Hanover Fire Ins. Co. v. MERCHANTS'TRANSP. CO.
| Citation | 15 F.2d 946 |
| Decision Date | 22 November 1926 |
| Docket Number | No. 4876.,4876. |
| Parties | HANOVER FIRE INS. CO. OF NEW YORK v. MERCHANTS' TRANSP. CO. |
| Court | U.S. Court of Appeals — Ninth Circuit |
S. Hasket Derby and Joseph C. Sharp, both of San Francisco, Cal., and Benjamin S. Grosscup and Charles A. Wallace, both of Seattle, Wash. (Forrest E. Single, of New York City, Derby, Single & Sharp, of San Francisco, Cal., and Grosscup & Morrow, of Seattle, Wash., of counsel), for plaintiff in error.
O. G. Ellis, John D. Fletcher, and Robert E. Evans, all of Tacoma, Wash. (E. M. Hayden, M. A. Langhorne, and F. D. Metzger, all of Tacoma, Wash., of counsel), for defendant in error.
Before RUDKIN, Circuit Judge, and DIETRICH and KERRIGAN, District Judges.
This was an action on a protection and indemnity policy of insurance. The policy was issued November 21, 1923, by the Hanover Fire Insurance Company of New York, in favor of the Merchants' Transportation Company, and covered a fleet of four vessels, of which the T. W. Lake was one. The policy ran for a term of one year from date, and provided indemnity, among other things, for loss of life which the insured should become liable to pay and did pay during the term. The amount of the insurance or indemnity as to the Lake was limited to $13,500, but it was provided that, if the liability of the assured for loss was contested with the consent in writing of the insurer, the latter would pay a portion of the costs of the defense.
December 5, 1923, or about two weeks after the issuance of the policy, the Lake foundered and sank in Puget Sound, resulting in the loss of the vessel and her entire crew. Claims were thereupon made upon the transportation company for damages for death by wrongful act, by the personal representatives of some of the members of the crew, and the transportation company immediately filed a petition for limitation of its liability under the federal statute, wherein it sought an adjudication that it was not responsible for the loss of life, or, if so, that its liability should be limited to the value of the wreck of the Lake and pending freight, amounting to the sum of $311.51.
The petition averred that at all times prior to the accident the Lake was in all respects seaworthy, and that the loss of the vessel and those on board was occasioned and incurred without the privity or knowledge of the petitioner. This allegation was denied by answer and it was affirmatively averred that the hull, deck, and superstructure of the Lake were old, worn, decayed, rotten, weak, patched, leaky, and about to fall to pieces; that she was wholly unfit to go to sea, or to navigate upon any waters whatsoever; and that her unseaworthy condition was well known to the officers, directors, and agents of the petitioner. In addition to this averment, the answer, by way of an affirmative defense, set forth many particulars in which the Lake was unseaworthy, and averred that the directors, officers, and agents of the owner well knew her condition when she was sent to sea.
Upon final hearing the court denied the petition for limitation of liability and awarded damages to the claimants and against the petitioner in sums aggregating approximately $30,000. These several amounts were paid, and the present action was thereupon commenced by the insured against the insurance company to recover the amount of the policy. A judgment for the plaintiff has been brought here for review by writ of error.
This form of policy is now in common use, and from the standpoint of the insurance company the case is important, because of the principle involved, rather than because of the amount of the recovery. Both parties concede that there is no implied warranty of seaworthiness in a policy of this kind, as in the case of an ordinary marine policy, and that the fact of unseaworthiness does not of itself bar a recovery. Eagle Star & British Dominions Ins. Co. v. Geo. A. Moore & Co. (C. C. A.) 9 F.(2d) 296. Both parties likewise concede, for the purposes of this case, at least, that if the negligence of the shipowner in sending an unseaworthy vessel to sea is so gross as to amount to a willful, deliberate, and intentional wrong there can be no recovery. Beyond these concessions, however, the parties are wide apart. The plaintiff in error contends, first, that the court below erred in excluding from the jury the oral opinion of the trial judge in the limitation proceedings, because that opinion shows or tends to show that the shipowner was in fact guilty of that character of negligence which it is conceded would bar a recovery; second, that the denial of the petition for...
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