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contractsustainedmarine insurance

contractdefendantsustained

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Thames & Mersey Marine Ins Co v. U S, 217 F. 685

Facts

The petitioner amended its petition to show that a general marine policy was issued covering successive shipments. When a cargo is aboard, the assured provides a declaration to the underwriter, detailing the cargo and its value for the intended voyage. The underwriter then issues a certificate to cover, which is sent along with the bill of lading and draft to the foreign country. The case centers on the distinction between insurance on goods in transit versus those intended for transit and the implications of taxation on these categories.

Upon delivery of this the underwriter issues a certificate to cover, and the assured sends this along with the bill of lading, draft, etc., to the foreign country.

Issue

The main legal issue is whether the taxation of marine insurance on goods intended for transit is permissible under the prohibition against taxing exports.

The contention, as I understand it, is that insurance upon goods actually in transit is different from insurance upon goods intended for transit, because a tax upon the first class of goods is within the prohibition, while a tax upon the second is not.

Rule

The court applied the principle that insurance on goods intended for transit does not constitute a part of their exportation, and thus, the taxation of such insurance is not prohibited.

The point of the decision in my judgment is, not that the contract of insurance does not touch exports, but that it is not a part of their exportation; that is to say, its performance does not involve any part of the transit, nor does it, like a manifest, record the transit.

Analysis

The court analyzed the distinction between insurance on goods actually in transit and those intended for transit. It concluded that the performance of the insurance contract does not involve the actual transit of goods, and therefore, the taxation of marine insurance does not violate the prohibition against taxing exports. The court referenced previous cases, particularly Hooper v. California, to support its reasoning that the business of marine insurance, even when related to foreign or interstate trade, is not itself considered foreign or interstate business.

Hooper v. California, supra, seems to me directly to support the defendant.

Conclusion

The court sustained the demurrer to the amended petition, ruling that the taxation of marine insurance on goods intended for transit does not violate the prohibition against taxing exports.

The court sustained a demurrer to the amended petition.

Who won?

The United States prevailed in the case because the court found that the taxation of marine insurance on goods intended for transit does not constitute a violation of export taxation prohibitions.

The case went squarely upon the theory that taking insurance upon foreign or interstate trade was not itself foreign or interstate business.

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