THE SINKING OF THE R.M.S. LUSITANIA,

WAR RISKS and INSURANCE LAW,

Decades Later

Part IV.B

Michael Sean Quinn, Ph.D., J.D., C.P.C.U. . . .*

There are other insurance disputes that arose quickly, either directly or indirectly, out of the sinking of the Lusitania, and those will be discussed in separate parts. The case to be discussed here, however, was not only a life insurance case, but it arose out the Japanese attack on Pearl Harbor, December 7, 1941, so the relationship between risks of war, the nature of war, and insurance were again mixed together.

The style of this case is Pang v. Sun Life Assurance Company of Canada, 37 Haw. 208 (1945). It must be remembered that Hawaii at the times relevant here was still a territory of the United States but not yet a state.  Thus, the decision was one of the Supreme Court of the Territory of Hawai’i.[1]

In any case, the plaintiff, Gladys Ching Pang (“Pang”) sued Sun Life because it denied double-indemnity coverage for her husband’s death.  Tuck Lee Pang was an employee of the Honolulu Fire Department and was killed putting out fire at Hickam Field.

There was no dispute that Mr. Pang’s death was “a death by external, violent and accidental means” falling within the meaning of the double-indemnity provisions of his Sun Life insurance policy.  The sole question was whether his death was or was not a death “resulting from war or any act incident thereto” and so be excluded from that provision.

Sun Life paid the face amount on the policy, apparently $1000.00 but refused to pay the amount of the doubling, another $1000.00.

The trial court sided with Sun Life; the plaintiff took exception to the court’s decision and judgment, and the case went to the Supreme Court.

All relevant acts were stipulated: cause of death, Japanese attack, declaration of war by America the following day, the language of the declaration, and so forth. Hence, as the Court puts it, “the real question before the court is, ‘were we at war with Japan on December 17, 1941?’” (There was another point of error—another “exception,” to use the lingo of the jurisdiction at the time—but the court did not rule on it.[2]

The Court’s reasoning is almost entirely theoretical, or philosophical, with only a twinge of the practical, and then only in the abstract. Here is a crucial section:

Various juridical consequences may flow from the existence of a state of war between two countries. For the purpose of determining when these consequences are produced, it is important to ascertain the date of the beginning and the date of the termination of a war, and it is desirable that these dates be fixed with exactness. Different dates of beginning and termination of a war may be set for different purposes. . . .

One must also keep in mind, said the court, that there are differences recognized, not always consistently, between a “state of war” and an “act of war.” Most significantly, the latter does not always include the former, or even cause it. And it must also be kept in mind that an announcement by a government that it was going to do something that would be an act of war is not itself such an act.

Given these distinction and this logic, it seemed clear to the court that a state of war did not exist between the United States and Japan on December 7^th, even after the attack began.

Another way to think about this would be to distinguish amongst various types of acts of war.  Some of them start wars; some of them, as it were, invite a war; some of them provoke the start of a war; some of them are in a different war; and some of them don’t have any consequence at all. It was clear, said the court, that the United States did not regard itself as at war with Japan until Congress declared war the next day.

According to the Court, these facts and their context differentiate Pang from Vanderbilt. In that case, a war was going on between Great Britain and Germany; the Lusitania was right in the way of it, even if it was not in the thick of it; and Alfred Vanderbilt was on the ship. The historical context in Pang was quite different. There was no war going on between Japan and the U.S., though there were other wars going on that included Japan. But Pearl Harbor and Hickam Field were not in the thick of the action or right in its way. Consequently, Vanderbilt is not precedent for anything in Pang.  (The cite for the earlier case is Vanderbilt v. Travelers’ Ins. Co., 184 N.Y.S. 54 (1920), aff’d 139 N.E. 715 (1923)

It is puzzling to me that Sun Life would have failed to settle this case.  Maybe that’s because there were a good number of other cases like it and the insurer didn’t want to take “slippery slope” type chances.  Maybe it’s because in that place and that time, there was public hostility toward people with names like “Pang,” whether there were Japanese, Chinese, or something else.  

*Michael Sean Quinn, Ph.D., J.D., C.P.C.U. . . .

