Barratry of the Master

by Twain Braden

Coffeehouse scene in 17th century London, England, where a popular coffee drinking fad began ca. 1658. The international insurer Lloyd’s of London’s roots are in marine insurance. It was founded by Edward Lloyd at his Tower Street coffee house in London ca. 1686. Some of this era’s insurance policy language has survived into the 21st century.

One recent afternoon, a fishing boat captain dropped off some gear at his company’s dock, and then headed up the bay to see some friends. He met them on the dock, and soon the beer started flowing, the whiskey came out, and, before long, the captain and his friends were drunk. When the celebrating wound down, he untied the boat and was soon steaming back to his home berth. He was going a little faster than he should have been, and maybe he wasn’t steering as straight as he might have otherwise. He did not get far.

Within a quarter of a mile, he collided with a floating dock. The boat capsized, dunking the captain, but he scrambled free and was soon sitting on its overturned hull, soaked to the skin and looking a little dazed but otherwise unhurt. As he sat there, adrift in the current, a passerby on shore asked him if he was okay. His response was slurred. He said he was fine but didn’t figure the same was true of the motor, which was now full of water. There was a gash in the hull. The electronics were ruined. The passerby later reported the captain’s dopey, glassy-eyed look.

These types of calls come in to our office, and I’m asked about the law pertaining to the circumstances. In this case, was this loss covered by the vessel’s insurance policy? I responded like most lawyers might without all the facts: “It depends.”

Insurance policies — those that cover the vessels themselves — come in two basic types, “named perils” policies and “all risk” policies. The former type specifically names the perils that are covered by the policy, such as the most notorious and common “peril of the seas” clause, and some are really obscure, such as the perils associated with “assailing thieves” and “restraints of princes.” (This is actually true; take out your policy and read it, if you don’t believe me.) For this reason insurance adjusters not accustomed to the archaic language of wet marine policies hate having to determine whether or not a particular set of facts fits within the policy’s coverage provisions. They feel like they’re trapped in one of the Canterbury Tales or in a Shakespearean farce. The other type of hull policy (all risks) is a little easier to interpret, since it covers all risks unless expressly excluded. The exclusions are fairly straightforward.

So what to do about our drunken captain who destroyed the boat? Let’s assume he had a “named perils” policy. (As an aside, the damage to the dock would be covered by the “P&I” policy, which covers damage to things other than the vessel itself; whereas damage to the boat would be covered — or not — by the hull policy. If your boat is insured, you have both.) If the captain was the owner of the boat, the answer as to whether there is coverage is a resounding “no.” You can’t insure yourself against your own drunkenness and the subsequent commission of crimes. There are exclusions in marine policies for this, and they are pretty explicit. (Insurance coverage for owning and operating boats is vastly different from that which covers motor vehicles on land.)

If the captain is not the owner of the boat, however, the captain has merely committed the same sin that captains have committed since time immemorial, and, guess what? There is likely coverage under the “barratry of the master” clause of the hull policy. I have about a half-dozen hefty maritime law books on my shelves, and I always reach for them for guidance on big-picture issues, before wading into the weeds of a particular issue, as I did in this case. Here is what the Second Edition of Marine Insurance and General Average of the United States by Leslie J. Buglass has to say about barratry:

“Unlawful, fraudulent, or dishonest act of the master, mariners, or other carriers, or of gross misconduct, or very gross and culpable negligence, contrary in either case, to their duty to the owner, and that might be prejudicial to him or to others interested in the voyage or adventure.”

(Marine insurance policies always describe voyages as “adventures”, and “named risk” policies typically start with the following lyrical introduction: “Touching the adventures and perils that the underwriters are contented to bear and take upon themselves, they are of the seas…” Adjusters can be forgiven their frustration.) My dictionary calls the word barratry “archaic” and explains it is a Middle English term derived from the Old French word barater, meaning, to deceive.

Had the owner of the vessel been one of the revelers, and perhaps complicit in the dereliction, there would be no coverage since policies are careful to exclude adventures in which the owners may have had a hand in the demise of the vessel. This was, and maybe remains, a common event: the owner wants the captain to arrange an accident and scuttle the vessel so that the owner can make a claim for the insured value of the vessel. Cases abound with these facts. For a more nuanced explanation of the modern challenges to determining barratry, Google the notorious case National Union Insurance Co. v. Republic of China, in which captains of six Chinese-owned ships publicly defected to the communist Republic of China on January 13, 1950, shortly after the communist government seized power. The ships were in Hong Kong at the time. The mortgages on the vessels were held by American banks, and, as a result, the ships were deemed lost. Therefore, the admiralty court needed to determine whether the captains’ defection was to be considered a “capture or seizure” of the nascent communist government, which was excluded from coverage, or barratry of the masters themselves, which was covered. Answer: it was barratrous. The Republic of China court adopted the rationale from an 1860s case in which a whaling crew mutinied, wresting control of the ship from the captain and spiriting it away from the owners. The court wrote: “If they violate their duty and disobey the master, displace him from command and assume entire control of the vessel, it is a breach of trust rather than a seizure.” While the Chinese captains were loyal to the new communist Republic of China, the court found they had committed barratry against the owners’ interests.

Such was the case with our drunken captain, who was apparently acting on his own when he demolished his owner’s boat. Clearly, his behavior was contrary to his duty and interests of the owner. Here, then, was an act of barratry, which is a specific, named peril in the policy — a covered loss.

Twain Braden is a partner at the Portland firm Thompson Bowie & Hatch, LLC, where he specializes in maritime and admiralty law: tbraden@thompsonbowie.com