HOOD'S EX'RS v. NESBIT, 2 U.S. 137 (1792)

U.S. Supreme Court

HOOD'S EX'RS v. NESBIT, 2 U.S. 137 (1792)  2 U.S. 137 (Dall.)

Hood's Executors v. Nesbit, et. al.

Supreme Court of Pennsylvania January Term, 1792

This was an action (tried at the sittings in Philadelphia in Nov. last) brought on a policy of insurance on the ship America, commanded by captain W. Keeler, from Philadelphia, to, at and from Fayal, against the defendants as underwriters. The jury found a special verdict; which, after stating the policy, the defendants' subscription, and the arrival of the ship at Fayal, on the 23rd December 1785, proceeds thus: 'And the said jurors further say, that about three weeks after the said William Keeler had so arrived at Fayal, in the said ship, he the said William Keeler, at the request of a certain captain Barnes, on the suggestion of Duncan Ross did with and on board the said ship America, sail from the said island, in quest and pursuit of a certain sloop called the Fly, whereof the said Barnes was master; which said sloop had been run away with by the seamen, belonging to her: and that the said William Keeler did return from the said pursuit, in the said ship, within 8 days after she had sailed from Fayal aforesaid; and that the said ship afterwards, on the 31st of January 1786, was, by storm and tempest, wrecked upon the island of Fayal and totally lost. And the jurors further find, that the said W. Keeler, by his agreement with the said captain Barnes, was to have received, as a compensation for his services in going with the ship America aforesaid, in pursuit of the said sloop, the sum of L 100 sterling; and that in going from the island of Fayal aforesaid, he had no view of, and did not intend, any exclusive profit or advantage to himself; but did intend that the benefit and advantage to be derived therefrom, should be for the owners of the said ship and himself. And whether the law be for the plaintiffs, &c. & c. they submit, &c. &c.'

The cause was argued by Lewis, and Sergeant for the Plaintiffs, and by Wilcocks and Ingersoll for the Defendants.

The Plaintiffs contended, that the departure from the course of the voyage amounted to barratry, and could not be considered as a mere deviation. As the consent of the owners is not stated, it cannot be presumed, and in many of the cases the want of consent is relied on as a principal ingredient in barratry. It is not necessary there should be a direct evil intention: Lata culpa & crassa megligentia will amount to barratry. Parke 95. Barratry is neglect

Page 2 U.S. 137, 138

of duty. Every wilful and inexcusable departure is a gross breach of duty, and amounts to barratry. Ibid. 93. It is said, he intended to benefit his owners as well as himself; but to construe this as an excuse would be productive of fraud. The master may easily pretend great zeal for his owner's interests, and yet sacrifice them to promote his own. In the definition given by Parke, it is said p. 94, it must be 'tending to his own benefit': This does not mean exclusive benefit. The master runs no risk himself by going out, but he might get L 50 by it; while he hazarded his owner's insurance, the mere premium of which was almost equal to the price he was to get, for giving chase to the Fly. The words of Parke, p. 94, are 'If it is for the benefit of his owners, and not for his own benefit, it is no barratry.' But here the departure was with a view to his own private advantage. He sacrifices the policy, wages, provisions and the safety of the ship, for a paltry expectation of private gain. A mere error might excuse; but here it is very different, and if the principle be established there will be no security for owners. The cases put in the books, shew that the principle contended for by the defendants is not found. Deserting a ship is barratry. Parke 93 'So when the master of a ship defrauds the owners by carrying the ship a different course.' Post. Dict. His interest is out of the question. So sailing out of port without payment of the duties, is barratry, though the master gains nothing by it: And Justice Builer seemed to think (Parke 103.63) that breach of an embargo (tho' perhaps done with a view to the owner's interest) was barratry. But when he has his own gain in view, the case is stronger; nothing but pure intentions can purge the act: And in Vellege & Wheeler, Parke 100, stress is laid on the circumstance, that the master was acting for his own benefit.

On the part of the defendant, it was urged, that here was a plain deviation stated, and unless the departure was clearly an act of barratry, judgment must be for the defendant. They said, that in all the cases respecting barratry, some circumstances of fraud, gross negligence, or evil and criminal conduct towards the owners, were stated. 1 Tem. Rep. 323. It must be more than devition; it must be something criminal. Parke 93. 1 Post. Dict. 136. 214. Cowp. 154. All define it to be a trick, fraud, or cheat, upon the owners. The definition, in Parke 94, is a good one; and we contend it must be for the exclusive benefit of the captain to make it barratry. There is no case which hints, that the captain may not connect his own interest with that of the owners. In Stammer v. Brown. 2 Stra. 1173, it must be something of a criminal nature, as well as a breach of contract. If he mistook honestly, the owners must bear the loss. The want of consent on the part of the insured is not sufficient of itself: So is Parke 335. The owners abide by all the misconduct of the captain, but such

Page 2 U.S. 137, 139

as imports fraud. There are some inaccurate expressions in the books, as that of 'wilful deviation'; but they must mean criminal or fraudulent deviation.

The opinion of the Court was delivered on the 10th of January.

M'Kean, Chief Justice, after stating the material facts, said

This is either a deviation or a barratry. The nature of barratry seems now pretty well understood, and we think there ought to appear fraud in the master's conduct, before it is considered as barratry. Barratry is a criminal act towards his owners, or an act done solely for his benefit, without the consent of the owners. We do not discover in this case, any marks of criminal misbehaviour, and the judgment must be for the defendants.

