Automobile Ins. Co. of Hartford, Conn., v. Eastern Machinery Co.

• Decision Date: 11 December 1939
• Citation: 25 N.E.2d 954,63 Ohio App. 203
• Parties: AUTOMOBILE INS. CO. OF HARTFORD, CONN., v. EASTERN MACHINERY co.
• Court: Ohio Court of Appeals

25 N.E.2d 954

63 Ohio App. 203

AUTOMOBILE INS. CO. OF HARTFORD, CONN., v. EASTERN MACHINERY co.

Court of Appeals of Ohio, First District, Hamilton.

December 11, 1939

Mr. Henry E. Beebe, of Cincinnati, for appellant.

Sanford A. Headley and James G. Headley, both of Cincinnati, for appellee.

MATTHEWS Judge.

This is an appeal from a judgment of the Court of Common Pleas reversing a judgment of the Municipal Court of Cincinnati in favor of the defendant, and entering judgment in favor of the plaintiff.

The plaintiff is a corporation engaged in the insurance business. It issued a policy covering a shipment of freight while in transit and insuring the defendant against loss or damage from specified causes, to the shipment while it was in transit from Evansville, Indiana, to Cincinnati, Ohio.

The shipment was damaged while in transit from a cause other than one of those specified in the policy delivered to the defendant, but under such circumstances as to lead both the insured and the insurer to believe that the carrier was liable to respond in damages. The insured also believed that the insurer was liable, but on inspection of the policy it found that the damage resulted from a cause not specified in the policy. The defendant asserted that it had applied and paid for insurance against all loss and not merely loss from specified causes. It demanded that the plaintiff--the insurer--settle with it on the basis of the terms of the policy applied for, rather than on the basis of the policy actually issued. The plaintiff seems to have concluded that under the defendant's application it should not have issued the policy limiting its liability from specified causes, but should have issued a policy insuring against loss from whatever cause, subject to certain general limitations. It is agreed that one of these limitations contained in such a policy is as follows: '1. Warranted by the assured free from any liability for merchandise in the possession of any carrier or other bailee, who may be liable for any loss or damage thereto and for merchandise shipped under a bill of lading containing a stipulation that the carrier may have the benefit of the insurance thereon.'

It is also agreed that the bill of lading contained this provision '2. Any carrier or party liable on account of loss or damage to any of said property shall have the full benefit of any insurance that may have been effected upon or on account of said property, so far as this shall not avoid the policy or contracts of insurance, provided that the carrier reimburse the claimant for the premium paid thereon.'

There circumstances furnished the basis for a controversy between the parties as to whether the plaintiff was bound to reimburse the defendant for the loss suffered by it.

In the meantime the defendant had presented a claim to the carrier for the amount of the loss which was $990.

In this situation the parties entered into an agreement under which the plaintiff's agent in Cincinnati drew a draft upon it payable to the defendant. This draft is worded as follows: 'Pay to the order of the Eastern Machinery Company the sum of $990 as a loan pending recovery from carrier from loss or damage by damage to machinery in transit,' etc.

Indorsed on this draft is this language:

'Received of the Fire & Marine Underwriters Agency of the Automobile Insurance Company of Hartford, Connecticut, the amount entered on the face of this draft as a loan in connection with claim for: Shipment November 14, 1934, to Eastern Machinery Company of Cincinnati, Ohio, via L. & N. Road.

'Said amount shall be returned to the Fire & Marine Underwriters Agency of the Automobile Insurance Company when and to the same extent recovered from any other person or persons.

'In consideration of said loan, it is agreed that we will institute and prosecute any and all suits and proceedings in our name for that purpose as we may be requested by the Fire & Marine Underwriters Agency of the Automobile Insurance Company of Hartford, Connecticut, at their expense.'

The defendant indorsed this draft below the quoted language and obtained the money upon it.

What transpired between these parties constituted a substituted agreement for the contractual relation theretofore existing between them. To enter upon a consideration of the rights of the parties under the superseded agreement would be altogether...