: J a A = ^^S ' A^ ^^^ — = ^^ = ^^ ^ 5 — 1 ^ ^■^B 1 — y ^^ ^^-— 1 — JO 5 = 6 = = =^= ^ ^^~ 9 s s? ^^'.^v \ ,/V rf-- 4k. « r!»t^*> EVENING POST STEAM PRESSE S, ao8 Broac.way, cor. Fulton St.. N. Y. T V- f n\n\ ON The, Claim of Mutual Insurance Companies to he paid their Share of Losses ovt of the Award. The facts of no great national transaction are better authenticated by cotemporaneous public records than those relating to the depredations of Confederate cruisers during the civil war, the reclamations made for the sufferers by their Goyernment against Great Britain, and the award made by the International Tribunal against the British Government, and promptly paid by it, on the ground of its breach of the duties of neutrality. The transaction and its history have an epic completeness in its beginning of wrong and loss, in its middle of national demand and reparation, and in its approaching eud, in a just recompense of the sufierers. It is not necessary to step outside of the record to search for the facts, or to have recourse to obscure rules of law to establish the trusteeship of the government, or the validity of the claim for retribution > J 3 1 > » » 2 made by those for whose loss the Government de- manded and received the award. A brief summary will be attempted of the essential facts and principles applicable to the claims of the mutual insurers. Po!^tii1ate§. 1. Our citizens originally had no claim against OUB Government for their losses inflicted by the Con- federate cruisers. (a.) It might have assumed a liability and paid the claims, and have been subrogated tq the claim- ants' rights against Great Britain. (6.) Or it might have purchased the claims (as at one time contemplated) and, as owner, have en- forced them. But it neither purchased the claims, nor assumed a liability for them ; never acquired a proprietary interest in the claims or in the satisfaction received for them. • (c.) Any liability of our Government to the claim- ants arose subsequently, out of its representation of the claims and its reception for the owners of the indemnity awarded. That subsequent liability, so incurred, was limited to the amount awarded and to the class of owners to which it was adjudged by the tribunal, viz, the owners of vessels and cargoes destroj^ed and those who had succeeded to their right of reclamation. {d.) All other claims were, by the judgment of the tribunal, and the operation of the treaty, ab- • • • • • • • • •!•••• • • * •*• *•• •-• • • • • •*.*.*••• ■ • • '.. . a solutely estinguished. (See Art. XI of the treaty, and the final decision and award, which declared that the claims allowed and paid, and the claims disallowed, were alike finally barred by the award). As shown by the documents, the claims pre- sented Avere in Jive classes (Case of the United States, vol. 1, pp. 185, G, 8, part VI), viz. : 1. The claims for direct losses growing out of the destruction of vessels and their cargoes by the insurgent cruisers. 2. The national expenditures in the pursuit of those cruisers. 3. The loss in the transfer of the American commercial marine to the British flag. . X 4. The enhanced payments of insurance. 5. The prolongation of the war and the addition ^ of a large sum to the cost of the war and the V suppression of the rebellion. *>, The third, fourth and fifth classes of claims ^ were ])ronounced against by the tribunal. Mr. ^- Fish thereupon, under date of June 22, 1872 (vol. ' II, p. 579), instructed our ageni, Mr. Davis, to com- municate to the tribunal the president's acqui- * esceuce in its decision. Mr. Davis communicated ^ that instruction accordingly (vol. IV, p. 21, protocol * VI, June 25, 1872), and declared to the tribunal * that " the above mentioned claims will not be ^ further insisted upon before the tribunal by the United States, and may be excluded from all consideration in the award that may be .. made." Protocol VII. of the 27th June, 1872 ^ (vol. IV., p. 22), is in these words : " Count Sclopis, on behalf of all the arbitrators, then declared that 257F tli6 said several claims for indirect losses mer.-» tioned in the statement made by the agent of the United States on the 25th inst., and referred to in the statement just made by the agent of Her Brit- tanic Majesty, are, and from henceforth shall be, wholly excluded from the consideration of the tribunal ; and directed the secretary to embody this declaration in the protocol of this day's pro- ceedings." The XXVII protocol (vol. IV, p. 43) states : " The tribunal proceeded to consider the questions concerning the claims for expenditure incurred in pursuit of the cruisers. ^' * As to the claims for expenditure incurred in pursuit of the cruisers, a majority of the tribunal decided to reject them as comprised in the costs of the war." The second, third, fourth and fifth classes of claims were thus definitively pronounced against. The only class left was the first, viz. : " The claims for direct losses growing out of the destruction of vessels and their cargoes by the insurgent cruisers." The tribunal thereafter confined itself exclusively to a consideration of the evidence re- lating to that class, and of the evidence to show what losses within that class were caused by the British breach of neutral duties; and having solved those two questions, it made its award of fifteen and a half millions of dollars. All the retri- bution was awarded for the devastations of three cruisers and their tenders, but only for such de- vastations as the tribunal attributed to a breach of neutral duties ; the ante-Melbourne Shenan- doah devastations being expressly excluded from such attribution. The claims of the mutual insurers all fall within that class, and are for losses which they had paid, and for which they furnished the proofs which our Government produced before the tribunal. 