This is an appeal from a judgment granting to respondent $26,546.44 in damages on its claim for negligence of appellants, insurance brokers, in failing to extend or renew marine insurance coverage on respondent’s dredge, which sank in Puget Sound.
Respondent, Pacific Dredging Company, Inc., was the owner of a suction dredge, called “Pacific Dredge No. 1.” The dredge was used principally on inland waters around Seattle (Lake Washington, Lake Union, the ship canal, and
Respondent, in 1961, carried a standard marine hull insurance policy on the dredge with the Glens Falls Insurance Company (herein called the insurer). The Marine Office of America was the managing underwriter for the insurance company on this coverage. The policy was obtained for respondent by appellants acting as insurance brokers. The policy was an enumerated perils policy which insured the dredge against
“. . . Perils ... of the Seas . . . and . . . all other like Perils, Losses and Misfortunes that have or shall come to the Hurt, Detriment or Damage of the said Vessel, &c., or any part thereof.”
It further provided that the dredge was insured for and valued at $33,000.
The policy also contained a trading limits warranty which reads as follows:
“Warranted during the currency of this policy to be employed in the Assured’s dredging business, and confined to the waters of Lake Washington, Lake Union and waters immediately adjacent thereto, but not West of the Government Locks, however, with permission to move to and operate on the waters of the Duwamish Waterway.”
Sometime in early 1961, respondent had undertaken to do some dredging at Day Island Yacht Basin near Tacoma. Respondent, through appellants, obtained an endorsement for its insurance policy on the dredge extending the trading limits to include one voyage to Day Island and return. This endorsement gave the extended coverage from July 14, 1961, until September 14, 1961. The dredge sank while at the job, and was returned to the Duwamish shipyards in Seattle, where it was repaired. The repairs were paid for by the insurance company. The dredge was under repair from sometime in August until October 16, 1961.
In the last week of September, Joseph A. Park, respondent’s president, was on the dredge at Duwamish yard, where
Thereafter, appellant Atkins obtained from the insurer an extension of the trading limits and mailed the endorsement and an invoice to respondent. Respondent received the endorsement and invoice, but read only the invoice. The invoice stated: “Trading Warranty extended to include one voyage to Day Island Yacht Club, Tacoma,” “Begins 10-2-61” and “Expires 2-24-62” for a premium of $33.70. The endorsement referred to reads as follows:
“Effective October 2nd, 1961, and in consideration of an additional premium in the amount of $33.70, it is mutually understood and agreed that the trading warranty under this policy is extended to include one voyage to Day Island Yacht Club, Tacoma, and while employed there and return to the basic trading limits, described elsewhere herein, but not beyond November 2nd, 1961, N.P.S.T.”
Mr. Park testified that, on October 31, 1961, he went to the office of appellants for the purpose of discussing insurance coverage then in effect on some tools and equipment on the dredge, which items were covered under a policy issued by another insurance company which did not carry the hull insurance on the dredge. At that time, Mr. Park disclosed to Mr. Atkins that the dredge had completed its work at Day Island but that it was still there because of the bad weather, and that he intended to keep it there until the weather improved sufficiently to bring the dredge back to Seattle. According to Mr. Park, Mr. Atkins agreed that this was a good idea.
November 6, 1961, the dredge was made ready for the return voyage to Seattle by Mr. Ferguson, the skipper of the dredge, an employee of respondent. He then turned the dredge over to Foss Launch and Tug Company’s tug, the “Drew Foss,” which took the dredge in tow and towed
The evidence indicates that the weather was fair and calm, with a slight northerly breeze blowing. There is no testimony from anyone who may have been aboard the dredge during the tow, nor is there any testimony from anyone aboard the tug “Drew Foss” concerning the actual cause of the sinking or the manner in which the sinking had occurred. The only testimony concerning the cause of the sinking was directed toward the seaworthiness of the dredge and toward the possibility that the manner of tow or speed of tow was to blame for the sinking. The testimony regarding the possibility that the manner or speed of the tow may have caused the sinking was from the skipper of the dredge, who was not aboard the dredge or the tug when the dredge sank. This was elicited on cross-examination, whereupon respondent’s counsel immediately interposed his remark that any testimony as to the cause of the sinking was pure speculation.
January 17, 1962, the insurer, through its managing underwriter, denied the claim of respondent 1 for loss of the dredge under the policy on two grounds, (1) that the claim did not show that the loss occurred due to an insured peril, and (2) that the dredge was outside the trading limits warranty, because the endorsement extending the scope of the trading limits had expired on November 2, 1961, whereas the loss occurred on November 6, 1961.
