Case Name: Smith et al. v. Universal Insurance Company
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1821-02-26
Citations: 6 Wheat. 176
Docket Number: 
Parties: Smith et al. v. Universal Insurance Company.
Judges: 
Reporter: United States Reports
Volume: 19
Pages: 176–187

Head Matter:
(Insuhakce.)
Smith et al. v. Universal Insurance Company.
Where, in a policy of insurance, a technical total loss is asserted as the ground of recovery, the loss must be occasioned'by the immediate operation of some of the perils insured against, and it is not sufficient that the voyage he abandoned for fear of the operation of the peril.
The insurers do not undertake, that the voyage shall be performed without delay, or that the perils insured against shall not occur; they undertake only for losses sustained by those perils; and if any peril does begin to act upon the subject, yet if it be removed before any loss takes place; and the voyage is not thereby broken up, but is, or may be, resumed, the insured cannot abandon for a total loss.
Insurance on munitions of war, laden on board a neutral vessel, on a voyage from New-York, to and át a port or ports, place or places, ■ in the Gulph of Mexico, frem the Balize to Campeachy, both inclusive, and from either back to Néw-York, &c. with a memorandum, that the. insurers should be free from any loss arising ■from illicit or prohibited trade. The goods insured were prohibited from, being imported into the ports of New Spain, in possession of the Royalists, by the laws of Old Spain, but were permitted to be introduced into such ports as were in possession of the Insurgents. The vessel and cargo arrived off a place in possession of the patriot General Mina, and the master made an agreement to sell the cargo to him, deliverable from time to time, as he should want it, at St. Ander. But before the cargo co.uld be. delivered, the vessel was chased off by Spanish armed ships, and after making several attempts- to return, was compelled to proceed to the Balize for repairs ; after which she again approached the coast, but found it still in possession of the Royalists, General Mina having retired into the interior. The objects of the voyage being thus defeated, the vessel returned to New-York with the original cargo on board; and the insured then abandoned to the underwriters, not having before had information of the breaking up of the voyage. Held, that- the insured were not entitled to recover as for a total loss of the voyage.
Error to the Circuit Court of Maryland.
This was an action of covenant on a policy of insurance, underwritten by the defendants for the plaintiffs, on the 4th of February, 18 i 7, on a voyage at and from New-York, to and at a port or ports, placo or places, in the Gulph of Mexico, from the Balize to Campeachy, both inclusive, and from either back to New-York, ór a port of discharge in the United States, upon all kinds of lawful goods and merchandises laden, or to be laden, on board the schooner Ellen Tooker. In another part of the policy, it is stated to be “ on cargo, consisting chiefly of muni tions of war.” There is a memorandum also in th©/ policy, whereby the underwriters are warranted by the assured free from any. charge, damage, or loss, , . , ... J ■’ . , which may arise m consequence ot a seizure or detention Gf the property for or on account of any illicit or prohibited trade. The declaration alleges, that the vessel, with the cargo, proceeded on the voyage, and asserts as a loss within the contract, that while on the voyage, the schooner, with her cargo, was restrained arid detained by certain persons acting under the authority of the King of Spain, whereby the goods and merchandises became wholly lost.
