JAMES SWINNEN

NEW ORLEANS

Chapter 14

EXCLUSION OF CANCELLATION

OF CHARTER AND LIABILITY

ARISING OUT OF TOWAGE

[Notwithstanding anything to the contrary contained in this policy, no liability attaches to the Assurer:]

For any loss, damage or expense arising from the cancellation or breach of any charter, bad debts, fraud of agents, insolvency, loss of freight hire or demurrage, or as a result of a breach of any undertaking to load any cargo, or in respect of the vessel named herein engaging in any unlawful trade or performing any unlawful act, with the knowledge of the Assured.

A freights policy containing a similar provision has been held under English law not to cover loss where the parties did not mutually consent to cancellation of the charter party, although performance of the charter was rendered impossible by damage which the vessel sustained from stranding. Jamieson v. Newcastle Steamship Freight Insurance Association, 2 Q.B. 90, 7 Aspinall's Reports of Maritime Cases 593 (Court of Appeals 1895).

For any loss, damage, expense, or claim arising out of or having relation to the towage of any other vessel or craft, whether under agreement or not, unless such towage was to assist such other vessel or craft in distress to a port or place of safety, provided, however, that this clause shall not apply to claims under this policy for loss of life or personal injury to passengers and/or members of the crew of the vessel named herein arising as a result of towing.

For any claim for loss of life or personal injury in relation to the handling of cargo where such claim arises under a contract of indemnity between the Assured and his sub-contractor.

Towage has been held to include delivery of the barge to an apparently safe berth and in an apparently safe position. Accordingly, a similar provision was held to exclude losses resulting when the vessel towed two barges and moored them negligently so that the barges later broke loose from their moorings, drifted into a bridge, and sank. Crain Bros., Inc. v. Hartford Fire Ins. Co., 149 F.Supp. 663, 1958 AMC 1468 (W.D. Pa. 1957).

A similar provision was held not to exclude coverage for damages resulting from towage of a sixteen-section tow of logs as the logs were not a "vessel or craft" within the meaning of the exclusion. Halvorsen v. Aetna Ins. Co., 1954 AMC 1996 (Super. Ct., King County, Wash. 1954).

A similar provision in a hull policy was held to exclude coverage for losses arising when generator failure aboard the tug resulted in both tug and its tow alliding with an offshore platform. The court also found that coverage had been voided due to a breach of the implied warranty of seaworthiness. Employers Ins. of Wausa v. International Marine Towing, 864 F.2d 1224, 1989 AMC 2974 (5^th Cir. 1984).

A policy containing a similar provision also carried an endorsement providing that hte P&I policy "provides Excess Collision and Tower's Liability". The court held tha this endorsement constituted excess hull coverage, and is not an additional enumerated P&I risk for collision and tower's liability. Ins. Co. of North America v. Board of Commissioners of the Port of New Orleans, 733 F.2d 1161, 1985 AMC 1460 (5^th Cir. 1984).

Injury to a member of the crew of the tug who was assisting in unloading a barge was held covered under a provision insuring against liability arising out of towage for loss of life or personal injury only to passengers and/or members of the crew, since the unloading was part of the towage operation and one of the duties of the tug's crew members. Upper Columbia River Towing Co. v. Glens Falls Ins. Co., 179 F.Supp. 705 (D. Ore. 1959).