Waters v. Merchants' Louisville Insurance Company/Opinion of the Court

This is a case certified to us from the circuit court for the district of Kentucky upon certain questions, upon which the judges of that court were opposed in opinion. The action was brought by Waters, the plaintiff, on a policy of insurance, underwritten by the Merchants' Louisville Insurance Company, whereby they insured, and caused to be insured, the plaintiff, 'lost or not lost, in the sum of $6000, on the steamboat Lioness, engine, tackle and furniture, to navigate the western waters usually navigated by steamboats, particularly from New Orleans to Natchitoches, on Red river, or elsewhere, the Missouri and Upper Mississippi excepted (Captain Waters having the privilege of placing competent masters in command at any time, $6000 being insured at New Albany, Indiana); whereof William Waters in at ptesent master; beginning the adventure upon the said steamboat, from the 12 of September 1832, at twelve o'clock meridian, and to continue and endure until the 12th of September 1833, at twelve o'clock, meridian (twelve months).'

The policy further provided, that 'It shall be lawful for the said steamboat, during said time, to proceed to, touch and stay at, any point or points, place or places, if thereunto obliged by stress of weather or other unavoidable accidents, also at the usual landings, for wood and refreshments, and for discharging freight and passengers, without prejudice to this insurance. Touching the adventures and perils, which the aforesaid insurance company is contended to bear; they are, of the rivers, fire, enemies, pirates, assailing thieves, and all other losses and misfortunes, which shall come to the hurt, detriment or damage of the said steamboat, engine, takcle and furniture, according to the true intent and meaning of this policy.' The premium was nine per cent. The declaration avers a total loss; and that the said steamboat and appurtenances insured 'were, by the adventures and perils of fire and the river, exploded, sunk to the bottom of Red river aforesaid, and utterly destroyed.'

The defendants pleaded six several pleas, to which a demurrer was put in by the plaintiff; and on the consideration of the demurrer, the following questions and points occurred: 1. Does the policy cover a loss of the boat by a fire, caused by the barratry of the master and crew? 2. Does the policy cover a loss of the boat by fire, caused by the negligence, carelessness or unskilfulness of the master and crew of the boat, or any of them? 3. Is the allegation of the defendants, in their pleas, or either of them, to the effect that the fire, by which the boat was lost, was caused by the carelessness, or the neglect or unskilful conduct of the master and crew, a defense to this action? 4. Are the said pleas, or either of them, sufficient? These question constituted the points on which the division of the judges took place in the court below; and they are those upon which we are now called to deliver our opinion, upon the argument had at the bar.

As we understand the first question, it assumes, that the fire was directly and immediately caused by the barratry of the master and crew, as the efficient agents; or, in the other words, that the fire was communicated and occasioned by the direct act and agency of the master and crew, intentionally done from a barratrous purpose. In this view of it, we have no hesitation to say, that a loss by fire caused by the barratry of the master or crew, is not a loss within the policy. Such a loss is properly a loss attributable to the barratry, as its proximate cause, as it concurs as the efficient agent, with the element, eo instanti, when the injury is produced. If the master or crew should barratrously bore holes in the bottom of the vessel, and the latter should thereby be filled with water and sink, the loss would properly be deemed a loss by barratry, and not by a period of the seas or of rivers, though the flow of the water should co-operate in producing the sinking.

The second question raises a different point, whether a loss by fire, remotely caused by the negligence, earelessness or unskilfulness of the master and crew of the vessel, is a loss within the true intent and meaning of the policy. By unskilfulness, as here stated, we do not understand, in this instance, a general unskilfulness, such as would be a breach of the implied warranty of competent skill to navigate and conduct the vessel; but only unskilfulness in the particular circumstances, remotely connected with the loss. In this sense, it is equivalent to negligence or carelessness in the execution of duty, and not to incapacity.

This question has undergone many discussions in the courts of England and America, and has given rise to opposing judgments in the two countries. As applied to policies against fire on land, the doctrine has, for a great length of time, prevailed, that losses occasioned by the mere fault or negligence of the assured or his servants, unaffected by fraud or design, are within the protection of the policies; and as such recoverable from the underwriters. It is not certain, upon what precise grounds this doctrine was originally settled. It may have been from the rules of interpretation applied to such policies, containing special exceptions, and not excepting this; or it may have been, and more probably was, founded upon a more general ground, that as the terms of the policy covered risks by fire, generally, no exception ought to be introduced by construction, except that of fraud of the assured, which, upon the principles of public policy and morals, was always to be implied. It is probable, too, that the consideration had great weight, that otherwise such policies would practically be of little importance, since, comparatively speaking, few losses of this sort would occur, which could not be traced back to some carelessness, neglect or inattention of the members of the family.

