Gracie v. Marine Ins. Co. of Baltimore, 12 U.S. 75 (8 Cranch 75) (1814)

12 U.S. 75

8 Cranch 75

3 L.Ed. 492


Feb. 16, 1814


ERROR to the Circuit Court for the district of Maryland.

The facts of the case, as stated by MARSHALL, Ch. J. in delivering the opinion of the Court, were as follows:

This case arises on a policy of insurance bearing date the 19th of June, 1807, for $20,000 on the cargo of the ship Spartan, 'at and from Baltimore to Leghorn,' the risk to commence on the loading, and to continue 'until the said goods shall be safely landed at Leghorn aforesaid.'

The policy contained, in the printed part, the usual stipulation that the assured, in case of loss, shall labor, &c. for the preservation and recovery of the goods, to the expense of which the assurers would contribute according to the rate of the sum insured; in the policy is inserted, in writing, the words 'warranted free from particular average.'

The vessel sailed from Baltimore in June, 1807, and on the 15th of August arrived in the port of Leghorn.

According to the laws and usages of the place, ships arriving at that port, and their cargoes were, obliged to perform a quarantine of thirty days before admission of the cargo, or of any person on board, into the city; the ships performing it in the port, the cargoes in a certain Lazaretto erected for that purpose on the shore of the port about half a mile from the city. Some specified articles were excepted from this rule, but the cargo of the Spartan did not come within the exception. On the arrival in port of a vessel liable to quarantine, the officers of government took possession of the cargo, and removed it in public lighters to the Lazaretto. Freight was earned upon the depositing of the cargo in the Lazaretto, but payment of it, though often made before, could not be enforced until after the expiration of the quarantine, and until payment, the lien for the freight continued on the goods. The duties also accrued in the Lazaretto, and until they were paid, the goods could not be removed thence into the city.

The goods remained in the custody of the officers of government until the expiration of the quarantine, during the continuance of which, neither the master of the ship. nor the consignees had any power to interfere with, or even see, them, but under a permit from the local authorities; such permits were commonly allowed the consignees, who might take samples, and sell by those samples, while the goods were performing quarantine.

After quarantine was performed, and an order from the master obtained, the goods were received at the Lazaretto by the owner or consignee, and transported at his risk and expense into the city. This transportation was most usually made by water; but there was a road along which light goods might be, and frequently were, carried. Even when goods were sold during the quarantine, they were removed at the risk and charge of the vendors.

In conformity with these regulations, the cargo of the Spartan was placed in the Lazaretto. While it remained there, performing quarantine, a body of French troops took possession of the city, seized the Lazaretto, sequestered the goods there deposited, and refused to give them up until a ransom, amounting to 53 per cent. on their estimated value, should be paid for them. This ransom the owners or consignees were compelled to pay in order to obtain restitution of their goods. This action is brought to recover it from the underwriters.

Judgment was rendered in the Circuit Court for the Defendants, which judgment is now brought before this Court by a writ of error.

HARPER, for the Plaintiff in error, contended,

1st. That the landing at the Lazaretto was not a landing in safety at Leghorn, within the meaning of the policy.

2d. That the Plaintiff is not prevented, by the warranty against particular average, from recovering the amount of the ransom paid.

1. The goods were not landed in safety at Leghorn. They were landed at the Lazaretto, which is no part of the city of Leghorn. The landing contemplated by the policy was at the city—the place where the goods were to find a market; and not merely a landing at the port. The voyage as to the ship might terminate at the port, but the goods were to go to the city, and be landed in safety. After having performed quarantine at the Lazaretto, they were to be re-shipped into lighters and carried to the city.

But if the landing at the Lazaretto be a landing at Leghorn, yet they were not landed in safety within the meaning of the policy. It is natural to suppose that the parties meant such a landing as would put the cargo into the possession and under the control of the consignee. But while it was at the Lazaretto, it was subject to the orders of the master, not of the consignee. It was still liable for freight, and although it is said to be part of the usage of the trade, that the freight is earned by the delivery at the Lazaretto, yet it is not payable until the termination of the quarantine. The Lazaretto is a mere substitute for the ship as a place in which to perform the quarantine. If it had remained on board the vessel, it would unquestionably have been at the risk of the underwriters. The landing was for their benefit inasmuch as the goods were safer on shore than in the ship.

The seizure was a detention of princes, and until the goods were ransomed, they were lost. 1, Marshall, 264, 176, Waples v. Eames, id. 269, 181, Pelly v. Roy. Ex. Assur.

2. Notwithstanding the warranty against particular average, the Plaintiff may recover upon the clause of the policy authorizing him to labor and travel for the preservation of the property, to the expense whereof the underwriters promise to contribute according to the rate of the sum insured. The ransom was an expense incurred to save the residue and prevent a total loss, for which the underwriters would have been liable.

JONES and PINKNEY, contra.

