General Mutual Insurance Company v. Sherwood
55 U.S. 351

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U.S. Supreme Court

General Mutual Insurance Company v. Sherwood, 55 U.S. 14 How. 351 351 (1852)

General Mutual Insurance Company v. Sherwood

55 U.S. (14 How.) 351

Syllabus

Under a policy insuring against the usual perils of the sea, including barratry, the underwriters are not liable to repay to the insured damages paid by him to the

Page 55 U. S. 352

owners of another vessel and cargo, suffered in a collision occasioned by the negligence of the master or mariners of the vessel insured.

A policy cannot be so construed as to insure against all losses directly referable to the negligence of the master and mariners. But if the loss is caused by a peril of the sea, the underwriter is responsible, although the master did not use due care to avoid the peril.

It was an action of assumpsit brought by Sherwood against the General Mutual Insurance Company upon a policy of insurance dated New York, 17 October, 1843, by which the company insured Sherwood to the amount of $8,000, for the account of whom it might concern, loss payable to him, upon the brig Emily, from the 17th October, 1843, at noon, until the 17th October, 1844, at noon, the vessel being valued in the policy at $16,000.

This policy was effected for the benefit and to protect the interest of Frederick Sherwood and Abraham Sherwood, part owners of said vessel.

On the 13th March, 1844, the brig sailed from Charleston with a cargo of merchandise, bound for New York, being at the time provided with a skillful and experienced master, experienced and skillful mates, and a competent crew, and was in all respects seaworthy for the voyage.

About 5 o'clock in the afternoon of Tuesday, 19 March, a licensed pilot boarded them and took the command and management of the vessel. The wind being unfavorable, the brig ran, close-hauled, heading north and north by east, until the pilot considered himself up to the point of the Romer Shoals; he then tacked and stood in for Sandy Hook, heading to the southward and westward, close-hauled. Between 7 and 8 o'clock at night, the pilot gave orders to go about; in attempting to execute this order, the brig mis-stayed, and the pilot then gave orders to wear ship. At this time, and whilst in the act of wearing, being very close to the shore, the rigging of the vessel having become entangled, and the crew being occupied with the maneuvering of their vessel, the first mate, who was on the top-gallant forecastle, saw a schooner very close to them. Confused by this sudden appearance, his attention in keeping a sharp lookout having been distracted by his attending to the working of the vessel, he, in this sudden emergency, exclaimed "Helm hard down! luff! luff!" The man at the wheel obeyed, and almost instantaneously the brig struck the schooner, which proved to be The Virginian, bound from Norfolk, with a full cargo of merchandise for New York. The order given by the mate to "luff" was erroneous.

Page 55 U. S. 353

The brig Emily was injured by the collision to the amount of $300; the schooner Virginian was so much injured that she sunk, and with her cargo was totally lost.

On 26 March, 1844, the owners of the schooner filed their libel in the District Court of the United States for the Southern District of New York, against the brig Emily, claiming that she was specifically liable for the loss and injury occasioned by the libel.

The owners of the Emily filed their answer, denying that the collision was occasioned by the fault of those in charge of her, and imputing the blame to the crew of the Virginian. On the 12th October, 1845, the cause was brought to a hearing and witnesses examined on both sides.

On 22 April, 1845, Judge Betts pronounced his opinion to be that the brig Emily was to leeward of the Virginian when the latter was first seen; that no sufficient and proper lookout was kept on board her at the time; that the intermission, for the moment, of their precautionary vigilance on board the Emily, might very naturally spring out of a confusion likely to arise from the failure of the vessel to come round to the wind, her dangerous proximity to the shore, the entanglement of some of the running rigging which impeded her maneuver, and the distraction these circumstances were calculated to produce in the attention of the mate, who, at the moment, appeared to have been the only one acting as lookout forward; but that these circumstances did not relieve the vessel from maintaining these precautions, and from the consequences of the omission to do so; and the judge accordingly held that the collision occurred by the negligence or fault of the brig. He decreed in favor of the libellants for the value of the schooner Virginian, and of so much of the cargo as belonged to her owners. It was referred to the clerk to ascertain and report the amount of the loss and damage. The cause came on to be heard on the 3d of June, 1845, upon the clerk's report and exceptions thereto. The court ordered and decreed, that the libellants recover their damages by means of the premises, viz., $5,250 90/100, with their costs, and that the brig Emily be condemned for satisfaction thereof; the libellants' costs were taxed at $704 90/100. On 3 July, 1845, the owners of the Emily appealed to the Circuit Court of the United States for the Southern District of New York, and in November, 1846, the appeal was argued before MR. JUSTICE NELSON.

