The History of Proximate Causation
July 2011
First-party property policies cover losses
that are "caused by" or "caused directly or indirectly by" a covered peril.
Usually, there is no further elaboration in the policy on the concept of
causation, leaving the courts to develop common law rules for interpreting
the bare-bones text.
by
Rich Scislowski
IRMI
How courts viewed causation under first-party property policies has
evolved over time, which makes for a fascinating story to students of
insurance.
Bacon's Rule—The Last Cause Controls
Some of the first causation questions to be litigated involved ocean
marine policies issued by Lloyd's of London underwriters covering sailing
vessels in the late 1700s and early 1800s. At that time, marine policies
covered vessels and cargo against the "perils of the seas"—grounding,
collision, allision, inrush of water, and so forth. But, in many instances,
a peril of the sea was itself caused by some act of negligence on the part
of the master or crew. For example, suppose the night watchman falls asleep
in the crow's nest and consequently the ship runs aground on a sandbar. Is
that a loss caused by a peril of the sea? True, the ship was damaged when it
ran aground, but the underlying negligence of the watchman was what caused
the grounding in the first place. Symbolically, the facts of the claim can
be represented as follows.
(Cause 1) Negligence of the watchman in falling
asleep → (Cause 2) Ship ran aground on the sandbar → (Loss) Damage to hull
So which is the cause of the loss—the negligence of the watchman (not
covered) or the grounding on the sandbar (a covered peril)?
To answer that question, some courts considering these early marine cases
looked to an influential treatise called
Maxims of the Law, written in 1596 by Sir Francis Bacon (1561–1626). Bacon read a
lot of cases and tried to synthesize the underlying rules he thought courts
were applying in various situations and on various issues, including
causation. His first and foremost rule (Regula
I) was "In jure non remota causa sed
proxima spectator," which translates as, "In law, one looks to the
near cause, not the remote one." He wrote:
It were infinite for the law to judge the cause of causes, and their impulsions
one of another; therefore it contenteth itself with the immediate cause, and
judgeth of the acts by that, without looking to any further degree.…
In other words, when asking what was the "cause" of an end result, courts should only
look back one link in the chain of causation and settle on
the event that immediately preceded the result. Otherwise, you could be
looking backward along the chain of causation forever and never come to an
answer. So, originally, "proximate" meant "close," as in Latin, and the
proximate cause was the nearest cause or the cause immediately preceding the
end result. Remote events further back along the chain should be ignored, in
Bacon's view.
Bacon's theory made sense to courts considering causation
questions under early marine policies. A great many losses can ultimately be
traced to human negligence. If the courts were to follow the chain of
causation to the root cause of every loss, not many marine claims would be
covered, which would greatly diminish the economic value of taking out
insurance to cover ocean commerce. Therefore, some of these courts adopted
Bacon's view and initially held that the proximate cause of a loss under an
ocean marine policy was the peril that was closest to the happening of the
damage. See, for example:
- Busk v. Royal Ins. Exch., 2
B & Ald. 73 (1818)
- Howard Fire Ins. Co. v. Norwich & N.Y. Transp.
Co., 79 U.S. 194, 20 L. Ed. 378 (1870)
- Queen Ins. Co.
of Am. v. Globe Rutgers Fire Ins. Co., 263 U.S. 487, 20 L. Ed.
738 (1924) (Holmes, J.) ("[T]he common understanding is that in construing
these [ocean marine] policies we are not to take broad views but generally
[we] are to stop our inquiries with the cause nearest to the loss.")
In the
hypothetical above, where the watchman fell asleep and the ship ran aground
on the sandbar, courts employing Bacon's rule would have held that (Cause 2)
the grounding on the sandbar was the proximate cause of the damage to the
hull, and that, because grounding was covered as a peril of the sea, the
loss was covered. Under this view, the underlying negligence of the watchman
would be considered a remote cause that has no legal significance for
purposes of the causation analysis.
