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Insurance Companies Refuse to Pay for American Ship Captured While Shipping Arms to Simón Bolívar’s Rebels
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This fascinating archive consists of 27 manuscript documents in English and one in Spanish from litigation between the Baltimore owners of the merchant ship Budget and insurance companies that underwrote its voyage from England to South America. This conflict occurred against a backdrop of the collapse of Spain’s American empire, as various areas in Central and South America asserted their independence, many under the leadership of Simón Bolívar. The ship, carrying weapons and supplies destined for Simón Bolívar’s rebels, was captured by a Spanish privateer and condemned in Puerto Rico. The insurance companies refused to pay on their policies, leading to two important cases on maritime law, neutral rights, and the responsibilities of insurance companies.

[INSURANCE, NEUTRALITY, SHIPPING, SPANISH EMPIRE]. Archive of Evidence in Thompson and Bathurst v. Maryland Insurance Company and Thompson and Bathurst v. Phoenix Fire Insurance Company cases, 1821-1824. 28 documents, 41 pp., most 7¾ x 9¾ in.

Inventory #21602       Price: $1,750

Historical Background

In October 1822, Baltimore merchants Hugh Thompson and Matthew Bathurst insured their ship Budget and its cargo for $5,000 with the Maryland Insurance Company and another $5,000 with the Phoenix Fire Insurance Company for a voyage from London, England, to two ports on the “Spanish Main” (Spanish colonies in Central America and on the northern coast of South America), then back to the United States. The Budget was transporting “munitions of war” from London to the blockaded port of La Guaira, Venezuela, on the coast ten miles north of Caracas, for Simón Bolívar’s rebels in Spanish America.

On December 1, 1822, the Spanish privateer Cora, under the command of Captain Don Juan Esiga, captured the Budget and had it condemned as a prize of war at a court in Puerto Rico. The Budget’s captain, John Meany, purchased the ship back, billing Thompson and Bathurst for doing so. The merchants applied for payment from their insurers in March, 1823. By May, Thompson and Bathurst had turned over the Budget and its cargo to the Maryland Insurance Company and demanded payment. The insurers demanded more documentation, especially of the condemnation proceedings in Puerto Rico. In August, the insurance companies returned the copies of the proceedings in Puerto Rico to the ship’s owners “to be translated into English.” In March 1824, the insurers denied the claims.

On March 17, 1824, the merchants sued the insurance companies in the Baltimore County Court for having “broken their covenant.” Chief Judge Stevenson Archer ruled in favor of Thompson and Bathurst. However, both the plaintiffs and the defendant’s objected to parts of the decisions and filed cross-appeals to the Court of Appeals of Maryland.

In December 1832, Judge Thomas Beale Dorsey of Maryland’s Court of Appeals concurred with the county court’s refusing exceptions presented by the insurance companies and dissented on the exceptions offered by merchants. The Court of Appeals therefore ruled in favor of the ship’s owners and entered judgment for “a total loss.”[1]

Excerpts:

Insurance Policy No. 8881 with the Maryland Insurance Company, October 10, 1822:

Touching the adventures and perils which we the assurers are contented to bear, and take upon us in this voyage; they are of the Seas, Men of War, Fires, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart, and Counter Mart, Surprisals, Takings at Sea, Arrests, Restraints and Detainments of all Kings, Princes or People, of what Nation, Condition or Quality soever, Barratry of the Master, and Mariners, and all other Perils, Losses, and Misfortunes, that have or shall come to the hurt, detriment or damage of the said vessel or any part thereof.

Translation of Order of Francisco Marcos Santaella, December 23, 1822:

Having seen this summary judgment relating to the capture of the transport corvette called the Budget going from New Orleans (under the orders & command of her Capt. & supercargo Mr. John Meany), the first of the present month, by the Spanish Privateer schooner called the Cora or Good Friends armed in this place and under command of her captain Don Juan Esija; taking into consideration the contents of the ships papers & from others found on board, together with the declarations taken (or made) at the time of capture, and those which have been made before this tribunal, by the captains, captor & captured, second mate of the corvette and the prize master, all tending to show, that that vessel sailed from London on the 11th day of October last with a cargo of munitions of War belonging to particular individuals residing in that capitol, who destined it for Caracas to be delivered to Messrs. Jones, Pawly, Harry and Co in Laguira, at that time a port blockaded by the enemy in order that, pursuant to the particular intention of Mr Zeas, the Columbian Squadron shd be placed upon a respectable footing; and for this purpose was to be fitted out the Brigantine New Orleans, & to make a regular deposit of said articles at the sd Laguira, for the general use of the service, where the sd corvette made efforts to enter, the said captain bearing orders in case he found the place actually blockaded to carry her into St Martha a port also occupied by the Insurgents, and comprehended in the same declaration of blockade, where she shd be discharged and the cargo left to the judgment of the said individuals of Caracas; that the same Corvette shd be offered for the service of sd Squadron whenever it shd be found needful, that it shd be particularly recommended for the said Capt Meany to be employed in the marine service; with various other particulars which the said document contained, and showing the decided protection which the European English and Anglo Americans afford to the insurgents of the continent contrary to all right and how much more worthy would it have been to have refrained out of respect for a short time...

