Nov. 27.
When at the beginning of the war Hitler ordered German merchantmen in foreign ports to break the voyage they had started, and make for home, and further to scuttle themselves rather than fall into the hands of the British Navy, he posed a problem in the' matter of marine insurance which the British Courts are now engaged in solving. In two. instances German vessels carrying British cargoes were scuttled, while in a third the ship managed to make'a German port, though this case also the British owners. lost their cargo. AN three claimed from the underwriters under their policies, the actions boeing consolidated into a test ease upon the result of which some millions of pounds are stake, The action is a purely friendly tone, both owners and underwriters selecting eases with the clearest legal issues, the] underwriters deciding to pay the costs in iny event. The ease for the defence contained the following polnts:—(1) that on the outbreak of war the policies were avoided fon the ground that they were an insurance by British insurers of cargo belonging to British owners in enemy ships; (2) that the German steamers were trying {0 run the Blockade and that that constituted a breach of the warranty of legality; (3) that, the] German steamers had abandoned their] voyages and the insurances had come to an end; and (4) that the policies were expressly digelared to be free from any claim arising out of frustration, The case was heard by Mr. Justice Hilbery, and early in September he rendered his deci sion. He held, amongst other things, that when the German masters sailed on Hitler's tutions for German ports, taking the ug as agents of the German Government and applying to the merchandise in their steamers the familiar process of restraint of princes, which in this case had the effect of frustrating the venture. In this connec tion it is interesting to note that when during the Jast war the British Navy intercepted a German ship carrying British owned goods, and diverted her to a British port, despite the foet that the owner was not deprived of his goods, he had been deprived of the opportunity to get the carya to the end of the voyage he had insured. On the ground that this amounted to a constructive total Joss he successfully sued the underwriters for the insured value of the cargo. the decision veins, ultimately upheld in "the House of] Lords on the stound that the venture had been frustrated, That view was not held by Mr. Justice Hitbery in the present case, his decision is that if a master breaks off his voyage through restraint of prinees and joes off with the cargo on board the frustra~ tion clause inserted in policies since the last war debarred carte owners from recovering a constructive total loss on the policies. 11 wae further contended by the plaintiffs that if the breaking off of the voyage did not Hive them their claim, surely the scuttling id, With this the judge did not awee. The policies in question insured the goods for particular voyages and no other. When the German masters left neutral ports, abandoning their original voyages, and starting en= tirely new ones, which the policies did not aver, the losses were incurred on voyages which the underwriter never contemplated ud never insured, and so again the merchant not recover.
That was merely the frst round in the battle, though it constituted a striking reverse for the unfortunate merchants. The matter was taken {0 the Court of Appeals and on Monday that body reversed Mr. Justice Hilbery's decision, holding that the underwriters were fully liable for Rritish losses suffered through the scuttling German ships. The reasons upon which the Court of Appeal based its findings have not yet been received, but if the merchants were: unpleasantly surprised by the decision of the lower Court, the underwriters have been painfully disillusioned by the higher Court. Thus with honours easy between the tivo parties there is still recourse to the House of Lords, to which the ease will undoubtedly be taken not ise of the several millions of pounds involved, but also beea-e fof the very important and interesting points law which are involved. What the Court Appeals appears to have done is to have rejected the contention of the defence that the insurance was a marine insurance on Hoods, stich an insurance being one on the adventure, not one on the chattels; and to! have adopted the view taken by the House Lords in the case which established the Jaw on the subject during the last war.
Text read from the printed page and cleaned; old type leaves the occasional error.