Drake Fishing Inc. v. Clarendon American

• Court: Court of Appeals for the First Circuit
• Decided: February 24, 1998
• Docket: 97-1817
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT



                                 ____________________



        No. 97-1817



                             DRAKE FISHING, INC., ET AL.,



                               Plaintiffs, Appellants,



                                          v.



                          CLARENDON AMERICAN INSURANCE CO.,



                                 Defendant, Appellee.



                                 ____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                   [Hon. Reginald C. Lindsay, U.S. District Judge]
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                                 ____________________



                                        Before



                                Torruella, Chief Judge,
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                            Aldrich, Senior Circuit Judge,
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                              and Boudin, Circuit Judge.
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                                 ____________________


John A. Birknes, Jr. for appellants.
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            Thomas  J. Muzyka  with whom  Clinton  & Muzyka  was on  brief for
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        appellee.



                                 ____________________



                                  February 20, 1998

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ALDRICH,  Senior Circuit  Judge.    The F/V  DRAKE,
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            dragging for scallops on February 28, 1995, "hung" her dredge



            on  the bottom.   She was unable to  free by maneuvering, and



            ended up  with the wire  at 90 degrees (downward),  her stern



            quarter   into  the  wind,   and  seas  splashing   into  the



            lazarettes, the hatch  covers having come  off, and the  crew



            unable  to replace them.   The  hydraulic winch  jammed, and,



            because of the  rain and weather, the crew could  not light a



            torch to cut the wire.  Meanwhile, the seas were  filling the



            lazarettes  faster than  the bilge  pumps  could handle.   In



            response to  a May Day  call, another vessel arrived  and the



            crew was  saved, but  the DRAKE was  lost.   This action  was



            brought to recover  the agreed value, on  defendant Clarendon



            American Insurance Company's hull policy.  On the basis of an



            unsatisfied condition  precedent, plaintiffs-appellants  lost



            on summary judgment in the district court.  We affirm.



                      When the  DRAKE put to  sea on this voyage,  it had



            various  minor  deficiencies,  including  no lazarette  bilge



            alarm warning  lights and  no  required spare  communications



            battery  in  the pilot  house.    The audible  bilge  alarms,



            however, were working,  and the crew  was obviously aware  of



            the water.  The battery's  absence was also irrelevant to the



            loss.   Accordingly,  Mass.  G.L. ch.  175,   186  might have



            precluded either of these defects, or a number of other minor



            ones, from giving  rise to a successful  misrepresentation or


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breach of warranty  defense on the policy,1 but  this was not



            the   set-up.    Defendant   had  a  stronger   defense,  the



            Massachusetts law of condition precedent.



                      Conformance with stated  conditions that are agreed



            to  govern  the  attachment  of  the  policy  is  obligatory,



            regardless  of their  irrelevancy to  the actual  loss.   See
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            Charles, Henry & Crowley Co. v. Home Ins. Co., 349 Mass. 723,
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            724-25,  212 N.E.2d  240 (1965);  see also Edmonds  v. United
                                              ___ ____ _______     ______



            States, 492  F. Supp.  970, 974 (D.  Mass. 1980),  aff'd, 642
            ______                                             _____



            F.2d 877 (1st Cir. 1981).   It is enough that the  statements



            relate essentially  to the insurer's  intelligent decision to



            issue  the policy.   See  Charles, Henry  & Crowley  Co., 349
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            Mass. at 726.  This question is an objective one:   would the



            matter be considered  of importance by a  reasonable insurer.



            See Krause  v. Equitable Life  Ins. Co., 333 Mass.  200, 204,
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            129 N.E.2d 617 (1955); Lopardi v. John Hancock Mut. Life Ins.
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            Co.,  289 Mass.  492, 496,  194  N.E. 706  (1935); Kravit  v.
            ___                                                ______



            United  States Cas.  Co., 278  Mass. 178,  180, 179  N.E. 399
            ________________________



            (1932); see also Edmonds, 642 F.2d at 883.
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                      Involved  here, among  others,  were the  following



            conditions.  The DRAKE was  to undergo and pass an inspection



            by the  United States  Coast Guard  and display  a compliance



            sticker.   There  was  to  be a  back-up  radio battery  with



                                
            ____________________



            1.  It  is  agreed that,  though  this was  a  marine policy,

            Massachusetts law governs.  See generally Wilburn Boat Co. v.
                                        ___ _________ ________________

            Fireman's Fund Ins. Co., 348 U.S. 310 (1955).
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                                         -3-



associated  charging equipment.   And, the DRAKE  was to have



            both audible and visual bilge alarms in the lazarettes, wired



            to  the  pilot  house.     All  are  conceded  to  have  been



            unsatisfied  at the  relevant  times.    The  district  court



            focussed on  the first, finding  that "as  a matter of  law a



            reasonable maritime  insurer would  have wanted  to know  and



            would  not as  a matter of  law, not fact,  have issued th[e]



            policy  had  it  known that  there  wasn't  that  Coast Guard



            sticker."  We agree.  Cf. Edmonds, 642 F.2d at 883 & n.2 (FAA
                                  ___ _______



            biennial flight review requirement).



