1. A vessel insured by the United States against "takings at
sea, arrests, restraints and detainments of all kings, princes, and
peoples," etc., "and all consequences of hostilities or war-like
operations" was stopped by a British war ship and boarded by a
British naval officer with armed men; her navigation was resumed by
her master, but under the general control of the officer; she
struck a rock and was lost.
Held that the proximate cause
was the seizure and paramount control (insured against), and not
the marine peril. P.
267 U. S.
77.
2. When the United States goes into the business of insurance
(Act of Sept. 2, 1914, c. 293, § 5), issues policies in familiar
form, and provides that, in case of disagreement, it may be sued,
it must be assumed to have accepted the ordinary incidents of suits
in such business, including the payment of interest. P.
267 U. S.
79.
291 F. 1 reversed.
Certiorari to a judgment of the circuit court of appeals
reversing a decree of the district court awarded against the United
States, as respondent, in a libel on two war risk insurance
policies, issued under the War Risk Insurance Act of September 2,
1914.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a libel upon two policies of insurance issued by the
government insuring respectively the steamship
Llama and
her freight and advances against war risks.
Page 267 U. S. 77
Act of September 2, 1914, c. 293, § 5; 38 Stat. 711, 712. The
libelant recovered in the district court, but the decision was
reversed by the circuit court of appeals. 291 F. 1. A writ of
certiorari was granted by this Court. 263 U.S. 694.
The risks assumed by the insurer in the two policies
included
"takings at sea, arrests, restraints and detainments of all
kings, princes, and peoples, of what nation, condition or quality
soever, and all consequences of hostilities or war-like operations,
whether before or after declaration of war."
The loss happened as follows. On October 14, 1915, the
Llama sailed from New York for Copenhagen with a cargo of
oil, routed via Kirkwall that her papers might be examined. On
October 29, she was stopped by the British warship
Virginia and was boarded by a lieutenant and four men, all
armed, and her papers examined. The result was signalled to the
Virginia and the lieutenant directed to proceed to
Kirkwall, which was 400 miles to the east on the further side of
the Orkneys, keeping to the northward of Scule Skerry and North
Rona and not to pass between the islands at night. The steamer
arrived off Westray Firth, one passage between the islands, on the
night of October 30. The next morning, it started on a course
through Westray Firth, but in a few hours struck a rock and was
totally lost.
In defense, it is argued that the proximate cause was a marine
peril not covered by the policies, and that the decision should be
governed by
Morgan v. United
States, 14 Wall. 531;
Queen Insurance Co. v.
Globe & Rutgers Fire Ins. Co., 263 U.
S. 487, and other similar cases. But, in those very
strict applications of a well known rule, however strong the
motives of the insured or owners for acting as they did, the loss
ensued upon their own conduct. But if a vessel should be taken from
an owner's hands without his consent and should be lost while thus
held by a paramount power, obviously a company that had insured
Page 267 U. S. 78
against such a taking could not look beyond and attribute the
loss to a peril of the sea. Whatever happens while the taking
insured against continues fairly may be attributed to the taking.
That is a nonconductor between the insured and subsequent events.
See Muller v. Globe & Rutgers Fire Ins. Co., 246 F.
759, 763;
Cory v. Barr, 8 App.Cas. 393, 398;
Anderson
v. Marten, [1908] A.C. 334.
The
Llama, at the time of the accident, was under the
paramount control and in the possession of the
Virginia.
We regard the differences between the testimony of the British
officer and that of the master of the
Llama as immaterial.
The master, who was believed in the district court, makes the
intervention of the British lieutenant frequent, active, and the
cause of a change of the course that the ship otherwise would have
taken. But whether the intervention was more or less, if, by mutual
understanding, after a manifestation of armed force, the last word
was with the lieutenant, it does not matter whether he uttered his
commands often or rarely. The lieutenant, while denying that he had
a general charge of the navigation, testifies again and again to
facts that show that he assumed and was recognized to be the
ultimate power. After his signaling his ship, the master, he says,
asked him if he could proceed. "So I said,
Yes.'" He looked at
the course to see that it complied with the orders from his
captain. "The captain approached me and asked my permission to go
through the Westray Firth. . . . I gave my consent." If the captain
had suggested a course that the lieutenant did not approve, the
latter said he assumed that he had power to correct it. He
recognized that the vessel might possibly be the subject of prize
court proceedings. Some comment was made upon the meagerness of the
entries in the log as to any control of the master's conduct. But,
after an entry "British naval officer boarded ship with prize
crew," nothing more was necessary to show what the master
understood his position
Page 267 U. S.
79
to be, whether in fact the crew was a prize crew or not. As
was said of similar facts in Muller v. Globe & Rutgers Fire
Ins. Co., 246 F. 759, 762, that the vessel and her cargo were
seized, arrested, and detained within the meaning of the policy we
think too plain to require much more than mention. It no more
mattered that the master took an active part in the navigation than
that the ship still was steered by one of the crew.
As the vessel had passed out of the owner's control before the
accident by a seizure within the policy, and as the loss happened
while the vessel thus was held by an adverse hand, it follows that
the libelant must prevail.
Some question was made as to the allowance of interest. When the
United States went into the insurance business, issued policies in
familiar form, and provided that, in case of disagreement, it might
be sued, it must be assumed to have accepted the ordinary incidents
of suits in such business. The policies promised that claims would
be paid within 30 days after complete proofs of interest and loss
had been filed with the Bureau of War Risk Insurance. The proofs
seem to have been filed on January 11, 1917. Interest at 6 percent
should be allowed from February 11, 1917. The decree of the
district court will be corrected so as to allow for total loss of
the
Llama, $115,000, with interest at 6 percent from
February 11, 1917; total loss of the freight, etc., $44,686.82,
with interest at 6 percent from February 11, 1917; expenses
incurred under sue and labor clauses, $2,270.34, with interest at 6
percent from February 11, 1917.
Thus modified the decree will be affirmed.
Decree of circuit court of appeals reversed.
Decree of district court modified and affirmed.
Page 267 U. S. 80
MR. JUSTICE McREYNOLDS is of opinion that the decree of the
circuit court of appeals should be affirmed.
MR. JUSTICE SUTHERLAND took no part in the decision.