In the absence of fraud or design, misconduct on the part of the
master of a vessel covered by a policy of insurance will not defeat
a recovery on the policy when the proximate cause of the loss is a
peril covered by it.
A provision in a policy of insurance of a steam vessel that the
insurer shall not be liable for losses occasioned by "the
derangement or breaking of the engine or machinery or any
consequences resulting therefrom" relates to losses of which the
derangement or breaking is the proximate cause, and not to such as
are a remote consequence of either.
The abandonment of a vessel for total loss, made in good faith
at a time when it was in reasonable probability impracticable to
recover and repair it, and when the damage from the perils insured
against amounted in like probability to more than fifty percent of
the value, is a valid abandonment within the terms of a policy
which provides that there shall be "no abandonment as for a total
loss" unless the injury sustained be equivalent to fifty percent of
the agreed value, although by a
Page 123 U. S. 68
change of circumstances it afterwards became practicable to
float off the vessel, and thereby the loss was reduced below fifty
percent of that value.
This was an action to recover on a policy of marine insurance.
Judgment for plaintiff. Defendant sued out this writ of error. The
case is stated in the opinion of the Court.
MR. JUSTICE HARLAN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
This writ of error brings up for review a judgment against the
Orient Mutual Insurance Company of New York upon a policy whereby
that company insured the defendants in error in the sum of $5,000
on the steamer
Alice, of the agreed valuation of $27,000,
against perils "of the seas, lakes, rivers, canals, fires, and
jettisons that should come to the damage of said vessel or any part
thereof."
The policy provided, among other things, that the company should
be free from all claim for loss or damage
"arising from or caused by . . . barratry, . . . or occasioned
by the bursting of boilers, the collapsing of flues, explosion of
gunpowder, the derangement or breaking the engine or machinery,
Page 123 U. S. 69
or any consequence resulting therefrom unless the same be caused
by unavoidable external violence,"
that there should be
"no abandonment as for a total loss on account of said vessel's
grounding or being otherwise detained, or in consequence of any
loss or damage, unless the injury sustained be equivalent to fifty
percentum of the agreed value in this policy; that the aforesaid
vessel is, and shall be at all times during the continuance of this
policy, tight and sound, sufficiently found in tackle and
appurtenance thereto, competently provided with masters, officers,
and crew, and in all things and means for the safe employment
thereof,"
and that
"In no case whatever shall the assured have the right to abandon
until it shall be ascertained that the recovery and repairs of said
vessel are impracticable, nor sell the wreck, or any portion
thereof, without the consent of the company."
The insured sued as for a total loss arising from one of the
perils specified in the policy.
The company pleaded
non assumpsit and payment, with
leave to give in evidence the matters set forth in its affidavit of
defense, which was adopted as a special plea. Those matters will
sufficiently appear from the facts which will now be stated.
According to the bill of exceptions, there was evidence in
behalf of the plaintiffs tending to show that, without willfulness
or design on the part of her captain, the vessel was carried, April
28, 1880 -- before the expiration of the policy -- over the falls
of the Ohio River at Louisville, Kentucky, and sunk, receiving
damage in a sum equal to fifty percent of her agreed value, and
that on the 18th of May, 1880, it being apparently impracticable to
float her off and repair her, the vessel was abandoned to the
insurers as a total loss, and the sum due under the policy
demanded.
