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Colonial Cases

Ching Hing Tah v. Gipperich and Burchadi, 1891

[insurance]

Ching Hing Tah v. Gipperich and Burchadi

German Consular Court, Shanghai
5 March 1891
Source: North China Herald, 6 March, 1891

H.G.M.'S CONSULAR COURT.
Shanghai, 5th March.
Before Vice-Consul von Lohr, President, and Messrs. Beck and Gebhardt, Assessors.
CHING HING TAH & OTHERS v. GIPPERICH & BURCHADI.
  The hearing of this case, which was previously before the Court on 3rd February and 2nd March, was resumed. It is a claim by a Chinese firm to recover from Messrs. Gipperich and Burchadi, agents for the National Insurance Co. of Berlin (Deutsche Transport Versicherungs Gesellschgaft) Tls. 2,024 in respect of the partial loss of cargo shipped in the Chinese lorcha Zukong, which was lost in a typhoon on Oct. 28th last when on a voyage from Shanghai to Chinkiang. The vessel was driven ashore and became a constructive loss, the whole of the goods insured being either lost, or so much damaged as to be practically valueless. Of the claim Tls. 1,636 was the amount covered by the risk notes, issued by defendants, and the remainder was for salvage expenses incurred by plaintiffs at the request as they alleged of the defendants. The latter who said they had no funds in hand to meet the claim declined payment, on the ground that the policy only insured the goods against "absolute total loss." This wording had only lately been adopted in the policies on account of considerable losses which had been paid in respect of cargo on lorchas. Defendants said they had instructed their compradore to point out to all Chinese clients the changed form of risk notes, but plaintiffs alleged that they were not made aware and never were aware of any difference between the risk notes in question and those which they had been previously accustomed to take out. Evidence was taken at considerable length on the first two days. The plaintiffs swore that they were never told of the change, whereas defendants' compradore stated that he told one of the plaintiffs of the changes. Mr. Gipperich deposed that he told the plaintiffs that if they wanted to insure under the old form they must pay three times as high a premium as they had paid before.
  Mr. Nonchen, of Messrs. Reuter, Brockelmann & Co., deposed that the plaintiffs came to him and asked him to take a risk under the old form. He refused to do so. He did not know when that was. Mr. Thomas Tatlock, in the employ of the defendants, deposed that he told his shroff, in the presence of one of the plaintiffs, that defendants would only insure against total loss, and he ordered the Shroff to tell this to all the firm's clients.
  On resuming, the plaintiffs were again represented by Mr. H. S. Wilkinson, and Mr. Gipperich defended in person.
  Mr. Wilkinson, in addressing the Court for the plaintiffs, said their claim was that they were accustomed to insure with defendants and continued to do so without being aware that any changes had taken place in the conditions of the risk notes. If the defendants changed their risk notes, which were in English and which the plaintiffs were not expected to understand, unless their attention was specially drawn to it and unless it was fully explained to them, the defendants were liable for the contract, it being such as their previous contract had led the plaintiffs to believe they were entering into. A person going into an insurance office to insure does so under conditions which are customary; but when a custom had prevailed and is altered the person insuring subsequently must have the alteration explained to him and brought home to him clearly in some way or other. In ordinary circumstances a notification would be given in the newspapers. That did not settle the matter and it was usual to notify by circular, or it might be done when a constituent came to enter into a similar contract, and on that occasion the contract ought to be  clearly explained to him.
  The question really before the Court was whether the change was brought home to the plaintiffs or not. No doubt Mr. Tatlock would not say anything he did not believe to be exactly right, but upon examining his evidence he (Mr. Wilkinson) believed the Court would come to the conclusion that Mr. Tatlock failed to bring home to the plaintiffs the change that had taken place. As to the circumstances under which this was done it seemed that Mr. Tatlock was passing casually through the compradore's office when he saw the plaintiffs' man there and told the Shroff to tell this man that a change had been made. There was no evidence whatever as to what the shroff told the man, and it was clear that Mr. Tatlock himself did not know the change that had taken place. The change was a very serious one. Under the new form if any part of the goods was recovered there was no insurance. Under these circumstances no reasonable man would insure. It was in evidence that when the new insurance was brought home to the Chinese they refused to insure further.
  When Messrs. Reuter, Brockelmann and Co. got a translation put upon the back of their risk notes showing the trade structure of the insurance, one hong ceased to insure on their own account, although they did so on two or three occasions for customers because they had orders to insure and had no option. If the nature of the risk had been  brought home to the insurers before the risk was taken, they would not have insured at all. They were only made aware of the change by seeing the Chinese translation on the back of Messrs. Reuter, Brockelmann and Co.'s risk notes. The defendants had never put such a declaration on the back of their notes. If they had, the plaintiffs would have nothing to say. They would have been handed in that case a paper which they were able to read and which they were bound to read.
  The defendants' shroff said he explained the change to one of the plaintiffs, but the latter denied it. All that seems to have been said was that Gipperich and Burchadi were going to do as the China Traders Co. had done, and the only impression that would be made by such a casual conversation would be that it was intended to point out how much better Gipperich and Burchadi were treating their clients than the China Traders' theirs.
