Summary
In Mathews v. Howard Ins. Co. (1854) 11 N.Y. 9, one of the principal cases relied on by the drafters of the New York Civil Code, a concurring opinion noted the rule that although "the maxim causa proxima non remota spectatur is the general rule for determining the liability of the underwriter, the parties may, nevertheless, by express stipulation, agree upon another rule of responsibility.
Summary of this case from Howell v. State Farm Fire & Casualty Co.Opinion
June Term, 1854
Henry E. Davies, for appellant.
Selah Mathews, for respondents.
I find no difficulty in agreeing with the court below, in so much of its judgment as decides that insurers are liable where a loss of the subject insured has happened in consequence of any of the perils expressly insured against, though it should appear that the negligence of the master and mariners was the remote cause of the property being brought within that peril. Although the supreme court, at an early day, held a contrary doctrine in the case of Grim v. The Phenix Ins. Co. (13 John. 451,) it has not been followed by the federal courts or even in the courts of this state; and in the English courts there is now a settled course of adjudication the other way, and in conformity with the principle contended for by the plaintiffs. The most prominent of the cases, aside from those in this state, are referred to by Jewett, J. in Gates v. The Madison County Insurance Co. (1 Seld. 478,) and need not be repeated. That case itself is a direct authority upon the point, and being the judgment of the highest appellate court in the state, is necessarily conclusive upon the question. It was an action upon an inland fire policy, and one of the grounds of defense relied upon was that the fire happened in consequence of the culpable negligence of the servants of the assured. It was held that this was not an answer to the action, and the decision was not placed upon the ground of any distinction between a marine and a fire policy. It was said in the opinion of the court to be a rule well established, not only in the English but in the general American insurance law, that in the absence of fraud, the proximate cause of the loss, only, was to be looked to, and that the rule was equally applicable to marine and to fire insurance; and the greater number of the cases cited to prove the rule, were cases of insurance upon vessels. The negligence of servants in the case of a fire was considered as a cause of the loss remote from the fire which was the direct and immediate cause.
But although in a case where the vessel is brought within the peril mentioned in the policy by means of the negligence of the master and mariners, the insurers are nevertheless liable, it is not one of the terms of the contract that the insurers shall indemnify the assured against the delinquency of the servants and agents of the latter, and such is not, in general, construed to be its effect. The rule of law that the misfeasance and nonfeasance of a servant are imputable to the party whose servant he is, and in whose business he was at the time acting, holds in insurance cases as well as in other legal controversies, and a number of cases have been decided in accordance with that rule. Thus, where a vessel is injured by a peril of the sea, and further damages arise from a neglect of the master to cause her to be repaired, when that was practicable; where a vessel had been stranded which rendered her liable to be injured by worms, and such injury occurred in consequence of a neglect of her master to repair; where in the case of an insurance upon cargo, the ship was lost and the goods saved, but the master neglected to tranship them as he might have done, and thus have prevented a portion of the loss; where a neutral vessel was condemned for resisting an attempt to search; where loss occurred in consequence of the master exhibiting a false bill of health, or leaving the ship's register on shore; in all these cases the insurers were held to be discharged upon the principle which has been mentioned. ( Copeland v. The N.E. Marine Ins. Co., 2 Metc. 432; Haxard v. The Same, 1 Law R. 218; Schieffelin v. N.Y. Ins. Co., 9 John. 21; Amer. Ins. Co. v. Centre, 4 Wend. 45; S.C. 7 Cowen 564; McGaw v. Ocean Ins. Co., 23 Pick. 405; Cleveland v. Union Ins. Co., 8 Mass. 308.) So far as the case of Grim v. The Phanix Ins. Co. holds that the underwriters are not generally liable for the misconduct of the master and crew, where there is no express stipulation to that effect, it is still an authority in this state. It is correctly said in that case that the master and mariners are not the agents and servants of the underwriters, so as to warrant the application of the general rules of law in such cases. The error into which the court fell was overlooking the consideration that the loss happened from one of the perils expressly mentioned in the policy, as its direct and proximate cause, and that where such is the case, the courts do not look further to ascertain what occasioned the happening of that cause of loss. The loss is within the very terms of the contract, and the rule of law which forbids further speculation as to the remote cause fixes the liability of the insurers. It should be kept steadily in mind that the underwriters do not undertake for the good conduct, skill, discretion or prudence of the master and crew, except in the case of an insurance