SECTION IX.

OF EXCEPTED RISKS AND LOSSES.

As nothing prevents the parties from extending the contract of insurance at their own pleasure, so they may limit it as they think proper, by expressly excepting, or, which is the same thing, warranting against some of the perils usually insured against. The most usual exception relates to illicit, or prohibited trade. This is not the same with contraband trade, although the words are sometimes used as if synonymous; for, as has been seen, it is not against the law, either of nations, or of any neutral nation, for its subjects to break through a blockade, or supply a belligerent, if they can; they take the risk of capture for so doing, but if they please they may encounter that risk. Illicit, or prohibited trade, on the contrary, is one which cannot be carried on without a distinct violation of some positive law of the country where the transaction is to take place. Of course such trade, or an attempt at such trade, exposes the guilty party to the consequences of it, which are usually seizure and condemnation. But no loss by forfeiture for such cause throws any responsibility on the insurers, if there be an exception of this risk, or a warranty against it, as is the case in most American policies; because such an exception at once intimates that the insured expects to attempt such trade, and agrees to stand his own insurer against its peril. It should be noticed, however, that this exception relates only to the property insured in the same policy, and not to other goods in the same ship; for if there be this warranty against "loss by illicit trade," and both insurers and insured know that other goods than those covered by the policy are on board, which other goods are contraband, and the ship and cargo are seized, condemned, and lost, on account of these other goods, the insurers are still held, because this warranty is to be read as if it were against "loss by illicit trade in the goods hereby insured." 1

1 Cucullu v. Orleans Ins. Co., 18 Mart. La. 11, 13. In Bowne v. Shaw, 1 Caines, 489, both parties knew that other goods were on board, which were illicit, and the under

This exception may give rise to three classes of questions; one where there has actually been this excepted trade and a consequent forfeiture; one where there has been an attempt at such a trade, never carried into effect, but followed by a seizure and condemnation for the attempt; the third where there has been neither the trade nor an attempt at the trade, but nevertheless a seizure and condemnation, grounded on an alleged violation of law, but not justified in fact. In the first case the insurers are certainly exonorated. In the second, they are exonerated where the seizure and condemnation were legal and justifiable by reason of any endeavor to do the thing embraced within the exception or warranty. In the third case, the insurers are not exonerated. That they are not liable for the consequences of an attempt to do that which is not done, if they would not be liable if the thing were done, seems to follow from the fact that the insured take upon themselves by the exception, all the risks springing from the trade, and it is fair to say that a peril arising from an attempt to enter into it is one of them. On the other

hand, if the property is lost by the illegal and unjustifiable conduct of a foreign court, this is a loss which the insurers cannot say arose from a prohibited trade, when there never was any such trade and no attempt at it; for the insurers have no right to defend themselves under a false pretence, merely because a foreign court have defended themselves under that same false pretence; 2

writers were held. So in De Peyster v. Gardner, 1 Caines, 492, where the underwriters knew the fact but the insured did not.

1 Church v. Hubbart, 2 Cranch, 187; Higginson v. Pomeroy, 11 Mass. 104. See also, Smith v. Delaware Ins. Co., 3 Wash. C. C. 127. It has so been held also where the vessel was not allowed to enter her port of destination. Smith v. Univ. Ins. Co., 6 Wheat. 176; Suydam v. Mar. Ins. Co., 1 Johns. 181; Speyer v. New York Ins. Co., 3 Johns. 88. In Tucker v. Juhel, 1 Johns. 20, the government of Antigua had given permission for American vessels to export sugar on certain conditions. These were complied with, and the vessel began to load. After the conditions were complied with, but before she began to load, the permission to export was revoked. The president of the island gave an opinion that vessels which had complied with the conditions might be cleared with their sugar. This was done in the present case, but the vessel was captured and the cargo condemned for a breach of the laws of trade. Held, that the president had no authority to so interpret the law, and that the underwriters were not liable.

2 Mr. Justice Story, in Carrington v. Merchants' Ins. Co., 8 Pet. 495, states the law as follows: "A seizure or detention, which is a mere act of lawless violence, 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 detention not bonâ fide made upon

and the same principle applies to an exception of breach of blockade.1

There must be an actual seizure to bring a case under this exception or warranty. Neither an attempt at a prohibited trade, nor the actual trade, will suffice without seizure for it.2

a just suspicion of illicit or contraband trade. 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. . . . . No seizure or detention, not justifiable by the law of nations, can come within the present exception, and every seizure which is justifiable by the law of nations must be deemed within it." It was therefore held that if the seizure was bonâ fide and on account of illicit or contraband trade, a sentence of condemnation or acquittal, or other regular proceedings to adjudication, were not necessary to discharge the underwriters.

