Hale v. Washington Ins.

| U.S. Circuit Court for the District of Massachusetts | May 15, 1842

STORY, Circuit Justice.

This is an appeal from a decree of the district court, sitting in admiralty, upon a libel brought upon a policy of insurance. Nearly twenty-seven years have elapsed since in the case of Do Lovio v. Bolt [Case No. 3,776] I had occasion to consider and to affirm the jurisdiction of the district courts of the United States, as courts of admiralty, over policies of insurance. I have not unfrequently been called upon in the intermediate period to re-examine the same subject, and I wish now only to state, that I deliberately adhere to the doctrine therein stated. Indeed, in the various discussions, which have since taken place, here, and elsewhere, I have found nothing to retract, and nothing to qualify, in that opinion, in respect to the true nature and extent of that jurisdiction, and its importance to the commercial and maritime world. To no nation is it of more importance and value, to have it preserved in its full vigor and activity, than to America, as one of the best protections of its maritime interests and enterprises. I rejoice to find, also, that, by a recent act of parliament, the admiralty in England has been restored to many of the powers and privileges, and much of the jurisdiction, which it anciently maintained, and which has been studiously withdrawn from it for the two last centuries by the ill-considered prohibitions of the common law. See St. 3 & 4 Vict. c. 65; 3 Hagg. Adm. Append, p. 436, note. It was my hope and expectation, many years ago, that the jurisdiction of the admiralty over policies of insurance, would have been finally settled in the supreme court of the United States, in a cause from this circuit then pending before it. But the cause went off without any decision. But I have reason to believe that, at that time, my learned brothers, Mr. Chief Justice Marshall and Mr. Justice Washington, were prepared to maintain the jurisdiction. What the opinion of the other judges then was, I do not know; but I have no reason to believe, that a majority of them were opposed to the jurisdiction. Since that period, I have often expressed a determination, whenever any cause of sufficient magnitude to be carried to the supreme. court, by appeal, should arise in this circuit, not to act upon the merits of it, until the question of the jurisdiction of the court over policies of insurance should be settled in the highest court. The sum in controversy, in the present case, falls below that necessary to maintain the appellate jurisdiction; and, therefore, it is my duty to decide the questions involved in it upon their own merits.

The cause has been very ably and ingeniously argued; and turns upon some niceties, which have not as yet come into direct and positive judgment in any former case. The first point naturally presented is; When and under what circumstances, a collision between two ships on the high seas is to be deemed a peril of the seas? And I take it to be now clearly established, that a collision is, in all cases, deemed a peril of the seas, within the words of a policy of insurance, not only when it resulted from accident (see Buller v. Fisher, 3 Esp. 67; 2 Phill. Ins. 2d Ed., p. 635. c. 13, § 8; Peters v. Warren Ins. Co., 14 Pet [39 U. S.] 99), but also when it has been occasioned by the fault or negligence of either ship, or of both of them. The case of Smith v. Scott, 4 Taunt 126, is-directly in point, that where the .loss has-happened to the vessel insured by a collision,, arising from the fault or negligence of the-other vessel, not the subject of the insurance, it is a loss for which the underwriters are liable. The other point was formerly a question of more difficulty; but since the cases of Busk v. Royal Exchange Ins. Co. 2 Barn. & Ald. 73; Walker v. Maitland, 5 Barn. & Ald. 171; Bishop v. Pentland, 7 Barn. & C. 219; Shore v. Bentall, Id. 798, note b; Sadler v. Dixon, 8 Mees. & W. 895; Columbia Ins. Co. v. Lawrence, 10 Pet [35 U. S.] 507; and Waters v. Merchants’ Louisville Ins. Co., 11 Pet. [36 U. S.] 213, it must be deemed at rest in England and in the-courts of the United States. In these cases, it was held, that where a loss occurs from a peril insured against, there it is a loss to be-borne by the underwriters, although it may have been occasioned by the negligence of the master and crew. And this doctrine-not only stands upon the maxim, “Causa próxima, non remota spectatur”; but upon the more general ground, that the underwriters take upon themselves all losses by the perils insured against, without any reference to the fact, whether they are attributable to the negligence or default of the master and crew, or to mere accident or irresistible force. There being no such exception in the words of the policy, the policy of the law does not create one; as the owner can, in most cases, be in no better a condition to guard himself against a loss by the negligence of his agents, than he is to guard against a loss by accident or irrisistible force. He does not warrant the fidelity of his agents, but merely their capacity and ability.

