Advance Piece Dye Works, Inc. v. Travelers Indem. Co.

• Decision Date: 08 December 1960
• Docket Number: No. A--672,A--672
• Citation: 64 N.J.Super. 405,166 A.2d 173
• Parties: , 88 A.L.R.2d 1114 ADVANCE PIECE DYE WORKS, INC., Plaintiff-Appellant, v. TRAVELERS INDEMNITY COMPANY and Sun Insurance Company of New York, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 405

64 N.J.Super. 405

166 A.2d 173, 88 A.L.R.2d 1114

ADVANCE PIECE DYE WORKS, INC., Plaintiff-Appellant, v. TRAVELERS INDEMNITY COMPANY and Sun Insurance Company of New

York, Defendants-Respondents.

No. A--672.

Superior Court of New Jersey

Appellate Division.

Argued Nov. 21, 1960.

Decided Dec. 8, 1960.

Harold D. Feuerstein, Newark, for appellant (Jack J. Terkowitz, Rutherford, attorney).

James A. Major, Hackensack, for respondent The Travelers Indemnity Co. (James I. Toscano, Hackensack, attorney).

George Winne, Hackensack, for respondent Sun Ins. Co., of New York.

Before Judges PRICE, GAULKIN and SULLIVAN.

The opinion of the court was delivered by

GAULKIN, J.A.D.

Plaintiff, a processor of textiles belonging to others, sued Travelers Indemnity Company (Travelers) and Sun Insurance Company of New York (Sun) upon their respective policies for the loss of certain customers' goods.

At the end of the plaintiff's case, the trial court ruled that plaintiff had not shown a loss within the coverage of the policy of either defendant, and entered judgment in their favor. Plaintiff appeals.

The Traveler's policy insured against 'Employee Dishonesty,' as therein defined. The Sun policy provided:

'5. This Policy Insures:--

Except As Hereinafter Provided:--

(A) Against All Risks of Physical Loss or Damage from Any External Cause;

'7. This Policy Does Not Insure:

(C) Against Mysterious Disappearance or Inventory Shortages;

(D) Theft, Conversion or Other Acts or Omissions of a Dishonest Character on the Part of the Assured or His or Their Employees; * * *.'

After plaintiff had introduced certain evidence, the judge suggested that plaintiff make an offer of its proposed additional proof 'to set up what its witnesses would show,' reserving the right to defendants (if the trial court found the offered proof enough to establish a Prima facie case) to cross-examine plaintiff's witnesses and to introduce evidence on their own behalf. The parties agreed to that suggestion, and plaintiff's attorney then said:

'Pursuant to the statement of the court that counsel for the interested parties attempt to agree on plaintiff's proof as it would be offered if the testimony were continued, the following is plaintiff's proffer of its proof as to the liability in addition to the testimony already received. * * *'

Then followed the offer of proof which, together with the testimony introduced before the offer, included the following facts which we have selected as pertinent to this appeal.

Plaintiff was in the business of dyeing and finishing textiles for various companies, in a two-story building in Rutherford. This building contained approximately 12 windows on each floor, not equipped with burglar alarms. There were a number of entrance doors into the building which also were not equipped with burglar alarms. More than three-fourths of the second floor was a storage room, where merchandise of customers was kept after it had been processed, awaiting the instructions of the customers. The balance of the second floor contained an employees' dressing room showers, lockers, lavatories and 'a little lunch room and what we call a sewing room.'

Independent truckers brought the 'greige' goods to a large loading platform, from which there was an entrance to the first floor and also an outside staircase leading to the second floor. At the top of the outside staircase there was a door to the second floor which was open during working hours but which was supposed to be locked at other times.

When the processing of the goods was completed, the goods were packed into cartons and marked with the customer's name and sealed with gummed paper, on the first floor. Each carton was from 43 inches to 50 inches high and from 4 to 5 feet wide, and contained a number of separate pieces of goods, each on a separate roll. The cartons weighed from 300 to 600 pounds each. They were usually moved from the first floor to the second by 'one of the fellows from shipping * * * (who) puts them on a hand truck and wheels it over to the elevator shaft and takes them up to the second floor on the elevator * * * and wheels them over to an island.'

When instructions were received to ship the cartons, they were brought down in the same fashion and, in due course, placed on the loading platform. If instructions came to ship part of a carton, the carton was brought to the first floor where the desired rolls were removed, after which the carton was resealed and returned to the second floor storage room. No cartons were unpacked in the storage room.

