ment of the neutral trade, in consequence of a foreign war, because the neutral is under no moral or legal obligation to abridge it. The presumption will be that the neutral trades, as usual, without any regard to the accidental circumstances of a war abroad, and without rejecting any part of his customary cargo, though a certain species. of it, under the description of articles contraband of war, is exposed to seizure, by coming in collision with certain rights of necessity created by the war. Underwriters are to presume the trade to be in its unfettered state, and to take the risk of the interfering rights I have mentioned. As in the former case of a war, in which the United States are a party, the assured can always diminish the premium consequent on the extraordinary risk, by a warranty that the property is neutral; so, in the latter case, of a war abroad, increasing by necessary consequence, the risk in a smaller degree, the assured can always diminish the premium attached to such increased risk, and reduce it to the standard of a peace premium, by a warranty that the cargo is not contraband of war. It is a general and a just principle, that every fact, in the knowledge of the assured, which enhances the ordinary risk, and which would, if disclosed, enhance the premium, ought to be communicated to the underwriters. But the principle is limited to circumstances which the underwriter is not presumed to know, nor bound to know; and, if my reasoning be good, the underwriter is presumed to know that the neutral trade undergoes no abridgment, or abandonment, in war; that it is likely to consist of the same kind of articles in war as in peace, and, consequently, that the nature of the cargo need not be disclosed."

And see to the same effect, Skidmore v. Desdoity (1800) 2 Johns. Cas. 77, where the insurance was upon "the lawful goods and merchandises" against all risks.

In Northwestern S. S. Co. v. Maritime Ins. Co. (1908) 161 Fed. 166, where a vessel insured against war risks on a voyage from Seattle to Vladivostok during the war between Russia and Japan, with a cargo consisting principally of salt beef, cleared for Shanghai, a neutral port, and carried documents showing that as her destination, but her bill of lading and other papers showed her to be an American merchant vessel, the true nature of her cargo, and her true destination, and the vessel was captured by the Japanese, her cargo condemned as contraband of war and herself as prize, but not for lack of documents showing the true nature of her cargo and destination, the court found as a fact that the nature of the cargo and the falsity of the ship's documents with respect to her port of destination were not matters which would have influenced a reasonable underwriter, and did not enhance the risk, and therefore held that the insurance was not invalidated for failure to disclose the above facts, where the cargo was known to the insurer to be of the character which would

probably be treated as contraband in case of capture, and the policy contained express permission for the ship to run a blockade, and the measures taken to conceal her distination did not increase but tended to lessen the risk.

Effect of warranty against contraband or illicit trade.

Since, as above pointed out, insurance on a cargo is not invalidated by the fact that it consists of or comprises contraband goods, it is necessary, in order to protect the insurer, to insert a stipulation to that effect.

Many of the so-called "warranties" in policies of marine insurance really operate only as exceptions from the risks assumed. But in Thompson v. Mississippi M. & F. Ins. Co. (1831) 2 La. 228, 22 Am. Dec. 129, it is held that a warranty "free from any damage or loss which may arise in consequence of having been engaged in illicit or prohibited trade" operates as a condition precedent to the right of recovery, so that it is immaterial that the illicit trade had no agency in producing the loss, provided the condition is not complied with.

Where the consequence of carrying contraband goods is only to subject the goods, and not the vessel, to condemnation, the carriage of such goods is not a breach of a warranty in a policy of insurance on the vessel "free from any damage or loss which may arise in consequence of having been engaged in illicit or prohibited trade." Ibid.

If both insurer and insured on lawful goods in a policy containing a clause of warranty against loss "by capture or detention for or on account of any illicit trade or trade in articles contraband of war" know there is contraband on board, the warranty will apply only to the goods insured. Bowne v. Shaw (1803) 1 Caines, 489.

Insurers assume the contraband risk when contraband articles are set forth and expressly named in the policy, notwithstanding a printed clause in the policy excepts articles contraband of war. Howland v. Commercial Ins. Co. (1808) Anthon, N. P. 26.

In order to exonerate the insurer under a clause stipulating that it 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 o trade in articles contraband of war, the seizure or detention must be for a legal or justifiable cause. Carrington v. Merchants' Ins. Co. (1834) 8 Pet. 495, 8 L. ed. 1021.

But in Seymour v. London & P. Marine Ins. Co. (1872) 1 Asp. Mar. L. Cas. 423, 41 L. J. C. P. N. S. 193, 27 L. T. N. S. 417, it was said that it may well be argued that as between the underwriters and the assured the warranty "no contraband of war," being expressed generally, must include goods which, there being a war between any two countries, would from their nature be specially liable to be seized by either of them, even though such goods, not being

intended for one of the countries at war, might not be legally seizable.

A warranty against contraband of war is violated by shipment of goods of a contraband character to a neutral port with the real intention of there transshipping the goods to a belligerent port. Ibid.

But a plea in an action on a policy of marine insurance, that the goods insured were contraband of war and were shipped for the purpose of being sent to and imported into a belligerent country, but which does not deny that the goods were sent from a neutral port to a neutral port in a neutral ship, does not set up a sufficient defense, although, by reason of the proximity of the neutral port to the belligerent country, the opposing belligerent has seized the goods as contraband of war. Hobbs v. Henning (1865) 17 C. B. N. S. 791, 11 Jur. N. S. 223, 34 L. J. C. P. N. S. 117, 12 L. T. N. S. 205, 13 Week. Rep. 431.

