Opinion · Supreme Court of the United States
Standard Oil Co. of NJ v. United States
267 U.S. 76
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1925-02-02
- Topic
- general
How later courts describe this case
- holding this clause satisfied when an armed boarding party ordered ship to change course during World War I
- where United States issues insurance policies in familiar form and consents to suit, it is subject to incidents of suits in insurance business
Citator
UpLaw has not yet analyzed Standard Oil Co. of NJ v. United States. The absence of a flag is not a finding that it is good law.
- Cited by
- 121 opinions
Headnotes
- Insurance Law — Marine War Risk — Proximate Cause Where a vessel insured against takings, arrests, restraints, and detainments, and all consequences of hostilities, is seized by a warship and thereafter lost while under the paramount control of the seizing power, the seizure and continuing control are the proximate cause of the loss, not the marine peril; whatever occurs while the insured taking continues may be attributed to the taking, which operates as a nonconductor between the insured and subsequent events. 267 U.S. at 77–79
- Insurance Law — War Risk — Seizure and Restraint A vessel is seized, arrested, and detained within the meaning of a war risk policy where, after a manifestation of armed force and by mutual understanding, the ultimate authority over her navigation rests with a boarding naval officer, and it is immaterial that the master continued to navigate the ship or that the officer rarely uttered commands, so long as the last word remained with the officer. 267 U.S. at 78–79
- Insurance Law — Actions against the United States — Interest When the United States enters the insurance business, issues policies in familiar form, and provides that it may be sued in case of disagreement, it must be assumed to have accepted the ordinary incidents of suits in that business, including the payment of interest, which may be allowed from the date the policies required payment following the filing of proofs of loss. 267 U.S. at 79
STANDARD OIL CO.v. UNITED STATES,267 U.S. 76(1925)
45 S.Ct. 211
STANDARD OIL COMPANY OF NEW JERSEY, AS OWNER, ETC., OF THE STEAMSHIP LLAMA,
v. THE UNITED STATES OF AMERICA.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.
No. 169.
Argued January 14, 1925.
Decided February 2, 1925.
CERTIORARI to a judgment of the Circuit Court of Appeals
reversing a decree of the District Court awarded against the
United States, as respondent, in a libel on two war risk
insurance policies, issued under the War Risk Insurance Act of
September 2, 1914.
The risks assumed by the insurer in the two policies included "takings at sea, arrests, restraints and detainments of all kings, princes, and peoples, of what nation, condition or quality soever, and all consequences of hostilities or war-like operations, whether before or after declaration of war." The loss happened as follows. On October 14, 1915, the Llama sailed from New York for Copenhagen with a cargo of oil, routed via Kirkwall that her papers might be examined. On October 29 she was stopped by the British warship Virginia and was boarded by a lieutenant and four men, all armed, and her papers examined. The result was signalled to the Virginia and the lieutenant directed to proceed to Kirkwall, which was 400 miles to the east on the farther side of the Orkneys, keeping to the northward of Scule Skerry and North Rona and not to pass between the islands at night. The steamer arrived off Westray Firth, one passage between the islands, on the night of October 30. The next morning it started on a course through Westray Firth but in a few hours struck a rock and was totally lost.
In defense it is argued that the proximate cause was a marine peril not covered by the policies and that the decision should be governed byMorganv.United States, 14 Wall. 531;QueenInsurance Co. v.Globe Rutgers Fire Ins. Co.,263 U.S. 487, and other similar cases. But in those very strict applications of a well-known rule, however strong the motives of the insured or owners for acting as they did, the loss ensued upon their own conduct. But if a vessel should be taken from an owner's hands without his consent and should be lost while thus held by a paramount power, obviously a company that had insuredPage 78against such a taking could not look beyond and attribute the loss to a peril of the sea. Whatever happens while the taking insured against continues fairly may be attributed to the taking. That is a nonconductor between the insured and subsequent events. SeeMullerv.Globe Rutgers Fire Ins. Co., 246 F. 759, 763.Coryv.Burr, 8 App. Cas. 393, 398.Andersenv.Marten, [1908] A.C. 334.
The Llama at the time of the accident was under the paramount control and in the possession of the Virginia. We regard the differences between the testimony of the British officer and that of the master of the Llama as immaterial. The master, who was believed in the District Court, makes the intervention of the British lieutenant frequent, active, and the cause of a change of the course that the ship otherwise would have taken. But whether the intervention was more or less, if by mutual understanding, after a manifestation of armed force, the last word was with the lieutenant, it does not matter whether he uttered his commands often or rarely. The lieutenant while denying that he had a general charge of the navigation testifies again and again to facts that show that he assumed and was recognized to be the ultimate power. After his signalling his ship the master, he says, asked him if he could proceed "So I said, `Yes.'" He looked at the course to see that it complied with the orders from his captain. "The captain approached me and asked my permission to go through the Westray Firth . . . I gave my consent." If the captain had suggested a course that the lieutenant did not approve, the latter said he assumed that he had power to correct it. He recognized that the vessel might possibly be the subject of prize court proceedings. Some comment was made upon the meagreness of the entries in the log as to any control of the master's conduct. But after an entry `British naval officer boarded ship with prize crew' nothing more was necessary to show what the master understood his positionPage 79to be, whether in fact the crew was a prize crew or not. As was said of similar facts inMullerv.Globe Rutgers Fire Ins.Co., 246 F. 759, 762, that the vessel and her cargo were seized, arrested and detained within the meaning of the policy we think too plain to require much more than mention. It no more mattered that the master took an active part in the navigation than that the ship still was steered by one of the crew.
As the vessel had passed out of the owner's control before the accident by a seizure within the policy and as the loss happened while the vessel thus was held by an adverse hand, it follows that the libellant must prevail.
Some question was made as to the allowance of interest. When the United States went into the insurance business, issued policies in familiar form and provided that in case of disagreement it might be sued, it must be assumed to have accepted the ordinary incidents of suits in such business. The policies promised that claims would be paid within thirty days after complete proofs of interest and loss had been filed with the Bureau of War Risk Insurance. The proofs seem to have been filed on January 11, 1917. Interest at six per cent should be allowed from February 11, 1917. The decree of the District Court will be corrected so as to allow for total loss of the
Llama ............................................ $115,000.00
With interest at six per cent. from February 11, 1917.
Total loss of the freight, c. ................... 44,686.82
With interest at six per cent. from February 11, 1917.
Expenses incurred under sue and labor clauses .................................... 2,270.34
With interest at six per cent. from February 11, 1917.
Thus modified the decree will be affirmed.Decree of Circuit Court of Appeals reversed.Decree of District Court modified and affirmed.Page 80
With interest at six per cent. from February 11, 1917.
Total loss of the freight, c. ................... 44,686.82
With interest at six per cent. from February 11, 1917.
Expenses incurred under sue and labor clauses .................................... 2,270.34
With interest at six per cent. from February 11, 1917.
MR. JUSTICE McREYNOLDS is of opinion that the decree of the Circuit Court of Appeals should be affirmed.
MR. JUSTICE SUTHERLAND took no part in the decision.