The Law Firm of Michael Sean Quinn et

Quinn and Quinn

                                 1300 West Lynn Street, Suite 208

                                             Austin, Texas 78703

                                                 (512) 296-2594

                                            (512) 344-9466 - Fax

                                E-mail:  mquinn@msquinnlaw.com

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[1] The apostrophe is right there in the word. I’m not making it up.

[2] The issue was whether the trial court erred in refusing entry into evidence the fact that Sun Life changed the double indemnity provision shortly after December 7th. It inserted immediately after the word “war” the phrase “whether declared or not.” For what it’s worth, I am inclined to reject the views of both the lower and the upper court. The addition of the new phrase is evidence that Sun Life though the existing formulation was at best unclear, vague, and/or ambiguous. If so, then a coverage issue should be resolved in favor of the insured and therefore the plaintiff. I wonder if in today’s world that might not constitute empirical evidence in support of an insurer bad faith case. 

Lusitania and Insurance--Introduction-- Part I

THE SINKING OF THE R.M.S. LUSITANIA AND INSURANCE, Part I

Michael Sean Quinn, Ph.D., J.D., c.p.c.u. . . .

The Law Firm of Michael Sean Quinn et

Quinn and Quinn

                                 1300 West Lynn Street, Suite 208

                                             Austin, Texas 78703

                                                 (512) 296-2594

                                            (512) 344-9466 - Fax

                                E-mail:  mquinn@msquinnlaw.com

May 7, 2015 will be the 100^th birthday of the sinking of the cruise liner The Lusitania.  It was one hell of a big boat, and it was a good deal more elegant both on its inside and outside than are the many storied cruise boats of our current age.

The ship was on a voyage from New York to Liverpool.  The ship sailed more or less directly NE; when it got a little past Ireland, it was to turn left; get to the ocean near Liverpool, and turn right.  The ship was not zigging and not zagging.  The sinking happened 12 or so miles off the southern, coast of Ireland, more or less.  There were a large number of fatal casualties, of which 125+ were Americans. The ship sank approximately 300± feet of water, where it has resided for the last century.  

It was torpedoed by a German U-Boat, as the result of a change in German maritime war policy. The one torpedo coming from the U-Boat may have triggered a second explosion, and especially as a result of that second explosion, the ship sank very quickly—18± minutes or so. (The second explosion happened, no doubt; the only question about it is what caused it.)

There is a substantial literature on the disaster—a few books, some articles, many newspaper stories, and now bunches of stuff on the Internet. As one might expect some of the literature is excellent; some is respectable; some is ok; while some is shit, especially the ones deploying the rhetoric of conspiracy theories and nothing or not much else. Like respectable evidence, for example. (Here’s an example: Did Winston Churchill arrange the sinking of the boat—him and his Mason and Jewish buddies?)

 Just as one would expect, the literature is creeping up, now that the 100^th birthday is approaching. Erik Larson’s DEAD WAKE: THE LAST CROSSING OF THE LUSITANIA   (Crown Publishers, 2015) has been well reviewed by both NYT, Book Review, Sunday March 8 and WSJ on the previous day. Ir has been a best-seller for several weeks, and had the #1 spot in Sunday NYTs at least twice. A second book was also published recently, though not with the same "buzz"; for example it was not reviewed in the Sunday NYT, and it has not been a best seller. Greg King and Penny Wilson, LUSITANIA; TRIUMPH, TRAGEDY AND THE END OF THE EDWARDIAN AGE (2015). Neither book has anything significant to say about insurance and the King-Wilson book says nothing at all on the subject

One of the most interesting speculations was that the ship was carrying a good deal of ammunition for the British. That mystery was resolved some years ago—it was carrying a lot of it--and I will tell a bit of that part of the story later. A related speculation has been what did the Germans know about this and when did they come to know it. Finally, there is the more legalistic controversy about the international law of Germany’s justification for doing what it did, given what the British were doing about Atlantic shipping. (That speculation is purely abstract and hyper-academic, since Germany threw in—or what forced to throw in--the towel on this matter by the Treaty of Versailles.

There has not been a good deal of discussion of insurance—indeed, hardly any. For example, the ship itself, worth more than 10M, this entity, and I have not been able to locate its war risk insurance policy (or policies) issued by the Liverpool and London War Risk Insurance Association. Not much is known now about what was known at  that time, nor have I found the actual policy covering the Lusitania. Nor has much of anyone else;  in fact, one court observed that it was not provided with a copy of the policy. (Or, maybe it would be better to say that the court expressed surprise at not receiving it.)

