Michael Sean Quinn, Ph.D.,
J.D., C.P.C.U. . . .
The first reported case of litigation flowing
out of the Lusitania catastrophe on May 7, 1915, a hundred year ago was a simple looking case in which coverage was 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,” 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 (“Alfred”), the son of Cornelius,  who was drowned during and as a result of the
sinking of the ship. The suit was actually brought by Frederick W. Vanderbilt
and some others, who were apparently executors of his vast estate.  Vanderbilt
v. Travelers Insurance Company, S
upreme Court, New York County, New York,
Trial Term, 112 Misc. 248, 184 N.Y.S. 54 (June 1920), affirmed by the Appellate
Division, 202 A.D. 732, 194 N.Y.S. 986 (1922) (No opinion and one judge
dissenting), that appellate court being affirmed by the New York Court of
Appeals,  235 N.Y. 514, 130 N.E. 715
(1923)(Memorandum Opinion with two judges dissenting, but Benjamin Cardozo in
the majority, though not the writer of the short memorandum opinion, as its
prose makes immediately obvious)[1]
So what do we
have?  We have a reported opinion by
trial level court, a rarity in almost all states except for New York; we have
an appellate affirmation without any opinion at all, and we have an affirmation
from the highest court in a memorandum opinion. 
(I shall refer to the dissenting opinion presently.)
Remember, this
is an ordinary life insurance dispute. 
The insured, i.e., the estate of the policyholder, demanded coverage
from the life insurer, the insurer refused to pay, i.e., denied the claim, on
the basis of the provisions in the contract of insurance, and the suit
resulted.  There was no question as to
whether was an Alfred was an insured and whether he was dead. There was no issue
as to timely notice, and there were no questions about the content of the
application for insurance or any questions based upon fraud by the insured.
There was only
one question before the court, and that pertained to whether the “war risk”
exclusion applied.  That exclusion in the
policy read this way, in pertinent part:
Nor shall this
insurance cover. . . death. . . resulting, directly or indirectly, wholly or in
part from . . . war. . . .”
Often these days, exclusions like this one often involve general issues
over whether the relevant causation was direct or indirect. Or whether a loss
was caused by a particular cause completely (wholly) or in part (i.e., whether
there was another cause involved, e.g., wind and hail or wind and flood, etc.)
These were not the issues.
The dispute rested solely upon the concept or idea of war
Technically, I suppose, one could say that the disputed hinged on the
meaning of the word “war.” Obviously, there was a war going on between Great
Britain and Germany. Whether there was a war going on was not in dispute. At
the same time, it was beyond dispute that the United States was not “in” this
war at that time.
The court characterized the Vanderbilt position as this:
[H]owever, execrable
may be the act of a belligerent, it is none the less, with respect to private
persons, a result of war after a formal declaration thereof, and comes within
the conditions which would excuse performance under the policy of payment of
the sum for which the decedent was injured.”
I begin by confessing that I am not sure that the Vanderbilt position
Maybe it’s this: there was a war, but the attack on a civilian vessel
and the killing of non-combatants could not be part of the war, but must be
something distinct from the war, since there was international law against
doing this sort of thing to a vessel like the Lusitania, while at sea. The
Vanderbilt position would be right about the claim that there were at that time
international laws forbidding what the German U-Boat did.
Or maybe it is this. There was a war going on between Germany and Great
Britain, among others, but the United States was not a belligerent in that war;
it was not a party to the war.  Hence,
the U-Boat attack was not an act of war upon the United States and therefore
not within the war risk exclusion of the Travelers’ policy.
The court would have none of it. For the court, the policy was quite
clear: there was no coverage if death resulted from war. According to the
court, this means “a war”. . . “any war.” One can wonder, I suppose, whether an
initial “act of war” means there is a war or a state of war, and I will return
to this is Part V, but in this case, there was a war, there was an event of
war, and there was what we would now call “collateral damage” resulting from
the war
. In other words, the key term in the court’s decision is
“resulting  from.”
The court went a long way out of its way to establish its view. It
cited and quoted from several classical texts on international law, including Alberico
Gentilis (1553-1608) and Sir Robert Phillmore (1810-1885), as well as several
early 19th Century cases from the United States Supreme Court,
including cases pertaining to the “Indian Wars.”
My favorite of the cites is from the opinion of Justice Marshall in Brown v. United States, 8 Cranch[2]
110, 12 U.S. 110 (1814).[3]
The trial court judge in the Vanderbilt case
observes that rules of war regarding
civilians are in a sense “nice-cities” and not really part of the definition of
“war” or the concept of war  itself. “Usage and custom,” says the
judge, “prescribing the restraints imposed for the protection of noncombatants
and third person generally is merely” [and here he picks up language from
Justice Marshall’s opinion:
a guide which the
sovereign follows or abandons at his will. The rule, like other precepts of
morality, of humanity, and even of wisdom, is addressed to the judgment of the
sovereign; and although it cannot be disregarded by him with obloquy, yet it
may be disregarded.
