Aetna Ins. Co. v. Sacramento-Stockton S.S. Co.

• Citation: 273 F. 55
• Decision Date: 06 May 1921
• Docket Number: 3601.
• Parties: AETNA INS. CO. et al. v. SACRAMENTO-STOCKTON S.S. CO. [1]
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

273 F. 55

AETNA INS. CO. et al. v. SACRAMENTO-STOCKTON S.S. CO. ^[1]

No. 3601.

United States Court of Appeals, Ninth Circuit.

May 6, 1921

Hunt Circuit Judge, dissenting uncommon causes; and severe storms, rough seas, and even fogs may be comprised in the perils of the sea.

McCutchen Willard, Mannon & Greene, Edward J. McCutchen, and Farnham P. Griffiths, all of San Francisco, Cal., for plaintiffs in error.

Nathan H. Frank and Irving H. Frank, both of San Francisco, Cal., for defendant in error.

Before GILBERT and HUNT, Circuit Judges, and WOLVERTON, District Judge.

GILBERT Circuit Judge (after stating the facts as above).

One of the questions involved on the writ of error is whether or not the vessel was lost through a peril covered by the policies. The defendants contend that each policy limited the perils insured against to fire and collision, as expressed in the rider which was attached to each. The riders were printed forms, and are identical, but there is some difference in the marginal indorsements on the policies and in the portions of the bodies of the policies which were deleted. The riders begin thus:

'This policy is to cover only as follows: Loss or damage caused by fire in accordance with the terms and conditions of the regular California standard form of fire policy as issued by the AEtna Insurance Company, of Hartford, Conn.'

'Loss or damage done to another ship or vessel through collision in accordance with the terms and conditions of the following collision clause.'

Then follows a printed collision clause, and special provisions therein limiting liability to damage in the amount of $750 or more. On the margin of the AEtna and the Union Marine policies, impressed by a rubber stamp, are the words:

'It is agreed that clauses on slip attached hereto form part of this policy.'

Also the words:

'Subject to limitations of trade as specified in slip attached to this policy.'

At the foot of each rider is the following:

'The foregoing clauses are to be regarded as substituted for the terms of the policy to which they are attached, the latter being hereby waived.'

In the body of the AEtna policy a collision clause differing in terms from that contained in the rider was deleted, marked:

'Void. J.A.W.'

Other portions of the body of the policy, which were deleted and similarly marked, were a provision in regard to general average and a provision excluding liability for any sum which the assured might become liable to pay for removal of obstructions under statutory powers for injury to harbors consequent on collision, or for loss of life or personal injury resulting therefrom. There remained undeleted a provision concerning the perils which the insurers were to assume, including perils of the sea. In the other two policies there are no deletions. The Hartford Insurance Company's policy does not contain the marginal clauses of the other two policies, but in the body of the policy, and in that portion which contains insurance against the perils of the sea, the insurer has filled one blank by writing therein the figure '3,' and has drawn a line through another blank, after the word 'return' indicating the adoption of that clause of the body of the policy.

It is well settled that all parts of an insurance policy must, if possible, be harmonized and given effect. Unless the rider is irreconcilable with the printed clause, such clause must stand. Merchants' Ins. Co. v. Allen, 121 U.S. 69, 7 Sup.Ct. 821, 30 L.Ed. 858. But if it is inconsistent and irreconcilable, the rider will control. Gunther v. Liverpool, L. & G. Ins. Co. (C.C.) 34 F. 501. In the AEtna Company's policy it distinctly appears that the company took pains to delete and mark with initials certain portions of the body of the policy. It thereby expressed its intention that the undeleted portions should remain in force and constitute portions of its obligation, unless the rider is irreconcilable with them.

It is contended that the rider was intended to express all the risk incurred by the insurer. We do not so construe it. It is true it begins with the words 'This policy is to cover only as follows:' but we think the words mean no more than that the insurer intended to substitute the two provisions contained in the rider for corresponding provisions in the body of the policy, and that as to those two provisions the policy was 'to cover only' as expressed in the rider. One of the substituted provisions is the collision clause, which differs in form from and takes the place of the collision clause which was deleted from the body of the AEtna policy. The provision in the riders as to loss or damage caused by fire appears to have been inserted for the purpose of limiting such loss to the 'terms and conditions of the regular California standard form of fire policy as issued by the AEtna Insurance Company. ' In the body of the policy fire is simply mentioned as one of the risks insured against.

The same construction, we think, should be given to the other two policies, although there are no deletions therein. They each contain in the body of the policy a fire risk and a collision clause. It is the language of the insurance company that we are called upon to construe, 'and it is both reasonable and just that its own words should be construed most strongly against itself. ' National Bank v. Insurance Co., 95 U.S. 673, 679, 24 L.Ed. 563; Thompson v. Phenix Ins. Co., 136 U.S. 287, 10 Sup.Ct. 1019, 34 L.Ed. 408. Light is thrown upon the defendant's own understanding of the contract by the fact that, when notified of the abandonment of the vessel, they made no claim that loss occurred from a cause not insured against, but wrote to the plaintiff that their policies 'were rescinded and voided by the unseaworthiness of said vessel which caused her loss.' Error is assigned to the exclusion of evidence offered to show the general understanding among those engaged in marine insurance business and in the shipping business 'in San Francisco and thereabouts' that a rider, such as is attached to the policy in suit, supersedes the terms of the policy and alone defines the risk. If the offer had been to prove that a term or expression used in a contract of insurance had received a particular construction by the general consent of the mercantile world, a different question would be presented; but the offer was to prove a general understanding of the meaning of an insurance contract in San Francisco and thereabouts. The evidence was clearly incompetent. The contract speaks for itself. It is neither ambiguous nor obscure.

'Custom or usage which contradicts the express terms of a policy of insurance is not controlling.' 12 Cyc. 1093, and cases there cited; 17 C.J. 506; Arnould, Sec. 56.

Nor was it error to exclude testimony offered to show that, in applying for insurance, the plaintiff's agent agreed with the agent of the Union Marine Insurance Company that the only risks intended to be insured against were fire and...