Libby, McNeill & Libby v. United States

87 F. Supp. 866, 115 Ct. Cl. 290, 1950 U.S. Ct. Cl. LEXIS 58

• Court: United States Court of Claims
• Decided: January 3, 1950
• Docket: [No. 46984
• Status: Published

Opinions

MaddeN, Judge,

delivered the opinion of the court:

The plaintiff on September 15,1941, bareboat chartered its vessel, the David W. Branch, to the Government. The vessel was a combination passenger and cargo vessel of a gross tonnage of 5,544 tons. Under the charter the Government was to man and supply the vessel, pay the costs and expenses of its operation, and pay a stated hire for the use of the vessel, with a suspension of hire for any “loss of time caused by damage to or by the said vessel under any of the risks herein assumed by the owner or in making any repairs or replacements for which owner is liable.” The charter con-tamed tbe following provisions, here pertinent, relating to insurance:

Owner shall at its own expense assume the usual American Time Hulls form of insurance for owner’s and charterer’s account, giving the charterer the benefit of such insurance. Owner or insurer shall have no right of recovery or subrogation against the charterer (Government) on account of loss or damage covered by such insurance.

(b) Charterer shall assume all other risks, including war risk (whether or not there shall be a declaration of war.) * * *

A new insurance policy, taken out by the plaintiff on December 31, 1941, Upon the expiration of the policy in force at the time of the charter, contained an endorsement by the insurance company saying:

It is agreed for the period of the charter of the above-named vessel to the United States Government * * * this insurance is extended also to cover the interest of the United States Government.

The policy was the usual American Time Hulls form of policy and contained the usual F. C. and S. (Free from Capture and Seizure) clause, reading as follows:

Nothwithstanding anything to the contrary contained in the Policy, this insurance is warranted free from any claim for loss, damage, or expense caused by or resulting from capture, seizure, arrest, restraint or detainment, or the consequences thereof or of any attempt thereat, or any taking of the Vessel, by requisition or otherwise, whether in time of peace or war and whether lawful or otherwise; also from all consequences of hostilities or warlike operations (whether there be a declaration of war or not), piracy, civil war, revolution, rebellion or insurrection, or civil strife arising therefrom.

The present litigation concerns and depends upon the interpretation and application of these insurance provisions to the facts hereinafter stated. For the present, we state merely that the vessel was, during its operation by the Government under the charter, stranded and severely damaged. The question is, was the damage a consequence of a warlike operation, and therefore not covered by the plaintiff’s policy. If it was not, the Government must pay for the damage, since, as we have seen, it assumed “all other risks, including war risk * *

The chartered vessel, the Branch, was in the possession of the Quartermaster Corps, which then operated the Transport Service of the War Department. The vessel was used to transport supplies and personnel between Seattle, Washington, and Alaskan ports, for the War Department. It was manned with civilian officers, some of whom, including the master and the pilot on watch at the time of the stranding, had been previously employed by the plaintiff, and with a civilian crew. The vessel was designated as an Army Transport, was painted gray, and was equipped with guns manned by an armed guard.

In January 1942 the Branch was loaded at the port of Seattle with materials for the construction of air bases in Alaska, food, kitchen supplies and diesel oil, and “troop cargo.” The passenger list contained 133 civilians for employment in the construction of the air bases, and some 160 officers and enlisted men of the Army and Navy. Before sailing, the Branch was “depermed.” This process is described in Finding 14. It was for the purpose of eliminating the attraction which a steel vessel would otherwise have for magnetic mines. During the deperming the compass and other navigational instruments were removed. After de-perming they were replaced, but the accuracy of such instruments may be and on the Branch was affected for some time by the unstable and variable magnetic condition produced in the vessel by deperming. The Branch was directed to sail by the “Inside Passage” which is described in Finding 7, rather than by the open ocean outside the coastal islands. See Finding 8. The outside route is shorter and is the route normally followed in peacetime. But ships whose passenger or cargo service require them to stop at ports on the inside route, and ships which exploit the scenic beauty of the islands and mainland, use that route regularly in peacetime. It is, however, narrow and tortuous, contains submerged rocks, reefs and shoals and swift, strong, and unpredictable currents. In winter there is frequently rain, wind, mist, fog, and snow which, when it occurs, adds to the hazards of navigating that passage. However, the apprehended peril from J apá-ñese submarines caused the Government to choose to use the inside passage for its own ships unless they could be heavily convoyed, and to require ships operated by private owners to use it. The Branch was, therefore, under orders to use the inside passage here involved.