5 2. The claim for Inclemiiity for those losses was el-* clusively against the Government of Great Britain, on the ground that its breach of neutral duties imparted to the confederate cruisers their destruc- tive efficiency, and thereby caused the destruction of the ships and cargoes, in respect of which the demand for reparation was made. The tribunal adjudged that, by the law of iiations. Great Britain was liable for only direct claims, and for only such direct claims as the tribunal sliould ad- judge and allow for the destruction of property attributed by it to Great Britain's breach of neutral duties. 3. The British Government expressly admitted be- fore the tribunal, that for losses of owners paid by insurance companies the claim was not extin- guished by such payment, and that the paying insurers were subrogated in the place and to all the rights of such owners to recover for such losses. The claim made for the insurers by our Government, and conceded to be valid by the British Government, was allowed by the tribunal, and entered into the computation of loss that made up the aggregate of the award finally made by the tribunal and paid to our Government by the Gov- ernment of Great Britain. 4. All the indirect claims, and among others the claim for war premiums, were rejected by the tribunal ; and the claim for losses inflicted by the Shenandoah before going to Melbourne was *i^^' eluded and disallowed by the tribunal, expressly on the ground that they were not, in point of fact, attributable to a breach of its neutral duties by the British Government. 5. The award so made and received thereupon be- came a Trust Fund, for the payment of the losses by the destruction of specific sliips and cargoes presented and mged by our Government before the tribunal, an indemnity for which entered spe- citically into the computation which made up the aggregate of the award. The character of a trust is impressed upon the fund, not only by reason and natural justice and the established principles of municipal law, but b}^ the immemorable usage of civilized nations, in demanding and receiving a retribution for wrongs to and losses by subjects and citizens ; a usage to which our own Govern- ment lias uniformly and honorably conformed. The trust attaches to the entire fund, and to all the claims which entered into and made up the total award ; and until all those claims are paid, the diversion of any part of the fund to other objects, would be a breach of trust and of the national faith. 6. A citizen who is wronged by a foreign govern- ment may seek for redress by directly appealing to its justice, or demanding reparation through its courts of justice, if that remedy is open to him. If he allows his own government to represent him and his claim, befoi'o a tribunal constituted for the determination of such claims, he will be bound by its decision. The ante-Melbourne SJiejiandoah claimants were so represented before the tribunal at Geneva, and are bound by its decision that their losses were not caused by a breach of British neutral duties. 7. It is conceded that a government cannot be com- pelled to intervene and support the claim of its citizen against a foreign government. But if a just claim of its citizen is persistently refused rep- aration, governments which respect themselves and demand the respect of others, do intervene in such cases. They choose their own time, earlier or later ; and the manner of their intervention, whether bj negotiation, reprisals or war ; but at some time, and in some way, tliej maintain the national honor by upholding the just demands of their subjects or citizens. 8. It is conceded that a government is not bound to support an unjust claim of its citizen against a foreign nation. A government is a moral person, and is not bound to stain itself Avith injustice. But our Government insisted upon the justice of the claims that made up the Geneva award. It will not avow that it consciously urged an unjust claim ; and if, by mistake, it did urge an unjust claim and received an award for it, the plainest dictates of justice and honor require it to refund the money to the British Government, and refrain from ap- propriating it to objects not within its own con- templation in making the claim, or within the contemplation of the tribunal in awarding the rep- aration, or within the contemplation of the British Government in paying the award to the United States. The suggestion that our Government obtained money from Great Britain on false pre- tenses ought to be indignantly repelled. 