Am. Employers Ins. Co. v. Goble Aircraft Spec.

• Citation: 205 Misc. 1066
• Parties: American Employers Insurance Company, Plaintiff,<BR>v.<BR>Goble Aircraft Specialties, Inc., et al., Defendants.
• Decision Date: 09 June 1954
• Court: United States State Supreme Court (New York)

205 Misc. 1066

American Employers Insurance Company, Plaintiff,

v.Goble Aircraft Specialties, Inc., et al., Defendants.

June 9, 1954.

Walter K. Connor for plaintiff.

John W. Trapp for Goble Aircraft Specialties, Inc., and others, defendants.

Louis E. Schwartz for Mary Finkelberg, as administratrix of the estate of Victor Finkelberg, deceased, and another, defendants.

Francis E. Carberry for Margaret O'Brien, as administratrix of the estate of Patrick O'Brien, deceased, defendant.

Morris Zweibel for Eugene Laurenzana, as executor of Frank Laurenzana, deceased, and another, defendants.

FRANK, J.

This is an action for a declaratory judgment.

On September 1, 1951, a fishing boat named "Pelican" sailed from a slip, forming a part of a development known as Fishangri-La, located in an inlet called Ford Pond Bay, at Montauk, Long Island. While more than a half-mile north of the lighthouse at Montauk Point and some miles from Fort Pond Bay, the vessel encountered high winds, heavy seas and a rip tide. It capsized and foundered with a resultant loss of forty-six lives. Edward Carroll, owner and captain of the "Pelican", was among those who died.

The dock was part of a business establishment that included a dockmaster's office, a bait and tackle shop, a garage, a gas station, two restaurants, a bar, a cocktail lounge, and a lodge and cottages with sleeping accommodations. The entire development was owned by defendant Goble Aircraft Specialties, Inc., and leased to defendant Fishangri-La, Inc. The defendant Gene W. Goble was president of both corporations.

The plaintiff insurance company issued a general liability policy (comprehensive form) dated April 5, 1951, containing a limit of its liability to $100,000 for each person and $300,000 for each accident, and purporting to indemnify the afore-mentioned corporations and Gene W. Goble, among other things (Coverage B) for "bodily injury * * * including death at any time resulting therefrom, sustained by any person and caused by accident".

The remaining defendants, executors or administrators of the estates of some of the persons drowned when the "Pelican" foundered, instituted wrongful death actions against the assureds prior to the commencement of this action for a declaratory judgment. Eleven such actions in five different courts seek an aggregate recovery of $1,476,830.60. We are told that additional actions are now pending and it is readily apparent that the claims may total several millions of dollars.

The plaintiff seeks a declaration that (a) no liability attach to it under the terms of its policy with the assureds, and (b) it not be required to defend the actions against the assureds and, in any event, not beyond the policy coverage limits of $300,000. The defendants resist the plaintiff's contentions, assert that no justiciable controversy exists, and affirmatively seek a declaration that the policy coverage is $300,000 for each of the assureds. The problems raised as to the reservation of rights agreements, in our view, became academic by this determination and require no further discussion.

We hold that a justiciable controversy exists between plaintiff and its assureds for which there is no adequate remedy at law and for which a declaratory judgment is proper (New York Cas. Co. v. Barbieri, 196 Misc. 203).

The three principal defendants contend that each of them has coverage to the limit of $300,000 for a total of $900,000. We cannot so construe the policy. There is no proof that separate premiums were paid for each of them to obtain such coverage. The policy (Par. 7) provides: "The inclusion herein of more than one insured shall not operate to increase the limits of the company's liability."

Prefatorily, it should be noted that generally the decisions indicate that policies of insurance or indemnity are to be construed liberally in favor of the assureds and strictly against the carrier (Lite v. Firemen's Ins. Co., 119 App. Div. 410, 412, affd. 193 N.Y. 639; Tonkin v. California Ins. Co., 294 N.Y. 326, 329; Gerka v. Fidelity & Cas. Co., 251 N.Y. 51, 55). The word "comprehensive" includes those damages which a person of ordinary business intelligence would reasonably and naturally regard as incidental to or flowing from the hazard insured against (Tonkin v. California Ins. Co., supra, 329).

