US SUPREME COURT DECISIONS

Insurance. In a policy of insurance there was a memorandum stipulating, that

"The assurers shall not be liable for any charge, damage, or loss which may arise in consequence of seizure or detention for or on account of illicit trade, or trade in articles contraband of war."

This provision is not to be construed that there must be a legal or justifiable cause of condemnation, but that there must be such a cause for seizure or detention.

It is not every seizure or detention which is excepted, but such only as is made for and on account of a particular trade. A seizure or detention which is a mere act of lawless violation, wholly unconnected with any supposed illicit or contraband trade, is not within the terms or spirit of the exception. And as little is a seizure or detentions not bona fide made upon a just suspicion of illicit or contraband trade, but the latter used as a mere pretext or color for an act of lawless violence, for under such circumstances it can in no just sense be said to be made for or on account of such trade. It is a mere fraud to cover a wanton trespass, a pretense, and not a cause for the tort. To bring a case, then, within the exception, the seizure or detention must be bona fide and upon a reasonable ground. If there has not been an actual illicit or contraband trade, there must at least be a well founded suspicion of it -- a probable cause to impute guilt and justify further proceedings and inquiries, and this is what the law deems a legal and justifiable cause for the seizure or detention.

The ship insured, when seized, had not unloaded all her outward cargo, but was still in the progress of the outward voyage originally designated by the owners; she sailed on that voyage from Providence, R.I., with contraband articles on board belonging, with the other parts of the cargo, to the owners of the ship, with a false destination and false papers, which yet accompanied the vessel; the contraband articles had been landed before the policy, which was a policy on time designating no particular voyage, bad attached; the underwriters, though taking no risks within the exception, were not ignorant of the nature and objects of the voyage, and the alleged cause of the seizure and detention was the trade in articles contraband of war by the landing of the powder and muskets which formed apart of the outward cargo. By the principles of the law of nations, there existed under these circumstances a right to seize and detain the ship and her remaining cargo and to subject them to adjudication for a supposed forfeiture notwithstanding the prior deposit of the contraband goods; there was a legal and justifiable cause of seizure.

According to the modern law of nations, for there has been some relaxation in practice from the strictness of the ancient rules, the carriage of contraband goods to the enemy subjects them, if captured in delicto, to the penalty of confiscation, but the vessel and the remaining cargo, if they do not belong to the owner of the contraband goods, are not subject to the same penalty. The penalty is applied to the latter only when there has chanrobles.com-red

Page 33 U. S. 496

been some actual cooperation on their part in a meditated fraud upon the belligerents by covering up the voyage under false papers and with a false destination. This is the general doctrine when the capture is made in transitu, while the contraband goods are yet on board. But when the contraband goods have been deposited at the port of destination, and the subsequent voyage has thus been disconnected with the noxious articles, it has not been usual to apply the penalty to the ship or cargo upon the return voyage, although the latter may be the proceeds of the contraband. And the same rule would seem, by analogy, to apply to cases where the contraband articles have been deposited at an intermediate port on the outward voyage, and before it had terminated, although there is not any authority directly in point. But in the highest prize courts of England, while the distinction between the outward and homeward voyage is admitted to govern, yet it is established that it exists only in favor of neutrals who conduct themselves with fairness and good faith in the arrangement of the voyage. If, with a view to practice a fraud upon the belligerent and to escape from his acknowledged right of capture and detention, the voyage is disguised, and the vessel sails under false papers and with a false destination, the mere deposit of the contraband in the course of the voyage is not allowed to purge away the guilt of the fraudulent conduct of the neutral.

Nothing is better settled both in England and America than the doctrine that a noncommissioned cruiser may seize for the benefit of the government, and if his acts are adopted by the government, the property, when condemned, becomes a droit of the government.

When there has been a bona fide seizure and detention for and on account of illicit or contraband trade, and by a clause in the policy of insurance it was agreed that

"the assurers should not be liable for any charge, damage or loss which may arise in consequence of seizure or detention for or on account of illicit trade or trade in articles contraband of war,"

a sentence of condemnation or acquittal, or other regular proceeding to adjudication, is not necessary to discharge the underwriters. If the seizure or detention be lawfully made for or on account of illicit or contraband trade, all charges, damages, and losses consequent thereon are within the scope of the exception. They are properly attributable to such seizure and detention as the primary cause, and relate back thereto. If the underwriters be discharged from the primary hostile act, they are discharged from the consequences of it.

The case, as stated in the opinion of the Court, was as follows.

On 1 October, 1824, the defendants, the Merchants' Insurance Company, underwrote a policy of insurance for the plaintiffs, Carrington and others, for $10,000 on property on board the ship General Carrington at and from the port of Coquimbo in Chili to any port or ports, place or places, one or more times, for and during the term of twelve calendar months, commencing on 5 June, 1824, chanrobles.com-red

Page 33 U. S. 497

at noon and ending on 5 June, 1825, at noon. The policy is against the usual perils, and contains the following clause.

"It is also agreed that the assurers shall not be answerable for any charge, damage, or loss which may arise in consequence of seizure or detention for or on account of illicit or prohibited trade, or trade in articles contraband of war. But the judgment of a foreign consular or colonial court shall not be conclusive upon the parties as to the fact of there having been articles contraband of war on board, or as to the fact of an attempt to trade in violation of the law of nations."