March 19,1962, respondent sued Foss Launch
&
Tug Company, Inc., in the United States District Court, for the loss of the dredge, alleging $83,000 damages caused by (1) breach of contract, and (2) negligence in the towing of the dredge. The tug company denied liability, and alleged some affirmative defenses. This suit was compromised and settled in November, 1962, for a total payment of $6,453.56, and the release of Foss Launch & Tug Company, Inc., and all its
Meanwhile, early in February, 1962, respondent had instituted the present action against appellants, alleging their negligence in failing to obtain an extension of the trading limits which would be effective until the dredge had returned to Seattle from Day Island, and that the insurance company had denied coverage under the policy due to this failure to obtain the extension of trading limits for a sufficient time. Appellants denied liability and set up several affirmative defenses. The case was tried before a jury. The verdict was in favor of respondent in the amount of $26,-546.44, being the value of the dredge as stated in the insurance policy, less $6,453.56, the amount obtained by respondent from Foss Launch & Tug Company, Inc., in the settlement of the case above referred to.
The trial court denied motions to dismiss the action made by appellants during the trial and also their motions for judgment n.o.v. and for new trial. Judgment was entered on the verdict. Appellants then took this appeal.
Appellants have assigned 11 errors to the trial court’s rulings. These 11 assignments raise 4 specific questions. First, assuming that appellants were negligent in failing to obtain or renew an extension of the trading limits warranty endorsement for a sufficient length of time to cover the dredge’s return to Seattle, is the burden upon respondent to show that the loss was caused by one of the perils insured against in the basic marine insurance policy if the requested extension of time had been obtained? Second, did the respondent submit sufficient evidence as to the cause of the sinking to warrant submitting to the jury the question of whether or not the cause of the sinking would have been covered under the enumerated perils clause in the policy? Third, was the release by the insured of a possible tortfeasor, who may have been responsible for the sinking of the vessel, in effect, a release of subrogation rights so that
The first question is relatively easy to answer. The question really asks whether respondent, insured, must prove that, if the insurance broker had obtained the insurance requested, the loss would have been within the risks insured against in the policy. In ordinary negligence terminology, the question is—must the insured prove a causal connection between the negligence of the insurance broker and the damage to the insured? The answer, of course, is yes.
There is a dearth of case authority on this point. The case most nearly in point is
Glatter v. Schwartz,
The general rule is recognized as being applicable to both breach of contract and negligence actions against an insurance broker because the issue is one of actual causation of damage to the insured. The “but for” test has been used to resolve the issue. See McNeil, Liability of Insurance Agents, in Roady and Andersen, op. cit., supra.
Undoubtedly, both the trial court and respondent agree with appellants’ position that causation in fact must be established in this negligence action, as in any other negligence action. The only difference between them is what must be shown to complete the chain of causation.
The trial court gave the whole policy to the jury without instructions as to its significance in this case, or to what use the jury was to put the policy. If there were a jury question on whether or not this loss would have been covered by the coverage clause of the policy, then the court must give appropriate instructions explaining to the jury any terms of the coverage clause that the jury might not be expected to understand, such as what factual patterns are or are not included within the coverage, when such matters are brought to the attention of the trial court, as was done in this case.
Respondent contends that the jury was properly instructed because the burden of proving that the insurance company would have had a defense under the policy is on the insurance broker, and that this was covered by the instructions. The instruction relied on by the respondent is misleading in the context in which it was given. The wording was correct, so far as it went, but the instruction fails to distinguish between what the insured must prove in order to show a claim under the coverage clause of an insurance policy and what the insurance company must prove in defense against a claim.
The rule announced by the court pertains only to defense. Yet the court gave this instruction in such a context that the jury was lead to believe that the insurance company (and the insurance broker in the position of the insurer) must disprove the allegations of the insured even though the insured has introduced no evidence to support his
It is clear to us that the jury was not instructed so that it could or did understand that, in order to find the existence of a causal connection between the negligence of the insurance broker and the uninsured loss of the dredge, it must first find that the coverage clause of the requested insurance policy would have insured respondent against perils, one or more of which actually caused the sinking of the dredge. The trial court erred in this regard, as claimed by appellants in their assignments of error, and this error was prejudicial.
We desire the precise limits of our holding on this point be understood and, hence, elaborate on the subject as follows: If the trial court had clearly ruled that the insurance policy coverage clause insured against the cause of the sinking of this dredge, as a matter of law, then the court’s instructions would have been correct (although we hasten to add that we would then have had to review this ruling of the trial court in the light of the evidence in the case). Furthermore, even if the trial court had not ruled on this point, and if the question of whether the policy coverage clause insured against such a loss had not been discussed, the pleading in the complaint was sufficiently broad
2
so
We turn to the second question. Was the evidence which was introduced into the case sufficient to take to the jury the question of whether the sinking of the dredge was caused by a peril insured against by policy? If the answer to this question is no, the case must be dismissed. The answer to this question depends first on our interpretation of the clause in the policy defining the perils insured against.