The several complaints in the wrongful death actions allege in substance that the assureds were negligent in the ownership, operation, supervision, maintenance, management and control of the dock, piers, equipment and appurtenances; that the assureds advertised to the public that they controlled and operated a fleet of fishing boats, including one described as "Pelican II", under competent and skillful captains; that special fishermen's trains direct to Fishangri-La were provided; that fishing vessels were supervised for the proper protection of passengers, including safety; that accurate weather reports were obtained and furnished to captains; and that Carroll, an independent contractor, operated the vessel under the directions of and pursuant to a contract with the defendants.

As heretofore indicated, plaintiff contends that under the terms of its policy it cannot be held to indemnify the assureds for any wrongful death resulting from the catastrophe. It relies upon "Exclusion b" in its policy, which reads: "This policy does not apply: * * * (b) under Coverages B and D, except with respect to operations performed by independent contractors, to watercraft while away from premises owned, rented, or controlled by the named insured, automobiles while away from such premises or the ways immediately adjoining, or aircraft, or the loading or unloading thereof."

To sustain its position, the plaintiff urges: (1) there was no relationship of independent contractor; (2) the claimed "overloading" is excluded from coverage under the phrase "loading or unloading thereof"; (3) the accident occurred "to watercraft while away from premises, owned, rented or controlled by the named insured".

It is alleged in the wrongful death actions that Carroll was an independent contractor who operated his vessel under the direction of and pursuant to a contract with the assureds and that their negligent acts at the premises resulted in the loss. Whether the captain was an independent contractor cannot be determined here. It remains as a question of fact in the wrongful death actions (Johnson v. R. T. K. Petroleum Co., 289 N.Y. 101; Irwin v. Klein, 271 N.Y. 477). If the findings in those actions establish the relationship and also impose liability upon the assureds, the plaintiff would be required to indemnify.

Fishangri-La, Inc., leased slips to boat owners, one of whom was Carroll, captain of the capsized vessel "Pelican". The agreement provided, inter alia, for the payment of $150 dockage to Fishangri-La, Inc., for the 1951 season. In addition, Carroll was required to pay twenty-five cents for each passenger; to purchase only from Fishangri-La, Inc., all gasoline, oil and bait used on the vessel; to operate his ship exclusively from Fishangri-La; and to abide by certain regulations in the agreement to be administered by the dockmaster employed by the assured. Pursuant to these regulations, Carroll and other boat captains were required to have their vessels available for fishermen arriving by train, to return from fishing trips in time for passengers to board homeward bound trains, to refuse boat charters unless all train passengers were first accommodated and prior notification of the charter had been given to the dockmaster. One of the crucial provisions follows: "(22) When, in the opinion of the Dockmaster, or his representative, weather, wind or sea conditions are such that sailings would be unsafe, he will cancel all sailings of boats docked at Fishangri-La. This decision will be binding upon all Captains of bottom boats and charter boats. Such cancellation will prohibit sailings of these same boats from other docks as well."

It thus appears and it is found that Fishangri-La exercised or had the right to exercise control over boats using its docks, for the safety of its patrons. It had the right to prohibit the departure of the subject vessel if, in the opinion of the dockmaster, weather, wind, or sea conditions made sailing unsafe.

The complaints in the wrongful death actions also allege that, under the direction of the assureds, the "Pelican" was permitted to sail without warning to its passengers despite adverse weather conditions, and while grossly overloaded. It is argued by plaintiff that carrying a far greater number of passengers than was proper or permitted (i.e., overloading) would relieve it of its obligation to indemnify under (b) of the exclusions. This, because the phrase "or the loading or unloading thereof" exempts the carrier from its coverage of the conveyances insured.

We cannot interpret the quoted phrase to include the transportation of an excessive number of passengers. It is our view that the exclusionary phrase deals with accidents occurring during the process of loading or unloading at the dock. Nowhere is the word "overloading" used in the policy, nor does it expressly eliminate coverage, in the event that an excess number of passengers were permitted to board the vessel. If that were plaintiff's intention, it should have so stated in the contract which it prepared. A careful search of the decisions, both American and British, has failed to reveal any case which precisely interprets the word "overloading" in its relation to "loading and unloading". Reverting, therefore, to the rules of interpretation hereinbefore discussed, we must hold that if the loss was occasioned by the assureds' permitting the vessel to sail overloaded, the carrier would be...