against barratry, and that where they are held responsible for a loss happening on account of the failure of the exercise of those qualities on the part of those agents of the owner, it is in pursuance of the terms of the contract, which as construed by the courts, renders them liable for a loss from a peril insured against, whatever may have been the cause which occasioned the ship to encounter that peril. Suppose a class of sea risks to be excepted from the policy: should the vessel be lost by encountering one of these risks, no one would consider the insurers liable, though it should be shown that the carelessness of the master was the sole efficient and procuring cause; and this consideration demonstrates that the underwriters do not contract for the care and skill of the crew, as a distinct hazard from which accidents may be expected. Such a contract if made, in terms, would be opposed to sound policy, as tending to encourage a relaxation of that degree of attention and vigilance so necessary at sea, and which might be expected to follow from a knowledge on the part of the master and mariners, that their immediate employers would be protected against the consequences of their inattention. It was this consideration which led Lord Mansfield, in passing upon a case where barratry was insured against, to express his surprise that such a hazard should ever have been inserted in contracts of insurance — and still more that it should have continued in them so long; for thereby, he said, "the underwriter insures the conduct of the captain (whom he does not appoint and cannot dismiss,) to the owner who can do either." (1 Term Rep. 330.)
In applying these principles to the case under review, the inquiry presents itself as to the cause of the loss which the plaintiffs have sustained. We find in the first place that the district court of the United States adjudged that a lien for a sum of money attached to the plaintiffs' steamer, and ordered her to be sold unless it should be paid, and that the plaintiffs were obliged to pay it to redeem their vessel. This was in one sense the cause of the loss; but the judgment of a court proceeding according to the law of the land cannot legally be considered a peril of any kind. Again, the judgment was for a cause of action which accrued on account of a collision with the propeller, which was insured by the defendants, and collisions are classed among sea risks; but the fact that the barque was injured by the collision was not of itself the ground of the judgment. If the crew of the barque had been alone in fault, or if it had been the result of accident without blame on either side, no judgment could have passed in the district court against the propeller. It would have been damnum sine injuria, out of which no cause of prosecution could have arisen against the insured vessel. It was the negligence of the master and crew which furnished the basis of the proceeding and the aliment for the judgment. Without that feature the collision, and the injury to the barque would have been harmless as it regards the propeller, whatever damage the barque might have suffered. It was that feature alone which shifted the misfortune from the owners of the barque, with which the defendants had nothing to do, to the owners of the propeller which they had insured. All this is very different where the insured vessel is itself injured by a collision or other marine accident, resulting from the negligence of her own crew. The damage is the direct and immediate consequence of the collision, and it arises equally whether the crew had been vigilant or careless. The assured has only to prove the collision and the damage and his case is made out, and the defendants cannot shield themselves by going back to the cause of the collision. But in a case like the present, where the insured vessel sustained no damage by the contact, proof of the collision and of damage to another vessel shows nothing which will sustain an action. The plaintiff must go further and establish the fault of his own servants, and that such fault has been productive of a lien, obtained through proceedings in rem in the admiralty courts. I think therefore that the reasoning concerning remote and proximate causes of loss and damage is inapplicable to this case; for I regard the negligence of the plaintiffs' servants as the sole efficient cause of the loss which he has sustained. The winds, the waves and the collision are instrumentalities through which the wrong of the crew became fruitful in a loss to the vessel which they had in charge. They do not, I think, stand in the relation of cause and effect. Suppose a building insured by a fire policy to be set on fire and consumed by the negligent conduct of the servants of the assured. The insurers we have seen are nevertheless liable. Now suppose an adjoining building not insured has taken fire from the insured one and is also burned down. Although the master of these servants would be liable to the owner of the uninsured property, who might have a recovery against him for the damage, yet no one would pretend that the former could recover such loss against the insurers. The case I admit would lack one feature which exists in this case, the lien upon the property insured, still it exemplifies the incongruity of enabling one to sustain an action founded upon the wrong of persons for whose conduct he is responsible.
