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

WAR RISK, 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 of another enemy attack, namely, the Japanese attack on
Pearl Harbor, December 7, 1941, so the relationships 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 a 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 facts 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 [i.e., the United States and its territories] 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, even 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 distinctions 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 7th, 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 a 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

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                                E-mail:  mquinn@msquinnlaw.com



[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. 

Originally posted on 05/08/2015 @ 7:56 pm

Michael Sean Quinn, PhD, JD, CPCU, Etc

Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)

One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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