9. But the claim of the insurers is not unjust. Our Government affirmed it to be just. The British Government conceded that it was just. The trib- unal adjudged it to be just. The whole rec- ord of the transaction proclaims its absolute equity and validity. The insurer's claim has been too exclusively looked at in its technical aspect of a subrogation. It stands firmly enough on that ground. The con- tract of marine insurance, out of which the right of subrogation arises, is an agreement that if the insured will pay a specified sum of money called a premium, and will, in case of a technical total 8 loss (wbicli is not ahvays or most usually an act- ual total loss), surrender to the insurer the subject insured, and all rights of reclamation incident to it, the insurer will pay him as for an actual total loss. This right of the insurer to the thing in- sured and all reclamations on account of it, is called a right to subrogation ; that is, the right to be put in the place of the insured as to the ownership of the property and the rights of reclamation. The paj-ment of the loss ipso facto works a transfer of the title. This right is not expressed in the policy ; but the law implies it as a part of the con- tract, and whatever is implied is as much a part of the contract as what is expressed. In the practice of fire insurance the insurer pays a total loss only when it is total. In marine insurance, the insurer pays a total loss when it is technically, but not actually total, and saves for himself what he can out of what is not destroyed and out of all recla- mations he may make against wrongdoers. This is what the insurers now claim, and all they claim, in respect of the losses paid by them on ships and cargoes destroyed by the Confederate cruisers, for which Great Britain was held liable by the tribunal and paid the award to the United States. 10. The claim of the mutual insurers is not only a claim of owners, on the basis of contract and the principle of subrogation, but they are, on an indeiDendeut ground, actual owners with all an owner's equities. A stock insurance company insures the prop- erty of others. Mutual insurers insure their own property. Mr. A. A. Low, owning ships trading with China, and Mr. A. T. Stewart, making large impor- tations of commodities from all parts of the world, may be supposed to enter into an agreement to create a fund out of which to pay all losses on their ships and goods at risk on the seas. They re- spectively contribute a sum to constitute that fund, and their contributions are in proportion to their respective risks afloat. The arrangement is con- tinued for a prescribed period. As losses occur they are paid out of the common fund. At the end of the prescribed period tliey make up the accounts, ascertain how much of the fund has been used to pay losses and what balance remains, and they then divide between the contributing owners the unexpended balance or surplus in the proportions in which they contributed to the com- mon fund. That is an exact statement of mutual insurance. The parties to such an arrangement may be two or twenty, or two or twenty thousand, but the transaction is identically the same what- ever the number of the parties united in it. If, in the case hj^pothetically stated, a successful rec- lamation were made against Great Britain for property destroyed at sea and paid for out of the common fund, the sum thus recovered would be merely a reimbursement of owners, and merely an increase of the surplus contributed by the owners to the common fund, and to be divided between them at the close of the transaction in the propor- tions in which they had made their contributions to it. The mutual insurers seek by such a reim- bursement of the common fund to which, as owners, they contributed, to increase the surplus saved and to divide the surplus between them- selves as contributors and as owners of the de- stroyed property. The methods by wJiich they make the distribution of the surplus saved at cer- tain periods, is matter of mere form. The mate- rial and substantial fact is that as owners tiiey contributed the fund that bore the losses, and as owners divide among themselves as much of their common fund as is saved by reclamations or other- wise. Mr. Shattuck, the eiijiiient Boston counsel for the war premium claimants, frankly admitted 3 10 before the committee that mutual insurers do not make gains, but merely save what they can out of the fund they contribute as owners, to pay their associate losses as owners. His suggestion, that the war premiums be paid directly to the contrib- uting owners, overlooks the fact that the losses were equally borne by the contributing owners, who were not insured on war risks, but on various sea, river and lake risks, and that the common retribution can be distributed equally and justly only through the companies. Attempts have been made to excite prejudice against these mutual insurers. It is said that they charged enormous premiums for war risks. If they did, they charged them to themselves, and the charge was subject to a rebate and return of all that w^as saved out of the common transac- tions. The statements respecting the premiums charged are gross exaggerations. The average war premiums during the whole war were between two and three per cent., including the exception- ally high premiums charged on the Shenandoah risks. Those exceptionally large premiums were charged after intelligence was received that the Shenandoah had struck the whalers in the North Pacific, had destroyed a dozen ships, and was pursuing her career of devastation. Owners who had not heard from their ships flocked to the in- surance offices demanding policies. It was as if a fire insurance company was asked to insure a house in the middle of a block when both ends of the block were on fire ; of