The Branch left Seattle on January 11, 1942. She proceeded without incident until, at 10:38 P. M. on January 13, she was at latitude 54°1' North abeam Herbert Eeef on her port. Herbert Eeef is some two miles south of Hanmer Island. The night was clear and the beacon lights at Genn Island and Lawyer Island, seven miles north, were visible. The pilot, who stands on the bridge to watch the beacon lights and give orders to the helmsman, went to the Chart Eoom to chart the time and courses leaving the master on the bridge. On passing Herbert Eeef the master lined up the vessel with the Genn Island light about 4° on the starboard bow which placed the course of the vessel approximately 350 yards to the west of Hanmer Island, a proper and safe course for navigating past that island. The pilot returned to the bridge at about 10:42. After the pilot’s eyes had become adjusted to the dark, the master, having made sure that the pilot had seen the beacon lights and Hanmer Island, and that the vessel was on a safe course, went to the Chart Eoom. Because of manpower shortage due to the war it was difficult to procure competent and experienced helmsmen and there was a standing order that the mate on watch stay with the helmsman to watch his steering. However, when the master got to the Chart Eoom he found the mate there. He sent him immediately to watch the helmsman. The pilot noticed that the Genn Island light was blacking out which showed that the ship was veering toward Hanmer Island. He called “left” to the helmsman, but the helmsman steered right. He shouted “Hard left” but the helmsman swung hard right. The second mate jumped to the wheel and put it hard left. The master, who had heard the excited commands and had returned to the bridge, saw Hanmer Island nearby and ordered full astern. But the vessel hit a submerged reef which is a part of Hanmer Island, and stranded. This was at 10:46 P. M.

The stranding of the Branch caused severe damage to her, hull, machinery and appurtenances, and in order to release the vessel it became necessary to jettison a part of her cargo and transfer the rest to other vessels for carriage to destina-, tion, and to otherwise carry out extensive salvage operations. After her release she was returned to Seattle and repaired, and was again ready to sail on April 13, 1942. ■ The plaintiff spent, in connection with the repairs and salvage operations, including general average, the reasonable sum of $372,470.07. The Government has paid the plaintiff on account of general average $26,954.29 leaving the plaintiff out of pocket $345,515.58. The plaintiff has received from the insurance company which issued the American Time Hulls policy $342,170.48 as a loan without interest and repayable only to the extent that the plaintiff may obtain recovery from the Government.

The question is, of course, whether the risk of the loss which occurred here was carried by the insurance company which issued the American Time Hulls policy, or by the Government. The answer depends, as we have said, upon the interpretation and application of the insurance provisions of the charter agreement, which we have quoted above. The policy expressly excepted from coverage those losses which were “consequences of hostilities or warlike operations.”

The Government contends that the Branch was not at the time of her stranding engaged in a warlike operation. We think she was. She was in possession of and being operated by the Army and was loaded with materials and persons being transported for the Army’s war purposes.

We thus reach the question whether the loss here sued for was a “consequence of a warlike operation.” To be a consequence is, we suppose, to be the result of a cause. Since the parties to these agreements were creating important legal relations, which might find their enforcement in litigation, we may assume that they were writing of legal consequences resulting from legal causes. We look therefore to the legal doctrines which have developed around the much litigated problem of causation. Was the fact that the Branch was engaged, as we have concluded that she was, in a warlike oneration. the legal cause of her stranding? Since most of the litigation in which the question of causation has been considered has been litigation concerning negligence, we look to such litigation for our principles. We recognize that the problems of causation are not quite the same in negligence litigation and in the instant case. Before the question can arise in a suit based upon negligence it must be found that the defendant was negligent. Then comes the question whether his already proved negligence was the legal cause of the injury, that is, whether he must pay for the harm which occurred. But having already concluded that the defendant is guilty of negligence, there is, of course, a considerable human urge, even in the judicial mind, to find a responsible connection between the negligence and the damage. In the instant case there can be, of course, no such urge. It was not negligent, or otherwise wrongful, to engage in warlike operations when the country was at war. The Government, so engaging, should be liable for the risks which it by its contract agreed to carry, but only for those risks.

In the law of torts it is elementary that, the mere fact that event B would not have happened “but for” the happening of event..A does not make A the legal cause of B nor B the legal consequence of A. The fact, therefore, that the ship would not have been where she was, and hence would not have been stranded “but for” the fact that she was engaged in the warlike operation, does not help to answer our question.

The fact that the ship was on the inside passage rather than in the open ocean was not a consequence of her warlike operation. If she had never been chartered t'o the Government but had been retained and operated by the plaintiff carrying civilian passengers and merchandise, she would have navigated the inside passage if she had navigated in that direction at all. The incompetence of her helmsman, because of a shortage of competent helmsmen would have been just as likely to occur under civilian operation, since the helmsman would have been obtained from the same labor market. Private ships were “depermed” to protect them from magnetic mines in the same way that the plaintiff’s ship was depermed, and if the ship had remained in the plaintiff’s possession it would have been depermed as soon as there was opportunity. The fact then that her compass was made inaccurate by the deperming was not a consequence of her warlike operation. These facts, sailing the inside passage, the incompetent helmsman, and the wandering compass, were the consequences of the war, but were not the consequences of the warlike operation of the plaintiff’s ship. They could just as readily have happened to any ship operating in wartime, but without any connection with the war.

