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Home > Journals > Michigan Law Review > MLR > Volume 54 > Issue 2 (1955)

 

Abstract

Petitioner's houseboat, used to transport passengers commercially on a lake between Texas and Oklahoma, was insured against fire and other loss by respondent. Following destruction of the boat by fire, respondent denied liability because of breaches of policy warranties against assignment, pledging, transferring, and use for hire. The petitioner's action was brought in the state court and removed to a federal court because of diversity of citizenship. Texas statutes provide that breaches of policy provisions by the insured are no defense unless the breach contributes to the loss, and that provisions in policies against pledging are invalid. Petitioner contended that these statutes were controlling. The district court disagreed and held that because a marine policy is a maritime contract, federal admiralty law, not state law, governs. The court held that an established admiralty rule requires strict fulfillment of warranties in marine policies and rendered judgment for the insurance company. The court of appeals affirmed. On certiorari to the Supreme Court, held, reversed. Under the McCarran Act. the regulation of insurance was left to the states except where Congress had specifically acted. There being no established admiralty rule regarding warranties in marine policies, the court declined to fashion a judicial rule and the case was remanded to the district court for trial under the appropriate state law. Justice Frankfurter gave his limited concurrence. Justices Reed and Burton dissented. Wilburn Boat Co. v. Fireman's Fund Insurance Co., 348 U.S. 310, 75 S.Ct. 368 (1955).

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