1. The voyage was enued by the landing of the goods at the Lazaretto. The policy is satisfied if they are landed at the port of Leghorn. When the name of a place is used in a policy it means the port, although Leghorn is a city, yet the port is also called Leghorn. When a place is named as the terminus of the voyage, it means the usual place to which ships come to unlade. It does not always mean the caput portus. It sometimes means the house of general receipt. Doubtful expressions are to be construed in favor of the underwriters. 1, Bur. 348, 349, Tierney v. Etherington, cited by lord Mansfield in the Bank-Saul case of Pelly v. Roy. Ex. Assur. 1, Marshall, 250, 251. Hargrave's Law Tracts, 46. Hales Treatise de portubus Maris, ch. 2. p, 56. The termination of the voyage, in fact and in law, is the landing of the goods at the usual place of landing, at the ultimate port of destination according to the usage of that trade. The usage of the trade is all important. The parties are bound to know it. It forms part of their contract. It may control and modify a warranty, and illustrate the termination of the voyage. The case states that the freight was earned by delivery at the Lazaretto—the duties had accrued to the Etrurian government—the transportation from thence to the city would have been at the risk and expense of the consignee or the owner. It was also a place where the goods might be sold by samples: All these circumstances show that the voyage was ended. The general rule is that if the insured undertakes to transport the goods, the underwriters are discharged. 1, Marshall, 165, 249, Sparrow v. Caruthers. id. 166, 253, Rucker v. Lond, Assur. id. 167, 254, Hurry v. Roy. Ex. Assur. The lien for the freight depends either upon the agreement of the parties on the municipal law of the place; it does not affect the question respecting the termination of the voyage. In the cases of Tierney v. Etherington and Pelly v. Roy. Ex. Assur. the voyage confessedly was not terminated. The government of Leghorn receives the cargo at the Lazaretto as the agent of the owner or consignee and holds it for his benfit; it is entered on the books of the Lazaretto in the name of the ship, the master and the consignee, if known.

The policy was never construed to undertake that the consignee should have the unlimited control over the cargo after it was landed. But in this case it was under his control; not absolute, but modified by the municipal government of the place. The government had a right so to modify it. Thus in London, some goods must be deposited in the kings warehouse. So also in France, the emperor took it into his head to turn merchant and monopolize all the tobacco, and ordered it to be stored in his warehouses. In all countries the power of the consignee is in a certain degree modified. He had a power to take samples and sell by them.

It is said also that the goods were to be landed at the place of market. But if the place of market means the place where the goods may be sold, and where they are under the control of the consignee—the Lazaretto was that place. The Lazaretto was an appendage to Leghorn, as the Piroeum was to Athens. Suppose the voyage had been from Carthage to Athens, landing at the Piroeum would have terminated the voyage. So would a voyage from the West Indies to London terminate at the West India dock; yet something must be previously done by a consignee at the dock before he can have the complete control over the goods in the wharehouses of the dock company. So in the port of Baltimore, some goods must be delivered at the Lazaretto. And if a cargo should be delivered at Fell's Point (which is out of the city) under a policy on a voyage to Baltimore, the policy would be discharged. The cargo would have been brought to its market.

In the case of Waples v. Eames, the ship was not 24 hours moored in good safety. There was no opportunity to unlade. But here the goods were actually unladen. In the Bank Saul case there was no question whether the voyage was ended. The ship was in itinere. The only question was whether, by the usage of the trade, the goods might be unladen for safe keeping while the vessel was repairing.

2. It was only a partial loss, which is excepted from the policy by the manuscript warranty against particular average; which means partial loss.

Although it would have been a total loss if abandonment had been offered while the goods were detained, yet as no such offer was made, it is now only a partial loss.

Those parts of the policy which are in manuscript are to be particularly regarded, as they control the printed form. 1, Marshall, 229, 305. Park, 4, 5, 60. 4, East, 130.

Ransom is only a partial loss. It was never considered as coming under the clause of laboring and travelling for the interest of all concerned. If it can come under that clause, then that clause is so far repealed by the express manuscript warranty, that the underwriters shall not be liable for a partial loss. If the French general had taken a part of the goods, there could have been no question that the underwriters would not have been liable the ransom represents the part which might have been so taken. The clause respecting the expenses of labor and travel was first introduced in 1741, to remove a doubt whether the insured could so labor and travel without losing his right to abandom; but he is not bound to labor and travel, nor to ransom. 1, Marshall, 234, 488. 3, Bur. 1734. Doug. 610.

But if the underwriters are liable under that clause of the policy, they are only liable in the proportion which the loss bears to the amount saved.

HARPER, in reply.

1. The first point depends upon the usage of the trade. We say that the usage merely substitutes the Lazaretto for the ship; like the cases of the store ship at Gibralter, and the Bank Saul at Canton. The principle of all these cases is substitution. The goods were not in the power of the consignee. He could only make an executory contract. He had no more power over the goods than if they had been upon the ocean.