The ship sailed from Providence, Rhode Island, on 21 December, 1823, cleared for the Sandwich Islands and Canton, but was immediately bound to Valparaiso, in Chili, with such ulterior destination as was stated in her orders, the clearance being a usual and customary mode of clearance at that time for vessels bound to Chili and Peru. A part of the cargo consisted of eighteen cases of muskets and bayonets, each case containing twenty; and three hundred kegs or quarter kegs of cannon powder, containing about twenty-five pounds each; and these, together with the residue of the cargo, belonged to the owners of the ship. At the commencement of the voyage and until the final loss of the ship, open hostilities existed between Spain and the new governments or states of Chili and Peru. From the orders it was apparent that the object of the voyage was to sell the cargo in Chili and Peru. The ship was to proceed direct for Valparaiso, and was to enter that port under the plea of a want of water. Some part of the cargo was expected to be sold at that port, and thence the ship was to proceed along the coast of Chili and Peru for the purposes of trade. There is no allegation that the underwriters were not well acquainted with the nature and objects of the voyage.

The ship arrived at Valparaiso on 17 April, 1824. At the time of her arrival and until the loss as hereinafter stated, the Spanish royal authorities were in possession of a portion of upper Peru, including Quilca and Moliendo, and of the port of Callao in lower Peru. The rest of Peru and the whole of Chili were in possession of the Peruvian and Chilian new governments. In the harbor of Valparaiso, sixteen casks of the powder were, with the knowledge of the government, chanrobles.com-red

Page 33 U. S. 498

sent on board of an English brig then in the harbor, and as the plaintiffs allege, sold to the master of the brig, and all the muskets except ten, alleged to be kept for the ship's use, were landed in Valparaiso with the knowledge of the government.

The ship, with the remainder of her cargo on board, sailed for Valparaiso, early in May following; arrived at Coquimbo in Chili on the 13th day of the same month. There the remainder of the powder, except nine casks, more or less damaged, alleged to be retained for the ship's use, was landed in the course of the same month with the knowledge of the government. The ship sailed from Coquimbo for Huasco in Chili on or about 5 June following, and arrived at Huasco in the same month, having sold at the previous port a part of her outward cargo by permission of the government, as the plaintiffs allege, and taken in merchandise belonging to the plaintiffs and other citizens of the United States, to be delivered at some ports on the coast. The ship arrived at Quilca, with the greater part of her outward cargo still on board, on 20 June, and there sold, with the knowledge of the government, as the plaintiffs allege, a considerable portion of her outward cargo and delivered some of the articles taken in at the previous ports. While lying at anchor in the roadstead of Quilca, and before she had completed the discharge of her outward cargo, she was seized by an armed vessel called the Constante, commanded by one Jose Martinez, sailing under the royal flag and acting, as the defendants allege, by the royal authority of Spain, but alleged by the plaintiffs to be fitted out and commissioned at Callao by Jose Ramon Rodil, the highest military commander of the castle of Callao, holding his commission subordinate to La Serna, the Viceroy of Peru under the King of Spain, there being, as the defendants allege, no regular civil government in the place, the castle of Callao being then and until the final loss of the ship besieged by sea and land. The ship was carried from Quilca to Callao, where certain proceedings were had against her and her cargo on board by the orders of General Rodil, and they were never restored, but were totally lost to the plaintiffs. The alleged cause of the seizure and detention was the trade in articles contraband of war by the landing of the powder and muskets in Chili as aforesaid. chanrobles.com-red

Page 33 U. S. 499

Upon the trial of the cause upon the evidence, the following questions occurred upon which the opinions of the judges were opposed, and thereupon it was ordered by the court, on motion of the counsel for the plaintiffs, that the points on which the disagreement happened should be certified to the Supreme Court of the United States for its decision, viz.:

"1. Whether a seizure and detention, to come within the exception of the policy relating to contraband and illicit trade, must be for a legal and justifiable cause."

"2. Whether, assuming the other facts to be as stated and alleged, and taking the authority of the seizing vessel to be such as the plaintiffs allege, there was a legal and justifiable cause for the seizure and detention of the General Carrington and her cargo."

"3. Whether, assuming the other facts to be as stated and alleged and taking the authority of the seizing vessel to be such as the defendants allege, there was a legal and justifiable cause for the seizure and detention of the General Carrington and her cargo."

"4. Whether a general in the military service of Spain, subordinate to La Serna, Viceroy of Peru under the King of Spain but having the actual and exclusive command of Callao, and no civil authority existing therein, and cut off by the forces of the enemy by sea and land from all communication with any superior civil or military officer, could lawfully seize and detain neutral property for contraband trade if just cause existed for a condemnation thereof."

"5. Whether such officer, so situated, has a right to appoint and constitute a court, of which he himself is one, for the trial and condemnation of such property."

"6. Whether, supposing the ship to have traded in articles contraband of war in the ports of Chili, and to have been seized afterwards in a port of Peru, then under the royal authority, before she had discharged her outward cargo, for and on account of such contraband trade, the underwriters be not discharged, whether the subsequent proceedings for her adjudication were regular or irregular. "

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