Baker Castor Oil Co. v. Insurance Co. of North Amer.

• Decision Date: 06 January 1947
• Docket Number: No. 297,Docket 20221.,297
• Citation: 157 F.2d 3
• Parties: BAKER CASTOR OIL CO. v. INSURANCE CO. OF NORTH AMERICA.
• Court: U.S. Court of Appeals — Second Circuit

157 F.2d 3 (1946)

BAKER CASTOR OIL CO. v. INSURANCE CO. OF NORTH AMERICA.

No. 297, Docket 20221.

Circuit Court of Appeals, Second Circuit.

August 5, 1946.

Writ of Certiorari Denied January 6, 1947.

Forrest E. Single, of New York City (David S. Jackson, of Buffalo, N. Y., of counsel), for appellant.

Bigham, Englar, Jones & Houston, of New York City (D. Roger Englar, Martin Detels, and Charles W. Harvey, all of New York City, of counsel), for appellee.

John F. X. McGohey, U. S. Atty., of New York City (Edward L. Smith, Sp. Asst. to the Atty. Gen., and Dudley C. Smith, Insurance Counsel, War Shipping Administration, and Eugene F. Russell, Jr., Sp. Atty., Department of Justice, both of New York City, of counsel), as amicus curiae.

Before AUGUSTUS N. HAND, CHASE, and CLARK, Circuit Judges.

Writ of Certiorari Denied January 6, 1947. See 67 S.Ct. 494.

CHASE, Circuit Judge.

In 1941, before the United States was at war, Lloyd Brasileiro, a department of the government of Brazil and the owner of three vessels here involved, the Commandante Pessoa, the Jaboatao, and the Lesteloide, applied to the United States Maritime Commission¹ for and received "warrants" for its vessels. A shipowner receiving such warrants obligated itself to adhere to the rules and regulations of the Commission, including the routes and voyages which its vessels should undertake, and in return was entitled, among other benefits, to priority for facilities for loading and discharging cargo and for the procurement of bunker fuel or coal. 50 U.S.C.A.Appendix, § 1283.

Early in 1942, the plaintiff-appellant shipped 44,967 bags of castor beans on the three named vessels, the bills of lading naming New York as the port of discharge but broad liberties were reserved to the carrier to proceed to and terminate the voyage at some other port in order to avoid war perils. This cargo was insured by the plaintiff with the defendant under two open policies, one of marine insurance, the other of war risk insurance which covered only while the cargo was aboard the overseas vessels from the port of loading in Brazil to the port of discharge in the United States. This latter policy, which is the only one sued on, provided:

"I. This insurance is only against the risks of capture, seizure, destruction or damage by men of war, piracy, takings at sea, arrests, restraints and detainments and other warlike operations and acts of kings, princes and peoples in prosecution of hostilities or in the application of sanctions under international agreements, whether before or after declaration of war and whether by a belligerent or otherwise, including factions engaged in civil war, revolution, rebellion or insurrection, or civil strife arising therefrom, and including the risks of aerial bombardment, floating or stationary mines and stray or derelict torpedoes; but excluding claims for delay, deterioration and/or loss of market, and warranted not to abandon on any ground other than physical damage to ship or cargo until after condemnation of the property insured. Also warranted not to abandon in case of blockade, and free from any claims for loss or expense in consequence of blockade or of any attempt to evade blockade; but in the event of blockade, to be at liberty to proceed to an open port and there end the voyage."

After the castor beans had been delivered to the carrier and the bills of lading issued therefor, Lloyd Brasileiro, because of recent sinkings of Brazilian ships by German submarines, ordered all its vessels into port pending arrangements for convoys to protect them from the menace of those submarines in the Atlantic. The owner's general agent in the United States then applied to the Wartime Insurance Committee of the War Shipping Administration for hull war risk insurance and was the next day informed by telephone that the applications would be granted if all the vessels would proceed to New Orleans instead of to New York. This condition upon the issuance of the hull insurance was confirmed by telegram. The agent informed the head office and a director of Lloyd Brasileiro of the condition, and the director then ordered all of his company's ships to proceed to New Orleans. The hull insurance was then issued, one clause stating:

"Special Conditions

"The owner of the vessel irrevocably and unconditionally agrees that in consideration of granting War Risk Insurance by the War Shipping Administration to follow the direction of the Administrator as to the Port or Ports of discharge the nature and quantity of the cargo to be carried and as to freight rates. Any breach of this warranty shall...