I think, moreover, that the point has been settled upon authority to which we ought to defer. The question has never arisen in the courts of this state. When this case was decided by the supreme court, there was a precedent in favor of the plaintiffs in the circuit court of the United States. ( Hale v. The Washington Ins. Co., 2 Story's R. 176.) Pending this appeal, a case in all its features like the one under review was determined in the supreme court of the United States adversely to the plaintiffs. ( General Mutual Ins. Co. v. Sherwood, 14 How. 351.) In the able opinion delivered by Mr. Justice Curtis, and which would appear from the report to have been the unanimous opinion of the court, the case before Judge Story was overruled, and the doctrine was established that the negligence of the master and crew in such a case was the sole efficient cause of the loss, and that the insurers were not responsible. It was also held that the case of Peters v. The Warren Ins. Co., (14 Pet. 99,) was inapplicable. In that case the insurers were held liable for a loss happening to a vessel not insured, by a collision with the one upon which the defendants were underwriters. But the collision was accidental, and the loss was visited upon the insured vessel and her owners by the peculiar laws of a foreign country within whose jurisdiction the accident happened. The decision was diametrically opposed to a judgment of the K.B. in a precisely similar case. ( De Vaux v. Salvador, 4 Ad. El. 420; 31 Eng. Com. Law, 104.) We are not called upon to pronounce upon these conflicting decisions. It is sufficient to say that if the case in 14th Peters sustains the judgment under review, and so far as it sustains it, it is overruled by the subsequent decision of the same court just referred to. There are strong reasons why we ought to follow the supreme court of the United States in this case. In a large class of cases it has concurrent jurisdiction upon questions of insurance with the appellate courts of all the states, and it is of great importance that the decisions upon such questions should be uniform. From the commercial and financial prominence of the city of New-York, it is to be expected that many such controversies will have their origin there in which citizens of other states will be interested parties, and it would be unfortunate if a different rule prevailed in our tribunals from the one which obtains in the federal courts. It is only necessary to add that the opinion delivered by Mr. Justice Curtis appears to be sustained by the continental writers on the law of marine insurance, as will be seen by examining the treatises to which he has referred, and as will also be seen by a reference to the opinion of Judge Story in the case of Hale v. The Washington Insurance Company.
I am of opinion that the judgment of the supreme court should be reversed, and that judgment should be given for the defendants.
It cannot be successfully questioned that a loss arising from collision is a loss by peril of the lakes and within the terms of the policy. ( Phil. on Ins. 636; Smith v. Scott, 4 Taunt, 126; Peters v. The Warren Ins. Co., 14 Peters, 99; Hale v. Wash. Ins. Co., 2 Story's R. 176.)
The insurance was upon "the body, tackle, apparel and other furniture" of the Ontario. That property was not injured by the collision, but it was subjected to a lien to the extent of the injury done to the Utica, because it appeared that the collision was caused by the carelessness and negligence of the master and crew of the Ontario; and it is claimed that it is brought within the policy, because it was subjected to such lien.
The collision itself gave no lien on the Ontario to the owners of the Utica. But the fault being wholly on the part of the Ontario, the owners of the Utica had their election either to proceed in personam against the owners of the Ontario, or in rem against the property, and they chose the latter remedy.