Shippen, Justice.

It is a mere imprudence of the master, and for that the owners alone are answerable.

Yeates, Justice,

concurred, but gave no separate opinion.

Bradford, Justice:

As this is a mercantile question and divided a very respectable jury, I think it right to state my opinion pretty much at large. [139-Continued.]

The special verdict states a voluntary departure from the due course of the voyage, without any necessity or just cause. This will, therefore, discharge the policy, unless the circumstances attending it, prove it to be (as the plaintiffs contend it is) an act of barratry.

Before I take notice of those circumstances, it will be proper to ascertain what is meant by barratry. It has been often defined, and its general meaning seems now as well fixed, as that of any other term known in the law. From comparing these definitions, it appears, that the terms 'villainy, knavery, cheat, malversation, trick, deceit, or fraud of the master,' are used as synonimous with it. The adjudged cases, from that of Knight & Cambridge (a) in 1724, down to that of Nut & Bourdeau (b) in 1786, speak the same language. There is no case of barratry, in which we may not perceive some fraud, or criminal conduct, in the master. Sailing out of port without payment of duties, is not an exception: This is said to be neglect, but it is more; it is evidently a fraudulent and criminal act, exposing the ship to forfeiture, for the dishonest purpose (c) of putting money in his own pocket. Sometimes, indeed, it is difficult to distinguish the lower species of fraud, from the higher degrees of mere misconduct. But one thing is clear, if the facts are not strong enough to import some fraud, or criminal conduct, in the master, whatever name we may find to his conduct, we cannot call it barratry. * 

The question then is, 'do the facts, found by the special verdict, fix any fraud, or criminal conduct, on captain Keeler.'

Page 2 U.S. 137, 140

If they do, it must be, either because the departure was without his owner's knowledge, or because it was made with a view to his own private benefit. It was not much urged at the bar, that every deviation without orders, amounted to barratry; yet, as this was the very point, upon which I have reason to think the jury divided in opinion, I will notice it. It is true, that in many of the commercial cities of Europe, a deviation without the owner's consent will not discharge the insurers. It is so established in France (a) Amsterdam (b) Middleburg (c) and Rotterdam (d). But this is the operation of positive ordinances. No such regulation is known among us. On the contrary, Lord Mansfield lays down the rule in 1 Bur. 347, in these words: 'If the voyage is altered, or the chance varied, by the fault of the insured, or of the master, the owner ceases to be liable.' Parke in p. 336, is clear, that 'it makes no difference whether the insured were or were not consenting to the deviation.' If the term insured is thought equivocal, Wesket is more express, and in p. 165 says; 'it makes no difference whether the owner of the ship, or the proprietor of the goods, were or were not privy to the deviation.' In Elton & Brogdon ( e) the deviation was against the express and positive orders of the owners, yet it was not barratry. Cases might be multiplied; but the point will not bear further comment.*

But the master's intention was relied on by both parties. It was admitted, that if the master had deviated with a view to his private advantage alone, and without intending any benefit to his owners, it would have been barratry. The law is so, and the reason is plain: Such conduct imports fraud on the face of it. It is a cheat upon the owners and secretly putting in his pocket, what belongs to them. On the other hand it was agreed, that if it had been for the exclusive benefit of his owners, it would not have been barratry: And why not? Because it is impossible to impute fraud to such disinterested conduct. The case before us is a middle case between the two I have mentioned. The master did intend the profit he might have gained, should be for the benefit of his owners and himself; and, while the defendants urge, that his attention to his owner's benefit renders it a mere deviation, the plaintiffs contend, that the private views poison the whole transaction, and make it barratry. Inconveniences appear to result from either construction, and I think it would be mischievous to give the captain's conduct, from this circumstance alone, a definite name. It does not of itself sufficiently import either fraud or fairness, to acquit or condemn the transaction. Cases may be put, where an attention to his own interest may not be inconsistent with the general purity of the master's views.

Page 2 U.S. 137, 141

Such was the case in Elton & Brogdon. On the other hand, the master may unite a small interest of his owners, with a greater one of his own, yet we may discover a dishonest heart, regardless of their essential interests. In every case therefore of this kind, we must weigh every circumstance, and form our judgment from the impression of fraud, or fairness, which the whole transaction makes on our minds.

Taking into view the whole conduct of Keeler, I cannot discover any fraud or criminal conduct. Here was an act of piracy committed in open day: The pursuit of the Fly was, in itself, a meritorious action; and if Keeler had been the owner of the America, he would have been applauded for it. The whole mercantile world seems interested in the suppression of such villany. He is solicited to employ his vessel on the occasion; he stipulates for a compensation; and though he expected to receive a part of it himself, yet that must have depended on the pleasure of his owners. It would have been their money, earned by their ship; yet the captain might honestly expect, that they would approve his conduct and reward his exertions. It was a sudden thing; we cannot say that he knew of this insurance, or that he was aware of the consequences of his deviation. Here are no marks of knavery, or even of a disregard to his owner's interests. It was an imprudence; and he is answerable for it to his owners; but the insurers are discharged.

For these reasons I concur with the rest of the Court, that judgment must be for the defendant.

Footnotes [Footnote *] (a) Mod. Ld. Ray. (b) 1 Term Rep. 323. (c) Cowper. p. 152.

[Footnote *] (a) 2 Magens 174. (b) 2 Mag. (c) Ib. 73. (d) Ib. 91. (e) 2 Stra. 1264.