Calmar Corp v. Scott

• Decision Date: 27 April 1953
• Docket Number: No. 303,303
• Citation: 1953 AMC 952,345 U.S. 427,97 L.Ed. 1125,73 S.Ct. 739
• Parties: CALMAR S.S. CORP. v. SCOTT et al
• Court: U.S. Supreme Court

345 U.S. 427

73 S.Ct. 739

97 L.Ed. 1125

CALMAR S.S. CORP.

v SCOTT et al.

No. 303.

Argued Jan. 15, 1953.

Decided April 27, 1953.

Rehearing Denied June 1, 1953.

See 345 U.S. 971, 73 S.Ct. 1110.

Mr. Edwin S. Murphy, New York City, for petitioner.

Mr. Hubert H. Margolies, Washington, D.C., for United States, as amicus curiae by special leave of court.

Mr. Russell T. Mount, New York City, for respondents.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

This is a suit in admiralty against British underwriters on a war-risk policy issued to cover the Calmar Corporation's S.S. Portmar for a voyage, in the winter of 1941—1942, from the United States to a port or ports in the Philippine Islands and return to an Atlantic or Pacific port in the United States. After the voyage had commenced Australia was duly substituted for the Philippine Islands as the outbound destination. The Portmar was under charter to the United States. This suit, based on damage inflicted by enemy aircraft, was tried together with a libel against the United States claiming recovery for the same damage as well as additional charter hire. See Calmar Steamship Co. v. U.S., 345 U.S. 446, 73 S.Ct. 733. The District Court held the underwriters liable for a constructive total loss of the vessel. Calmar Steamship Co. v. U.S., 103 F.Supp. 243. The Court of Appeals reversed. 2 Cir., 197 F.2d 795. We granted certiorari, 344 U.S. 853, 73 S.Ct. 92, because wide use, so the Court was advised, of the clauses of this policy makes their construction, a necessary issue here, a matter of more than individual concern.

Pursuant to the charter agreement between the Calmar Corporation and the United States, the Portmar left San Francisco for Manila on November 28, 1941. She carried high-octane gasoline, ammunition and other military supplies and equipment. She was some 600 miles southeast of the Hawaiian Islands on December 7, when Pearl Harbor was attacked. Her master at that time put her on a southerly course so as to avoid the combat area. On December 11, United States naval routing orders were received by radio on the Portmar. From that day until she was damaged and abandoned, a little over two months later, her every movement was in obedience to orders issued by competent United States and Australian authorities. The Portmar, which flew the American flag, was subject to these orders.

On December 30, the Portmar arrived at Sydney, Australia.¹ Without being permitted to discharge cargo, she was dispatched up the coast to Brisbane. There her cargo was unloaded and sorted, part of it was put back on her, and she was sent almost half-way around the island to Port Darwin. She had been in Brisbane a week and had left on January 9, 1942. She was in Darwin on the 19th and lay at anchor till the 31st, waiting to dock and discharge cargo. This she then did, in part. Still carrying two thousand drums of her original load of gasoline, she left on February 4 for a relatively short trip across Joseph Bonaparte Gulf to Wyndham, where she arrived on the 8th. She returned empty to Darwin on the 12th. She then took aboard troops with equipment and armament and joined an exceedingly perilous expedition to Koepang, on the Island of Timor, some 500-odd miles northwest of Darwin. This expedition ran into heavy air attacks and turned back. On the 18th of February, the Portmar was at Darwin again, awaiting her turn to dock and discharge the personnel and equipment she had taken on. While thus at anchor on the morning of the 19th, she underwent bombing and strafing by Japanese airplanes and sustained the damage which forced her master to beach her and caused him to abandon her.

Article 2.17 of the charter agreement under which the Portmar sailed provided that her owners might obtain war-risk insurance, to be paid for by the United States. Before commencement of the voyage, Calmar took out the war-risk policy now in question on the hull and machinery of the Portmar, valued at $860,000. This policy insured 'only against the risks of war, strikes, riots and civil commotions.' It was assembled—that seems an appropriate word—by superimposing on the age-old Lloyd's form layer upon layer of warranties and riders. Warranties free the underwriters from obligations imposed by riders, and subsequent riders then reimpose obligations thus avoided.