It was held in this state, in Grim v. The Phœnix Insurance Co., (13 John. 451,) where the vessel, among other risks, was insured against fire, that the insurers were not liable for loss from fire which was occasioned by the carelessness of one of the crew, not amounting to barratry. And such were the earlier decisions in Massachusetts and Ohio. (8 Mass. R. 308; 5 Ohio R. 436; 7 id. 2.) But in those states, and in others, that doctrine has been expressly overruled. ( Copeland v. New England Ins. Co., 2 Metc. R. 432; Perrin v. Protection Ins. Co., 11 Ohio, R. 147; 10 Robinson's R. 164; 2 Gill 365; 7 Barr, 223; Patapsco Ins. Co. v. Coulter, 3 Peters, 222; Columbia Ins. Co. v. Lawrence, 10 id. 507; Waters v. Merchants' Ins. Co., 11 id. 213; 14 id. 99; 2 Story's R. 176.) And the cases last cited are in accordance with the English decisions. (2 Barn. Ald. 73; 5 id. 74; 5 Mees. Welsb. 14; id. 476, 405; 8 id. 895; 7 Barn. Cress. 219; id. 794, note a.) It is apparent that the weight of authority is against the holding, in Grim v. The Phenix Ins. Co., and such is the opinion expressed by Chancellor Kent, (3 Kent's Com. 300, 306, 307) and though that case has never been expressly overruled in this state, it seems to have been virtually abandoned, (3 Hill 253; 1 Selden, 469, 478,) and I think we are bound to hold the rule to be as it was stated by Verplanck, senator, in The Am. Ins. Co. v. Bryan (26 Wend. 583) that "underwriters are not discharged from risks expressly assumed, because the losses were incurred remotely or consequently by the default of the master or mariners."
If this were therefore a case of injury caused by the collision, I should feel bound to hold that the carelessness or negligence of the master and crew would form no defense.
But the vessel insured was not injured by the collision. The other colliding vessel sustained the injury. That vessel is not covered by the policy. To charge that loss upon the owners of the Ontario, it was necessary to do more than simply to prove the collision. It was indispensable to the recovery, to show that the collision was owing to the carelessness or negligence of the master and crew of the Ontario. It is no defense as to a loss upon the property insured, that it was caused by the carelessness of the master and crew. But does the policy extend to injuries to other vessels caused by such carelessness? That is the question presented for our determination.
There are but two reported cases in this country upon this question. In Hale v. The Wash. Ins. Co., (2 Story's Rep. 176,) and Sherwood v. The General Mutual Ins. Co. (1 Blatch. C.C.R. 251,) it was held that the policy extended to such a loss. But both these cases are overruled by the supreme court of the United States in 14 Howard 351, where the judgment of the circuit court in Sherwood v. The Gen. Mutual Ins. Co. was reversed. The whole question is there discussed with great ability by Mr. Justice Curtis, and his reasoning is conclusive to my mind against the claim. It cannot be necessary to repeat his argument. So far therefore as the United States courts are concerned, it must now be regarded as authoritatively settled that such a claim cannot be maintained, when, as in this case, the collision was chargeable solely to the carelessness or negligence of the persons in charge of the insured vessel.
On this point, there has been no reported case in the state courts of this country. It is said that just before the late decision of the supreme court of the U.S., a case had been decided by the supreme court of Massachusetts in accordance with the views expressed in 2d Story; but it has not been reported and we have not been furnished with a copy of the opinion. We have no means therefore of knowing its extent or application. Whatever they may have been, as it was no doubt based upon the two decisions of the U.S. circuit court, which have been since overruled, it can no longer have any foundation whatever as authority.
The judgment of the supreme court of the U.S. in Sherwood v. The Mutual Ins. Co. is in accordance with the well settled English law; ( De Vaux v. Salvador, 4 Ad. El. 420; 31 Eng. Com. Law, 104 ;) and also with the French law. The rule is thus stated by Ledru Rollin, in his Repertoire Générale, Journal du Palais, 2 vol. 17, s. 270, Assurance. "Les assureurs ne répondent pas de'l abordage occasionné par la faute du capitaine, ou de l'equipage ni de la prise arrivée, parce que le capitaine n'a pas su éviter l'ennemi, ou parce qu'il ne s'est pas suffisamment défendu, ou parce qu'il s'est volontairement écarté de l'escorte avec laquelle il devait voyager," ( citing 3 Pardessus, No. 771 Boulay Paty, to. 4, p. 66.)