course a high rate would be charged for such a risk if any company would take such a risk on any terms. The beak of the ha,wk had already struck the frightened and flying bird. But high as the Shenandoah premiums were, they did not compensate for the losses on the policies. Those losses by the At- lantic Mutual, after payment of the government 11 tax and the returned premiums and dividends to the insured owners, exceeded the premiums by over $155,000. It has also been said that the insurers specu- lated upon and made money out of the calamities of the war. It has been shown that they did not speculate at all, but only insured their own ships and cargoes with their common funds contributed for self-protection. But war insurance is not to be made odious by calliug it a speculation ; it is no more a speculation upon tho calamities of war than a peace insurance is a speculation upon the calamities of the seas. Insurance is a handmaid of commerce, combining the resources of many to prevent the ruin of a few. If commerce is a blessing, so is insurance, which is a mere helper of commerce. The insured owners were prose- cuting a lawful and beneficent commerce, largely to procuie medicines, war materials and other commodities, to enable the Government to prose- cute the war with vigor. If the merchants we"e serving their country in the voyages in which their ships and cargoes were burned and sunk, the insurers were no less serving their country in assisting the merchants to prosecute those same voyages. If the merchants are to be applauded* surely the insurers are not to be condemned for combining their contributions to save the mer- chants from ruinous losses and bankruptcy. If the Government now, by a legislative act, con- demns American marine underwriters, and denies their legal rights as long allowed in the courts of justice, it must happen in future wars that Ameri- can commerce will be driven from the ocean, or compelled to cover its war risks by foreign insur- ance ; thus ensuring a monopoly of the business to foreign underwriters. A paternal and just government should not strike its commercial interests with such a deadly blow. 12 The class of claims represented by Mr. Metcalf and disallowed by the trilmnal, demands more than one-fifteenth of the whole Geneva Award. If the owners in thai chiss had combined upon the principle of mutual insurance, and out of their contributions to their common fund had paid their entire loss, it is not easy to see that their claim to be repaid what they had thus lost would be weak- ened. Their case would then have been the case of owners whose property had been destroyed by the Shenandoah, which is precisely their case now. If, in addition, the tribunal had decided that their loss had been caused by a British bieach of neu- tral duties, it would have been allowed, and would by so much have increased the award. Their case would then have been identical with the case of the marine insurers. Their misfortune is, that the tribunal decided that their losses were not attributable to a breach of neutral dutijs, and therefore excluded them from the award. That exclu- sion, which cuts off their claim to be indemnified out of the award, is made the meritoiions ground of their claim to be indemnified out of that very fund. Ordinary minds cannot follow the process of reasoning by which that extraordinary conclu- sion is reached. Upon the facts in the record, two things are clear : first, that if only the ante- Melbourne claims had been presented to the tri- bunal, no money would have been awarded to the United States ; and, second, that if those claims had not been presented at all, the award would have been precisely what it is. The extraordinary pretension has been put fortb in support of the ante-Melbourne claims to pay- ment out of the award, that Great Britain was liable for those losses but that our Government condoned that liability in consideration of some national advantage received by itself. If that were .true, the obvious deduction would be that if 13 a private claim was surrendered for a national benefit, the nation should pay that claim out of the general treasury, for the manifest reason that what the i:ation acquires for the benefit of all should be at the common cost of all, and that the property of one should not be appropriated to pay the deV't of the many. But the pretension is ut- terly unsupported by the facts. Our Government surrendered nothing, and received nothing from Great Britain as a compensation for some right given up or some right acquired. The three rules of the treaty declared the ]aw of nations as under- stood by us and as conceded by Great Britain for the purpose of the arbitration. Those three rules certainly did not narrow the rules of international law, and did not enlarge them ; and the tribunal, by its unanimous decision, Mr. Adams, the Ameri- can Commissioner, concurring, adjudged that no liability was incurred by Great Britain under the law of nations for a breach of neutral duties, ex- cept for those direct claims for which the award was made and from which the ante-Melbourne claims were excluded. The use made by our Government of the premature proclamation of belligerency was not to make Great Britain liable for all war disasters that afterwards fell upon our commerce, but to show an unfriendliness on the part of the British Government which interpreted its