The material facts, as they appeared on the trial, are these— he Ellen Tooker having on board property of thf plaintiff of a greater value than the sum insured, sailed from Néw-York, on the voyage insured, on the 31st of January, 1817. On the 25th of February she arrived at the Balizo, where the master left the vessel and went to New-Orleans, and having obtained information, that Nantla and Talacuta were in possession of the Independents, to which places American vessels inight proceed, on his return to the Balize, the schooner proceeded for Nantla, and arrived off that place on the 23d of March, and found it in possession of the Royalists. The schooner then proceeded to Talacuta, and having arrived off that place, a boat was sent ashore for information, the crew of which were made prisoners. Concluding from this occurrence, that the place was in possession of the Royalists, the schooner put to sea, and on the 5th of April fell in with a fleet of six sail under the command of General Mina, with troops on board, bound for the bar of St. An-der. The master having had communication with General Mina, and received encouragement from him that he would purchase the cargo, the schooner kept company with the fleet, and arrived off the bar of St. Ander on the '28th of April, where the schooner came to anchor in the open sea, the entrance being too shoal to permit her to cross the bar. On the 11th of May, the master left the schooner and went up the river to Porto La Marina, (where • General Mina had his head quarters,) for the purpose of selling the cargo, which he accordingly did, deliverable to General Mina, as he should want it, from time to time, at St. Ander, the whole delivery to be completed by the first of July. On the 18th of May, While the master was on shore, a Spanish frigate and two armed schooners of the Royalists hove in sight, and the schooner was immediately gotten under way for the purpose of escaping them, and after four hours chase effected her escape. The schooner made several attempts to return, but was prevented by Spanish ships hovering about the place; on the 26th of May, finding the coast clear, she returned to St. Ander, which was still in possession of the Independents, and the master was taken on board. The foremast of the schooner being found to be loose in the step and injured, and the crew being short of water, the schooner proceeded to the mouth of the Rio Grande for water and to examine the foremast; and there the heel of the foremast being found to be gone, the schooner proceeded to the Balize for repairs, and arrived there on the sixth of' June. The foremast was there repaired, and the schooner sailed again, for St. Andér. for the purpose of delivering the cargo to General Mina according to contract^ and on her arrival there, on the ¿2d of June, the place was found to he in possession of the Royalists, who occupied it with a military force. In Consequence of this, the schooner did not approach the shore, but proceeded along the coast northward to a place called Pass Cavellos, about 270 miles from St. Ander, where information was received that St. Ander, and the coast, were completely in possession of the Royalists. The objects of the voyage being in this manner defeated, the schooner returned to New-York with her original cargo on board, and arrived there on the 22d of July, 1817. The plaintiffs had no intelligence .of the breaking up of the voyage until the return of the schooner to New-York, and then abandoned to the unaerwriters in due time, assigning as a cause,,that the Ellen Tooker was “ compelled, by an armed force, to leave St. Ander in the Gulph of Mexico, where she had arrived and was about to deliver her cargo, and was prevented thereafter by a like force from re-entering that place.” This abandonment was not accepted. It was also in evidence, that the cargo of the Ellen Tooker was shipped, and intended to be sold to the Independent party of Mexico, which was waging war with the King of Spain, and that the same was prohibited from importation into Mexico by the laws of Spain, and would have been seised and confiscated if it had been carried into any of the ports in possession of the Royalists, but would have been freely admitted into any ports in possession of the Independent party.
February 17th.
Upon these facts a verdict was given, and judg-meat rendered for. the defendants, and the cause was brought to this Court by writ of error.
Mr. Winder, and Mr. Raymond,, for the plaintiffs,
stated, that this was an action of covenant On a policy of insurance, and that the. breach assigned in the declaration was a loss occasioned by the restraint and detention of certain persons acting under the authority of the King of Spain. The voyage was broken up and destroyed by the constraint imposed Upon the vessel to leave St. Ander, in order to avoid capture by the Spanish armed ships. The insurers were apprized of the nature of the risk. The' port of St; Ander became the destination, and the vessel was prevented from entering it, by the risks injured against. This is a restraint within the meaning of the policy. Every restraint or control exerted by a people, prince or state, over the subject matter insured, so as to defeat the voyage, is a loss within the policy. Such are the restraints of a blockade; an embargo, limited in point of time, or indefinite: and the municipal law of a couatc,? which subjects the vessel and cargo to confiscation, if it is morally certain that it applies to the vessel, and-would be enforced. So, if the pout of destination be. shut, by being in. possession of an eneiny- or by interdiction of. trade, it is. a just cause for breaking up the voyage. There is a great apparent discrepancy in the English authorities as to ‘‘ restraint of princes.” But this Court has settled the import and meaning“of the term. in. the case of Olivera v. The Urtion Insurance Company, But it may be said that there is no proof that the blockade existed, at the time of the abandonment. To which it is answered, that this principle does not apply .to a technical total loss produced by blockade,. In the casé of an embargo or capture, the voyage is not necessarily broken up; it is merely suspended : but ..in. that of a blockade, it is entirely defeated, and the object of the voyage cannot be accomplished. Though thé restraint now under consideration, is not that of a blockade, yet it is equivalent; since the master was prevented by the restraint from, entering the port which he had selected, within the limits prescribed by the policy., A reasonable fear of loss by capture, seizure, &c. is a justifiable cause of deviation, and consequently protects against all losses Arising from deyiation. In the case of Schmidt y. United Insurance Company, it is said to be “ sufficient to justify the master’s, conduct in cases of this kind, if he have good reason to apprehend that a capture will be the consequence of going on.”
