Marine insurance

“ It did not appear that either the insurer or the insured had any previous knowledge of the existence of the marine policies, nor did it appear whether they were issued before or after the date of the fire policy. The issuing of the marine policies, in order to have any effect in this case, must amount to double insurance. In no other view can the defendant have any interest in the question of marine insurance. Double insurance exists only in the case of risks upon the same interest in property, and in favor of the same person. ”

“ As only a single instance can be given, and as ordinary business management in shipping circles more or less {173} resembles what is practised in other commercial affairs, the special factor of marine insurance will alone be taken, as being the most typically maritime and by far the most interesting historically. Ordinary insurance on land is a mere thing of yesterday compared with marine insurance, which, according to some, began in the ancient world, and which was certainly known in the Middle Ages. ”

“ The business of marine insurance often may be so related to the success of many manifestations of commercial maritime endeavor as to demand application of a uniform rule of law designed to eliminate the vagaries of state law and to keep harmony with the marine insurance laws of other great maritime powers. ”

“ A contract of marine insurance is a contract of indemnity whereby the insurer undertakes to indemnify the insured, in the manner and to the extent agreed, against marine losses, i.e. the losses incident to marine adventure. Definition. The contract may by its express terms or by usage be extended to cover risks on inland waters or land risks incidental to any sea voyage. There is a “maritime adventure,” where any ship, goods or other movables are exposed to maritime perils, such property being termed “insurable property” ”

“ Until about 1798 or 1799, marine insurance was done entirely by underwriters, as they were called. A ship owner, for instance, about to send his vessel to sea, who wished insurance, would ask a few men of means how large risks each would take, and they would under write their names on printed blanks, stating the amounts they would insure. Of course the establishment of insurance companies put an end to this method of insurance except in outports like Plymouth, and the name underwriter was transferred to the companies. ”

“ Congestion of ports in the artificially prosperous times succeeding the Armistice was another cause contributing to increased losses.
During this period, owing largely to the competition of new underwriters, the marine insurance contract was quite generally extended to cover the risk of theft and pilferage. Experience under this coverage has been most unfavourable, as the existence of insurance tended to relieve shippers and carriers of concern for the safety of the cargo. ”

“ Thus the business of marine insurance was intelligently and wisely practised three centuries ago. But the underwriters were private persons, acting independently, so that the insured lacked the benefit of large aggregations of capital to make his contract safe; while the insurer, who took one or a few risks, was without the security of large averages and might be crushed by an exceptional loss. A partial remedy was gradually reached in London. Men who had capital to employ in this hazardous business used to meet at fixed hours when shipowners and merchants could negotiate with them. ”

“ Therefore the subtleties and sophistries of tort liability for negligence are not to be applied in construing the covenants of a policy. It is one thing for the law to impose liability by its own notions of responsibility, and quite another to construe the scope of engagements brought and paid for. The law of marine insurance is concerned with and reflects the practicalities of commercial dealings. The law does not play an unreal metaphysical game of trying to find a single isolatable factor as the sole responsibility to which is to be attributed a loss against which insurance has been bought. ”

“ New England Mutual Marine Insurance Co. v. Dunham, 11 Wall. 1, 20 L.Ed. 90. And so it recognizes that the power 'to fashion controlling federal rules' rests in the Federal Government-in Congress and the federal courts. However, the Court determines that in the absence of congressional action it will leave the formulation of rules governing marine insurance policies to the States. It applies this conclusion to the effect of a breach of warranty in a maritime insurance policy.
I disagree with both conclusions. Our admiralty laws, like our common law, came from England. ”

“ As is shown by The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264, such an exercise of state power permits the States to declare the applicable laws of marine insurance even on the high seas. The event of loss must always be local, but the coverage of the policy is general. [20] When state power intrudes upon the uniformity imposed by federal law, its exercise is invalid when applied to maritime litigation whether the application occurs in litigation arising from an incident that happens on a small lake or a mighty river. ”

“ Under our present system of diverse state regulations, which is as old as the Union, the insurance business has become one of the great enterprises of the Nation. Congress has been exceedingly cautious about disturbing this system, even as to marine insurance where congressional power is undoubted. [28] We, like Congress, leave the regulation of marine insurance where it has been-with the States. ”

“ These remarks must not be concluded without mention of the important part played in the evolution of modern shipping by the system of marine insurance and by the rules of classification. For the cost of insurance is a heavy tax on the profits of the shipowners, ' and only by providing vessels of the best construction and maintaining their reputation can owners gain the advantage of low insurance rates. And not only so, but by the merchants also, to whom insurance premiums are a no less serious consideration ”

“ Marine insurance being peculiarly an international business, being a factor in 95% of the operations of oversea trade, it is natural that those engaged in this business or making use of marine insurance in their business should experience the difficulty Conflict of laws. ”

“ Raft, 40 Fed. 596, where there was a collision between a raft and a dredge, moored by six anchors, the jurisdiction was sustained.
[21] In modern practice, insurance is nearly always carried upon a vessel and cargo. The modern authorities on the subject of constructive or total loss and abandonment, as well as the items of damage recoverable on account of vessel and cargo are, in nearly every instance, cases arising out of policies of marine insurance. ”