The insuring clause in this marine hull policy was the ordinary enumerated perils clause
5
plus a standard “Inch
First, the portions of the enumerated perils clause which are claimed to be pertinent to this case insured respondent against “. . . Perils ... of the Seas . . . and ... all other like Perils, Losses and Misfortunes. ...” The “perils of the seas” provision insures against wave action, wind action, and obstructions which are “fortuitous” as differentiated from ordinary or expected action of the waves or wind. The essence of the concept of the perils of the seas is that the cause of the danger is outside the vessel as differentiated from an internal weakness of the vessel.
7
The additional words “and all other like Perils, Losses and Misfortunes” broadens the coverage only to the extent of insuring against similar perils which might not be within the strict interpretation of the words “perils of the seas” (or the other enumerated
Respondent stressed the “all other like perils” phrase when it quoted the coverage clause in its statement of additional authorities, without explaining why it did so. We emphasize that the phrase “and all other like Perils, Losses and Misfortunes,” which words were used in the present insurance policy, simply extends coverage to similar perils. Similar clauses in other insurance policies have never been interpreted to convert this coverage clause into an all-risk coverage clause. 9 Therefore, this phrase does not lighten the insured’s burden of proof. Respondent also stressed the phrase that stated that the insurance was to be effective when the dredge was towed, again without explanation. We likewise wish to emphasize that this provision was contained in a clause which simply stated that the insurance would be effective under varying kinds of places and uses. 10 It did not broaden the coverage clause with relation to the number or kind of perils insured against.
The “Inchmaree” clause pertains to this case in two respects. It extends the coverage of the policy to include losses caused by “latent” defects, which means weakness in the vessel, which were not discovered even though the vessel was properly surveyed for purposes of determining its seaworthiness and was properly maintained in repair by the owner.
11
The clause also extends the coverage of the insurance to include losses due to negligence of the master, mates, or crew, so long as the negligent party is not the owner.
12
The wording of this clause leaves no doubt that it also is intended to be an enumerated perils clause which simply extends the coverage beyond the standard enumerated perils in the standard marine policy. Under
The critical question submitted by the parties is whether or not a claim has been proven under the clauses discussed above when the insured claims that the cause of the sinking of the vessel is from an unknown cause. 13 Each party has cited a leading case which supports his position, and each case reaches a directly contrary result on facts so similar as to be substantially identical.
Watson v. Providence Washington Ins. Co.,
Glens Falls Ins. Co. v. Long,
This latter case cites considerable authority, some of which was not considered by the court in
Watson v. Providence Washington Ins. Co., supra,
including the annotation in
“The scope proper of this annotation is limited to those cases in which it was contended by the insurer that a specific cause must be shown; the annotation, therefore, does not purport to treat of the question more frequently presented in cases of sudden or unexplained sinking, namely, Must the insured, in order to recover, affirmatively establish the seaworthiness of the vessel at the inception of the risk? Nor does it include cases which stop short with the declaration that the insured must prove a loss from causes within the terms of the policy, this being a general rule recognized by even those cases holding that specific cause need not be shown, where to do so is impracticable or impossible.” (Italics ours.)
We have read many cases concerning proof of losses under marine policies,
14
including those cited in both
Watson
The case before us is different. Here, the persons who were most likely to be able to shed light on the cause of the sinking were the members of the crew on the tug “Drew Foss.” They had charge and control of the dredge. They were present when the dredge sank. Yet the only evidence brought in by respondent was the testimony of its president and the skipper of the dredge. Neither of them was on the scene when the dredge sank. In the words of respondent’s counsel, testimony from either of them on the cause of the sinking would be either “hearsay” or “speculation.” See footnote 13, supra.
The record shows that, shortly after the insurer denied liability on respondent’s claim, giving as one reason that the loss was not shown to be due to a peril insured against, respondent brought an action against Foss Launch & Tug Co., Inc., to recover $83,000 because of alleged negligence in towing the dredge. This action was settled prior
“. . . [T]he insured ordinarily is not entitled to recover under a marine insurance policy when the insured vessel sinks in calm water and fair weather without explanation.”
We conclude, therefore, that there was no issue of fact for the jury on this point, and that the trial court should have ruled, as a matter of law, that respondent, insured, had failed to sustain its burden of proof to show that the sinking was caused by one of the perils insured against.
Respondent cites
Delanty v. Yang Tsze Ins. Ass’n,
It follows from this conclusion that, assuming that appellants were negligent in failing to obtain from the insurer
This conclusion is dispositive of the case. Therefore, we do not reach the question of whether or not the alleged negligence of the tug operators was covered by this policy’s “Inchmaree” clause, nor do we reach the question of the effect of the release of the purported subrogation rights.