The deciding court of the Appellate Division did not
write an opinion and the majority of the New York Court of Appeals said
nothing new.  The ground of the
dissenters was sketched ever so briefly, however:
the word
‘war,’ in the exception of the policy [what would today be called the exclusion
in the policy], because of its association, means war in which the insured
participates as a belligerent.
I have no
idea what the phrase “because of its association” might mean, or what
significance it might have. At the same time, I am reasonably certain that this
is a way of applying what it is today often called the “Rule [or Doctrine] of
Contra Preferentem” which is the legal principle that all ambiguities in a
document should be construed unfavorably to the drafter.  The rule is also called the “Ambiguity Rule” or the “Rule Against Ambiguity.” This rule is of special importance to
insurance policies, although it applies to all contracts. The reason why this
application is of special importance in that insurers are almost always the drafters
of the insurance policies, and the vast majority of insured can use whatever
help they can get.
Perhaps a
bit of trivial history about the Vanderbilt who was drowned is appropriate. He
was the scion of Cornelius Vanderbilt—not the eldest but perhaps the most
responsible from a financial point of view. 
He was mostly a sportsman and playboy, who never really grew up, but he
was to some degree involved in financial matters.  He sat on the boards of several of his
father’s railroads, and he was involved in building the Vanderbilt Hotel in New
York City; apparently he lived in the hotel at least some of the time. He was
divorced for infidelity, and his mistress and a different girlfriend seem to
have killed themselves in different and separate occasions.There is a story
about his death.  He seems to have taken
off the life jacket he got for himself and either put it on an old woman or a
young woman holding an infant. There is no disagreement about another piece of
the story, however. Alfred had never learned how to swim—odd for an inveterate
sportsman. See Greg King and Penny Wilson, LUSITANIA: Triumph, Tragedy, and the
End of the Edwardian Age (2015), the mush better though less gossipy book Erik
Larson, DEAD WAKE: The Last Crossing of the Lusitania (2015), a best seller in
the Sprint of 2015, and, of course, there is Wikipedia.

This case does not represent a significant contribution to the changes mores of American jurisprudence following the Great War. However, a strain of it is there. The plaintiff obviously expounds an different definition of “war,” attempting to use what would now be called the “Strong Ambiguity Rule” for interpreting standardized insurance policies by means of applying international law. The effort fails, and probably rightly so, but the arguments of the plaintiff are culturally advanced. 
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
Texas 78703
344-9466 – Fax
[1] For those
readers not accustomed to reading this sort of thing, “Misc” names an official
reporter of the State of New York for trial level courts; “N.Y.S.” names a
publication of Westlaw or Westlaw Next. These are the big brown books one seen
in law offices or many pictures of law offices, e.g., those on the
Internet.  The reader might wish to keep
something in mind. In most states, the “Supreme Court” is the highest court in
the state. The reverse is true in New York state. Thus, the Supreme Court
just cited first, is the trial court level; in many states and in the federal
system, this is—or might be–called the “district court” or the “county court
at law,” as some of them are called in Texas, or—as it is called elsewhere–the
“court of common pleas.” The parallel cite, “N.Y.S.” is “New York Supplement”
and it refers to opinions of the Appellate Division. The second piece in the
cite is to the
Appellate Division of the Supreme Court. The initial
means “Appellate Division,” and it is the official report of those
courts in the State of New York. The New York Court of Appeals is the highest
court in New York state now, just as it was then. The official report is
abbreviated “N.Y.,” and it is reported in Westlaw as part of the North East
“district,” Westlaw’s name,  or “N.E.,”
now “___N.E.3d. ____,” with the volume number in the first blank space and the
page number in the second.
William Cranch (1769-1855) was a lawyer and federal judge who reported cases of
the Supreme Court of the United States during some its early years.  There were several people who did this, one
after another until “U.S.” became the official reported. Judge Cranch did it
from 1801 to 1815. He is a mildly interesting character, a real estate lawyer
and speculator for a while, a relative of Abigail Adams (and therefore by
marriage to John Adams who bailed him out at one point), a relative of John
Quincy Adams, one of the “Midnight Judge” appointments between John Adams and
Thomas Jefferson but then appointed and made Chief Judge by Jefferson himself.
He also swore in two different presidents, John Tyler, and Millard Fillmore.

There were a series of “Prize” cases decided by the U.S.Supreme Court in its
early days, and Brown was one of
them. “Prize” is a term of maritime referring to right one country to capture
the ships flying the flag of another during war time. The country that captures
a prize gets to keep it.  Often crews received
some of the money. Countries at war could appoint privateers to act for them by
means of a Letter of Marque and Reprisal. The Brown case involved the cargo of a vessel that was trapped in an
American port by the onset of the Was of 1812. The cargo at issue got stuck in
the mud, quite literally, and the issue whether it could be counted as a “prize.”
British law said “Yes,” but Marshall on behalf of the Court said “No.”