subse- quent neglect to perform its neutral duties. A mere sentimental unfriendliness was not a sub- stantive ground of liability, but interpreted the subsequent acts of the Government Avhich, causa causans, imparted to the confederate cruisers their destructive energy. Those acts created the lia- bility, and measured it ; and for all the losses that resulted from iliose acts, the Tribunal charged Great Britain with an indemnity. Our Govern- ment was not faithless to its great duties, and did not give away or sell the rights of any of its citi- zens. u It has been made a point that our Government secretly instructed its counsel to prevent an award of specific sums to specified claimants. But what just inference agaiust any claim cau be deduced from that circumstauce ? It was a policy of caution. Its apparent purpose was to relieve the Government from paying out of its general treas- ury any sums that might by mistake be awarded to the wrong chiinuint, and for Avhich the true claimant might make a reclamation upon the Gov- ernment. Surely the purpose was not to enable the Government, capriciously and arbitrarily, to divert the award from its true owner and give it to those who.are not entitled to it upon the prin- ciple upon wdiich it was adjudicated. The impu- tation of such a purpose insults the Government. The Government received the money to pay it to those to whom it belongs under known laws, and the true inquiry is, to wdiom does it so belong? The suggestion made before the comuiittee, that ihe claim of the insurers vv^as in the nature of a double claim, and had been rejected by the Tri- bunal, could hardly have been serious. The award was for the single value of ships and cargoes. To whom it was to be paid was left to depend upon the fact and the right. If the owner was unin- sured, it w\is to be paid to him. If the owner was insured, but his loss had not been paid by the insurer, it was to be paid to him. If the loss had been paid by the insurer, he thereupon be- came the owner, and the loss was to be paid to him. The right to that single compensation, to b5 paid to the one or the other, was asserted by our Government, was conceded by Great Britain, and was adjudged by the Tribunal. To affirm the contrary is strangely to falsify the whole record of the transaction. The strength of the marine insurers claim, upon its historic facts and its legal principles, seems to 15 be its weakness. If the claim had been doubtful, they might have been suffered to go before the courts and attempt to establish it. The certainty that no court, of law or equity, would stultify it- self by denying the validity of the claim, seems in the opinion of some to be the sufficient reason for withholding from them the right to be heard. They cannot go into any of the permanent courts of justice, because the Government will not permit it- self to be sued. They cannot go into the court specially created to adjudicate upon the Alabama claims, because the Gov ernment shuts the door of that court in their face. In Eugland, an aggrieved subject may not sue the Queen, but he may pre- sent a petition of right to the Court of Exchequer, and that court then proceeds to hear his case and decide it upon its law and its facts as all other cases are decided between subject and subject. In a great historic case like this, to which the at- tention of the civilized world has been drawn, our Government cannot afford to be unjust. It cannot cover up injustice by a nisi prim dexterity. Mr. Burke has well said that " justice is itself the great standing policy of civil society, and any eminent departure from it, under any circumstances, lies under the suspicion of being no policy at all." It has been shown that our Government never acquired for itself the claims of its citizens against Great Britain for the losses in question. It never pretended to own them. It never pretended that the money awarded for those losses and paid by the British Government was to be appropriated to its own use. It never pretended that it was re- ceived for any other purpose than to be paid to those sufferers who had proved their losses, and for whose indemnity the Tribunal awarded the damages. Those who are represented by this argument have an abiding faith that the Govern- ment, true to its principles and its traditions, will 16 maintain the public faith before the American people and before the world, and distribute the award among those for whose use it was made and who are entitled to it upon every principle of con- tract, of law and of policy. All who truly love their country must wish that the last act of our Government in this memorable interna- tional controversy may, like those which preceded it, reflect lustre upon the national name ; and that the centur}^ which began with our infant struggle for in- dependence, may close with an illustrious demonstra- tion not only of an indissoluble national unity, but also of a stainless national honor and justice. Joshua M. Van Cott. Washington, January, 1876. THE UNIVERSITY LIBRARY This book is DUE on the last date stamped below 3 1962^ mTm JUNl 1962 KC'O CD- ; .m S Ml! h EC2 6 1969 Form L-9 25?»-2, '43(5205) UNIVERSrrY OT LAi.lFUKNlA! AT LOS ANGELES tr ■rrtr\ ft T^ir UC SOUTHERN REGIONAL LIBRARY FACILITY t AA 000 517 560 PLEASE DO NOT REMOVE THIS BOOK CARDS X^^tUBRARY(2^ '^ Jo — 'cyOJITVDJO^ University Research Library a s » e e ts K 8 6 « ii'vA'*;"