                      There  is   a  further  question   raised  by   the



            plaintiffs:  were these matters truly expressed as conditions



            precedent.  Whether a policy term is a condition precedent or



            a warranty is a question of law.  See Shaw v. Commercial Ins.
                                              ___ ____    _______________



            Co., 359 Mass. 601, 605-06, 270 N.E.2d 817 (1971).  Here, the
            ___



            requirement  that  the words  "condition precedent"  or their



            equivalent be  used was  met.  See  Charles, Henry  & Crowley
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            Co.,  349  Mass.   at  726.     The  Fishing  Vessel   Safety
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            Requirements Clause, expressly attached to and forming a part



            of the policy, stated,



                      It  is  a  condition  precedent  of  this

                      coverage that these  requirements must be

                      complied  with  prior to  the  attachment

                      date  of this policy and as proof of such

                      compliance  this  Fishing  Vessel  Safety

                      Requirements Clause must be signed by the

                      Assured   and   be   returned   to   this

                      company . . . .


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The  listed "requirements"  included the  inspection sticker,



            the battery, and the bilge alarms.  The captain of the DRAKE,



            who was also the  son of its owner, signed the  clause as the



            assured, one month before the final voyage.2  



                      Plaintiffs attempt to save their case by contending



            that  valid conditions  precedent must  appear,  initially at



            least,  in the  application  for  insurance.    Although  the



            language in  Charles, Henry  & Crowley Co.  might be  read to
                         _____________________________



            support this, see 349 Mass. at 726 ("[A] statement made in an
                          ___



            application  for a policy of insurance may become a condition



            of the policy rather than remain a warranty or representation



            if . . . ."),  other cases reveal a broader view, see Shurdut
                                                              ___ _______



            v. John Hancock Mut.  Life Ins. Co., 320  Mass. 728, 731,  71
               ________________________________



            N.E.2d  391  (1947)  (application  for  reinstatement   after



            lapse); Lopardi,  289 Mass.  at 495  (provisions in  policy);
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            Kravit, 278 Mass. at 179 (policy schedule); see also Edmonds,
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            492 F. Supp. at  972-73 (amendments added in connection  with



            renewal).



                      There  can be no  dispute here that  plaintiffs had



            notice  of  the  conditions,  or that  they  related  to  the



            insurer's decision to  take the risk.  Cf.  Edmonds, 642 F.2d
                                                   ___  _______



                                
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            2.  Although  the insured's  signature  is dated  January 27,

            1994 rather  than 1995, it  is clear  that this was  simply a

            mistake.  Despite a later,  and feeble, effort to cast doubt,

            plaintiffs-appellants essentially admitted  as much.  In  any

            event,  plaintiffs-appellants can  make  no  claim  that  the

            Fishing Vessel Safety  Requirements Clause was not  a part of

            the policy or that they had no notice.



                                         -5-



at 882.  Clarendon reinstated the policy on February 2, 1995,



            after issuing notice  of cancellation, only after  plaintiffs



            had separately  executed  and submitted  the  Fishing  Vessel



            Safety Requirements Clause  days earlier.3  The  DRAKE had no



            inspection sticker at that time, nor later that month when it



            left  harbor.     Considering  the  facts  and  circumstances



            surrounding  the  issuance  of  the policy,  as  we  may, see
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            Massachusetts  Mun. Wholesale Elec.  Co. v. Town  of Danvers,
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            411 Mass. 39, 45-46, 577 N.E.2d 283 (1991), we think it clear



            that plaintiffs' argument  fails.  Cf. Shurdut, 320  Mass. at
                                               ___ _______



            731  (resumption of  obligation  after lapse  made  expressly



            conditional   upon  the  truth  of  statements  made  in  the



            application for reinstatement).



                      Affirmed.
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            3.  A simultaneous basis for  cancellation was non-payment of

            the premium,  also remedied before  reinstatement.   Although

            its owners  had never before  had the Drake inspected  by the

            Coast Guard for  purposes of obtaining a  compliance sticker,

            they requested  such an  inspection in February  1995 at  the

            behest of their  insurance brokers.  The Drake  did not pass,

            and no sticker was issued.  The reasons are immaterial to the

            loss. Cf. Edmonds.
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