It is believed such is also the law in all the other maritime countries of Europe in which the civil law is resognized as the basis of their jurisprudence. Pothier, in his "Traité du Contrat d'Assurance," (§ 50,) states the rule with great clearness and precision, as follows:
"Abordages, c'est a dire lorsque mon vaisseau, que j'ai fait assurer a été endommage par le heurt d'un antré vaisséau. L'assuerur est tenu de m'indemniser du dommage arrivé a mon vais seau par cet abordage, lorsqu'il est arrivé par un cas fortuit, comme dans une tempeté; ou méme lorsqu'il est arrivè par la faute du maitre d'un autre vaisseau; Auquel cas je dois céder à l'assureur mes actions entre celui par la faute de qui est arrivé l'abordage, et contre son commettant. Mais si c'est par la faute du maitre de mon vaisseau que l'abordage est arrivé, l'assuréur n'en este pas tenu, s'il n'y a une clause particuliére que l'assureur sera tenu de la barratiné du capitaine." ( Se also Emerigon, 329; Boucher, 1500, 2.)
Similar opinions have been expressed by writers on insurance, in our own tongue. (1 Phil. on Ins. 636; Marsh. on Ins. 493; Park. Mar. Ins. 131; Broom's Leg. Max. 167.) Arnold (2 Arn. on Ins. 775.) says when the loss is not proximately caused by the perils of the sea, but is directly referable to the negligence or misconduct of the master or other agents of the assured, there seems little doubt that the underwriters would be thereby discharged."
It is conceded on both sides of this question, that it is governed by the maxim, ( Bac. Max. Reg. 1,) In jure, non remota causa, sed proxima, spectatur. The difference of opinion arises from its application. What is the proximate cause, in this case, of the injury? If an injury to the vessel was the immediate result of the collision, the latter would then be the proximate cause, and being within the terms of the policy the defendants would be liable. But can it be said that the collision is the proximate cause, when, of itself, it inflicts no injury, and when it is necessary to prove something more, viz. the carelessness or negligence of the master and crew, to give even a right of action? The plaintiff establishes no right, by simply proving a collision, because from that alone no damage accrued. The right to damage against the owners of the Ontario, rested exclusively upon the fault of those in charge, to whose neglect the collision was solely chargeable. If that ingredient be taken away, the case is emasculated. Curtis, J. said in The Mutual Ins. Co. v. Sherwood, "In applying this maxim, we look for the proximate cause of the loss; if it is found to be a peril of the sea, we inquire no further. We do not look for the cause of that peril. But if the peril of the sea, which operated in a given case, was not of itself sufficient to occasion and did not in and by itself occasion the loss claimed; if it depended upon the cause of that peril whether the loss claimed would follow it, and therefore a particular cause of the peril is essential to be shown by the assured, then we must look beyond the peril to its cause to ascertain the efficient cause of the loss. In such a case," said the learned judge, "the real cause is the negligence, and unless the policy can be so interpreted as to insure against all losses directly referrible to the negligence of the master and mariners, such a loss is not covered by the policy."
In De Vaux v. Salvador, above cited, Lord Denman, C.J. said, "The ship is driven against another by stress of weather; the injury she sustains is admitted to be direct, and the insurers are liable for it. But the collision causes the ship insured to do some damage to the other vessel. And whenever this effect is produced, both vessels being in fault, a positive rule of the court of admiralty requires the damage done to both ships to be added together, and the combined amount to be equally divided between the owners of the two. It turns out that the ship insured has done more damage than she has received, and is obliged to pay the owners of the other ship to some amount, under the rule of the court of admiralty. But this is neither a necessary nor a proximate effect of the perils of the sea; it grows out of an arbitrary provision in the law of nations from views of general expediency, not as dictated by natural justice, nor (possibly) quite consistent with it; and can no more be charged on the underwriters than a penalty incurred by contravention of the revenue laws of any particular state, which was rendered inevitable by perils insured against."
The plaintiff's claim seems to me to be as adverse to principle as it is unsupported by authority. If we sustain it, we shall commit, in my judgment, the great fault of establishing for our own state, a rule of law in conflict with the now settled doctrine of the highest federal court, and at variance with the often expressed judgment of the whole civilized world. Such a decision could not fail to be exceedingly embarrassing, for in no department of the law is uniformity more desirable, than in that which regulates the rights and obligations of those engaged in commercial pursuits. The law of the maritime world should be limited by no national boundaries, but should be as universal as the commerce which it protects and regulates.
I think the judgment of the supreme court should be reversed, and judgment should be given in favor of the defendant on the demurrer.
Judgment accordingly.