'Touching the Adventures and Perils which we the Assurers are contented to bear and do take upon us in this Voyage,' the basic Lloyd's policy states, 'they are, of the Seas, Men-of-War * * * Enemies * * * Takings at Sea, Arrests, Restraints and Detainments of all Kings, Princes and People * * *.' The policy is then 'warranted free from * * * capture, seizure, arrest, restraint or detainment, or the consequences thereof * * * or any taking of the Vessel, by requisition or otherwise * * * also from all consequences of hostilities or warlike operations * * *.' This warranty is known as the capture and seizure war- ranty. It is superseded by a war-risk rider, which provides:

'It is agreed that this insurance covers only those risks which would be covered by the attached policy * * * in the absence of the C. & S. warranty * * * but which are excluded by that warranty.

'This insurance is also subject, however, to the following warranties and additional clauses:—

'The Adventures and Perils Clause shall be construed as including the risks of piracy, civil war, revolution, rebellion or insurrection or civil strife arising therefrom, floating and/or stationary mines and/or torpedoes whether derelict or not and/or military or naval aircraft * * * and warlike operations and the enforcement of sanctions by members of the League of Nations * * * but excluding arrest * * * under customs or quarantine regulations, and similar arrests, restraints or detainments not arising from actual or impending hostilities or sanctions.'

A further warranty, known as the free of British capture warranty, carves a specific exception out of the war-risk rider. It holds the underwriters

'free of claims arising from Capture, Seizure, Arrest, Restraint, Detainment, Requisition, Nationalization or Condemnation by or under the authority of the government of Great Britain or any of its dominions * * * or allies, or by any forces acting in cooperation with or under the control of them or any of them.'

But a saving clause, following immediately, provides that

'unless the insured Vessel is condemned this warranty shall not exclude losses otherwise covered by this policy which are caused by gunfire, torpedoes, bombs, mines or other implements of war, or by stranding, sinking, burning or collision, provided such losses would not be covered by a marine insurance policy (in the form hereto attached) warranted free of claims arising from Capture, Seizure or Detention.'

Construing such conglomerate provisions requires a skill not unlike that called for in the decipherment of obscure palimpsest texts. A judicial sigh recently uttered at the seat of Lloyd's evokes a sympathetic echo. 'Freight insurance entered into on the old form of marine insurance policy with deletions or additions to adapt the form to the intended contract (has) almost invariably given rise to difficulties, and the present case (is) no exception.' Mr. Justice Sellers in Atlantic Maritime Co. v. Gibbon, Law Report, March 16, 1953, The Times, March 17, p. 11.² One envies not merely the perceptiveness of Lord Mansfield in matters of commercial law but his genial means of informing himself. We cannot resort to the elastic procedure by which Mansfield sought enlightenment at dinners with 'knowing and considerable merchants,'³ nor have we any Elder Brethren of Trinity House to help us. To be sure we have in this case the benefit of the views of the most experienced of admiralty judges. Considering the scanty contact this Court has these days with maritime law, we pay especial deference to the weighty judgment before us. But since it is before us, we cannot abdicate the duty to decide and must in the end exercise our own judgment however unsure it be.

Assuming that the policy was in force when the Portmar was attacked, there is no doubt whatever that the underwriters would be liable for the damage under the basic adventures and perils clause taken alone. Cf. Standard Oil Co. of New Jersey v. United States, 267 U.S. 76, 45 S.Ct. 211, 69 L.Ed. 519. The capture and seizure warranty, on the other hand, would, of course, hold the underwriters free. We understand the war-risk rider to provide as follows: Risks which are covered by the adventures and perils clause, but which are excluded by the capture and seizure warranty, and only such risks, remain covered. These risks include, in the language of the adventures and perils clause, 'Restraints and Detainments of all Kings, Princes and People,' or, in that of the capture and seizure warranty, 'restraint or detainment, or the consequences thereof * * * or any taking of the Vessel, by requisition or otherwise.'⁴ The free of British capture warranty would, in turn, again very likely avoid liability in this case. But the war-risk rider makes the loss of the Portmar one which is 'otherwise covered by this policy' within the terms of the saving clause in the British capture warranty. The loss is 'otherwise covered by this policy' because it is insured against elsewhere within it, that is, in the war-risk rider. Since the Portmar had not been 'condemned' when she was damaged by 'implements of war,' the saving clause thus reinstates, in this case, coverage avoided by the free of British capture warranty, still assuming, of course, that the policy was in force at the time of the loss.⁵

The underwriters contend that the phrase 'losses otherwise covered by this policy' in the saving clause refers to losses which the policy would cover if they were not the consequences of an Allied restraint or detainment. A loss such as that of the Portmar, they say, is not otherwise covered...