  There was the evidence of some other man who said that he on another occasion told Nee Kwong-yuen that if one particle of the ship came back Gipperich and Burchadi would not pay. He asked the Court to totally disbelieve that. The witness in saying this was stating that which was false and which he knew to be false. If a statement of that kind had been made to any of the plaintiffs' men, was it likely that they would not have reported it or not felt bound to state it? They acted upon it as if no such statement had been made. They continued to send in their applications for insurance upon the same basis as they had done before, and on the same form, on which there was nothing to warn them that any change had taken place. The fact was that Gipperich and Burchadi  had failed to take proper and reasonable means of bringing to the knowledge of the Chinese the fact that a change, a most serious and important change, had taken place; and, having failed to take that precaution, defendants were liable.
 Plaintiffs would have been utter fools if they had gone on insuring if they knew the change had taken place. They would simply have been making defendants a present of the premiums, and it was not to be expected that they would have acted in that way. Mr. Gipperich himself had to admit that there would have been very little chance indeed of a ship being so totally lost on a voyage of that kind that her hull could not be brought back and that the cargo should be totally lost.
  Mr. Gipperich questioned by the Court, denied that he had given the plaintiffs notice to take steps for the salvage of the cargo. He declined to have anything to do with it.  Some further evidence having been given by Messrs. Nonchen and Lundt, the latter of whom said the new clause in Chinese was printed on Messrs. Reuter, Brockelmann and Co.'s risk notes early in January:
 Mr. Gipperich, in addressing the Court on his own behalf, said it had been urged that there was no perceptible difference between the two forms of risk note; but on one there were three lines printed in ordinary type which appeared on the other as two lines in italics. The Chinese had simply to put their own construction upon the note. All he had to urge was that the Chinese were bound to make themselves acquainted with the conditions of the policy. If the speaker himself took out a policy without knowing the conditions he would expect to have the matter decided afterwards if there was any dispute. The total loss clause was now used by English as well as German insurance companies for risks on Chinese vessels and he did not know of any company that would insure with particular average against loss in lorchas. As to the claim for salvage expenses, he left it in the hands of the Court.
  After an interval, the President gave judgment as follows:
  I have come to the conclusion that I must disallow the claim of Tls. 1,630 for insurance, and allow the claim of Tls. 394.82 brought to recover expenses of salving the cargo, the plaintiffs to pay four-fifths of the costs of this Court, and the defendants one-fifth.
  I consider that it was the duty of the plaintiffs to inform themselves of the contents of the risk notes and that it was not the duty of Messrs. Gipperich and Burchardi to explain the notes to plaintiffs. The clause was put in English on the face of the risk notes. The plaintiffs contend that a special notification ought to have been given to them of the serious alteration in the risk notes. Evidence was given to this effect. Witnesses, all Chinese more or less interested in the matter, asserted that they knew nothing of the alteration in the risk notes. They only heard of it first after the burning of the Shanghai, and they also assert that the defendant did not explain this alteration properly to them, and that their compradore did not explain the meaning of the alteration fully.
As all these Chinese witnesses are parties to the same claim, I conclude that they are to such an extent interested in it that they would explain their understanding of the risk notes according to their own views. Mr. Tatlock, although he is employed in the defendants' firm, has given evidence, in which it would appear that he repeatedly told the shroff to explain the matter clearly to the Chinamen, and Mr. Tatlock's evidence I am bound to believe. He even told two of his customers named Ching Ching and Ching Foo that this alteration had been made. They did understand it as far as he could say, and it appears that Mr. Tatlock told the plaintiffs;' compradore who admitted that he had been told by Mr. Tatlock in the presence of plaintiffs' shroff. Mr. Tatlock asserts the Chinese were well aware of the alteration in the risk notes and that it had been sufficiently explained to them, therefore, as Mr. Tatlock's testimony seems to be very impartial, I consider it credible.
  Although the conversation between defendants' shroff and Nee Kwong-yuen had to be reconstructed from memory, it is clear that Mr. Tatlock told his shroff to inform the Chinese of the change, and that the shroff did so, and I conclude that the Chinese understood the meaning of the clause inserted on the note perfectly well.   The plaintiffs had sufficient opportunity to inquire about the changes in the risk notes, and it was their duty to inform themselves of what that change meant. It was no part of Mr. Gipperich's duty to explain the change to them.
  With regard to the salvage money I have come to the conclusion that as Mr. Gipperich had admitted the claim today it was his duty to pay it when it was made, and I decree that he pay the plaintiffs Tls. 394.82 with interest at 8 per cent from November 2nd.
  The Court cannot go into the question whether interest is to be payable from the actual date of loss of the vessel or from the day of salvage. As to the plaintiffs' claim for insurance money, there are not sufficient legal grounds to support it, and I dismiss that part of their claim. As I have given judgment for only Tls. 394.82 out of a total of more than Tls., 2,000 sued for, I decree that the plaintiffs pay four-fifths of the costs and the defendants one fifth.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School