Among plaintiff's customers were United Textile Company, Leno Elastic Web Company, Inc., and Beauknit Mills, Inc., and finished goods belonging to them were stored on the second floor. In January 1958, when United Textile Company ordered plaintiff to deliver its merchandise, it was discovered that not only its goods but those of the other two as well were missing, a total of 17 cartons, having an alleged value of approximately $20,000. Plaintiff immediately investigated, but the only fact which it learned was that in 1957 one of its employees had discovered three or four empty cartons in the storage room, with broken tapes indicating that they had held finished goods, but he had not reported his discovery. Plaintiff reported the loss to the Rutherford police in February 1958 as a larceny.

There was no work in the storage room at night. The plant was closed on Saturdays and Sundays, but there was a maintenance crew on the premises. In addition there was 'a boilerman, also referred to as the fireman, who also acts as a watchman in it.' The 'boilerman' made his rounds from 10:45 p.m. until 5:45 a.m., and hourly he punched 'American District Telegraph' stations on the first and second floors. There were no records of punches being omitted at the A.D.T. office in Paterson, N.J.

The first shift at the plant started at 7 a.m., although in some sections of the plant plaintiff had '24 hour work periods'; the shipping department 'more than likely was 10 hours'; work in the storage room was usually from '7:30 in the morning until 5 at night, perhaps 6'; 'certain of the other departments about 10 hours a day, office staff 8 in the morning until 5 or 5:30 at night.'

In ruling upon defendants' motions for judgment, the court delivered an oral opinion in which it said:

'Viewing the proof in the light most favorable to the plaintiff and indulging all legitimate inferences therefrom, the circumstantial evidence reasonably supports a conclusion that the goods were stolen. That is to say, such a deduction could be supported by logical circumstantial proof in a reasonable sense.'

However, the court ruled that plaintiff had not produced, or offered, any proof that the loss was due to employee dishonesty within the coverage of the Traveler's policy, and therefore granted Traveler's motion for judgment of involuntary dismissal. Plaintiff admits that it did not produce or offer any such proof, but, for reasons which shall hereafter be discussed, argues that nevertheless the judgment of involuntary dismissal in favor of Travelers should not have been granted until Sun had rested.

As to Sun, the court held that:

'The plaintiff concedes that its theory of theft is as consistent with employee dishonesty as it is with the absence of employee dishonesty. This being so, why should the defendant be required to prove affirmatively as a defense what the plaintiff itself finds it is impossible to set up as a claim, or stated differently, if the plaintiff is unable to prove what the ultimate cause of the loss was, why should the defendant be compelled to prove it?

'In the particular circumstances of this case a showing of theft per se is not enough. The proximate cause of the theft is an additional link of critical proof so that the legal defect in the plaintiff's position appears to be that its evidence does not serve to state a clear allegation of liability.

'With this element of proof missing from the case, I believe that the plaintiff's judicial authorities do not apply to fasten upon defendant Sun the obligation to come forward with proof in avoidance of liability.

'So, for these reasons, the motion by the defendant Sun Insurance Company of New York for judgment is granted.'

In this the court erred. As we have said, the policy of the Sun insured 'except as hereinafter provided, against all risks of physical loss or damage from any external cause.' (Sun argued that 'external cause' means something which happens off the premises or, at least, is set in motion by someone or something that comes from without. The trial judge properly rejected this contention. It is patently devoid of merit.) Since the court had found that plaintiff's proof 'reasonably supports the conclusion that the goods were stolen,' it should have held that plaintiff had established a loss which was Prima facie within the coverage of Sun's policy. The judge suggested that the cartons might have been 'missing because the plaintiff misdirected them in shipment,' but that also would have been covered by the Sun policy. It then became Sun's burden to prove its assertion that the loss fell within the exceptions of the policy, i.e., that it was a mysterious disappearance, or that it was due to employee dishonesty. Morie v. N.J. Manufacturers Indemnity Insurance Co., 48 N.J.Super. 70, 75--77, 137 A.2d 41 (App.Div.1957).

Sun cites two New Jersey cases in support of the action taken by the trial court, but neither contains language similar to that in the Sun policy. In those cases, Brindley v. Firemen's Insurance Company of Newark, 35 N.J.Super. 1, 113 A.2d 53 (App.Div.1955), and Trad Television Corporation v. Hartford Accident & Indemnity Co., 35 N.J.Super. 36, 113 A.2d 47, 48 (App.Div.1955), certif. denied 19 N.J. 330, 116 A.2d 827 (1955), the risk assumed was limited by the very language which gave the coverage. For example, in Trad the coverage was for 'all loss of money * *...