Michael v. Prussian Nat. Ins. Co.

Decision Date18 April 1902
Citation171 N.Y. 25,63 N.E. 810
PartiesMICHAEL v. PRUSSIAN NAT. INS. CO.
CourtNew York Court of Appeals Court of Appeals

OPINION TEXT STARTS HERE

Appeal from supreme court, appellate division, Fourth department.

Action by Edward Michael, executor of John Michael, against the Prussian National Insurance Company. From a judgment of the appellate division (71 N. Y. Supp. 918) affirming a judgment in favor of plaintiff, and from an order denying a new trial, defendant appeals. Affirmed.

The action was brought by the Buffalo Elevating Company upon a policy of insurance, issued to it by the defendant, to recover the insurance moneys by reason of the destruction of its elevator plant by a fire on August 13, 1900. The above-named plaintiff has been substituted as such in the place of the Buffalo Elevating Company. The body of the policy is in the standard form authorized by the laws of New York. The insurance was for the term of one year from the 10th day of March, 1900, and in an amount not exceeding $1,500. Attached to and made a part of the policy was a slip, or ‘rider,’ which described the subject-matter of the insurance, and declared it to be ‘on the use and occupancy of their property and elevator building, with boiler and engine houses attached, situate * * * in Buffalo, New York, and known as the ‘Dakota Elevator.” The slip further provided: ‘It is a condition of this contract of insurance that if, by fire, during a continuance of this policy, the property, buildings, or machinery therein, or either of them, or any part thereof, shall be destroyed, or so damaged as to prevent the elevating and other handling of grain, this company shall be liable at the rate of $4.77 per day for each working day of such prevention; and in case the building or machinery, or any part thereof, are so damaged as to prevent the elevating or handling of the full daily average of grain, this company is to be liable per day for that proportion of $4.77 which the elevating or handling so prevented bears to the said daily average ability of said elevator one year previous to the fire, which, for the purposes of this insurance, shall be considered the average daily ability of the elevator, not exceeding the amount insured. Loss to be computed from the day of the occurrence of any fire to the time when the building could, with ordinary diligence and despatch, be repaired or rebuilt and the machinery placed therein, and not to be limited by the day of expiration named in this policy.’ Provisions of the policy made it void if the insured had concealed or misrepresented any material fact concerning the subject of insurance, or if the interest of the insured had not been truly stated therein, or if the interest of the insured were other than unconditional and sole ownership, or ‘if any change, other than by the death of an insured, take place in the interest, title, or possession of the subject of insurance,’ etc. The defense to the action was rested upon the ground, in substance, that there had been a breach of the express warranties of the contract, in that the interest of the plaintiff was not that of sole and unconditional ownership; inasmuch as at the time of the issuance of the policy the ownership of the subject-matter of insurance, to wit, ‘the use of the elevator Dakota and the earnings thereof,’ had been transferred to the Western Elevating Association, under certain contracts between that association and the plaintiff, and that any loss of the plaintiff's use and occupancy of said elevator had been made good by payments under the contract with that association; that there had been concealment and misrepresentation of a material fact concerning the subject of insurance by the plaintiff in the failure to have the policy state the true nature of the plaintiff's interest; and it was further claimed by the defendant that it was entitled, by the right of subrogation, to have applied, and to be credited with, upon any liability it may have come under, a pro rata share of the moneys paid by the Western Elevating Association to the plaintiff since the fire which had caused the damage. The policy was one of forty-six policies taken out at the time, all effecting a similar insurance, in the same form, and amounting, in the aggregate, to the sum of $73,250. The aggregate daily insurance thus effected for the period required for the reinstatement of the destroyed or damaged property amounted to $232.93. The fire, which occurred in August, 1900, upon the plaintiff's premises, destroyed the elevator and its contents, and appraisers, who were agreed upon, made an award in favor of the plaintiff ‘for 259 working days.’ The proportionate liability on the defendant's part upon its policy amounted to $1,235.41, while the aggregate liability upon all the policies amounted to $60,328.87. Prior to the issuance of the policies, the Buffalo Elevating Company had entered into a written agreement with a number of other proprietors of elevators to form the Western Elevating Association, to continue for the term of one year, and during the insurance period of the policy renewed the agreement for the further term of one year. Under this agreement between the elevators the Western Elevating Association would collect the receipts and the earnings of the various elevators to a certain amount, which, in the case of the plaintiff, amounted to 80 per cent. of its total earnings. The association would make payments or distributions from these receipts or earnings to the various members of the association at various intervals, as determined by its executive committee. Each member of the association retained possession of its or his elevator, employed and directed its employés, and paid its own operating expenses, taxes, and insurance premiums. The executive committee fixed the rates of elevation and storage for all the members of the association. The individual members made their own contracts with the railroad companies, shippers, and consignees for the shipping and handling of grain for their particular elevators, except as to the price for elevating. It was the course of business that consignments of grain to any elevator, upon arrival, were immediately reported to the secretary and treasurer of the association, who issued warehouse receipts for the grain. When the grain was transferred out of the elevator, such transfer was reported to the same officer, and the warehouse receipt was canceled. This course of business, as regulated and controlled by the agreements, obtained during the seasons of navigation. Since the date of the fire the earnings collected and paid over to the plaintiff, or which will be collected and paid over, aggregate $33,698, as the plaintiff's percentage of the earnings of the elevators forming the Western Elevating Association * * * for the period since the date of the fire.’ The above facts were all stipulated, and upon them each party moved for the direction of a verdict, which the trial court directed in favor of the plaintiff. The judgment upon the verdict has been unanimously affirmed by the appellate division in the Fourth department, and the defendant appeals to this court.George Richards and Newell B. Wood-worth, for appellant.

Tracy C. Becker, for respondent.

GRAY, J. (after stating the facts).

The contract of insurance is quite exceptional in its nature, and the difficulty of the case arises in the construction which it should receive under the circumstances as disclosed by the evidence. The insurance is neither specifically upon the building, nor upon the machinery which it contains. It is ‘on the use and occupancy of the property and elevator building, with boiler and engine houses attached.’ The condition upon which the liability of the insurer accrues is the happening, through a fire, of such destruction or damage ‘as to prevent the elevating and other handling of grain,’ and the measure of the liability is a fixed per diem valuation while such a condition of affairs continues. The peculiar feature of the contract is that it contemplates, as its subject-matter, not the mere material loss of the plant, or any part of it, but the loss to the owner of the ability to use it; which, as further matter of distinction, is agreed to be valued, in advance, at a certain sum for each working day of the prevention of the use. Such is the agreement, which controls and which defines what is covered by the policy, and, although the ‘standard form’ of policy was, necessarily, used, the slip, or special clause, added and attached to the statutory form, to the extent that its terms and conditions are inconsistent in material points concerning the contract of insurance, governed when the contract was executed, and now represents the stipulations of the parties in the matter. So far as consistent, the general conditions of the policy will apply, but in case of repugnant or inconsistent statements that which is more favorable to the assured will control. See Ins. Law, § 488; Wood, Ins. §§ 62, 64; Beach, Richards, Ins. 134. The policy is in fact a valued one,-where the parties intended, and...

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