But if "there was a mere lawless seizure or detention under the pretext of illicit or prohibited trade, and it was utterly unfounded and without any reasonable cause of suspicion, and was used merely as a pretence to cover an intentional fraud or tort, then the seizure or detention was not such as is contemplated in the clause." Per Story, J., in Bradstreet v. Neptune Ins. Co., 3 Sumner, 600, 615. See also, Magoun v. New England Mar. Ins. Co., 1 Story, 157.

1 In Yeaton v. Fry, 5 Cranch, 335, a vessel was insured "at and from Tobago to one or more ports in the West Indies, and at and from thence to Norfolk," against all risks, blockaded ports and Hispaniola excepted. The vessel sailed for a port which was then blockaded in fact, although this was not known when she sailed. Being warned off, the master directed his course for Norfolk, but on the way the vessel was plundered by a French privateer, and ordered to St. Domingo for trial. The underwriters were held liable. In Radcliff v. United Ins. Co., 7 Johns. 38, 9 Johns. 277, the policy contained this clause, “the insurers take no risk of a blockaded port, but if turned away, the assured to be at liberty to proceed to a port not blockaded." The vessel was taken and condemned for a breach of blockade. Held, that it made no difference whether this seizure was legal or illegal. See Laing v. United Ins. Co., 2 Johns. Cas. 174, 487; Johnston v. Ludlow, 2 Johns. Cas. 481, 1 Caines, Cas. xxix.

2 Graham v. Pennsylvania Ins. Co., 2 Wash. C. C. 113, 120. Washington, J., in this case said: "An illicit trade unaccompanied by a seizure, or an unfounded seizure for a supposed illicit trade, where none took place, will not affect his (the assured's) right to recover." In Kohn v. New Orleans Ins. Co., 12 La. 348, the policy contained the usual clause. There was a general law of Mexico prohibiting the exportation of bullion. The insurance was on bullion from any port in the Gulf of Mexico to New Orleans. The vessel put into Tampico in distress, and was totally lost. Part of the bullion was shipped to Mobile, and the rest was sunk in shallow water with a view to its recovery. The underwriters were held liable. In Smith v. Delaware Ins. Co., 3 S. & R. 74, goods were insured from Baltimore to Hamburg, with liberty to touch at Toningen, warranted American property, with the usual clause in regard to illicit trade. The vessel was seized off Cuxhaven by the French and carried to Hamburg, and the cargo condemned by Napoleon in person. At the time of the seizure, the French forces had command of the Elbe, but the senate of Hamburg continued to exercise its functions, and there was an American consul at Hamburg. Tilghman, C. J., said: "There must be both a seizure and an illicit or prohibited trade. It is not

In some policies, capture and seizure of any kind are expressly excepted,1 or the insurers assume the risk while the vessel is at

enough that a seizure is made on an allegation of prohibited trade. It must be proved that there was a prohibition, and that the case is within it. And it must be a legal prohibition, such as the prohibiting power had a right to make." It was held that the temporary occupation by a belligerent of a neutral country without dissolving the government, did not give the occupant the right to make municipal regulations of which other nations were bound to take notice. And that a seizure for breach of such regulation was not within the exception. See Donaldson v. Thompson, 1 Camp. 429. It was also held that the Berlin decree was illegal, and that the underwriters were liable for a loss occasioned by a violation of it. But see Speyer v. New York Ins. Co., 3 Johns. 88. The decree was not known when the vessel sailed, and was considered therefore not to apply. And the condemnation being made by Napoleon in person and not by any court of competent jurisdiction, it was held to be an act of violence not falling within the true intent of the warranty. This case was decided in 1817, but in 1811, in an action on a policy on the same voyage, Washington, J., held that it made no difference that the insured did not know of the decree, and decided the case in favor of the defendants on the ground that there was a breach of the warranty of neutrality owing to the absence of the documents which were required by the decree, of which the insured had no knowledge. The other points were not touched upon, Smith v. Delaware Ins. Co., 3 Wash. C. C. 127. It was held also in Faudel v. Phœnix Ins. Co., 4 S. & R. 29, that a seizure for a violation of the Berlin decree was not a seizure within the exception, it being against the law of nations. See also, Cucullu v. Orleans Ins. Co., 18 Mart. La. 11; Gracie v. New York Ins. Co., 13 Johns. 161. "To constitute a breach of such warranty," said Sutherland, J., in Francis v. Ocean Ins. Co., 6 Cow. 404, 427, "the seizure must be for an actual, illicit, and prohibited trade. A seizure and condemnation under pretext of such trade is not sufficient, if the trade is not in fact illicit. Both a seizure and illicit trade must concur; and the illicit character of the trade is not proved merely by the fact of the seizure." See also, Johnston v. Ludlow, 2 Johns. Cas. 481, 1 Caines, Cas. xxix; Savage v. Pleasants, 5 Binn. 403.

