Al Berman, Inc. v. Aetna Casualty & Surety Co.

• Decision Date: 10 November 1954
• Docket Number: No. 11322.,11322.
• Citation: 216 F.2d 626
• Parties: AL BERMAN, Inc., Appellant, v. The AETNA CASUALTY & SURETY CO.
• Court: U.S. Court of Appeals — Third Circuit

216 F.2d 626 (1954)

AL BERMAN, Inc., Appellant, v. The AETNA CASUALTY & SURETY CO.

No. 11322.

United States Court of Appeals Third Circuit.

Argued October 5, 1954.

Decided November 10, 1954.

Sydney C. Orlofsky, Philadelphia, Pa. (Henry Arronson, Philadelphia, Pa., on the brief), for appellant.

Joseph W. Henderson, Philadelphia, Pa. (Rawle & Henderson, Harrison G. Kildare, Philadelphia, Pa., on the brief), for appellee.

Before MARIS, McLAUGHLIN and STALEY, Circuit Judges.

McLAUGHLIN, Circuit Judge.

The water damage insurance policy on which this suit is based covered a Philadelphia haberdashery store "* * * against all Direct Loss by `Water Damage' * * * Except as Hereinafter Provided * * *." Water damage is defined in the policy to mean among other things "the accidental discharge, leakage or overflow of water or steam from * * * plumbing systems * * * the accidental admission of rain or snow directly to the interior of the building through defective roofs, leaders or spouting * * *." Under "Perils not included" the policy provides that "This Company shall not be liable for loss by `Water Damage' * * * caused directly or indirectly by: (a) seepage, leakage or influx of water through building walls, foundations, basement floors, * * *." On the face page of the policy immediately after stating its amount, the premium rate and the amount of the premium, is space for "Additional coverages for which insurance is provided only when a premium is inserted." This has specific space for insertion of premiums, if coverage is provided, for "Underground Water Supply Mains and Fire Hydrants" and for "Chemical Refrigerant Leakage." There is a third line for the insertion of any other special coverage that might be desired. In the spaces opposite these three lines appears the word "Nil".¹

It is undisputed that on August 3, 1950, during the policy period, there was a heavy rain-storm in Philadelphia which resulted in some water damage to merchandise located in the rear part of the basement of the insured premises. The main issue is whether under the proofs the loss was within the policy. The court below held that it was not.

This is a diversity suit in which the law of Pennsylvania controls. There is no real dispute as to the facts. During the storm the rain water drained from the roof of the store into a spout or "leader" which ran down the outside front wall of the building and entered a ground soil pipe that in turn connected eventually with the city sewer. The soil pipe was broken about three inches beyond its connection with the spout with the result that considerable of the rain water coming into the pipe from the spout flowed out of the broken pipe and through a hole in the store's front foundation wall and into the front section of the basement. From the latter the water ran into the lower rear portion of the basement doing some damage to the stock there stored.

Appellant argues that the above quoted policy clause excluding water damage caused by "seepage, leakage or influx of water through building walls, foundations, basement floors" does not apply because in the present instance rain was involved. The thought is that since the words water and rain are used in the coverage clause the fact that rain is not mentioned in the exclusion provision creates at least an ambiguity which must be interpreted in favor of the assured. If the ambiguity asserted were present, by settled law we would resolve it in favor of the assured. But there is no ambiguity here. The coverage is for water damage, a generic term under which the policy includes particular kinds of water in stated conditions. And just as carefully it excludes certain types of damage caused by water generally and not restricted to rain water, water from plumbing systems or the like. Actually, under the facts the water now concerning us at the time it occasioned the damage in the rear basement, had ceased to be rain and, properly characterized, was by then surface water. See Richman v. Home Ins. Co. of N. Y., 1952, 172 Pa.Super. 383, 94 A.2d 164. Rain as such is "The condensed vapor of the atmosphere falling to the earth in drops large enough to attain sensible velocity." New Standard Dictionary.

Appellant suggests that when the policy uses the language in its protective clause "through defective * * * spouting" it should be interpreted as "because of" defective spouting. This may well be correct but that does not alter the plain policy directive that damage so arising is strictly limited by the exclusion provision which does not contradict the coverage but does directly restrict it to that which the insurance company has contracted to insure. And the exclusion applies just...