The lien for the freight continues until the end of the quarantine, when it is to be paid, and not before, because the master has not until then done all that the contract requires.

2. It is said that the exception of partial loss operates upon every part of the policy; not merely upon its general provisions, but upon every particular provision, however contradictory it may be to that exception. But the two clauses, viz: the engagement to pay for labor and travel, and the warranty against partial losses, may stand together. The latter means warranted free from all partial lossess except such as arise from labor and travel for the preservation of the goods. The blanks in the printed form of the clause respecting labor and travel were filled in manuscript, as well as the warranty against particular average, and therefore are to be equally regarded. That circumstance also shows that the parties intended that both clauses should stand, and have effect. The ransom was as much the means of saving the underwriters from a total loss, as if it had been strictly labor and travel.

Feb. 19th.

MARSHALL, Ch. J. after stating the case, delivered the opinion of the Court as follows:

The Plaintiff in error contends,

1st. That the placing of the goods in the Lazaretto was not 'a landing in safety at Leghorn,' and a termination of the voyage.

2d. If the loss happened during the continuance of the risk, the Plaintiff is not prevented from recovering, by the warranty in the policy against particular average.

In support of his first point he contends that 'Leghorn,' in the policy, means the city and not the port of Leghorn.

2d. That the Lazaretto being substituted for the ship for the greater safety of the goods, their situation, as it respects all parties, while performing quarantine in the Lazaretto, is precisely the same as if performing quarantine in the ship. This argument is supposed to be much strengthened by the facts, that freight cannot be demanded until quarantine is performed, and that the lien for the freight continues after the landing of the goods.

3d. That a landing in safety must be such a landing as places the goods at the disposal of the owner or consignee.

However, true it may be in general that when we speak of Leghorn, we speak of the city which bears that name, it does not follow that the same meaning is attached to the word when used in a policy. The insurance is 'at and from Baltimore to Leghorn.' Now if, as is admitted, Baltimore means the port of Baltimore, it would seem not unreasonable to suppose that, in the same instrument, Leghorn means the port of Leghorn—the place which is the ultimate destination of the vessel on board which the goods are laden. The voyage is understood to be terminated when the vessel arrives at her port of destination, and has been moored there in safety for twenty-four hours.

But it will be conceded that the termination of the voyage as to the ship, does not necessarily terminate the risk on the goods. This risk may continue when the voyage at to the ship is ended. Its duration depends on the intention of the parties, and this intention must be found in their contract.

This brings us to consider the argument that the goods while performing quarantine in the Lazaretto remain at the risk of the insurer in like manner as if performing quarantine in the ship.

The words of the policy being 'beginning the adventure on the said lawful goods and merchandizes from and immediately following the lading thereof on board of said vessel at Baltimore aforesaid, and so shall continue and indure until the said goods and merchandizes shall be safely landed at Leghorn aforesaid.' The risk continues until the goods be safely landed, although the voyage as to the ship, might be terminated previous to their landing.

In ordinary cases, where the government does not interfere between the parties, this risk would continue until the goods should be landed in safety at the usual place, and at the disposal of the consignee. If it were usual to receive goods at the Lazaretto or at any other place on the shore of the port, it would be the duty of the owner or consignee to receive them there, and a landing at such place, it is admitted, would be a landing at Leghorn.

If on the other hand the goods while performing quarantine remained on board the ship, and could not be landed, it is not to be doubted that they would remain at the risk of the insurer. How then, it is asked, can the substitution of the Lazaretto for the ship alter this risk? A substitution made, not by the act of the parties, but of the government of the country? A substitution which does not alter the rigbts of the parties since it leaves the lien of the master for his frieght unimpaired, and gives no power over the goods to the owner or consignee? A substitution beneficial to the insurer since it diminishes the risk on the goods?

Whatever might be the effect of this reasoning if the establishment of the Lazaretto, and the laws of quarantine had been of so recent a date, as not to have been in the contemplation of the parties to the contract, as to which the court gives no opinion, this cause may well be decided upon the usage found in this case, a usage of ancient date and of general notoriety. It existed and was known to exist when this contract was formed. When the parties stipulated that the adventure should continue till the goods were landed in safety at Leghorn, they knew that the place of landing was the Lazaretto, and that the landing would be made under the direction and control of the local authority. This then must be considered as the landing contemplated in the policy. It is the landing which terminates the risk. Had the parties intended to continue the risk during the continuance of the goods in the Lazaretto, they would have inserted, in the policy, words manifesting that intention. Instead of terminating the adventure on the landing, a fact which they knew must take place at the Lazaretto thirty days before the goods could be delivered to the owner or consignee, they would have continued it, till the goods should be landed in safety and should perform their quarantine.

The Court is of opinion that under this policy the goods in the Lazaretto were not at the risk of the underwriters and consequently that there is no error in the judgment of the Circuit Court.

It is affirmed with costs.

Last modified: October 4, 2009