Court cases applying Bacon's version of
the proximate cause rule establish a particular pattern. In
chain-of-events-type situations, where an initial peril (Cause 1) directly
caused a subsequent peril (Cause 2), courts employing Bacon's rule would
always focus on the subsequent peril (Cause 2). If the subsequent peril
(Cause 2) was covered, they would hold that the loss was covered. If the
subsequent peril (Cause 2) was not covered or excluded, they would hold that
the loss was not covered or excluded. Table 1 shows this pattern.
Click here
for Table 1: Bacon's Proximate Cause Pattern.
Newton's Rule—The Initial Cause Controls
Not all courts accepted
Bacon's theory. There was a competing line of decisions based on the work of
Sir Isaac Newton (1642–1727), who, in 1687, published
Philosophiæ Naturalis
Principia Mathematica, laying the groundwork for classical
mechanics. Newton's first law of motion was that physical objects will
remain at rest unless compelled to change their resting state by an outside
force. Consider a cue ball and a nine ball resting on the surface of a pool
table. Suppose a player takes a stick and strikes the cue ball, the cue ball
strikes the nine ball, and the nine ball drops into the pocket. Newton would
frame the chain of events as follows.
(Cause 1) Player strikes the cue ball
→ (Cause 2) Cue ball strikes the nine ball → (Loss) Nine ball drops into the
pocket
Newton would say that what caused the nine ball to
drop was Cause 1, or the kinetic energy imparted to the cue ball by the
player's strike. Cause 2, the subsequent collision between the cue ball and
the nine ball, merely transmitted the kinetic energy of the player's strike
from one to the other, making Cause 2 an instrumentality in the chain of
events. But Cause 2 was not the underlying cause, in Newton's view.
Newton's
theory of causation slowly permeated judicial thought. As early as the
mid-19th century, American courts began rejecting Bacon's maxim "non remota
causa sed proxima spectator" in favor of the more modern
or scientific view that the proximate cause was the first event that set the
chain of events in motion culminating in the end result. See, for example:
- Montgomery v. Firemen's Ins. Co., 55 Ky. 427 (Ct.
App. 1855) (explaining that "older cases" adhered to a rule that "a loss was
to be attributed to the cause immediately operating at the time of its
occurrence," but the "modern decisions" had "established the more reasonable
doctrine" that a loss is covered if "the peril insured against puts the
destructive cause in operation")
- Aetna Ins. Co. v. Boon, 95 U.S. 117, 24 L. Ed. 395 (1877) ("if two causes conspire, and one
must be chosen, the more scientific inquiry seems to be, whether one is not
the efficient cause, and the other merely instrumental or merely incidental,
and not which is nearer in place or time to the consummation of the
catastrophe")
Court cases applying Newton's version of the proximate cause
rule establish a different pattern. Where an initial peril (Cause 1)
directly causes a subsequent peril (Cause 2), courts employing Newton's rule
would always focus on the initial peril (Cause 1). If the initial peril
(Cause 1) was covered, they would hold that the loss was covered. If the
initial peril (Cause 1) was not covered or excluded, they would hold that
the loss was not covered or excluded. Table 2 demonstrates this phenomenon.
Click here for Table 2: Newton's Proximate Cause Pattern.
Adjustments to Newton's Rule
Adapted for use as a
rule for interpreting causation language in a first-party property policy,
Newton's theory of causation from classical mechanics was not completely
satisfactory and required a few tweaks. For one thing, the word "proximate"
means "close" in Latin. To differentiate Bacon's idea of the proximate cause
as being the one nearest in time to the happening of the loss (i.e., Cause
2), courts employing Newton's idea of proximate cause as being the initial
cause that set the chain of events in motion (i.e., Cause 1) had to come up
with a new label.
Here, judges borrowed from the works of Aristotle (384–322
B.C.). In his Lectures on Physics, Book II, Aristotle
wrote that the word "cause" has several meanings in the philosophic sense.
One meaning of the word "cause" is "the primary source of the change or
coming to rest." In his Lectures on Metaphysics, Book V.2, he wrote that in this sense, "causation" can be understood as "That from
which the change or the resting from change first begins." In his
Lectures
on Meteorology, Book IV, Aristotle called the agent that
brings about a change in the state of matter the "efficient cause."