Also, the original order in Spanish, December 23, 1822, with a certification by Judah Lord, “Commercial Agent of the United States of America for Port Rico,” January 2, 1823.

Thompson and Bathurst to President and Directors of Maryland Insurance Company, March 12, 1823:

Having received advise from Captain Maney that he had purchased the Ship Budget after her having been condemned, and drawn on us for amount of Cost & Disbursements; we wish to know if we may calculate on receiving from you the amount insured in your Office at the stipulated time expressed in your Policy; say 90 days from proof of loss?

Thompson and Bathurst to President and Directors of Maryland Insurance Company, May 7, 1823:

We abandoned to you on the 6th February last the Ship & Freight of Ship Budget insured in your Office by Policy No 8881, and at same time handed you a Certified Copy of the Condemnation of said Ship at Porto Rico. The Period of time required by your Policy for payment of Loss after proof thereof, having now expired, we beg leave to call upon you for the amount thereof.

President John Hollins of Maryland Insurance Company to Thompson and Bathurst, May 24, 1823:

Your letter of the 21st Inst has had the attention of a full board of Directors, who have instructed me to inform you that they will advance to you $4,498.75, on receipt of your & R. Oliver Esqrs joint note at six months, bearing interest, at the expiration of which time, or sooner, if convenient, you are required to produce to this Company, the following documents, relative to the Ship Budget, Viz, The proceedings of the Court at Porto Rico, The Log book or authenticated copy thereof, The Charter Party or copy authenticated, upon receipt of which, & their proving satisfactory, an adjustmt of the loss shall take place.

President John Hollins of Maryland Insurance Company to Thompson and Bathurst, March 4, 1824:

The board of Directors have instructed me to inform you, that they do not consider the Company answerable for the claim you make for the ship Budget & freight, insured by policy No 8881, this opinion they have formed from advice given by Mr Wirt & Mr Purviance, who have had the case under their consideration.

I am also instructed to say to you, that if your note in favor of Messs Rob. & Jno Oliver, & by them endorsed, for $4498.75 with interest & cost of protest, be not taken up, & paid at the Bank of Baltimore, where it now lays, on or before the 10th Inst it will be handed to Mr Purviance, to be put in suit against you, & those Gentlemen, we hope you will prevent this unpleasant business, but if not, you will know the blame will not be chargeable to this Company.

Thompson and Bathurst to President and Directors of Maryland Insurance Company, March 9, 1824:

we are sorry to learn you still seem determined not to admit your liability for the Loss on the Ship Budget condemned at Porto Rico.

We had hoped that the very clear and decided opinions handed you of Messrs Ogden & Binney (Lawyers considered as the best informed in this Country on Marine Insurance) would have removed all doubts & have been conclusive on that subject.

It is extremely unpleasant to us being under the necessity of resisting the payment of our Note, which our Counsel have advised us to do; at same time we feel confident, the result will prove we are in the right & justifiable in doing so.

Matthew Bathurst (1778-1847) and Hugh Thompson (1760-1826) were partners in a general mercantile business in Baltimore, Maryland.

John Meany (1770-1841) was a sea captain in the merchant service and then a merchant and ship-owner in Philadelphia. For many years, Hugh Thompson employed him.

John Hollins (1760-1827) was a banker in Liverpool before immigrating to Baltimore, where he became a successful merchant. He was president of the Maryland Insurance Company from 1802 to 1827, and he held a variety of local offices.

Simón Bolívar (1783-1830) was born in Caracas and educated in Spain and France. He joined the group of patriots that seized Caracas in 1810 and proclaimed independence from Spain. He went to Great Britain in search of aid but could get only a promise of British neutrality. When he returned to Venezuela, and took command of a patriot army, he recaptured Caracas in 1813 from the Spaniards. The Spaniards forced Bolívar to retreat from Venezuela to New Granada (now Colombia), also at war with Spain. He took command of a Colombian force and captured Bogota in 1814. The patriots, however, lacked men and supplies, and new defeats led Bolívar to flee to Jamaica. In Haiti he gathered a force that landed in Venezuela in 1816, and took Angostura (now Ciudad Bolívar). He also became dictator there. Bolívar marched into New Granada in 1819. His forces decisively defeated the Spaniards at Boyacá in 1819, liberating the territory of Colombia. He then returned to Angostura and led the congress that organized the original republic of Colombia (now Ecuador, Colombia, Panama, and Venezuela). Bolívar became its first president on December 17, 1819. Bolívar crushed the Spanish army at Carabobo in Venezuela on June 24, 1821. Next, he marched into Ecuador and added that territory to the new Colombian republic. After meeting with another great liberator José de San Martin in 1822, Bolívar became dictator of Peru in February 1824. His army won a victory over the Spaniards at Ayacucho in December 1824. Upper Peru became a separate state, named Bolivia in Bolívar’s honor, in 1825. He stepped down as president of Gran Colombia in January 1830 and died of tuberculosis eleven months later.


[1] The Maryland Insurance Company and Phoenix Fire Insurance Company v. Bathurst, Surviving Partner of Thompson, 5 Gill and Johnson (Maryland) 159-239.


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