Standard Oil Co of New Jersey v. United States the Yms 8212 12 the John Worthington

• Decision Date: 27 November 1950
• Docket Number: 28,Nos. 27,s. 27
• Citation: 340 U.S. 54,95 L.Ed. 68,71 S.Ct. 135
• Parties: STANDARD OIL CO. OF NEW JERSEY v. UNITED STATES (two cases). THE YMS—12. THE JOHN WORTHINGTON
• Court: U.S. Supreme Court

340 U.S. 54

71 S.Ct. 135

95 L.Ed. 68

STANDARD OIL CO. OF NEW JERSEY

v UNITED STATES (two cases). THE YMS—12. THE JOHN WORTHINGTON.

Nos. 27, 28.

Argued Oct. 13, 1950.

Decided Nov. 27, 1950.

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

Mr. Samuel D. Slade, Washington, D.C., for respondent.

Mr. Justice BLACK delivered the opinion of the Court.

These are admiralty proceedings involving the Government's liability on a policy of war risk insurance by which it insured petitioner's steam tanker John Worthington against 'all consequences of hostilities or warlike operations.' ¹ Stipulated facts show that on December 16, 1942, there was a collision between the Worthington and the YMS—12, one of three United States Navy minesweepers clearing the channel approaches to New York harbor.² Both vessels were at fault in failing 'to comply with the applicable rules' of good seamanship 'under the circumstances.'

In the District Court the United States conceded that minesweeping is a 'warlike operation' but urged that the evidence failed to show that the collision was a 'consequence' of the minesweeping within the meaning of the insurance contract. Petitioner contended that the mere showing of loss from collision with the moving warship established liability under the policy as a matter of law. It argued that this was the English rule which should be followed by American courts. The District Court did not accept petitioner's view of the English rule. It read both the American and English authorities as conditioning the underwriter's liability on proof of facts showing that the 'warlike operation' was the 'proximate,' 'predominate and determining' cause of the loss. The court held for petitioner, finding as a fact that this burden of proof had been met. 81 F.Supp. 183. The Court of Appeals reversed. 2 Cir., 178 F.2d 488. It recognized that some language in certain English opinions possibly indicated that the facts relied on would make the war underwriter liable as a matter of law. Nevertheless, it refused to go that far and, contrary to the District Court, found as a fact that petitioner's evidence failed to show that the warlike phase of the minesweeper's operation had caused the collision.³ Petitioner sought certiorari here without relying on the divergence below in the findings of fact on the question of causation. Its ground was that the Court of Appeals had failed to hold for petitioner as a matter of law as the English cases allegedly required. We granted the writ, 339 U.S. 977, 70 S.Ct. 1021, because of asserted conflict on this one point with General Ins. Co. v. Link, 9 Cir., 173 F.2d 955.

We are asked only to determine whether as a matter of law the provision insuring against 'all consequences of * * * warlike operations' covered the loss resulting from collision between the Worthington and the minesweeper. Of course, the intention of the contracting parties would control this decision, but as is so often the case, that intention is not readily ascertainable. Losses from collisions are prima facie perils of the sea covered by standard marine risk policies.⁴ To take such a loss out of the marine policy and to bring it within the coverage of the provision insuring against 'all consequences of' warlike operations, common sense dictates that there must be some causal relationship between the warlike operation and the collision. Courts have long so held in interpreting what was meant by use of the phrase 'all consequences' in war risk policies.⁵ In turn, the existence or non-existence of causal connection between the peril insured against and the loss has been determined by looking to the factual situation in each case and applying the concept of 'proximate cause.'⁶ Proximate cause in the insurance field has been variously defined. It has been said that proximate cause referred to the 'cause nearest to the loss.'⁷ Again, courts have properly stated that proximate cause 'does not necessarily refer to the cause nearest in point of time to the loss. But the true meaning of that maxim is, that it refers to that cause which is most nearly and essentially connected with the loss as its efficient cause.'⁸

In view of the foregoing, can it be said that the Court of Appeals erred in failing to hold as a matter of law that the mine-sweeping, a warlike operation, was the 'predominate and determining' cause of the collision? As we read the record, the facts are susceptible both of the inference that the mine-sweeping activity of the YMS—12 had some relation to the collision and that it did not. That is to say, reasonable triers of fact considering all of the circumstances of this collision might differ as to whether the loss was predominately or proximately caused by usual navigational hazards (and therefore an ordinary marine insurance risk) or whether it was caused by extraordinary perils stemming from the minesweeping (and therefore a war insurance risk).⁹ Indeed, the District Court and the Court of Appeals did differ on this factual determination. Since certiorari was not granted to consider that divergence in the findings of fact, we need go no further than to hold that the courts below properly considered the case as depending on the resolution of factual questions.