The judgment of the trial court is reversed with directions to dismiss the action.
Ott, C. J., Finley, Weaver, and Hamilton, JJ., concur.
March 15, 1965. Petition for rehearing denied.
Notes
In respondent’s claim, the cause of loss was stated as follows:
“Dredge was in tow of tug ‘Drew Foss’ and without previous warning it sank. There was no showing that the dredge struck an obstruction.”
Respondent’s complaint alleged as follows:
“That the insurance coverage provided by the Glens Falls Insurance Company was for the sum of Thirty-three Thousand Dollars ($33,000) upon the hull of said dredge; that claim has been presented to the Glens Falls Insurance Company; that they have denied the claim and advise that they had limited the extension of trading limits by endorsement to the 2nd day of November, 1961; that the said loss occurred on the 6th day of November, 1961, and therefore was not covered by the said
‘Answering paragraph VI, defendants deny each and every allegation contained therein.”
Bates v. Bowles White & Co.,
56 Wn. (2d) 374,
In the instance of a building destroyed by fire, when the agent is sued for his failure to provide fire insurance on the building, since such a loss is obviously within the peril insured against, unless expressly excluded, the burden of proving any loss outside the policy is obviously on the insurance agent. See
Stevens v. Wafer,
See
Hardt v. Brink,
‘Touching the Adventures and Perils which we, the said Assurers, are contented to bear and take upon us, they are of the Seas, Men-of-
“This insurance also specially to cover total or constructive total loss of vessel directly caused by the following:—
“Accidents in loading, discharging or handling cargo, or in bunkering or in taking in fuel.
“Explosions on shipboard or elsewhere.
“Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull (excluding, however, the cost and expense of repairing or renewing the defective part).
“Negligence of Master, Mariners, Engineers or Pilots, provided such loss or damage has not resulted from want of due diligence by the Owners of the Vessel, or any of them, or by the Managers.
“Masters, Mates, Engineers, Pilots or Crew not to be considered as part owners within the meaning of this clause should they hold shares in the Vessel.”
For a comprehensive discussion of the meaning of the phrase “perils of the seas,” see 11 Couch on Insurance (2d) §§ 43:87, 43:92, 43:96-101, and the cases cited therein.
See 11 Couch on Insurance (2d) §§ 43:3-5, and 43:91, third paragraph.
See 11 Couch on Insurance (2d) §§ 43:3-5.
See 11 Couch on Insurance (2d) § 43:94.
See 11 Couch on Insurance (2d) §§ 43:82, 43:84, 43:85.
See the specific wording of the “Inchmaree” clause in footnote 6. Also, see 2 Arnould, Marine Insurance (14th ed., Chorley) § 861a, p. 782.
The complaint of the respondent alleged as follows:
“ . . . the said barge for some reason unknown to plaintiff became swamped and sunk in Puget Sound and was and is a total loss.”
The additional testimony and discussion between the court and counsel for both sides, during the cross-examination of the skipper of the dredge, was as follows:
“[Appellants’ attorney]: Q. What was the weather like when you took the dredge out to the Drew Foss, which then took it in tow? A. Well, it was perfect. It couldn’t have been any calmer. Q. You have stated in your opinion that the dredge was in perfect shape, seaworthy, and ‘the weather was perfect, it couldn’t have been any calmer.’ Do you have any opinion as to what caused the dredge to sink?
“[Respondent’s counsel]: Objection, your Honor. There is no showing that this man was aboard the dredge, and I think it would just be speculation as to what caused the dredge to sink. If we had somebody who was with the dredge when it sank, that would be different.
“The Court: Let’s see. He was familiar with the dredge. He knew what happened. I presume he was there immediately after? A. Pardon?
“The Court: Were you there soon after the dredge sank? A. No.
“The Court: I see. He may express an opinion as to what he thinks due to his qualifications as the skipper. A. I can’t very well answer that question, only on a guess. If you want to, a guess, I could probably.
“The Court: No, just your honest opinion as skipper. Q. Are you aware of any fact that in your opinion would have caused that dredge to sink; you can answer that yes or no? A. Yes. I know I have an idea what made it sink. Yes. Q. Do they relate in any way to the condition of the dredge? A. No. Q. Do they relate in any way to the manner in which it was towed? A. Yes.”
The position of respondent in this case is clear. It insists that it does not know the cause of the sinking. Appellant accepts this position, and claims that respondent has not sustained its burden of proof that the loss was due to a peril insured against.
See cases listed in 11 Couch on Insurance (2d) 427 (1960), and cases cited in