Eagle Star & British Dominions Ins. Co. v. Geo. A. Moore & Co.

• Decision Date: 18 December 1925
• Docket Number: No. 4621.,4621.
• Citation: 9 F.2d 296
• Parties: EAGLE STAR & BRITISH DOMINIONS INS. CO., Limited, et al. v. GEORGE A. MOORE & CO.
• Court: U.S. Court of Appeals — Ninth Circuit

9 F.2d 296 (1925)

EAGLE STAR & BRITISH DOMINIONS INS. CO., Limited, et al. v. GEORGE A. MOORE & CO.

No. 4621.

Circuit Court of Appeals, Ninth Circuit.

December 18, 1925.

Pillsbury, Madison & Sutro, of San Francisco, Cal., for appellants.

S. Hasket Derby and Carroll Single, both of San Francisco, Cal., for appellee.

Before HUNT, RUDKIN, and McCAMANT, Circuit Judges.

RUDKIN, Circuit Judge.

This is an appeal from a decree in admiralty awarding damages to the appellee under certain protection and indemnity insurance policies issued by the appellants to the owner of the sailing vessel C. S. Holmes, and assigned to the appellee as chartered operator. The several policies cover "loss or damage to any goods, merchandise, freight, or other things or interests whatsoever, other than as aforesaid, whether on board said steamship or not, which may arise from any cause whatever, but no liability to attach to underwriters for shortage of cargo," during the space of 12 calendar months beginning at noon May 15, 1920, and ending at noon May 15, 1921. The amount of the loss was fixed by a decree of the Supreme Court of New Zealand, sitting in admiralty. A more complete statement of the case is not deemed necessary to a proper understanding of the questions presented for decision, except to state the facts upon which each contention is made, as we proceed.

Briefly stated, the several contentions are: First, that the policies were issued after the appellee had notice of the loss, and that a failure to communicate that fact to the appellants avoided the policies; second, that the judgment of the New Zealand court rests upon a necessary finding that the loss occurred through unseaworthiness of the vessel, by the fault and with the privity of this appellee; third, that the policies contain an implied warranty that the vessel was seaworthy at the commencement of the voyage, that a breach of that warranty is conclusively established by the judgment of the New Zealand court, and that such breach precludes a recovery, regardless of actual fault or privity on the part of the appellee; fourth, that the claim upon which the liability in suit arose was for shortage of cargo, and no liability attaches to the underwriters for such shortage, under an express exception contained in the several policies.

The facts upon which the first contention is based are as follows: The vessel sailed from San Francisco about May 1, 1920, and made fast at New Plymouth wharf, New Zealand, July 7, 1920. The loss occurred prior to the latter date, although the full extent of the loss was, perhaps, not known until a few days later. The first policy, in point of time, was issued July 17, 1920; the second, July 21, 1920; and the third, July 27, 1920. If the rights of the appellee rested upon the written policies alone, there could be no recovery, under well-settled principles of law, as to one of the policies at least, because as to that the appellee had actual notice of the loss before the policy was issued, and failed to communicate that fact to the insurer, and perhaps notice of the loss as to the other two policies would likewise be imputed. Gladstone v. King, 105 Eng. Reprint, 13. But the court below found that the insurance was effected as to all three policies in May, 1920 before the loss, and by agreement of counsel that finding is not open to question on this appeal.

We are confronted, then, with this situation: Valid contracts of insurance were entered into before the loss, and these were followed by formal written policies after the loss. For the purposes of this case we may assume that, at the time of the issuance of the latter, the appellee had...