The evidence introduced by the company tended to establish these
facts:
The master of the
Alice was C. F. Adams, one of the
assured, and a son of the other plaintiff. Before the sailing of
the vessel, he had the reputation of being a "drinking" man, and of
that fact his father was informed. On her arrival at Louisville on
the morning of April 28, 1880,
Page 123 U. S. 70
the master gave the usual signal (which was transmitted to the
engineer) that he had no present need of the engines. The joint of
the mud valve was out of order, threatening damage to the freight
and making repairs necessary. The steam was thereupon blown off in
order to make repairs. The captain, coming on board, saw that
repairs were going on, and knew that the mud valve connected with
the boiler needed repairs. The work of repairing made in necessary
to blow off steam. The captain subsequently went on deck, and
without making inquiry of the engineer as to the condition of the
steam or receiving any notice from him that the steam was ready,
tapped his bell at 8:30 A.M. as a signal to let go the boat. At
that time there was not sufficient steam to propel the vessel. It
is the custom of the river, for the master before giving the order
to let go, to inquire of the engineer as to the condition of the
steam and await his reply that steam is ready before giving the
order to let go. At the time of the accident, the vessel was in a
position to be carried over the falls if she was let go without
steam on. Upon being let go, she was carried by the current down
the river and over the falls, and, striking a pier, was badly
damaged, in consequence of which she sunk soon thereafter below the
bridge in about eighteen feet of water.
There was also evidence in behalf of the company tending to show
that the vessel was but slightly injured, and, in the spring of
1881, was floated and removed from the place at which she sunk and
put in the condition in which she was before sinking for a sum
little less than $6,000; that when she was raised the plaintiffs
refused to pay the expense thereof; that after May 18, 1880, the
plaintiffs sold her furniture and apparel without the company's
consent, and that on or about the twenty-eighth of April, 1880,
they put her into the possession of the Cincinnati Underwriters'
Wrecking Company, which thereafter had the right of possession
until the vessel was seized by the United States marshal under
process, in December, 1880, upon maritime liens.
To further maintain the issues on its behalf, the defendant --
the bill of exceptions states -- produced in evidence an
exemplification
Page 123 U. S. 71
of the record of a certain cause, entitled "Cincinnati
Underwriters' Company against The Steamer
Alice," etc., in
the United States District Court for the District of Kentucky as
tending to show that after the 18th May, 1880, the claimants, by
the answers and petitions in that suit, claimed to be the owners of
the vessel, her furniture and apparel; that the Alice was subject
to maritime liens in a considerable sum, existing on the 18th of
May, 1880; that she was sold under a decree to satisfy the same,
the plaintiffs receiving a part of the proceeds of sale; that the
plaintiffs admitted that she was slightly damaged, and they had
refused, after she was raised, to pay the expense of raising
her.
Thereupon the plaintiffs offered evidence tending to show
that
"it was the custom of the river that the engineer should give
notice to the captain before exhausting steam, and that it was not
the custom for the captain to have notice from the engineer that
steam was ready before giving the order to let go."
The plaintiffs, in further reply, offered to prove by the
plaintiff C. F. Adams
"that the steamer at the time of loss, was insured in seven
companies for a total insurance of eighteen thousand dollars, and,
after the notice of abandonment, six of them, representing an
insurance of $13,000, settled with the insured, and, as part of the
settlement, released to the latter all interest in the steamer as
she lay; that after the marshal's sale of the boat, the plaintiffs
claimed to own the 13/18 of the proceeds of sale, and that when the
claim for the entire proceeds was made, it was, as to form, under
the advice of counsel, but the plaintiffs did not intend thereby to
waive the abandonment theretofore made, or to keep, as against the
Orient Insurance Company, the 5/18 of the proceeds of sale."
This was offered as bearing upon the question of waiver of
abandonment of the
Alice, to which offer the defendant
objected, but the objection was overruled and the testimony of the
witness admitted. The defendant excepted to the overruling of the
objection and to the admission of the testimony.
The first assignment of error relates to the instructions upon
the general question whether the insured, by anything done or
Page 123 U. S. 72
omitted to be done, had defeated their right to recover on the
policy. The court at the request of the plaintiffs, and against the
objections of the company, instructed the jury that
"Where a loss under a policy of insurance such as the one in
suit happens from the perils of the river, it is not a defense to
the insurance company that the remote cause of loss was the
negligence of the insured or his agents,"
and that
"the mere fault or negligence of the captain of the vessel by
which the
Alice was drifted into the current and drawn
over the falls will not constitute a defense for the company unless
the jury should be satisfied that the captain acted fraudulently or
willfully, with design in so doing."
