LANASA FRUIT STEAMSHIP & I. CO. v. Universal Ins. Co.

• Decision Date: 06 April 1937
• Docket Number: No. 4136.,4136.
• Citation: 89 F.2d 545
• Parties: LANASA FRUIT STEAMSHIP & IMPORTING CO., Inc., v. UNIVERSAL INS. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

89 F.2d 545 (1937)

LANASA FRUIT STEAMSHIP & IMPORTING CO., Inc., v.UNIVERSAL INS. CO.

No. 4136.

Circuit Court of Appeals, Fourth Circuit.

April 6, 1937.

George Forbes and Henry L. Wortche, both of Baltimore, Md., for appellant.

Southgate L. Morison and Frank B. Ober, both of Baltimore, Md.(Bigham, Englar, Jones & Houston and Martin Detels, all of New York City, and Ritchie, Janney, Ober & Williams, of Baltimore, Md., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from a judgment for the defendant in an action on a policy of marine insurance.The declaration set forth the policy and alleged the loss of a cargo of bananas as covered thereby.Defendant filed four pleas, the first two pleading the general issue, and the others being special pleas which set up as precluding the right of recovery one of the clauses of the policy and the cancellation of a certain rider which had been attached thereto.Plaintiff demurred to the special pleas and upon the hearing of the demurrer conceded that its right to recover depended upon the court's construction of the policy.The court, after overruling the demurrer as to one of the pleas and sustaining it as to the other, entered judgment for the defendant on the pleadings; and the plaintiff has appealed from that judgment.The facts disclosed by the pleadings are as follows:

On June 23, 1933, the Universal Insurance Company issued to the Lanasa Fruit Steamship & Importing Company a floating policy of marine insurance, covering in the sum of $35,000 shipments of fruit from the West Indies to the United States.For this policy a premium of 25 cents on the $100 of risk was charged.The general coverage clause¹ embraced perils of the seas; but a subsequent clause limited liability with respect to fruits and "other articles that are perishable in their own nature" to cases involving total loss or general average.²This was modified by rider containing provisions with respect to fruit which provided coverage for particular average, or partial loss, in case of stranding.³

On April 4, 1934, for an additional premium of 35 cents, the company added a rider to the policy providing that it should be free of particular average unless the vessel were stranded, sunk, burned, on fire, or in collision, in any of which events there should be liability "for such loss by decay, injury or damage to the fruit as is occasioned thereby or occurs during or in consequence of delay resulting therefrom."⁴On June 25, 1935 this rider was cancelled and the rate on the policy was reduced from 60 cents to 25 cents.

In July, 1935, the Norwegian steamship Smaragd, loaded with bananas belonging to plaintiff and covered by the policy sued on, was stranded while coming up Chesapeake Bay.Before she could be floated, the bananas became overripe and rotted, resulting in a total loss of the cargo; and this action has been instituted to recover under the policy for the loss sustained.The only question in the case is whether this loss is covered by the policy.The contention of plaintiff is that it is covered since it resulted from stranding which, as a peril of the seas, is embraced in the coverage.The contention of the defendant is that it is not covered as it resulted, not from stranding, but from delay incident thereto and that the intention that loss resulting from such delay should not be covered is shown by the act of the parties in affixing and subsequently canceling the rider relating to loss from delay.The judge below based his decision for defendant upon the presumed intention of the parties as evidenced by their conduct in affixing and canceling this rider.