The case of Peters v. Warren Ins. Co., 14 Pet. [39 U. S.] 99, completely covers the third case, where there is a mutual loss to both ships by collision, which is properly chargeable and apportionable on both in rem, whether that loss be by accident or by mutual fault. A different rule may prevail, and indeed seems to prevail, in the French law, making the underwriters liable for losses by collision occasioned by accident, or the fault of the other party; but not for losses occasioned by the fault of the assured or his agents. Pothier, and his excellent commentator, Estrangin, and Valin and Em-erigon, hold this doctrine. Poth. Traite d’Assur. 2, 49, n. 50; Estrangin’s Notes, Id.; 1 Emer. Assur. p. 411, c. 12, § 14; Id. (Ed. 1783) pp. 414, 417, 418; 2 Valin, Comm, bk. 3, p. 177, tit 7, art. 10; Id. p. 183, art 11; Code de Comm. arts. 350, 407. But it has not received any sanction in our law; and, after all, as it stands upon mere general reasoning, it is open to some question, both as to its policy and practical convenience. It is sufficient, however, to say. that in a case of difference between us and foreign writers as to the interpretation of the true rules of commercial law, we must follow our own decisions and doctrines, in preference to theirs. But an attempt has been made to distinguish the present case from the foregoing, upon various grounds; first, that the loss is primarily a personal charge upon the master, who committed the fault; secondly, that it is a charge personally upon the owner; thirdly, that the ship is liable only as a collateral security for the damages. It is hence inferred, that as the charge was not actually fixed upon the ship by any decree, but was paid by the master on the owner’s personal account, the loss is not a loss on the ship insured; but a mere personal loss of the owner, which the underwriters are not bound to compensate.

Now. 1 agree, that where the loss by collision arises from the negligence of the master and crew, the master is personally responsible for the damages, and the owner is also personally responsible. But it is by no means true, that the ship is, therefore, to be treated only as secondarily liable for the loss, in aid of, or as security for, the master and owner. On the contrary, as I understand it, the ancient law of the admiralty holds the ship to be the offending or guilty party, and, therefore, primarily, although not exclusively, liable for the compensation. The judgment of Lord Stowell in the case of The Dundee, 1 Hagg. Adm. 109, 120, 122, recognizes this doctrine, if it does not proceed upon it as its true foundation. Indeed, the common course in the admiralty is to proceed against the ship in rem for the damage, whenever she can be reached, and this is not only a proper course, but in many cases almost indispensable, as the owner is now by statute not liable ordinarily for damages beyond the value of the vessel and her appurtenances and freight, which must be first ascertained and established. See St. 53 Geo. III. c. 159; The Dundee, supra; The Richmond, 3 Hagg. Adm. 431. Indeed, the argument admits, that by the general (perhaps not the universal) maritime law of the continent of Europe, the owner may escape all personal liability by abandoning the guilty ship and freight to the injured party. This of itself would seem to show, independently of any statute provisions, that the liability for losses by collision is primarily understood to be a charge on the ship itself, and that so far from the ship being a mere collateral security for the damages, in aid of the personal responsibility of the owner, he is to be deemed, under the present British law, as well as the maritime law of the continent, as rather a collateral security for the guilty ship, to the amount of her value and the value of the freight, and, at most, personally responsible only when they are not forthcoming to the amount of their value.

The citations from the Digest prove nothing more than the responsibility of the offending mariners for the loss, which I suppose to be undeniable. “Si navis tua im-pacta in meam scapham, damnum mihi debit,” &c.; “si in potestate nautarum fuit, ne accideret, et culpa eorum factum sit, lege Aquilia cum nautis agendum.” Dig. lib. 9, tit. 2, 1. 29, § 2. And again; “Si navis alte-ram contra se venientem obruisset; aut in gubernatorem, aut ducatorem, actionem com-peteré damni injuriae. Sed si tanta vis navi facta sit, quae temporari non potuit, nullam in dominum dandam actionem; sin autem culpa nautarum id factum sit, puto (says Ul-pian) Aquiliae suffieere.” Dig. lib. 9, tit. 1, 1. 29, § 4. But this personal responsibility does not, at least in modem times, exclude, or supersede, or qualify the right to proceed in rem against the offending ship. My learned friend, Judge Ware, of the district court of Maine, in his able opinion in the case of The Rebecca [Case No. 11,619], has fully expounded this doctrine, and traced it up to its fountain head.

