Supreme Court of Canada
O'Connor v. Merchants Marine Ins. Co. (1889) 16 SCR 331
Date: 1889-03-18
Philip O'Connor (Plaintiff)
Appellant
And
The Merchants Marine Insurance Co. (Defendants)
Respondents
1888: Nov. 14; 1889: Mar. 18.
Present—Sir W. J. Ritchie C.J. and Strong, Taschereau, Gwynne and Patterson JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA.
Marine insurance—Exceptions in policy—Barratry—Proximiate cause of loss—Perils of the seas.
Insurance in a marine policy against loss "by perils of the seas" does not cover a loss by barratry.
It is not necessary that barratry should be expressly excepted in a marine policy to relieve the insurers from liability for such a loss.
Per Strong J. dissenting.—If the proximate cause of the loss is a peril of the seas covered by the policy the underwriter is liable though the primary cause may have been a barratrous act.
Appeal from a decision of the Supreme Court of Nova Scotia sustaining a verdict on the trial for the defendant.
This was an action on a marine policy brought by the mortgagee of the vessel insured. The defence was that the vessel was wilfully sunk and destroyed by the master, and the evidence on the trial showed that holes had been bored in the vessel by the master's directions which caused her to sink. There was no exception in the policy of loss from barratry, nor was barratry expressly insured against, and the only question raised on the appeal was whether the plaintiff could recover as on a loss by the perils of the seas under the ordinary clause in a marine policy. The judgment in the court below, both on the trial and on appeal, was in favor of the company.
Mac Master Q.C. and W. B. Ross for the appellant
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(The court intimated that they were concluded by the findings in the court below as to the facts, and the counsel did not press the contention set out in the factum that there was no barratry in point of fact.)
As to whether or not barratry avoids a policy when there is no express exemption see Hamilton v. Pandorf; Earle v. Rowcroft.
Barratry was not the proximate cause of the loss. Hamilton v. Pandorf.
The insured being a mortgagee is in a different position from that of an owner. Merchants Shipping Act R. S. C. ch. 72 s. 36.
MacCoy Q.C. for the respondents. If barratry is not expressly insured against it will relieve the insurers, Cory v. Burr; Waters v. Merchants Louisville Ins. Co.; Parkhurst v. Gloucester Ins, Co..
As to barratry being the proximate cause, see Cory v. Burr (4); Arnold on Marine Insurance.
The insured being a mortgagee can only recover for a total loss and mere submersion is not such a loss.
And see Aspinall's Rep. of Mar. Cas..
Sir W. J. RITCHIE C.J.—The court found barratry committed and, in my opinion, could not find otherwise. Barratry is a peril specially insured against by express words and which was not specially insured against in this case. Mr. Parke, speaking upon insurance upon a ship in any lawful trade says: "If the captain commits barratry by smuggling the underwriters are answerable, othewise the word barratry should be struck out of the policy."
This, in my opinion, was not a loss by perils of the
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sea, but by barratry. The loss, in my opinion, cannot be separated from the barratrous act which was not insured against. Therefore, I think the appeal should be dismissed with costs.
STRONG J.—With much regret, though I cannot say with any doubt, I am compelled to differ not only from the court appealed from, but also from the majority of this court, for I am of opinion that the appeal ought to be allowed. As regards two of the grounds of appeal I am with the respondents. I agree that the evidence, so far as the purposes of the present appeal are concerned, is so strong that the findings of Mr. Justice Smith as to the facts cannot on any recognized principle applicable to the exercise of appellate jurisdiction be now disturbed. I am further of opinion that on authorities which it would be a mere parade of citation to quote the policy sued upon does not cover losses by barratry of the master and crew.
On a third ground, however, very distinctly taken in the appellant's factum, I am compelled to differ as well from the learned judges in Nova Scotia as from the Chief Justice and my brethren in this court.
The learned judge who tried the case found that the vessel was not lost by any of the perils assured against, but was scuttled by direction of the master. This is in substance the effect of the judgment on the 4th, 12th, 13th and 16th paragraphs of the statement or defence as finally entered by the Supreme Court. I am of opinion that this judgment was erroneous; that on the facts in evidence the loss of the vessel was undoubtedly caused by perils insured against.
Perils of the seas are within the express terms of the policy, and the appellant insists that the proximate cause of the loss being certain leaks which caused the vessel to founder and sink, the proximate causes of
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the loss were perils of the seas. It seems to me that whatever may have been the state of the case formerly this identical question is concluded by very high and very recent authority in favor of the appellant. The cases I refer to are those cited by the appellant of Hamilton, Fraser & Co. v. Pandorf & Co. and Wilson & Co. v. Owners of Cargo ex Xantho, both decided by the House of Lords on the 14th of July, 1887. By these cases it was decided in the first place that the words "dangers and accidents of the seas," and of course the equivalent expression "perils of the seas," were to receive the same construction, whether used in defining the risks covered by the policy in a contract of marine insurance, or used for the purpose of describing excepted perils in favor of the shipowner in a charter party or a bill of lading. Next it was decided, virtually in both cases but certainly in the case of Hamilton v. Pandorf that when a court is called upon to determine whether a loss has arisen from a "peril of the sea" it is to regard, not the remote or originating but only the proximate and immediate cause of the loss. Thus, in the case of Hamilton v. Pandorf (1) it was held that though damage caused to a cargo by rats was not a peril within an exception in favor of the shipowner of dangers and accidents of the seas, yet that when rats had caused a leak the damage thence arising from sea water was within the exception. And in the other case of Wilson v. Owners of Cargo per Xantho (2), it was in like manner held that though a collision was not per se within a similar exception to that before mentioned yet when the collision caused the vessel to founder the loss so occasioned was within the exemption in favor of the shipowner. It follows from these cases, and especially from many passages in the judgments in both of them, that the learned lords who decided them intended
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that their decisions should apply to policies of insurance, in determining what losses came within the words "perils of the seas." Indeed, in the case of Wilson v. The Cargo, &c., in the concluding paragraph of Lord Macnaghten's judgment he says this in so many words. It follows that when there is a loss, as in the present case, proximately and immediately resulting from the foundering of the vessel caused by a leak, it is a loss from "perils of the seas," though it may have been barratrously caused by the scuttling of the ship by the master and crew. This, of course, always implies that the assured is free from any complicity in the act of barratry. In such cases it is considered that the immediate cause of damage and loss is the sea, and this is within the contract of the underwriter who has assured against perils caused by the sea.
The plaintiff in the present case is a mortgagee, and it is not pleaded or suggested that he was in any way privy to the wilful destruction of the vessel by the master and mariners composing the crew.
I am of opinion that the appellant is entitled to judgment.
TASCHEREAU J.—I would dismiss this appeal. I think the plaintiff must fail for the reasons given by Mr. Justice McDonald in the court below.
GWYNNE and PATTERSON JJ. concurred.
Appeal dismissed with costs.
Solicitor for appellant: Otto S. Weeks.
Solicitor for respondents: William P. MacCoy.
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