We now consider the decisions in which the very language involved in the insurance arrangements here in question has been interpreted and applied to various fact situations.

In Queen Ins. Co. v. Globe Ins. Co., 263 U. S. 487, the ship Napoli in the summer of 1918 sailed from New York for Genoa with a cargo, a part of which was intended for the Italian Government, and a small part of which was munitions of war. All of the cargo was contraband. At Gibraltar the ship joined a convoy, as it was practically necessary to do, though not ordered by the military powers. The convoy sailed with screened lights, protected by British, Italian, and American war vessels, and navigated by an Italian commander on the Napoli, subject to the command of a British captain as the senior naval officer present. The Napoli's convoy met another convoy head-on, there was confusion, and a British steamship in the other convoy struck and sank the Napoli. The court, in- its opinion written by Justice Holmes, held that the loss of the Napoli was not a “consequence of a warlike operation” within the meaning of the insurance policy language. It said that the common understanding in construing these policies is that the courts are not to take “broad views” but generally are to stop their inquiries with the cause nearest to the loss. The thought apparently expressed was that, the loss having been occasioned by the collision of two merchant ships, the more remote facts that they were sailing in convoy and with screened lights because of the war were not legal causes of the collision and loss.. The court relied upon the decision of the House of Lords in the cases of the Petersham, and of the Matiana, heard and decided together, British Steamship Co. v. The King, [1921] 1 A. C. 99. In the case of the Petersham, it was a vessel chartered to the crown, sailing without lights because of Admiralty regulation and it collided with a Spanish vessel also sailing without lights. It was found that, because of the absence of lights, the collision could not have been avoided by reasonable care. It was held that the loss was a result of a “peril of the sea”, i. e. a collision, and not a “consequence of a warlike operation.” In the case of the Matiana a vessel sailing in convoy struck a reef without negligence on the part of the master, or of the naval officer in charge of the convoy. Again it was held that the loss was not a consequence of a warlike operation.

In the Queen Ins. Co. case, supra, the court said, “There are special reasons for keeping in harmony with the marine insurance laws of England, the great field of this business * * *.” This statement is heavily relied upon by the plaintiff, for reasons that will become apparent.

In the case of General Insurance of America v. Link, et al., 173 F. (2d) 955, the United States Court of Appeals for the Ninth Circuit held that a loss caused by a collision of a small armed navy oil tanker with a privately owned merchant ship, due to the fault of both ships, was a consequence of a warlike operation. The court points out that the Queen Insurance Co. case, supra, did not involve “the wrongful commands of naval officers directing the navigation of an armed naval vessel in a war service.” Although we have found that the Branch was engaged in a “warlike operation,” that operation did not answer the description just quoted and relied upon to distinguish the General Insurance Go. case from the Queen Insurance Co. case. The Court of Appeals for the Ninth Circuit relied upon the House of Lords decision in Board of Trade v. Hain S. S. Co. Ltd. [1929] A. C. 534, where a British steamship, under requisition to the Government, collided with a ship operated by the United States as a mine planter, officered and manned by Navy officers and crew. Both vessels were negligent. It was held that the loss was the consequence of a warlike operation, that of the American mine planter. In the case of Attorney General v. Adelaide Steamship Co. (The Warilda) [1923] A. C. 292, the House of Lords held that where the steamship Warilda, requisitioned by the Admiralty and used as an ambulance transport, was proceeding from Havre to Southampton with 603 wounded men and a staff of doctors and nurses aboard, and, in accordance with Admiralty instructions was steaming at top speed and without lights, and struck a merchant vessel proceeding at top speed with dimmed side lights, the damage to both ships was a consequence of a warlike operation, that of the Warilda. It was held that the negligence of the master of the Warilda should not affect the decision.

We come now to the case upon which the plaintiff relies most strongly, the recent decision of the House of Lords in the case of the Coxwold, the full title of which is Yorkshire Dale Steamship Co. Ltd. v. Minister of War Transport, [1942] A. C. 691, 58 The Times L. R. 263. In that case the use of the vessel had-been requisitioned by the British Government, and the vessel, while carrying a military cargo in convoy, altered her course under orders of the Naval Commodore in charge of the convoy, to avoid what was thought to be an enemy submarine, and ran aground.

