QUEEN INSURANCE COMPANY OF AMERICA
v.
GLOBE & RUTGERS FIRE INSURANCE COMPANY.
No. 116.
Supreme Court of United States.
Argued December 6, 1923. Decided January 7, 1924. CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.*488 Mr. Oscar R. Houston, with whom Mr. D. Roger Englar and Mr. George S. Brengle were on the brief, for petitioner.
Mr. Van Vechten Veeder, with whom Mr. Charles C. Burlingham was on the brief, for respondent.
*490 MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a libel in admiralty upon a New York policy insuring cargo on the Italian steamship Napoli lost by collision in the Mediterranean, in or near the Gulf of Lyons, on July 4, 1918. The libellant also in New York had insured the cargo concerned against marine risks and the libellee had insured it against war risks. Each company by agreement paid half the loss subject to adjustment and took an assignment of the claim of the assured against the other. The main question in the case is whether the loss was covered by the libellee's policy as the libellant contends. We were asked to assume that the exception of "all consequences . . . of hostilities or warlike operations" in the marine policy and the liability for "acts of kings, princes and people authorized by and in prosecution of hostilities between belligerent nations" assumed by the libellee were coextensive. For the purposes of argument we shall do so. The Courts below in deference to the English decisions held that the loss could not be attributed to warlike operations. There was a difference of opinion as to whether the collision was due to faulty navigation, but all the judges agreed that it was expedient to follow the English law. 278 Fed. 770. 282 Fed. 976.
*491 It will not be necessary to state the facts in detail. They are fully set forth in the decisions below but those that are material to our conclusion need but a few words. The Napoli sailed from New York for Genoa with a cargo of which a part was intended for the Italian Government and a small part was munitions of war. All of it was contraband. At Gibraltar she joined a convoy, as it was practically necessary to do although not ordered by the military powers. The convoy sailed with screened lights, protected by British, Italian and American war vessels, and navigated by an Italian commander on the Napoli, subject to the command of a British captain as the senior naval officer present. The route to be followed was ordered beforehand up to a point where instructions from Genoa were to be received but were not, as the convoy was ahead of the scheduled time. At about midnight July 4 another convoy similarly commanded met this one head on. It was seen only a very few minutes before the meeting, there was much confusion, and one of its vessels, the Lamington, a British steamship, struck the Napoli and sank her. As our judgment is based on broader grounds, we do not describe the movements bearing upon the nice question whether the navigation of the Napoli or the Lamington was in fault.
To show that the loss is to be attributed to warlike operations, the petitioner points to sailing under convoy and without lights, both made necessary by the war, as enough. To this it adds that the cargo of the Napoli was an aid in carrying on the struggle, a matter of special importance in the late war, where the issue depended so largely on supplies, where, as it was put by Hough, J., below, " commerce existed only as an adjunct to war"; that the routes and particulars of navigation were determined by naval command; and that the naval authorities were responsible for the meeting of the two convoys without previous notice. It urges with plausibility that the *492 collision would not have happened but for the proceedings thus prescribed as an essential part of the conduct of the war. As corroborating its large interpretation of "consequences of hostilities or warlike operations" it states that, while the premiums upon war risk insurance were greatly increased, those upon marine risks underwent but little change.
On the other hand the common understanding is that in construing these policies we are not to take broad views but generally are to stop our inquiries with the cause nearest to the loss. This is a settled rule of construction, and, if it is understood, does not deserve much criticism, since theoretically at least the parties can shape their contract as they like. Morgan v. United States, 14 Wall. 531, applied this rule beyond the limits of insurance to a charter party made during the Civil War, by which the United States assumed the war risks and the owners were to bear the marine risks. The boat carrying troops and stores was compelled to put to sea by the orders of a quartermaster given to meet what he thought the exigency of the service, although the danger was obvious and the master and pilot advised against it. This Court recognized the hardship of the owner's case, in view of the peremptory order to proceed to sea, but declined to look beyond the wind and waves that were the immediate cause of the loss. A similar decision was reached by the House of Lords after the late war in a case where the chartered vessel, the Petersham, was sailing without lights because of Admiralty regulations and collided with a Spanish vessel also without lights, and it was found that because of the absence of lights the collision could not have been avoided by reasonable care. Britain Steamship Co. v. The King, [1921], 1 A.C. 99; affirming the decision of the Court of Appeal, [1919], 2 K.B. 670. See Morgan v. United States, 5 Ct. Clms. 182, 194; Reybold v. United States, 5 Ct. Clms. 277, 283, 284.
*493 The same principle was applied to insurance, the special field of this narrow construction, in the case of the Matiana heard and decided with the Petersham, where a vessel was sailing under convoy and struck a reef without negligence on the part of the master or the naval officer in command of the escort. The discussion turned largely on the question whether the remoter causes of the collision and stranding were warlike operations, and from the tenor of the arguments on the one side and the other it may be doubted whether Morgan v. United States would not have been thought to go too far. But the Matiana certainly goes as far as the decision below in this case. There are special reasons for keeping in harmony with the marine insurance laws of England, the great field of this business, and as we could not reverse the decision below without overruling Morgan v. United States, we are of opinion that the decree of the Circuit Court of Appeals must be affirmed. We repeat that we are dealing not with general principles but only with the construction of an ancient form of words which always have been taken in a narrow sense, and in Morgan v. United States were construed to refer only to the nearest cause of loss even when there were strong grounds for looking beyond it to military command.
Decree affirmed.