American Eagle Fire Ins. Co. v. Eagle Star Ins. Co., Limited

The appellants, hereafter the reinsurers; appeal from a judgment holding them liable to Eagle Star Insurance Co., hereafter the insurer, for the latter’s expenditures (a) in attempting to salvage two cargoes of lumber on two barges towed by a tug, wrecked on the Columbia River bar, as subrogee of the lumber owners by the payment to them of its insurance against such loss and (b) in prosecuting unsuccessfully a libel against the tug and her owners for negligently towing the barges so wrecked.

The reinsurance covered the lumber so to be carried and towed “at and from Portland, Oregon to Hawaiian Islands.” (emphasis supplied). Its terms, first fixed by telephone and then by a written provisional binder signed by all the re-insurers provided for the rate of premiums to be paid to the reinsurers and contained a warranty provision for the towing as follows: “Warranted Col. River Pilot in charge over Col. River Bar.” On January 18, 1947, the barges were wrecked while being towed across the Columbia River Bar without a Columbia River pilot.

The parties are now agreed that at the time of the wreck the breach of the pilot-age warranty freed the reinsurers from any liability for the value…