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 1 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.
1
20 N. S. Rep. 514.
Mac Master Q.C. and W. B. Ross for the appellant

[Page 332]

(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. Pandorf2; Earle v. Rowcroft3.

Barratry was not the proximate cause of the loss. Hamilton v. Pandorf4.

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. Burr5; Waters v. Merchants Louisville Ins. Co.6; Parkhurst v.
Gloucester Ins, Co.7.

As to barratry being the proximate cause, see Cory v. Burr (4); Arnold on Marine
Insurance8.

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.9.

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

2
12 App. Cas. 518.
3
8 East. 134.
4
12 App. Cas. 523-4.
5
8 App. Cas. 393.
6
11 Peters 213.
7
100 Mass. 301.
8
P. 749 of Ed. 6.
9
P. 26.
[Page 333]

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

[Page 334]
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
Xantho10, 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 11 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

[Page 335]

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.,12 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
10
12 App. Cas. 503.
11
12 App. Cas. 518.
12
12 App. Cas. 503.
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.