I cannot even find “knock offs” of the policy on any of the many historical antique auction houses findable on the Net. In contrast, there is at least one good fragment of an insurance story to be found on the Internet, and I will share it, as we go along.

I intend to tell the story in short little essays.  Given the character of the tale, I don’t think there are many who would want it read it all at once. And I will be telling a couple of stories related to insurance that are not really insurance or not really an insurance matter closely related to this stunning beautiful ship.

There is an amount of material available on amounts paid to survivors and to the relatives of those killed that have inheritance rights.  There is also a good story—although the evidence is thin—regarding some things one of the passengers had in his possession that was most assuredly insured, but with respect to which there is almost no available discussion.

This introductory blog, is now long enough, so I will not tell even one of the insurance stories.  I will start in  Part II. It’s a simple case in which coverage is sought under a life insurance policy. It may say more about the times than it does about the role of insurance in the “small picture” of the disaster, and it certainly reveals something about the changing bases of legal argument in American courts.

The contract of insurance in question was a life insurance  policy on Alfred G. Vanderbilt who was drowned as a result of the sinking of the ship. I will discuss the case first, and then say a couple of words about the insured.

Part II will concern the litigation regarding whether the ship owner or some of its employees were negligent and if so whether they caused the disaster. Part II concern an action in the Wreck Commission in Great Britain. Part III is an American version of some of the same issues. Both parts II and III are to be found both in the series of blogs Quinn's Commentaries on Insurance Law and in the blog Quinn's Commentaries on Lawyers and Lawyering. 

Part IV concerns two life insurance cases. One of them, Part IV.A, arose out of the Lusitania disaster. Part IV.B arose out of the Pearl Harbor attack. the cases are related.

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It might be worth mentioning in passing that Canard was no stranger when it came to litigation.  In 1909 the Municipal Court of the City of New York, Borough of Manhattan, First District, the court issued an opinion involving the Lusitania, vaguely. It seems that Cyrille Eggermont was booked as a passenger on the Lusitania. Cunard, however, lost his luggage, refused to let him board--(one wonders why)--but booked him on another line, and arrangement Cyrille accepted.  Cyrille sued Canard anyway, even though there was a $25.00 limit on lost bag damages. 

Cyrille lost, but not until after the court made a good deal of fun of his counsel, Cornelius O'Connor. Here is some of what it said: 

"The learned counsel for the plaintiff, in a brief which is verily a literary production, ingeniously, and yet by the invocation of what are undoubtedly elementary principles of law, argues that plaintiff is not bound by the contract of carriage by him entered into with the defendant, that the defendant may not urge the limited liability therein fixed, and the plaintiff is entitled to the full value of the lost trunk. He contends that, when when the defendant refused the plaintiff passage on the Lusitania, it committed a breach of contract, that the plaintiff then had a right to rescind the contract and hold the defendant as bailee, under the common law, for the full value of the trunk and its contents; and that the defendant may not urge the contract which is breached as establishing the limited liability."

The trouble is, said the judge, that though the principles are unassailable, they do not fit the facts. If Cyrille was going to rescind the contract he had to actually do so.  He could not accept a voyage on a different ship, provided as the defendant's expense, and then rescind.  

And the court continued: "In eloquent language counsel pictures the hardship which plaintiff, a man of small means, must suffer by limiting the recovery to $25. To this argument can be made only the now trite answer, that there was the contract of the parties, that it is the duty of courts to determine the rights of the parties under the contracts of the parties; that is the duty of the courts to determine the rights of the parties under the contracts which they make, not to make new contracts for them, and to declare the law as they fine it, not to change or strain the law to make it fit a particular hard case."

Sound familiar? Certainly because of the case itself.  According to WestLawNext, no other case has ever cited it for anything.

Maybe but there is a piece of this case which is not so clear. Cyrille is awarded his $25.00, but from it is deducted $15.00, "the amount of the defendant's counterclaim." The counterclaim is $15.00 in costs recovered by Cunard against the plaintiff in a previous action. What's going on there? Was there some secret reason why Cunard wouldn't let him on the Lusitania? Hummm.

A post-script (May 11, 20200; I recently saw figures that many more gentlemen from third and second class class perished than did men in first class.