Where the policy of insurance provides that "the insurers shall not be answerable for any loss which may arise in consequence of seizure for or on account of illicit or prohibited trade or trade in articles contraband of war," it is sufficient to exonerate the insurer that the vessel was seized for attempting to trade in violation of the law of nations by participating in a filibustering expedition. Decrow v. Waldo Mut. Ins. Co. (1857) 43 Me. 460.

Conclusiveness of decision of prize court as to contraband character.

have held

In England the courts "after much hesitation that the sentence of a competent prize court (either of an enemy's or of a neutral country) is, in actions on a marine policy, conclusive as to the existence of the ground on which the court professes to decide." 17 Laws of England (Halsbury) p. 422, citing Lothian v. Henderson (1803) 3 Bos. & P. 499, 7 Revised Rep. 829; Bolton v. Gladstone (1805) 5 East, 155, 7 Revised Rep. 674; and see also Gibson v. Mair (1813) 1 Marsh. 39, 15 Revised Rep. 668, in which it is held that sentence of condemnation is sufficient evidence that the ship has been engaged in some illegal transaction.

But in Laing v. United Ins. Co. (1802) 2 Johns. Cas. 487 (reversing 2 Johns. Cas. 174), it is held that in an action upon a policy of insurance whereby the assured warrants the property "free from any charge, damage, or loss which may arise in consequence of seizure or detention for or on account of any illicit or prohibited trade or any trade in articles contraband of war," the decision of a foreign prize court is not conclusive evidence that the cargo contained contraband of war.

The finding of a matter of fact in the course of the adjudication

of a prize court cannot be pleaded as an estoppel in cases where if adduced in evidence the judgment would be received as conclusive evidence of the fact so found. Hobbs v. Henning, supra.

E. S. O.

[HOUSE OF LORDS.]

ANDERSEN, Appellant,

and

MARTEN, Respondent.

[1908] A. C. 334.

Also Reported in 77 L. J. K. B. N. S. 950, 99 L. T. N. S. 254, 24 Times L. R. 775, 52 Sol. Jo. 680, 13 Com. Cas. 321.

Capture

Insurance (marine) — Warranty of freedom from capture · of neutral ship by belligerents — Subsequent loss by perils of the sea- - Total loss Condemnation — Relation back of title of captor.

In a policy against perils of the sea the risk insured was only against total loss and "warranted free from capture." A neutral ship thus insured during the Russo-Japanese War was captured by the Japanese, and while being navigated towards a Court of Prize was wrecked and became a total loss. She was afterwards condemned in the Prize Court:

Held, that there was in fact a total loss by capture, and that the owner could not recover on the policy.

Decision of the Court of Appeal [1908] 1 K. B. 601, 77 L. J. K. B. N. S. 569, 98 L. T. N. S. 146, 24 Times L. R. 208, 13 Com. Cas. 205, 10 Asp. Mar. L. Cas. 605, affirmed on the above ground.

(July 3, 1908.)

THE facts arising on this appeal are stated in the judgment of Lord Loreburn, L.C.

J. A. Hamilton, K.C., and E. M. Pollock, K. C. (Balloch with them), for the appellant. The proximate cause of the loss of the ship was perils of the sea, and not the capture. The loss by capture was partial loss only, and there was no relation back to the date of the seizure. There was no property in the vessel, no right in re, until condemnation, although the captors had rights in rem. The Romulus was a neutral ship,

and the cases relied upon by the respondents were cases of enemy vessels. The Tobago (1804) 5 C. Rob. 218. In The Maria (1799) 1 C. Rob. 340, 374, Sir W. Scott lays down the right of the captor as being "to visit and examine," and that the vessel should "submit to the inquiry proposed," "looking with confidence" to the decision of the appropriate tribunal to adjust all the rights and claims involved. The Dispatch (1801) 3 C. Rob. 278, was a case of the rescue of a neutral by her crew, which resulted in condemnation. Der Mohr (1800) 3 C. Rob. 129, decided [335] that in the case of misconduct of a prize master there should be restitutio in integrum; and in Der Mohr (1802) 4 C. Rob. 314, where the ship was lost by the prize master's negligence, though a portion of the cargo was saved and sold, there was a decree in toto against the captor. These authorities show that the question was open until the adjudication of a Prize. Court. Moulton, L.J., confuses seizure and adjudication. Many things might happen between the former and the latter; peace, for example, might be declared in the interval. Hahn v. Corbett (1824) 2 Bing. 205, 9 J. B. Moore, 390, 3 L. J. C. P. 253, 27 Revised Rep. 590, cited by the Master of the Rolls, was the present case inverted, the wreck in that case happening first and the capture afterwards, and supports the appellant's contention, for it was held that the vessel was lost by perils of the sea and was insured by the policy. Here, too, the cause of loss was the wreck, and not the capture; there was a possibility that there would never be a condemnation at all. The text writers state the law in accordance with these contentions. In Hall's International Law, § 277, it is said: "The property remains in the neutral until judgment of confiscation is pronounced by the competent courts after due legal investigation." Arnould, § 829, says that the arrest and carrying in for adjudication of a neutral ship is not properly called "capture" at all, though certain consequences may flow therefrom. The loss and the right to the policy money were, therefore, not excluded by the warranty, which has no application, and the appellant is entitled to The decision of the German Supreme Court of Appeal, before whom the same question arose, was against the respondents in the present appeal.

recover.