- Wilburn Boat Co. v. Fireman’s Fun Ins. Co., 348 U.S. 310 (1955)
- FACTS: The Powned a houseboat that they used to ferry people back and forth across a lake on the Oklahoma-Texas line. The boat was insured by the D. The boat was transferred from the original owners to the P. The boat caught fire while moored at a dock. The insurance company attempted to deny coverage because of clauses which prohibited using the boat for commercial purposes or from transferring ownership. Under Texas law the clauses would not be enforceable if the breach of them did not cause the loss. However, the DC held that federal admiralty law applied and that that law provided that breach of any of the terms of a maritime insurance policy bars recovery.
- HELD: There is no federal admiralty rule that regulates marine insurance. This is a purely state law matter.
- REASONING: A
choice of rules on insurance involves various policy considerations and
is obviously one which Congress or the states are peculiarly situated
to make. The whole judicial and legislative history of insurance
regulation in the US warns us against the judicial creation of admiralty
rules to govern marine policy terms and warranties.
- Courts applying maritime law may adopt state law by express or implied reference where state law does not conflict with federal law or by virtue of the interstitial nature of federal law.
- The general rule of maritime law that parties bear their own costs, coupled with the need for uniformity in federal maritime law, precludes the application of a state statute providing that a party may recover attorney’s fees for breach of contract.
- If there is no admiralty rule that is established, then the sitting district judge has the latitude to establish a new rule. However, if there is no overriding admiralty interest, then the court should apply the doctrine of comity and apply state law.
- In this particular case: the insurance involved is first party insurance. There is little need for a uniform national rule on insurance to insure a vessel. So there is no need to create a new rule. Also, the state has a large interest in regulating first party insurance because of the volume of law that is established in regulating insurance law. So, although this case is maritime in flavor, the interest is local, so state law is applicable. If it were third party insurance that was involved, the analysis could be different.