.
2. As to the second question, see note 11 above.
3. Thus in MS . Quincy (who had replaced Sewall as Bancroft's counsel) may have referred to Pedrick's deposition mentioned by the referees in Doc. IV. The Minute Book does not specify whether this is Samuel or Josiah Quincy. Min. Bk. 93, SCJ Salem, Nov. 1772, C–4.
4. A blank space of several lines follows in the MS . It is therefore difficult to tell whether the opinion that follows is Justice Cushing's, but presumably it is.