On 6 April, 1847, judge Nelson delivered his opinion and found, upon the proofs, in substance, that the Virginian was not in fault; that the mistaken order of the mate of the brig to the man at the wheel, in connection with the derangement of

Page 55 U. S. 354

the running rigging of the vessel, and the confusion on board from her mis-staying a few minutes before, had produced the collision. The circuit court affirmed the decree of the district court, with costs. This decree was settled by compromise, and upon payment by the owners of a sum less than the decree, it was satisfied. Early notice of the pendency of the action in the district court, and also of the appeal to the circuit court, was given to the Mutual Safety Insurance Company, with a request that they would unite in the defense, or take such measures as they might deem proper.

Owners of other parts of the cargo lost by the collision, filed their libels against the Virginian, which, after the decrees above mentioned, were settled by compromise; other claims were also made, and settled by compromise; in every instance, the sum paid being less than the claim. On 23 August, 1847, the owners of the brig Emily, having previously presented to their various underwriters preliminary proofs of the loss, copies of the proceedings in the district and circuit courts, and of the payment and settlement of the demands aforesaid, commenced suits upon the policies of insurance, in the circuit court of the United States. The declaration filed in the present action contains two special counts, and the common money counts.

The special counts, set forth all the facts and circumstances with great particularity.

The defendants filed demurrers to each of the special counts, assigning as cause, that neither of the said counts showed any loss or damage by any peril covered by the policy of insurance. The plaintiff below joined in demurrer.

The cause was argued in April, 1848, before his Honor, MR. JUSTICE NELSON, and the Hon. Samuel R. Betts. judgment was given upon the demurrer in favor of the plaintiff below. The defendants did not interpose any other answer to the two special counts, but to the common counts III, IV, V, and VI they pleaded the general issue.

The court having decided the demurrers, ordered the damages to be assessed under the special counts. In May, 1849, the jury assessed the plaintiff's damages at $4,526 34/100. Judgment was signed 5 June, 1849.

Upon the assessment of the damages, the defendant's counsel prayed the court to instruct the jury:

"1. That the general objection to the recovery of the plaintiff was that [it] is apparent, on the face of the declaration, that the loss claimed was not occasioned by a peril insured against, but was to be attributed solely to the gross negligence of the agents of the assured, and therefore, that the loss was either an exception from the terms of the policy, or was not covered by them at all. "

Page 55 U. S. 355

"2. That the rule 'causa proxima non remota spectatur,' in its proper application, relieves the defendants from all liability; since the proximate cause here was, according to the decree of the district and circuit court, 'the fault of the Emily.' The collision by itself did not create the liability to pay. The want of care, skill, and vigilance on the part of the master and crew of the Emily were to be superadded to the collision."

"3. That if the negligence and fault of the assured, and not the collision, were the proximate cause of the loss, such fault and negligence in this case, without which the decree would not have been made, should certainly excuse the underwriters."

"4. That even if the insurer is liable for the amount of the claim against the Emily for the loss of the schooner, it does not follow that he is also liable for the loss of the cargo on board the schooner Virginian. No case has yet carried the liability of the underwriter to this extent."

"5. That the cost of defending the suits are not chargeable upon the underwriters."

"6. That the counsel fees to the advocate are clearly inadmissible."

Whereupon his honor the judge charged the jury:

"It appeared from the evidence that the brig Emily sailed from Charleston for New York on the thirteenth day of March in the year 1841 with a cargo of cotton and other merchandise; that on the afternoon of 18 March aforesaid, being near Barnegat, she took aboard a licensed pilot, and proceeded towards New York, the wind being boisterous, and blowing in flaws; that between 7 and 8 o'clock in the evening she stood over for the Romer Shoals, close-hauled on a wind, heading for Sandy Hook. Finding that the brig could not fetch in to the Hook upon that tack, and having run as close to the beach as he deemed prudent, the pilot gave orders to tack ship; in consequence of the maintopsail-brace being slacked the vessel did not go about, and orders were then given by the pilot to wear ship, and whilst in the act of wearing, the mate of the Emily discovered a sail close by, which proved to be the schooner Virginian, bound for New York, with a cargo on board; the mate cried out, sail ahead! but almost immediately thereafter the brig struck the schooner and sank her, with her cargo. The owners of the schooner Virginian filed their libel in the District Court of the United States for the Southern District of New York, before referred to, against the brig Emily, alleging that the collision was occasioned by the fault and mismanagement of those having charge of the Emily. An answer was filed by the owners of the latter, denying that the collision was properly attributable to the Emily; and, on the contrary, alleging that it