Aristotle's definition of the efficient cause as being "that from which the
change first begins" aptly described Newton's idea, that the scientific
cause of an end result was the first event setting the chain of events in
motion. Hence, courts adopted the phrase "efficient proximate cause" or "efficient cause" to describe Newton's
concept in their decisions.
Another problem was that, under Newton's theory,
the underlying negligence of the policyholder could be cited as the initial
peril that set the chain of events in motion. If a named perils policy did
not list negligence as a covered peril, insurers could argue that a good
many property losses would not be covered. To combat this, courts simply
carved out an exception to Newton's rule for human negligence when
considering causation questions under a named perils policy.
For example, in
Federal Ins. Co. v. Tamiami Trail Tours, Inc., 117 F.2d 794
(5th Cir. 1941), the negligence of the insured in failing to properly
maintain a bus led to a fire, which caused damage to the vehicle. The named
perils policy covered losses caused by fire but did not expressly cover
losses caused by negligence. The insurer invoked Newton's rule that the
initial negligence of the policyholder set the chain of events in motion and
ultimately led to the loss. It argued that, since negligence was not
covered, the loss was not covered. However, the court ruled that human
negligence was not cognizable as a separate peril for purposes of the
causation analysis. The court explained:
An overwhelming percentage of all
insurable losses sustained because of fire can be directly traced to some
act or acts of negligence. Were it not for the errant human element, the
hazards insured against would be greatly diminished. It is in full
appreciation of these conditions that the property owner seeks insurance,
and it is after painstaking analysis of them that the insurer fixes his
premiums and issues the policies. It is in recognition of this practice that
the law requires the insurer to assume the risk of the negligence of the
insured and permits recovery by an insured whose negligence proximately
caused the loss. In the absence of fraud or gross negligence on the part of
the insured, his negligence is no defense against his recovery. [Footnote
omitted.]
Taking negligence out of the fact pattern leading up to the damage
to the bus, the only peril left was fire, which was a covered peril.
That
took care of the initial negligence problem under named perils policies.
But, as for all risks policies, most courts take the opposite view,
reasoning that all risks policies are different from named perils policies.
Under an all risks policy, losses caused by any cause of loss whatsoever are
covered unless there is a specific exclusion. If an all risks policy does
not specifically exclude negligence, most courts presume that the insurer
meant to provide coverage where human negligence was the initial peril that
initiated a chain of events leading up to the loss.
See
Associated Eng'rs,
Inc. v. American Nat'l Fire Ins. Co., 175 F. Supp. 352 (N.D.
Cal. 1959); General American Transp. Corp. v. Sun Ins. Office,
239 F. Supp. 844 (E.D. Tenn. 1965).
A minority of courts applies the same
exception to all risks policies as they do to named perils policies. That
is, some courts hold that human negligence that sets a chain of events in
motion is not cognizable as a separate peril for purposes of causation
analysis under an all risks policy (which is probably the better reasoned
view). See, for example:
- E.B. Metal & Rubber Indus., Inc. v.
Federal Ins. Co., 84 A.D.2d 662, 444 N.Y.S.2d 321 (App. Div. 3d
Dep't 1981)
- Chadwick v. Fire Ins. Exch., 17 Cal. App.
4th 1112, 21 Cal. Rptr. 2d 871 (1993)
- In re Katrina Canal Breaches Litig., 495 F.3d 191 (5th Cir. 2007)
Conclusion
For most
of the 19th century, courts in America and England struggled to settle on
which theory of causation they would employ in a first-party property case.
By the early 20th century, the debate in the caselaw largely died out, with
almost all courts adopting Newton's rule in the end. Overwhelmingly, courts
now hold that, in chain-of-events-type cases, where an initial peril causes
another peril, which causes the loss, the efficient proximate cause is
(Cause 1) the initial peril that set the chain of events in motion.
Sometimes, a stray court may apply a line of thinking reminiscent of Bacon's
rule and will select the last event in the chain of events immediately
preceding the loss as the proximate cause, but today those instances are
exceedingly rare.
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