Be the origin of it, however, what it may, the doctrine is now firmly established both in England and America. We had occasion to consider and decide the point at the last term, in the case of the Columbia Insurance Company of Alexandria v. Lawrence, 10 Pet. 517-18; which was a policy against the risk of fire on land. The argument addressed to us on that occasion, endeavored to establish the proposition, that there was no real distinction between policies against fire on land and at sea; and that in each case, the same risks were included; and that as the risk of loss by fire, occasioned by negligence, was not included in a marine policy, unless that of barratry was also contained in the same policy, it followed, that as the latter risk was not taken on a land policy, no recovery could be had. In reply to that argument, the court made the comments which have been alluded to at the bar, and the correctness of which it becomes now necessary to decide.

It is certainly somewhat remarkable, that the question now before us should never have been directly presented in the American or English courts; viz., whether, in a marine policy (as this may well enough be called), where the risk of fire is taken, and the risk of barratry is not (as is the predicament of the present case), a loss by fire, remotely caused by negligence, is a loss within the policy. But it is scarcely a matter of less surprise, considering the great length of time during which policies against both risks have been in constant use among merchants; that the question of a loss by negligence, in a policy against both risks, should not have arisen in either country, until a comparatively recent period.

If we look to the question, upon mere principle, without reference to authority, it is difficult to escape from the conclusion, that a loss by a peril insured against, and occasioned by negligence, is a loss within a marine policy; unless there be some other language in it, which repels that conclusion. Such a loss is within the words, and it is incumbent upon those who seek to make any exception from the words, to show that it is not within the intent of the policy. There is nothing unreasonable, unjust or inconsistent with public policy, in allowing the assured to insure himself against all losses, from any perils not occasioned by his own personal fraud. It was well observed by Mr. Justice BAYLEY, in delivering the opinion of the court in Busk v. Royal Exchange Assurance Company, 2 Barn. & Ald. 79, after referring to the general risks in the policy, that 'the object of the assured, certainly, was to protect himself against all the risks incident to a marine adventure. The underwriter being, therefore, liable, prima facie, by the express terms of the policy, it lies upon him to discharge himself. Does he do so, by showing that the fire arose from the negligence of the master and mariners?' 'If, indeed, the negligence of the master would exonerate the underwriter from responsibility, in case of a loss by fire; it would also, in cases of a loss by capture or perils of the sea. And it would, therefore, constitute a good defence, in an action upon a policy, to show, that the captain had misconducted himself in the navigation of the ship, or that he had not resisted an enemy to the utmost of his power.' There is great force in this reasoning, and the practical inconvenience of carving out such an implied exception from the general peril in the policy, furnishes a strong ground against it; and it is to be remembered, that the exception is to be created by construction of the court, and is not found in the terms of the policy. The reasons of public policy, and the presumption of intention in the parties to make such an exception, ought to be very clear and unequivocal, to justify the court in such a course. So far from any such policy or presumption being clear and unequivocal, it may be affirmed, that they lean the other way. The practical inconvenience of creating such an exception would be very great. Lord TENTERDEN alluded to it, in Walker v. Maitland, 5 Barn. & Ald. 174. 'No decision (said he) can be cited, where in such a case (the loss by a peril of the sea), the underwriters have been held to be excused, in consequence of the loss having been remotely occasioned by the negligence of the crew. I am afraid of laying down any such rule. It will introduce an infinite number of questions, as to the quantum of care, which, if used, might have prevented the loss. Suppose, for instance, the master were to send a man to the mast-head to look out, and he falls asleep, in consequence of which the vessel runs upon a rock, or is taken by the enemy; in that case, it might be argued, as here, that the loss was imputable to the negligence of one of the crew, and that the underwriters are not liable. These, and a variety of other such questions, would be introduced, in case our opinion were in favor of the underwriters.' His lordship might have stated the argument from inconvenience, even in a more general form. If negligence of the master or crew were, under such circumstances, a good defence, it would be perfectly competent and proper, to examine on the trial, any single transaction of the whole voyage, and every incident of the navigation of the whole voyage, whether there was due diligence in all respects, in hoisting or taken in sail, in steering the course, in trimming the ship, in selecting the route, in stopping in port, in hastening or retarding the operations of the voyage; for all these might be remotely connected with the loss. If there had been more diligence, or less negligence, the peril might have been avoided or escaped, or never encountered at all. Under such circumstances, the chance of a recovery upon a policy, for any loss, from any peril insured against, would of itself be a risk of no inconsiderable hazard.

This is not all, we must interpret this instrument according to the known principles of the common law. It is a well-established principle of that law, that in all cases of loss, we are to attribute it to the proximate cause, and not to any remote cause; causa proxima non remota spectatur: and this has become a maxim, not only to govern other cases, but (as will be presently shown) to govern cases arising under policies of insurance. If this maxim is to be applied, it disposes of the whole argument in the present case; and why it should not be so applied, we are unable to see any reason.