Mr. Pinkney, and Mr. D. B. Ogden, contra,
argued, that in order to establish a technical total loss in this case, the insured must show a restraint, within the policy and declaration; and that it actually produced the breaking up of the voyage. The onus probandi is on the plaintiffs, and they must-trace the supposed consequences of the peril home to its efficient cause. The insurance was on munitions, contraband of war; but the memorandum that the underwriters were not to be liable for a loss by illicit-trade, secured them against any loss by mere municipal regulations. They have nothing to do with an internal conflict, by which the port may change masters. . The declaration alleges a loss by restraint of princes. But this restraint must be the direct and immediate agent in breaking up the voyage ; as in an embargo, or blockade, which being removed, the peril instantly ceases. Here the restraint was not only not the efficient cause of the loss, but it arose but of illicit traffic. This part of the coast of Mexico did not cease to be subject to the colonial code of Spain, by the temporary possession of the insurgents. The vessel attempted to escape, not merely from the ordinary peril of capture in war, but from that combined with the local prohibition. It was a loss from a fear, which had it been realized, would not have made the underwriters liable. All the quia timet caseS} are caSes where they would be so liable. The attempt is to make the underwriters find a lawful market; whereas the insured stipulates to take that upon himself by his warranty. Even if the market were lawful for a time, its ceasing to be so is not at the risk of the underwriters. So that the insured have broken up the voyage for a technical total loss, arising from perils not insured against.
February 26th.
Schmidt v. Unit. Ins. Co. 1 Johns, Rep. 249. Craig v. Unit. Ins. Co. 6 Johns. Rep.. 226. Yeaton v. Fry, 6 Cranch, 335. Olivera v. Union Ins. Co. 3 Wheat. Rep. 183.
M'Bride v. Mar. Ins. Co. 5 Johns. Rep. 299. Walden v. Phoenix Ins. Co. 5 Johns. Rep. 310. Ogden v. Firemen Ins. Co. 10 Johns. Rep., 177. Rhinelander v. Ins. Co. of Pennsylv. 4 Cranch, 29.
Craig v. Unit. Ins. Co. 6 Johns. Rep. 226.
3 Wheat. Rsp. 185.
Per Livingston, J. 1 Johns. Rep. 262. and Targa. Ponderaz. c. 59. 291. Casaregis, Disc. 83. No. 84, cited by him-See also 1-Emerig. des Assttr. 509.

Opinion:
Mr. Justice Story
delivered the opinion of the Court, and, after stating the facts, proceeded as follows:
Upon these facts, the Circuit Court directed the jury that the plaintiffs were not entitled to recover; and the propriety of this direction is the question before us upon this writ of error.
Two points have been argued at the bar: 1. That there was no actual restraint of persons acting under the authority of Spain, whereby the voyage was defeated. 2. That if a technical total loss took place, by the loss of the voyage, it was a loss occasioned by engaging in an illicit and prohibited trade, for which, by the memorandum in the policy, the underwriters are not liable.