“ Peculiar remedies, equitable in their nature, are given to persons engaged in navigation and marine adventures, for the reason that such pursuits are exposed to extreme dangers, and stand in need of such peculiar and equitable remedies. Contracts of marine insurance are enforced to indemnify the owner of such an adventure from a portion of his loss. Services of salvors are liberally rewarded to encourage the hardy mariners to encounter such risks to save the property invested in such an adventure from complete destruction. ”

“ As a complement to this scheme for the insurance of hulls, there was also established a Government office for the insurance of cargo. The marine insurance market continued actively in business, but underwriters had themselves realized that bad news or heavy losses could easily have the result of forcing up rates to levels that might be prohibitive for commerce. ”

“ This judicial evolution was doubtless influenced as well by the similarly absolute implied warranty in contracts of marine insurance by which the assured, whether shipowner, charterer, or shipper, warranted the seaworthiness of the vessel at the start of its voyage as a condition upon the attaching of the policy. The origin of this rule has been attributed to the customary understanding of the risks actually undertaken by the insurer. See, e.g., Tetreault, Seamen, Seaworthiness, and the Rights of Harbor Workers, 39 Cornell L.Q. 381, 395. ”

“ The rule that the insured may recover in full for partial losses under hull insurance (International Navigation Co. v. Atlantic Mutual Insurance Co., supra; International Navigation Co. v. Sea Insurance Co. (C. C. A.) 129 F. 13; Providence & S. S. S.C.o. v. Phoenix Insurance Co., 89 N. Y. 559; contra, Clark v. United Fire & Marine Insurance Co., supra; cf. Brewer v. American Ins. Co., 123 Mass. 78) does not, we think, militate against the coinsurance rule as applied to cargo insurance, or afford support for that for which petitioner contends. ”

“ In rejecting abdication of all responsibility by this Court for uniformities in marine insurance and its complete surrender to the States, one is not required to embrace another absolute, complete absorption by this Court of the field of marine insurance and entire exclusion of the States. It is not necessary to assert that uniformity, if it be required in any case, is required in all cases cognizable in admiralty-whether the craft was for business or pleasure, touched in five states, five nations or never left the confines of an inland lake. ”

“ It is variously estimated that premiums for this business aggregate 20% to 30% of the total for the United States.
The War and Marine Insurance.—Marine insurance was more intimately connected with the conduct of the World War than was any other line, since it dealt with hazards involved in shipping supplies to Europe. As evidence of the increase of interest in the business during the war, the N. Y. Insurance Department reports that, while there were but 58 organizations authorized to write marine insurance in New York on Jan. ”

“ These riders and warranties, which, when assembled, constitute the policy, are often independently developed. That may explain overlapping provisions such as these. Moreover, it is not hard to understand why extreme caution is exercised in making certain that only war risks are insured against by war-risk riders and saving clauses. For war-risk insurance is often-as it was in this case-written separately from ordinary marine insurance, and it is important to exclude losses, caused by collision or stranding, for example, which are attributable to the ordinary hazards of navigation.↑ See n. ”

“ Liability for general average contributions is a risk insured against by the marine policy as is loss by particular average. Its amount, as is the case of a particular average loss, is dependent upon and varies with the sound value of the goods. There is nothing in the policy to suggest that the liability of the insurer is to be computed on a basis different in the one case from the other, and a clause whose general use and effect is to limit risk from fluctuation of value of the cargo insured is equally applicable in both classes of risks. ”

“ If worms infest the Pacific ocean, so that a vessel upon entering it, and not properly protected, is necessarily exposed to destruction, the danger is not an extraordinary peril, against which alone insurance is made; but a certain one, against which the insured is bound to provide.
A contrary doctrine would involve the absurdity of converting the contract of insurance into one of indemnity against certain loss. ”

“ The Commissioners, however, with great force, remark, that “a complete and thorough revision of our laws relating to marine insurance is a task of equal importance, difficulty, and delicacy, requiring evidence of an extensive character, and necessitating a very lengthy and careful investigation, and it touches directly on so many subjects unconnected with the security of life at sea, on which it has only an indirect and somewhat remote bearing, that we do not think it properly falls within the scope of our commission. ”

“ Cases of collision between ships and wharves are very frequent and the damages caused thereby are a well recognized subject of marine insurance for which the underwriters agree to indemnify the vessel when it has been compelled to pay them. Damage to the wharf can not be recovered in the admiralty because the tort is not maritime; it is not consummated upon the water but on the land of which the wharf is a part. The wharf owner must, therefore, sue at common law or under local statutes; he has no maritime lien for the injury. ”

“ Does the general clause of the marine cargo insurance policy, insuring for loss caused by perils of the sea, cover a loss where a marine peril, viz., stranding, has so delayed the voyage that the cargo has become a total loss?
Respondent contends (1) that deterioration of perishable cargo caused through inherent vice while the vessel is delayed by a sea peril, is not, without more, covered under a marine policy which does not expressly insure against such deterioration ”

“ In other cases, when there has been no absolute fraud on the part of the captain, there can be little doubt that the system of marine insurance comes in to complete the destruction accident may have commenced. For instance, if a ship receives any damage, but is rescued from it by the exertions of the captain, he is certain to entail a direct loss upon his employer, inasmuch as the assured in such cases is obliged to bear one-third of the loss ”