Let us now look to the authorities upon the point. In Busk v. Royal Exchange Assurance Company, 2 Barn. & Ald. 73, the very point came before the court. The policy covered the risk by fire, and the question made was, whether the fact that the loss of the ship by fire, occasioned by the negligence of the crew, was a good defence; the court held, that it was not. In that case, the policy also included the risk of barratry; and it is now said, that the decision of the court turned wholly upon that consideration, the court being of opinion, that in a policy, where the underwriter takes the superior risk of barratry, there is no ground to infer, that the does not mean to take the inferior risk of negligence; it is certainly true, that the court do rely, in their judgment, upon this circumstance; and it certainly does fortify it. But there is no reason to say, that the court wholly relied upon it, and that it constituted the exclusive ground of the judgment; on the contrary, Mr. Justice BAYLEY, in delivering the opinion, takes pains, in the earlier part of that opinion, to state, and to rely upon the maxim already stated. He said, 'in our law, at least, there is no authority which says that the underwriters are not liable for a loss, the proximate cause of which is one of the enumerated risks; but the remote cause of which may be traced to the misconduct of the master and mariners.' 'It is certainly a strong argument against the objection, now raised for the first time, that in the great variety of cases upon marine policies, which have been the subjects of litigation in courts of justice (the facts of many of which must have presented a ground for such a defence), no such point has ever been made.' In Walker v. Maitland, 5 Barn. & Ald. 173, a similar question was presented, where the maxim was still more strongly indicated, as the general, though not as the exclusive, ground of the judgment. The case of Bishop v. Pentland, 7 Barn. & Cres. 219, turned exclusively upon the very ground of the maxim; and not a single judge relied upon the policy, as containing the risk of barratry. Indeed, it does not appear, that the risk of barrarty was, in that case, in the policy. Mr. Justice BAYLEY, on that occasion, put the former cases as having been expressly decided upon this maxim. His language was, 'the cases of Busk v. Royal Exchange Assurance Company, and Walker v. Maitland, establish as a principle, that the underwriters are liable for a loss, the proximate cause of which is one of the enumerated risks; though the remote cause may be traced to the negligence of the master and mariners.'

Then came the case of the Patapsco Insurance Company v. Coulter, 3 Pet. 222, where the loss was by fire, and barratry also was insured against. The court, on that occasion, held, that in such a policy, a loss which was remotely caused by the master or the crew, was a risk taken in the policy; and the doctrine in the English cases already cited, was approved. It is true, that the court lay great stress on the fact, that barratry was insured against; but it may also be stated, that this ground was not exclusively relied on, for the court expressly refer to and adopt the doctrine of the English cases, that the proximate and not the remote cause of a loss is to be looked to. It is known to those of us who constituted a part of the court at that time, that a majority of the judges were then of opinion for the plaintiff, upon this last general ground, independently of the other. It was under these circumstances, that the case of the Columbia Insurance Company of Alexandria v. Lawrence, 10 Pet. 507, came on for argument; and the court then thought, that in marine policies, whether containing the risk of barratry or not, a loss whose proximate cause was a peril insured against, is within the protection of the policy; notwithstanding it might have been occasioned remotely by the negligence of the master and mariners. We see no reason to change that opinion; and on the contrary, upon the present argument, we are confirmed in it.

The third and fourth questions are completely answered by the reasoning already stated. Those pleas contain no legal defence to the action, in the form and manner in which they are pleaded; and are not sufficient to bar a recovery by the plaintiff.

Some suggestion was made at the bar, whether the explosion, as stated in the pleas, was a loss by fire, or by explosion merely. We are of opinion, that as the explosion was caused by fire, the latter was the proximate cause of the loss.

The fifth plea turns upon a different ground. It is, that the taking of gunpowder on board was an increase of the risk. If the taking of the gunpowder on board was not justified by the usage of the trade, and therefore, was not contemplated as a risk by the policy; there might be great reason to contend, that if it increased the risk, the loss was not covered by the policy. But in our opinion, the facts are too defectively stated in the fifth plea, to raise the question.

Our opinion will be certified to the circuit court accordingly. On the first question, in the negative; on the second question, in the affirmative; and on the third and fourth questions, in the negative.

THIS cause came on to be heard, on the transcript of the record from the circuit court of the United States for the district of Kentucky, and on the questions and points on which the judges of the said circuit court were opposed in opinion, and which were certified to this court for its opinion, agreeable to the act of congress in such case made and provided, and was argued by counsel: On consideration whereof, it is the opinion of this court, 1st, that the policy does not 'cover a loss of the boat by a fire, caused by the barratry of the master and crew;' 2d, that the policy does 'cover a loss of the boat by fire, caused by the negligence, carelessness or unskilfulness of the master and crew of the boat, or any of them;' 3d, that the allegations of the defendants, in their pleas, or either of them to the effect that the fire, by which the boat was lost, was caused by the carelessness, or the neglect or unskilful conduct of the master and crew of the boat, 'is not a defence to this action;' and 4th, that the said pleas, or either of them, are not sufficient in law as a bar to the action of the plaintiff. Whereupon, it is now here ordered and adjudged by this court, that it be so certified to the said circuit court.