Page 55 U. S. 356

was occasioned by the fault and unskillfulness of those on board of the schooner; proofs were taken in the district court, and the cause having been heard upon the pleadings and proofs, an interlocutory decree was pronounced therein on the twenty-second day of April, in the year 1845, whereby, after reciting that it appeared to the court that the said collision, and the damages and loss incurred by the libellant in consequence thereof, occurred by the negligence or fault of the said brig Emily, it was considered that the libellants were entitled to recover the damages by them sustained thereby, and by which decree a reference was ordered, to ascertain the value of the said schooner Virginian, her tackle &c., at the time of the collision, and of the cargo then on board of her, belonging to the libellants, and the amount of the loss in the premises sustained by the libellants by means of such collision; and afterwards, the said cause having again been heard upon exceptions to the report, and the proofs and allegations of the respective parties, a final decree was pronounced thereon on the seventh day of June, in the year 1845, whereby it was ordered, adjudged, and decreed, by the said district court that the libellants recover in the said action their damages, by means of the premises, the sum of five thousand two hundred and fifty-four dollars and seventy cents, together with their costs to be taxed, and that the said brig, her tackle and apparel, be condemned for satisfaction thereof, which said costs of the libellants were afterwards duly taxed at $704.96."

"From this decree an appeal was taken by the owners of the brig Emily to the Circuit Court of the United States for the Southern District of New York, in the second circuit, and after hearing the proofs and the arguments of counsel, the court affirmed the decree of the district court, with the costs of the respondents to be taxed. After the decision of this Court had been pronounced, another libel was filed by the owners of a portion of the cargo lost on board the Virginian, against the brig Emily, and claims were made, and libels threatened by others of the shippers of the cargo lost on board of the schooner, against the owners of the Emily, which action and claims by the owners of the said cargo were compromised and settled by the owners of the Emily. That if they should find, upon the evidence, that, at the time of sailing from Charleston, the brig Emily was a seaworthy vessel, properly equipped for the voyage to New York, and that she had on board a skillful master, and a sufficient and competent crew, the defendants are liable upon the policy given in evidence for the one-half of the loss to the brig Emily, arising from the collision with the schooner Virginian, not exceeding the sum insured, notwithstanding that it was occasioned by, or resulted from, the fault of the pilot, or of

Page 55 U. S. 357

the master and crew of the brig, either from want of keeping a sufficient lookout or from mismanagement of the vessel."

The direct and immediate consequence of the collision was that a lien was created on the brig in favor of the owners of the Virginian and of the owners of the cargo on board of her to the extent of the value of the schooner, and of the cargo that was destroyed by the disaster, and the plaintiff is entitled to recover from the underwriters not only the cost of the actual repairs of the injury done to the brig, but also the several sums that her owners have actually and in good faith paid to the owners of the schooner and of the cargo lost with her in order to discharge their vessel from the liens created by the said collision; that the plaintiff is also entitled to recover from the underwriters on the brig the actual expenses and costs, including reasonable advocate's fees, necessarily incurred in the defense of the brig from the aforesaid claim.

The policy of insurance in this case is subscribed for $8,000, the vessel being valued therein at $16,000; it was therefore an insurance upon one-half of the vessel, and the defendants are consequently liable for one-half only of the loss and damage sustained by the assured in consequence of the said collision which the jury shall find, upon the evidence, was actually and properly paid by the owners of the Emily in order to relieve their vessel.

The counsel for the defendant then and there excepted to said charge, so far as the same differed from or did not conform to the instructions prayed for by him, as above.

The jury thereupon rendered a verdict for the plaintiff, for four thousand five hundred and thirty-six dollars and thirty-four cents damages, and six cents costs.

And because the said several matters so offered and given in evidence, and insisted upon by the defendants aforesaid, and the charge of the said judge, and the said exceptions taken to the same, do not appear by the record of the verdict aforesaid, the said defendants have caused the same to be written on this bill of exceptions, to be annexed to such record, and have prayed the said judge to set his hand and seal to the same. Whereupon the Hon. Samuel Nelson, the associate Justice before whom the said issues were tried, and said exceptions taken, and one of the judges of said circuit court, hath hereto set his hand and seal, this twenty-eighth day of November, in the year of our Lord one thousand eight hundred and fifty-one.

Upon this bill of exceptions, and the judgment of the court upon the demurrers, the case came up to this Court.

Page 55 U. S. 361

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