There can be no doubt but that stranding is one of the marine perils covered by the policy.Richelieu, etc., Nav. Co. v. Boston Marine Ins. Co., 136 U.S. 408, 421, 10 S.Ct. 934, 34 L.Ed. 398;Liverpool, etc., Steam Co. v. Phenix Ins. Co., 129 U.S. 397, 438, 9 S.Ct. 469, 32 L.Ed. 788.And this is expressly recognized in the quoted warranties against particular average in which loss from stranding is excepted.The question, however, is not whether the policy covers loss and damage due to stranding, but whether it covers damage due to the decay of cargo where stranding did not cause the decay but merely the delay in voyage which was the occasion for the decay resulting from the inherent nature of the cargo.This question is to be answered, not in the light of the logic which courts might employ in dealing with such questions as liability of the vessel for negligence in stowage cf.Toyo Kisen Kabushiki Kaisha v. Wellman (The Nichiyo Maru)(C.C.A.)89 F.(2d) 539, this day decided, but in the light of the construction which has been given to "an ancient form of words which always have been taken in a narrow sense."Queen Ins. Co. of America v. Globe & Rutgers Fire Ins. Co., 263 U.S. 487, 493, 44 S.Ct. 175, 177, 68 L.Ed. 402.And the answer is found by the courts in the application of two well-settled rules, one that the underwriters take no risk with respect to the retardation of the voyage nor its interruption by the perils insured against (Jordan v. Warren Ins. Co., Fed. Cas. No. 7,524, 1 Story, 342;38 C.J. 1097), and the other that the proximate and not the remote cause of the loss is to be considered, the latter rule being applied with greater strictness in the case of marine insurance than in other cases.Arnould on Marine Insurance and Average (10th Ed.) vol. 2, ß 818.The resulting rule is thus stated in 38 C.J. 1097: "Insurer in general takes no risk with regard to the length or retardation of the voyage by the perils insured against, nor to its interruption, if it is resumed or capable of being resumed; as in the case of an embargo, or where the master is detained in port by a prosecution against him for a supposed violation of law, or where he remains to prosecute a suit for collision, or where a cargo insured is sunk and raised uninjured after considerable delay and is sold for a less price owing to the delay, or where a cargo of meat, fruit, or other perishable goods is injured by the delay, or a collision causes delay for repairs."

The leading English case dealing with the question is Taylor v. Dunbar, 4 L.R. 206, decided in 1869, wherein it was held that there was no liability under a marine policy for damage to meat resulting from delay due to tempestuous weather.Keating, J., said: "The facts stated in the case show beyond a doubt that the proximate cause of the loss of the meat was the delay in the prosecution of the voyage.That delay was occasioned by tempestuous weather; but no case that I am aware of has held that a loss by the unexpected duration of the voyage, though that be caused by perils of the sea, entitles the assured to recover on a policy like this."Montague Smith, J., said: "To render the underwriter liable, it must be shown that the loss is proximately due to one of the known perils.Retardation or delay of the voyage is not one of them."Brett, J., said: "Such damage must have occurred many times, and yet no trace is to be found of such a claim being maintained.If it be desired, a clause may easily be inserted in the policy to meet the case."

In another English case much cited, Pink v. Fleming, 25 L.R. 396, decided by the Court of Queen's Bench in 1890, it was held that there was no liability under such a policy for damage to fruit from delay due to collision.Lord Esher, M. R., said: "It is well settled that by the law of England there is a distinction in this respect between cases of marine insurance and those of other liabilities.In cases of marine insurance the liability of the underwriters depends upon the proximate cause of the loss.In the case of an action for damages on an ordinary contract, the defendant may be liable for damage, of which the breach is an efficient cause or causa causans; but in cases of marine insurance only the causa proxima can be regarded."Lord Justice Lindley said: "It has long been the settled rule of English law with regard to marine insurance that only the causa proxima or immediate cause of the loss must be regarded.The rule is well known, and people must be taken to have contracted on that footing."Lord Justice Bowen said: "Whether we consider the damage occasioned by the delay or that occasioned by the handling of the fruit, the same principle appears to apply.The proximate cause of the loss was not the collision or any peril of the sea.It was the perishable character of the articles combined with the handling in the one case and the delay in the other."While Lord Esher used language in his opinion to the effect that the cause last in point of time should be regarded as proximate, which cannot be supported, there has been no question as to the correctness of the rule laid down in the language quoted or of its application to cases of this character.

Other English authorities laying down the same rule are Imerson Steamship Co. v. Bischoff, 7 L.R. 670, holding that loss of freight resulting from the exercise of a power of mulct or abatement because of delay caused by a peril of the sea was not covered by the policy, and Totham v. Hodges, 6 T.R. 656, holding that death of slaves for lack of provisions due to delay caused by bad weather was not covered.The rule was codified in the Marine Insurance Act of 1906, Sec. 55(2)(b), as follows: "Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against."

In this country, Taylor v. Dunbar has been followed in Cory v. Boylston Fire & Marine Ins. Co., 107 Mass. 140, 9 Am.Rep. 14, and in Perry v. Cobb, 88 Me. 435, 34 A. 278, 281, 49 L.R.A. 389.In the first of these cases, in which the opinion was written by Mr. Justice Gray, it was held that there could be no recovery for injury to goods by the ordinary dampness of the...