Petitioner nevertheless contends that (1) we are bound by certain decisions in the House of Lords and (2) these opinions have announced a rule-of-thumb construction of the phrase 'all consequences of * * * warlike operations' under which the facts in this case result in war risk liability as a matter of law. We cannot accept these arguments. It is true that we and other American courts have emphasized the desirability of uniformity in decisions here and in England in interpretation and enforcement of marine insurance contracts.¹⁰ Especially is uniformity desirable where, as here, the particular form of words employed originated in England. But this does not mean that American courts must follow House of Lords' decisions automatically. Actually our practice is no more than to accord respect to established doctrines of English maritime law.¹¹

The difficulties inherent in the rigid conformity rule urged by petitioner are obvious to those familiar with the search for state decisional law under the Erie-Tompkins doctrine. In this very case, we, like the Court of Appeals, cannot be sure what conclusion the House of Lords would reach were this case presented to it. Some of their decisions indicate that they would have held as a matter of law that the collision was the 'consequence' of the warlike operation;¹² other cases cannot easily be reconciled with such a result. ¹³ Indeed, in one decision, Lord Wright declared that 'In many cases reconciliation is impossible. What matters is the decision.'¹⁴ And even in those decisions implying that proof of certain facts results in liability as a matter of law, the House of Lords has spoken in terms of factual proximate cause.¹⁵ Their most recent decision construing the words before us states that cases applying the 'question of law' technique should be carefully restricted to their holdings; and Lord Norman warned, 'The numerous authorities cited can therefore have only a limited bearing on the present issue. * * * (T) hey will easily lead to error if it is attempted to extract from them a principle of law to solve what is a question of fact.'¹⁶

This Court, moreover, has long emphasized that in interpreting insurance contracts reference should be made to considerations of business and insurance practices.¹⁷ The particular English cases relied on by petitioner produced such an unfavorable reaction among that country's underwriters that they revised the clause here involved to avoid the injurious effects of those decisions.¹⁸ The terms of American war risk policies have also been altered.¹⁹

The proximate cause method of determining on the facts of each case whether a loss was the 'consequence' of warlike operations may fall short of achieving perfect results. For those insured and those insuring cannot predict with certainty what a trier of fact might decide is the predominant cause of loss. But neither could they predict with certainty what particular state of facts might cause a court to discover liability 'as a matter of law.' Long experience with the proximate cause method in American and English courts has at least proven it adaptable and useful in marine and other insurance cases. There is no reason to believe that its application in this case will disappoint the just expectations of insurer or insured.

The judgment of the Court of Appeals is affirmed.

Affirmed.

Mr. Justice FRANKFURTER, joined by Mr. Justice JACKSON, dissenting.

Although the parties are the United States and the Standard Oil Company of New Jersey, this is nothing more than an ordinary insurance case. It is before us because of a conflict with the views of the Court of Appeals for the Ninth Circuit in General Insurance Co. of America v. Link, 173 F.2d 955. On December 16, 1942, the Standard tanker Worthington collided with a United States Navy mine sweeper, the YMS—12, engaged in sweeping mines in the channel outside New York harbor. It has been stipulated that the collision 'was contributed to both by fault in the navigation of SS. John Worthington and fault in the navigation of the United States Ship YMS—12, consisting of failures on the part of both vessels to comply with applicable rules for the prevention of collisions and the requirements of good seamanship under the circumstances.' The Worthington was undamaged, but under admiralty law Standard was liable for half the damage sustained by the mine sweeper since both ships were at fault. Standard, as a self-insurer of its tanker Worthington, had assumed all marine risks except those undertaken by the United States, the charterer of the vessel. The Government's undertaking was to insure against 'all consequences of hostilities or warlike operations.'¹

The United States filed a libel...