In Gracie v. The Marine Insurance Company of Baltimore, the Supreme Court was asked to decide whether a marine insurance policy covered losses due to an embargo imposed by Congress on all vessels and cargoes in American ports. The plaintiff had purchased a policy from the defendant that provided coverage for any loss or damage caused by "capture, seizure, arrest or restraint" of their vessel while at sea. After being detained in port due to the embargo, they sought compensation under this clause but were denied as it did not explicitly cover embargos. In its ruling, the court held that although embargos are not specifically mentioned in the contract language itself, they should be considered within its scope since such events can cause capture and restraint similar to those listed in the agreement. As such, damages incurred during an embargo must be compensated according to this policy's terms and conditions.

In the case of Gracie v. The Marine Insurance Company of Baltimore, Chief Justice Marshall delivered a dissenting opinion in which he argued that the insurance company was not liable for any damages incurred by Gracie due to his failure to provide timely notice of his claim. He reasoned that since there is no evidence that the company had knowledge or should have known about the loss before it occurred, they were under no obligation to pay out on such a claim. Furthermore, he noted that even if they had been aware prior to its occurrence, their policy did not require them to do so and thus could not be held responsible for failing in this regard. In conclusion, Chief Justice Marshall concluded that while it may seem unfair for an insured party who has suffered losses without providing proper notification beforehand from recovering those losses through an insurance policy; however this would set a dangerous precedent as insurers would then be obligated to cover all claims regardless of whether or not they received timely notice from their customers.