The theory of the defense was disclosed by the request to
instruct the jury that if they
"are satisfied from the evidence that the accident and loss was
caused by the misconduct of Capt. Charles F. Adams, that then the
plaintiff cannot recover."
This request was denied, but the court said to the jury:
"This is true if the jury is satisfied that the conduct of the
captain is properly characterized. If he designedly or recklessly
exposed the vessel to the dangers of navigation at the falls,
knowing that she was not in a condition to encounter them, he was
guilty of misconduct such as would relieve the defendant from
liability, but if the proximate cause of the loss was the stranding
of the vessel, this was covered by the policy and the defendant is
not relieved from liability by showing that the loss was remotely
ascribable to the negligence of the captain or the other officers
or employees."
We do not perceive anything in these instructions of which the
insurance company can rightfully complain. The court proceeded upon
the ground that if the efficient and therefore proximate cause of
the loss was a peril of the river, the company could not escape
liability by showing that the loss was remotely caused by mere
negligence in not ascertaining, before giving the signal to let the
vessel go, that she had steam enough for her proper management. The
court committed no error in so ruling. In
Columbia Ins. Co. v.
Lawrence, 10 Pet. 517, which was a case of
insurance against fire on land, the Court said that
"a loss by fire occasioned by the mere fault
Page 123 U. S. 73
or negligence of the assured or his servants or agents and
without fraud or design, is a loss within the policy upon the
general ground that the fire is the proximate cause of the loss and
also upon the general ground that the express exceptions in
policies against fire leave this within the scope of the general
terms of such policies."
In the subsequent case of
Waters v. Merchants'
Louisville Ins. Co., 11 Pet. 213,
36 U. S. 224,
it was said in reference to the case of
Columbia Ins. Co. v.
Lawrence that
"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."
To the same effect are
Patapsco Ins. Co. v.
Coulter, 3 Pet. 237;
General Mut. Ins. Co. v.
Sherwood, 14 How. 352, and
Phoenix Ins. Co. v.
Erie Transportation Co., 117 U. S.
325.
But it is insisted that the court should have granted the
request of the company to the effect that it was not liable if the
accident and loss were caused by the "misconduct" of the master.
Had that request been granted in the form asked, the jury might
have supposed that the company was relieved from liability if the
master was chargeable with what is sometimes described as gross
negligence, as distinguished from simple negligence. Hence, the
court properly said in effect that the misconduct of the master,
unless affected by fraud or design, would not defeat a recovery on
the policy. The principle upon which the court below acted was that
expressed by Chief Justice Gibson in
American Ins. Co. v.
Insley, 7 Penn.St. 229, when he said that
"Public policy requires no more than that a man be not suffered
to insure against his own knavery, which is not to be protected or
encouraged by any means, for though the maxim
respondeat
superior is applicable to the responsibility of a master for
the acts of his servants, yet the insured, so long as he acts with
fidelity, is answerable neither for his servants nor for
himself."
Williams v. Suffolk Ins. Co., 3 Sumner 276.
The next assignment of error is that the court erred in ruling
that the loss was not within the express exceptions of the
Page 123 U. S. 74
policy. The specification under this assignment is that the loss
was the consequence of the derangement of the mud valve, and
therefore within the exception that the company should be free of
all claim for loss or damage occasioned by "the derangement or
breaking of the engine or machinery, or any consequence resulting
therefrom." The "consequence" here referred to is an immediate or
proximate, not a remote, consequence. Even if the mud valve is a
part of the machinery of the vessel within the meaning of the
policy, its derangement cannot be said to have been the proximate
cause of the loss. So far as the bills of exception show, the
repairs of the mud valve had been completed before the order was
given to let the vessel go.