The declaration and the abandonment, both tie up the case to a total loss of the voyage, by the restraint of Spanish authorities. If this case be not made out in proof, there is ap end of the controversy.
In a claim for a technical total loss, the loss of the voyage must be occasioned by the immediate operation of a peril insured against. .
If a peril begins to act upon the subject, yet if it be removed before any loss takes place, and the voyage is not thereby broken up, but is or may be resumed, the insured cannot abandon for a total loss.
In cases of this sort, where a technical total loss is asserted as a ground of recovery, it is not sufficient that the voyage has. been entirely frustrated and lost; but the loss must be occasioned by some peril actually insured against. The peril must act directly, and not circuitously, upon the subject of the insurance. It must be an immediate peril, and the loss the proper consequence of it; and it is not sufficient that the voyage be abandoned, for fear of the operation of the peril.
The plaintiffs rely upon the fact, of the Ellen Tooker's being chased away from St. Ander, and being prevented for several days from returning to that place by the presence of Spanish armed ships, as decisive proof of actual restraint. But the voyage was delayed only, and not broken up by this occurrence, for the vessel afterwards returned in safety to St. Ander. The insurers do not undertake that the voyage shall be performed without delay, or that the perils insured against shall not occur; they undertake only for losses sustained by those perils; and if any peril does act upon the subject, yet if it be removed before any loss takes place, and the voyage be not thereby' broken up, but is, or may be resumed, the insured cannot abandon for a total loss. If a vessel be captured during a voyage, and after-wards be recaptured, and performs, or may perform it, there can be no abandonment after the recapture, for a technical total loss. In the present case, the vessel actually did resume her voyage after the restraint ceased; and there is no evidence to show that any object of the voyage was defeated by this tem- pcrary restraint and delay to avoid capture. Then, what was the real cause of the final destruction of the voyage? It was, that St. Ander, which but for a short time was in the possession of the troops of General .Mina, was, in transitu, again occupied by the royalists, and the colonial. Government resumed its functions, A trade was inhibited with that place, by the colonial laws of Spain;. and the voyage itself; in which the Ellen Tooker was gaged, placed her, . and her cargo also, in thern racter of an enemy.. It was, clear, `therefore, that a proceeding into St. Ander, would have subjeCted the Ellen Tooker to confiscation for.a double cause; for breach of the ordinary laws of `trade, and for a violation of neutral The voyage then was broken up from fear of loss, by reason of the seizure and confiscation of the property. It was abandoned. by the master quia timebat, and not because there was any actual direct restraint, which `prevented the vessel from proceeding to the port of destination.' The case, therefore, falls directly within the authority of the cases of Hadkinson v. Robinson, 3 Bos. amd Pull. 388. and Lubbock v. Rowcroft, 5 Esp. R. 50. which have never been shaken. In the former case Lord Alvanley said "any loss which necessariJy arises from capture or detention' of princes is a loss within the policy; but here the Captain learning that if be entered the port of destination the vessel would be liable to confiscation avoided `that. port whereby.the object of the voyage is defeated. This does not operate to the `total destruction of the thing insured." There are precisely thi'same circum stances in the case now at bar. The underwriter does not warrant that the vessel shall have a right to trade at the port of destination; but only that notwithstanding the perils insured against, the vessel shall proceed to such port. If the plaintiffs, in the events which have occurred, were entitled to abandon and recover, as for a technical total loss, they would have been entitled to abandon for the same cause at the time of the vessel's sailing from New-York on the voyage ; for St. Ander was at that time just as much shut against the vessel, and she was just as liable,to Confiscation for illegal traffic with that place, as she was at the time the voyage was broken up.
The cases of Hadkinson v. Robinso, 3 Bos. and Pull. 388. and Lubbock v. Rowcroft, 5 Esp. N.P.R.50 are good law.
It is the unanimous opinion of the Court, that the judgment of the Circuit Court be affirmed, with costs.
1 Johns. Rep. 268. Per Kent, Ch. j. who cites 1. Emerig. Des Assur. 242.