But it does not strike me, that it is at all material in the present case to establish, whether the ship or the owner is primarily liable for the loss sustained by the Ritchie, or whether they were each liable pari passu, and in solido. Suppose the ship had been actually arrested under the admiralty process in England, as clearly she might have been (see The Christiana, 2 Hagg. Adm. 183; The Johann Friederich, W. Rob. Adm. 35); and the master had made the compromise, which is not denied to have been fairly and reasonably made, or suppose a decree had passed agaffist the -ship, and the master had paid the money to deliver the ship from a sale, or to discharge the lien; there cannot, as I think, be the slightest doubt, that the underwriters would have been liable for the charges; for the master would be an agent acting for all concerned -under such circumstances. At least, if there be any doubt on this point in any mind, I do not partake of it; and I deem the case of Peters v. Warren Ins. Co., 14 Pet. [39 U. S.] 99, a direct authority in favor of it. What possible difference can it make in law, if the charge is a fixed lien in rem, and properly chargeable on the ship, that it has been paid without any legal process or proceedings? If the master pays for a salvage service to the ship without process, is it less a charge on the underwriters, than if it had been adjudged under a decree in the admiralty? If a ransom is paid to enemies or pirates by the master bona fide out of property on board, or other funds, to deliver the ship from their possession and power, can there be a doubt, that R is a loss to be borne by the underwriters, without any inquiry, whether there be or be not a right, primary or secondary, to proceed in rem or in personam by those, whose money or goods have been applied or sacrificed, against the ship or the owner, for contribution? In truth, however, the loss by collision must be treated as a loss, giving an immediate title and remedy to the persons or property injured, from the time of tlie injury; and whether the amount be paid by the proceeds of the ship, or by the owner personally, it is still a loss occurring to the owner from the peril insured against, for which tlie underwriters are responsible to him.

And this leads me to add, that, in my judgment, it makes no difference, whether the ship was liable at all for the loss, if the loss was a peril insured against, and tlie owner was compellable to pay the loss, as happening by and in consequence of the peril. Unless the collision had taken place, the owner would have incurred no responsibility for any damages. It did take place, and he became chargeable therefor, and it was a peril insured against; how then can he say, that it was not a loss directly occasioned by and attaching to the peril-' The case of Peters v. Warren Ins. Co. [supra], shows, that the collision was the proximate cause of the loss; and if the owner was thereby compellable to pay it, as well as the ship, the payment must be deemed an immediate charge on him, occasioned by the collision, just as much as upon the ship. The argument seems to suppose, that the insurance attaches only to the extent of the direct injury sustained by tlie very thing insured. But that argument is not well founded. Any and every expense, borne by and chargeable upon the owner of the thing insured, as a direct and immediate consequence of a peril insured against, is covered by the policy. There are many expenses incurred by the owner, in consequence of a peril insured against, which constitute no charge in rem; and yet the underwriters are bound to pay the same. Take for example, the fees of proctors and counsel, and officers of the court, paid under judicial proceedings in eases of capture; or the fees of notaries in making a protest; or the costs of a survey; or the duties and expenses, and charges paid in a port of necessity: or the expenses and charges of a sale of damaged goods, or of a sale of other goods, to enable the master to repair damage by a peril of tlie seas. These are all incidents to the original peril or loss; and they must be borne by the underwriters, although they constitute, strictly speaking, no lien in rem. The truth is, that in all these and the like cases we look to the origin of the loss. If it be a peril insured against, all the incidents attached thereto by law, as necessary or natural incidents, become a part of the loss; just as much as the storage of goods saved from a shipwreck is deemed a part of the loss; aud the ex-Denses of court, in a suit to ascertain the salvage, are also deemed a part of the loss.

Upon the whole, I see nothing to take the case out of the general rule fixed by the cases of Waters v. Columbia Ins. Co., 10 Pet. [35 U. S.] 507, and Peters v. Warren Ins. Co. 14 Pet. [39 U. S.] 99. The money, paid to the owners of the Ritchie, was a part of the loss occasioned to the owner of the Columbia by the collision, and a direct consequence thereof. I shall, therefore, affirm the decree of the district court.