It is also contended that the court erred in its instructions as
to the abandonment of the vessel by the plaintiffs. The court told
the jury in substance that the assured were entitled to abandon the
vessel if, on May 18, 1880, it was impracticable to recover and
repair it and if the damage from the perils of the river amounted
to fifty percent of the agreed value; that the right to abandon was
to be determined from the facts as they existed on that day; that
if the right then existed, and the plaintiffs availed themselves of
it, the subsequent floating off of the vessel in the winter or
spring of 1881 would not change the result, and that in determining
whether the injuries to the vessel from the perils of the river
were to the extent of fifty percent of her agreed value, the jury
should take into consideration the "place where the
Alice
lay and the uncertainty as to when (if at all) a rise would come to
float her off, and all other circumstances in the case."
The argument in behalf of the company is that these instructions
disregarded the express terms of the contract between the parties;
that while the rule laid down by the court made the probability of
the stipulated loss at the time of abandonment the test of the
right to abandon, the policy made the actual existence of the
stipulated proportion of loss the ground of the exercise of that
right. We do not think the court mistook the meaning of the
contract or erroneously instructed the jury. The jury were
distinctly told that the right to
Page 123 U. S. 75
abandon depended upon the fact that it was impracticable to
recover and repair the vessel. But how were the jury to determine
the existence of that fact? The contract provided as a condition
precedent to the right to abandon that it be "ascertained that the
recovery and repairs of said vessel are impracticable." But in what
mode ascertained? How was the insured to determine whether the
recovery and repair of the vessel was impracticable at the time of
abandonment? Why manifestly as the jury were told, by taking into
consideration where the vessel lay, the uncertainty as to when (if
at all) a rise would come to float her off, and all the other
attendant circumstances. While the damage must at the time have
been equivalent to fifty percent of the agreed value, and while the
fact that the repairs subsequently made amounted to only $6,000
tended to show that the actual damage was not so great as claimed,
that fact is not decisive of the right to abandon. For as said in
Bradlie v. Maryland Ins.
Co., 12 Pet. 378,
37 U. S.
397:
"If the abandonment when made is good, the rights of the parties
are definitely fixed, and do not become changed by subsequent
events; if, on the other hand, the abandonment when made is not
good, subsequent circumstances will not affect it so as
retroactively to impart to it a validity which it had not at the
origin."
Rhinelander v. Ins.
Co., 4 Cranch 29;
Marshall v.
Delaware Ins. Co., 4 Cranch 202.
Again:
"In many cases of stranding, the state of the vessel at the time
may be such, from the imminency of the peril and the apparent
extent of expenditures required to deliver her from it, as to
justify an abandonment, although by some fortunate occurrence she
may be delivered from her peril without an actual expenditure of
one-half of her value after she is in safety. Under such
circumstances, if in all human probability the expenditures which
must be incurred to deliver her from her peril are at the time, so
far as any reasonable calculations can be made, in the highest
degree of probability, beyond half value, and if her distress and
peril be such as would induce a considerate owner, uninsured and
upon the spot, to withhold any attempt to get the vessel off
because of
Page 123 U. S. 76
such apparently great expenditures, the abandonment would
doubtless be good."
In the same case, the Court quote with approval the following
language of Kent:
"The right of abandonment does not depend upon the certainty,
but on the high probability, of a total loss either of the property
or of the voyage or both. The insured is to act not upon
certainties, but upon probabilities, and if the facts present a
case of extreme hazard, and of probable expense exceeding half the
value of the ship, the insured may abandon though is should happen
that she was afterwards recovered at a less expense."
3 Kent Com. 321.
In this connection it is assigned for error that the court erred
in ruling that the fact of the actual repair of the vessel for less
than fifty percent of her agreed value was not evidence relevant to
the issue as to the amount of damage done to the Alice. This
statement as to the ruling of the court is scarcely accurate. The
court refused, and properly, to tell the jury that the fact that
the vessel was recovered and repaired was "the best evidence" that
it was practicable to recover and repair it. That fact, however,
went to the jury as evidence, and they were at liberty under the
instructions to give it due weight, in connection with all the
other circumstances, in determining whether the recovery and repair
of the vessel were, within the principles announced in other
instructions, impracticable at the time of the abandonment.
Upon the whole case, we are of opinion that no error of law was
committed to the prejudice of the company, and the judgment is
Affirmed.