Court Opinion

ID: 9640180
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:00:12.940939+00
Date Added: 2024-06-11T18:10:27.963329
License: Public Domain

CLARK, Circuit Judge (dissenting).
I can agree with the basic principle of insurance law as stated by my brothers and nevertheless remain convinced that both on the authorities and on grounds of practical policy the court below reached the correct conclusion in finding the first insurer responsible for the loss. D.C., 26 F.Supp. 79. As held in Corporation of Royal Exchange Assurance v. United States, 2 Cir., 75 F.2d 478, the general intent of these time policies is to provide liability insurance, and not to insure against the happening of a single event, such as nondelivery of goods, or death as in the ordinary 'policy of life insurance. The opinion states that in such a policy as is here involved, “the insurer is bound to make the insured whole on losses due to liabilities that accrued against the insured during the term covered by the policy.” With that I agree. The question, then, is as to when liability — duty to pay — • accrued. The answer, I believe, is clear that the carrier’s duty to the shipper, and hence the insurer’s duty to the carrier, arose once the tobacco showed damage. I would agree that an accident or default without damage computable in money does not show liability any more than mere carelessness without injury shows actionable negligence. (This is the explanation of decisions declining to carry the principle of the fire insurance cases to the extent of holding that when a fire spreads to a different building the time of the loss is the time of origin of the fire; but there is loss, as the opinion states, “when the fire touches the insured property.”) And once liability has accrued, it seems clear that the entire loss is to be included.
Among direct cases supporting this conclusion are Coit v. Smith, 3 Johns.Cas., *13N.Y., 16, cited in the opinion, and the well briefed and well considered case in the New York Court of Appeals, cited below, Duncan v. Great Western Ins. Co., 1 Abb. Dec., N.Y., 562, 564; affirming Crosby v. New York Mutual Ins. Co., 5 Bosw. 369, 18 N.Y.Super.Ct. 369, where William M. Evarts was counsel for the defeated insurance company. The court there held that the loss of the vessel insured must have been “deemed effectual and certain from the time the vessel was so injured and crippled as that her destruction became inevitable,” and that “the claim for damage must be deemed to have attached when the injury was received which ultimately, and before she could be brought to port, caused the destruction of the vessel.” And the fire insurance cases, which admittedly support this holding, are not an exception to the rule, but are simply the rule. Professor Wambaugh states in 17 Green Bag 674, 675, that the doctrine of the fire loss cases comes really from the “death wound” cases of marine insurance, and he seems to be supported by that line of English decisions which hold that the loss of the vessel insured occurs when she receives her “death wound,” even though she may not break up until after the policy has expired. Shawe v. Felton, 2 East, K.B., 109; Knight v. Faith, 15 L.R.Q.B.D. 649, 667; 1 Arnould on Marine Insurance, 12th Ed., §§ 437, 438. Applications of the same principle to miscellaneous forms of insurance are found in Phillips v. Holmes Express Co., 229 N.Y. 527, 129 N.E. 901; affirming 190 App.Div. 336, 179 N.Y.S. 400 (dealing with workmen’s compensation insurance) ; and Burkheiser v. Mutual Accident Association of the Northwest, 7 Cir., 61 F. 816 (dealing with beneficial accident insurance); and see 5 Couch, Cyclopedia of Insurance Law, 1929, § 1213; 4 Joyce, Insurance, 2d Ed., § 2793. Outside of cases of special agreement (such as Liverpool, London & Globe Ins. Co. v. McFadden, 3 Cir., 170 F. 179, 27 L.R.A.,N.S., 1095; certiorari denied, 215 U.S. 604, 30 S.Ct. 405, 54 L.Ed. 345) and the special contract upon which all life policies are based, I read no case as going the other way, except perhaps Howell v. Protection Ins. Co., 7 Ohio 284, pt. 1, where recovery was given for only the partial loss occurring during the life of the policy. The question there may well have been, however, whether the vessel was lost in attempting to pursue the voyage. 1 Phillips on Insurance, 3d Ed., 685, 686. The other cases cited in the opinion where there was no loss during the life of the policy are clear and are not in opposition.
On grounds of practical policy this rule would seem to be sound. Any attempt to guard against such a loss in the future must be directed to the act of improper stowage. It is entirely impracticable to expect constant unloading of the vessel in an endeavor to detect and correct defects of stowage. The effective human act which caused the loss occurred once’and for all as the initial step in the voyage; it could not thereafter be changed or corrected under the circumstances, since no one knew that it had occurred. The situation would be quite different where a vessel is allowed to continue in an unseaworthy condition or where other discoverable defects are not corrected. Taking the practical test suggested in the opinion, one may venture to doubt that had there been no later insurance at all, the first insurer would have been relieved from paying all the loss. On the other hand, with the efficient cause operating a month before the second insurance took effect, one may doubt, too, whether many would confidently expect the second insurer to be held if that were the only insurance in effect. It would seem to me that considerable disruption in the business of shipping and of marine insurance must result from the rule here announced, which holds that there exists some continuing failure of duty and resulting liability of the carrier during all the course of the voyage. Practically speaking, obedience to such a duty cannot be enforced; for it is obvious that carriage of freight by ships cannot go on if seamen must continually change load and reload in the hope of disclosing and correcting some hidden defect of stowage.
Unless such a continuing duty exists, there can be no legal justification for an •apportionment of damage. And there are practical difficulties in the way of such apportionment. The testimony upon which it is based involves a theoretical reconstruction of events which no one observed. As the opposing witnesses pointed out, it is the building of an unreal structure by experts, upon premises which are open to question. It assumes, first, that for a period after the stowage no damage occurred, and, second, that thereafter the damage accrued steadily day by day. A different *14choice of time when the damage began would, of course, lead to a quite different result. Indeed, only one expert, Kemp, gave the figures relied on for the apportionment ordered here of 26 per cent and 74 per cent; he concluded that substantial damage to the tobacco would begin about two weeks after the loading was completed, or on February 4. The other expert, Wiley, who is supposed to have confirmed these figures, considered that the damage would start in three or four days and actually adopted as his estimate of the relative damage before and after February 20 figures of 30 per cent and 70 per cent respectively — an estimate which if followed would lead to a difference of something over $4,000 from the result here ordered. Four others, however, testified that the damage would start practically at once when the loading was completed. I fear that Kemp was the more believed in proportion as he was the more dogmatic. Moreover, this theoretical allotment of loss day by day, once, it had started, does not allow for the fact that fine tobacco, even though only slightly damaged, has suffered a substantial loss in value when it is no longer high grade — a loss not accurately measured by time and space elements, just as the greatest loss in value of an automobile occurs at once when it becomes a “used” and no longer a “new” car. In place of the various assumptions of this witness, another of the carrier’s experts stated with refreshing candor that he could not make an estimate of the damage on an intermediate day and that he did not believe anyone else could — a conclusion, in my judgment, worthy of credence.
The stowing of the valonia took place on January 17, that of the tobacco on January 19 to 21, the change in insurers occurred on February 20, and the loss was discovered in New York on March 13. The first insurer had contracted to give insurance for about three-fifths of the period involved, including the time when the acts causing'the loss occurred. It is now to be called upon to pay only about one-quarter of the loss. The balance is assessed against the second insurer, who carried the insurance for two-fifths of the voyage, .during which time no default occurred. I think that neither on practical grounds nor on the authorities can the result be justified, and that the decree below should have been affirmed.