The House of Lords decided that the loss was a consequence of a military operation. Some of the learned lords, including Viscount Simon, the Lord Chancellor, p. 700 of the A. C. report, and Lord MacMillan, id. p. 702, seem to have rested their conclusions on the fact that the arbitrator, who had first decided the case, had concluded that the stranding was a consequence of military operations, and that the courts had “no right to reverse this conclusion, unless the facts found by him cannot support it.” On this basis, the decision would not be of great importance, as it would leave to the first trier of the facts a good deal of leeway, just as a jury in a negligence case has leeway to find that the negligence was or was not the cause of the loss. But others of the lords used language much more inclusive- Lord Wright said:

The warlike operation is (as it were) an umbrella which covers every active step taken to carry it out, including the navigation, the course or helm action intended to bring the vessel to the position required by the warlike operation, and that none the less because accident, mischance, or negligence lead to stranding or collision. , .

Lord Porter said:

The logical conclusion of these observations would seem to be that, in a case where the warlike operation consists in passing from one war base to another, any accident due to proceeding between the starting and finishing point is caused by the warlike operation.

Lord Atkin said:

* * * if in the course of a warlike operation the direction of the ship’s course against another ship is a consequence of a warlike operation, Attorney-General v. Ard Coasters (37 The Times L. R. 692; (1921) 2 A. C. 141), it is surely impossible to distinguish the case where the course of the ship is directed against a rock, and this whether negligently or without negligence, and whether the ship is deflected by tide, or current or wind. * * *.

We think, then, that the present English interpretation of the insurance clause in question is that when a casualty occurs to a ship which is engaged in a warlike operation, as a result of any activity of the ship, the loss is a consequence of the warlike operation. The development of the English law toward this conclusion is traced by Lord Wright in his opinion in the case of the Coxwold, supra. The end result seems to us to make the expression about a loss which occurs as a “consequence of a warlike operation” mean a loss which occurs “while the ship is engaged in a warlike operation.” We do not think that these expressions are identical in meaning. They are not treated so in the law generally. In the Restatement of Torts, Vol. 2, Negligence, Section 281, the following illustration is given:

2. A gives a loaded revolver to B, a boy of eleven, to carry to C. In handing the revolver to C, the boy drops it, crushing the bare foot of D, a comrade. The fall discharges the revolver, wounding C. A is liable to C but not to D.

We think that there must be some causal relation , between the warlike operation in which such a ship as the Branch is engaged, and the casualty in question, before the casualty can be regarded as a consequence of the warlike operation. In addition to being urged to that conclusion by general legal principles, we think that this must have been the intention of the parties in making their contracts. The Branch was chartered to the United States in September 1941, the charter being negotiated by the Assistant Superintendent, Army Transport Service. The plaintiff thus knew what the ship was going to be used for. The charter, as we have said, required the plaintiff to carry ordinary marine insurance. The current policy expired on December 31, 1941. In the new policy, issued as of that date, the insurance company attached an indorsement recognizing the charter arrangement, and extending the policy to cover the interest of the United States. We were, of course, then at war. If the broad expressions of the Coxwold decision, supra, are to be followed, all of these careful arrangements were substantially meaningless, because the policy did not protect anyone against any loss of a kind which, in fact, was likely to happen.¹ The plaintiff was, in effect, wasting its money in buying the insurance, and the insurance company was getting its premium for carrying substantially no risk.

We think that the parties must have intended that the marine insurance should cover the risks which the ship would have been subject to if she had been operated by her owner for the owner’s commercial purposes. The ship would have been just as likely to have run aground if so operated, as it was when operated by the army. It would have had the perils of the inside passage, the unreliability of the compass resulting from deperming, and the dangers of having an incompetent helmsman, due to the shortage of experienced labor. The only change in actual navigating conditions resulting from the ship’s military errand was the slightly increased speed, and that had nothing to do with the ship’s stranding.

We conclude, therefore, that the casualty which befell the Branch was not a consequence of a warlike operation, and that the Government is under no contractual liability to compensate the plaintiff for the loss. The plaintiff’s petition will be dismissed.²

It is so ordered.

LittletoN, Judge; and JoNes, Chief Judge, concur.

1 See the statement of Lord Porter in the Ooxwold ease, supra, that “almost any casualty befalling a vessel as a result of her own action in proceeding on a voyage, in a ease where proceeding on that voyage was a warlike operation, was caused by a warlike operation * *

And see the statement in the plaintiff’s brief at page 164 that “Almost every casualty to a vessel occurring during a warlike operation is caused by and is a consequence of the warlike operation.”

2 The conclusion which we have reached is in accord with the decision of the United States Court of Appeals for the Second Circuit, in the case of United States v. Standard Oil Company of New Jersey, decided December 15, 1949. Judge Clark’s excellent opinion in that case has come to our attention too late to be discussed in this opinion.