1 In Powell v. Hyde, 5 Ellis & B. 607, 34 Eng. L. & Eq. 44, a vessel and her cargo were insured from Galatz to London. The policy was in the usual form but contained a stipulation that the ship and goods were warranted "free from capture and seizure, and the consequences of any attempt thereof." The vessel passed the mouth of the Ismail river where there was a Russian fort, and close enough to the shore to be hailed, with the English ensign flying, without being molested or receiving any communication from the shore. After the vessel had passed the fort about half a mile, two guns were pointed at her, and fired till the vessel sunk. After the firing commenced the anchor was dropped and the sails lowered. The officers and crew escaped in their boats, and landed on the Russian side of the river, where they were detained as prisoners several weeks. War, at this time, had not been declared between England and Russia. Held that the exception covered illegal as well as legal seizures, and that there was a seizure in point of law. Lord Campbell, C. J., said: "I am clearly of opinion upon the evidence laid before us, that when the Russian guns fired, and the ship dropped her anchor, and the crew forsook her, and she was at the mercy of the Russians, she was seized by the Russians, just as much as if the Russians had actually come on board and taken manual possession of her, and afterwards sent her to the bottom. If they had done that it would have been a seizure; although after she is

sea, but not while she is in her port of discharge. And the question has arisen, what is to be considered as such port? 1

Excepted risks are sometimes, by the circumstances of the case, mingled with those insured against, so that it is not quite easy to say to which class the loss is owing; as where a ship warranted free from capture, was first stranded on the coast of Spain, and then seized and made prize of. The general rule must be, that the insurers are liable or exonerated, according as the leading and principal cause of the loss be one insured against or one that is excepted.2 Thus where goods are insured against

seized, they choose, instead of taking her into port, to send her to the bottom of the Danube, still it is a seizure."

In Black v. Mar. Ins. Co., 11 Johns. 287, insurance was effected against capture only, warranted free from seizure in any river, port or place, under the jurisdiction of Napoleon, or under the jurisdiction of any power under his control or in alliance with him. The vessel was taken on the coast of Holland, by two French privateers, and carried into Amsterdam, and afterwards condemned as prize of war. It was held that though the word "seizure was generally applicable to a taking or detention for the violation of some municipal regulation, yet here it was to be taken as meaning the same as capture, because to give the exception any effect it must be construed to limit the risk assumed by the general words of the policy, and here the insurance was against capture only, and the underwriters were therefore held not to be liable, Holland being in alliance with or under the control or jurisdiction of Napoleon.

1 In Dagleish v. Brooke, 15 East, 295, and in Maydhew v. Scott, 3 Camp. 205, it was held that a vessel in the roads of Pillau, two miles from the inner harbor, was to be considered as in the port of discharge. In each of these cases the vessel was seized by a land force. But in Brown v. Tierney, 1 Taunt. 517, the vessel while in the same roads was taken by a French privateer, and the underwriters were held liable. In Oom v. Taylor, 3 Camp. 204, a vessel bound for Rugenwald, anchored about two miles and a half from the harbor of that place, and made a signal for a pilot. A pilot boat came in consequence, but with douanniers on board, who carried the ship into the harbor where the cargo was seized and condemned. Held, that this was a seizure within the port of discharge. And in Jarman v. Coape, 2 Camp. 613, 13 East, 394, where a vessel bound for the port of Varrel, was seized in the river Jahde, fifteen miles from that place, the underwriters were discharged. The case, however, turned in a great measure on the fact that there was evidence that the parties contemplated landing the goods somewhere along the banks of the river, rather than at Varrel. In Mellish v. Staniforth, 3 Taunt. 499, the vessel was captured while at anchor four miles from the roads of her port of discharge. The underwriters were held liable. So where a vessel was captured after coming to anchor outside of the roads of Pillau. Levy v. Vaughan, 4 Taunt. 387; Keyser v. Scott, 4 Taunt. 660. And in Baring v. Vaux, 2 Camp. 541, where a vessel was captured by a privateer while lying within the headlands of the river, half a mile from her port of destination, the jury having found that she was not in port at the time, a verdict was found for the plaintiff. The criterion adopted in many of these cases seems to be whether the ship was in the place where vessels usually unloaded their cargoes.

2 Hahn v. Corbett, 2 Bing. 205. The insurance in this case was on goods warranted