Fishing Fleet, Inc. v. Trident Ins. Co., Ltd., No. 77-1524

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: Before COLEMAN, GODBOLD and INGRAHAM; GODBOLD
• Citation: 598 F.2d 925
• Decision Date: 11 July 1979
• Docket Number: No. 77-1524
• Parties: FISHING FLEET, INC., Plaintiff-Appellee, v. TRIDENT INSURANCE CO., LTD. and Pike/Anco, Defendants-Appellants.

Page 925

598 F.2d 925 FISHING FLEET, INC., Plaintiff-Appellee,
v.
TRIDENT INSURANCE CO., LTD. and Pike/Anco, Defendants-Appellants. No. 77-1524. United States Court of Appeals,
Fifth Circuit. July 11, 1979.

Page 926

L. Glen Kratochvil, T. G. Schirmeyer, Houston, Tex., for defendants-appellants.

Paul Q. O'Leary, Brownsville, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before COLEMAN, GODBOLD and INGRAHAM, Circuit Judges.

GODBOLD, Circuit Judge:

This case involves the right of Fishing Fleet, the owner of the shrimp boat, the Estoellen, to recover for her loss under a marine insurance policy issued by Trident. The district court awarded Fishing Fleet the face amount of the insurance coverage, $30,000, on the theory that the total constructive loss of the Estoellen was caused by "barratry of the master." Trident attacks the judgment on the ground that barratry of the master was not proved and that, even if proved, recovery was barred by the contractual exclusion of liability for losses caused by government seizure of the boat (free of capture and seizure clause). Other issues raised by Trident include the insured's alleged concealment of material facts, its failure to diligently protect its interest in the Estoellen and the admissibility of Mexican government documents. ¹

Page 927

Fishing Fleet hired Frank Borsch to captain the Estoellen in late 1973. Borsch was given the necessary ship documents for processing with the Coast Guard, but never delivered them to the Coast Guard. As a result, Borsch never signed on as captain, and the prior captain, James Homan, was the captain of record at the time the Estoellen was lost. ² Borsch made one successful fishing trip. The events which occurred during the second trip form the basis of this lawsuit.

Around the middle of November, the Estoellen set out on its second fishing trip with Borsch as captain. After an initial shrimp catch she put into Campeche, Mexico, to refuel and take on supplies. One of the crew members left the ship and returned to Brownsville, Texas, where he reported to the owners that he left because he "did not like the way things were going." By January 1974, the Estoellen was overdue and no shrimp had been received for Fishing Fleet's account from the Estoellen. Harold Dyke, a part owner of Fishing Fleet and its general manager, went to Campeche to investigate. Before leaving, Dyke told his insurance agent in Brownsville that he was concerned about the Estoellen. The insurance agent told Pike-Anco, Trident's insurance broker in Texas, that the vessel was or might be missing. Dyke found Borsch in Campeche and was told by him that the Estoellen had loaded 168 boxes of shrimp into a freezer boat known to be in the area. Borsch told Dyke that the Estoellen had been repainted and pointed the vessel out in the harbor. Dyke returned to Brownsville.

Back in Brownsville, Dyke discovered that Borsch had not loaded any shrimp onto a freezer boat. In February 1974 Dyke sent two employees, Cordoba and Garcia, to Campeche. They found the Estoellen sunk but in shallow water so that she was partly visible above water, with a hole in her port side. The boat had been towed into Campeche on February 12 by a Mexican vessel. When Cordoba and Garcia returned and reported to Dyke, he informed his insurance agent of the condition of the Estoellen. Dyke did not return to Campeche because the insurance agent warned him that he might be detained in Mexico until charges accrued against the ship were paid. The district court found that the total charges were $40,783.51. The Estoellen is now owned by a Mexican national and registered under the name Durango.

As of February 13, 1974, the Mexican authorities could find no trace of either Borsch or the crew. Before Borsch disappeared, however, and before the Estoellen sank, Borsch made an unsuccessful attempt to sell her for $10,000.

I. Barratry of the master

In Marcardier v. Chesapeake Insurance Co., 12 U.S. (8 Cranch) 39, 3 L.Ed. 481 (1814), the Supreme Court defined barratry of the master as "an act committed by the master or mariners of a ship for some unlawful or fraudulent purpose, contrary to their duty to the owners, whereby the latter sustain an injury." Id. at 49, 3 L.Ed. at 484; Accord, Patapsco Insurance Co. v. Coulter, 28 U.S. (3 Peters) 222, 7 L.Ed. 659 (1830). This court in Commercial Trading Co. v. Hartford Ins. Co., 466 F.2d 1239 (CA5, 1972), approved the district court's conclusion that " 'in the absence of fraud, nothing but acts of known criminality, gross malversation, or the like can amount to barratry.' " Id. at 1244-45; Accord, National Union Fire Ins. Co. v. Republic of China, 254 F.2d 177, 183 (CA4), Cert. denied, 358 U.S. 823, 79 S.Ct. 38, 3 L.Ed.2d 64 (1958) (" '(Barratry) is a generic term which includes many acts of various kinds and degrees. It comprehends any unlawful, fraudulent or dishonest act of the master or mariners, and every violation of duty by them arising from gross and culpable negligence contrary to their duty to the owner . . . .' " (Quoting Greene v. Pacific Mutual Life Ins. Co., 91 Mass. 217, 220 (1864))); Isbell Enterprises, Inc. v. Citizens Casualty

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Co., 303 F.Supp. 549, 552 (S.D.Tex.1969), Aff'd on other grounds, 431 F.2d 409 (CA5, 1970). Simple negligence of the captain or crew can never amount to barratry. Commercial Trading Co. v. Hartford Fire Ins. Co., supra at 1245; Intermondale Trading Co. v. North River Ins. Co., 100 F.Supp. 128, 132 (S.D.N.Y.1951).

Appellant claims that Fishing Fleet has failed to prove barratry as defined above. ³ We disagree. The evidence recited above points to gross malversation by Captain Borsch. He lied to Dyke about the loading of shrimp, fraudulently tried to sell the Estoellen, and once she sank, disappeared, failing to protect the owner's interest in her, a duty Borsch owed Fishing Fleet. We believe this is...