Canton Ins. Office v. Independent Transp. Co.

• Decision Date: 13 October 1914
• Docket Number: 2382.
• Citation: 217 F. 213
• Parties: CANTON INS. OFFICE, Limited, et al. v. INDEPENDENT TRANSP. CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

217 F. 213

CANTON INS. OFFICE, Limited, et al. v. INDEPENDENT TRANSP. CO. et al.

No. 2382.

United States Court of Appeals, Ninth Circuit.

October 13, 1914

William H. Gorham, of Seattle, Wash., for appellants.

Kerr &amp McCord, of Seattle, Wash., and Ira A. Campbell, of San Francisco, Cal., for appellees.

Before GILBERT and ROSS, Circuit Judges, and WOLVERTON, District judge.

GILBERT Circuit Judge.

On July 3, 1907, the appellants issued to the Independent Transportation Company polices of insurance covering its steamer Vashon, then engaged in the summer trade between the city of Seattle and Alki Point, a summer resort on Puget Sound, about six miles from Seattle. The policies covered the vessel from July 3, 1907, until July 3, 1908. Each of the policies insured the owner against perils of the sea 'and all other losses and misfortunes that shall come to the Vashon or damage to the said vessel insured or any part thereof, to which insurers are liable by the rules of insurance in San Francisco. ' In August, 1907, the Vashon discontinued her run to Alki Point, and until December was moored at the King street dock in Seattle. About December 1, 1907, she was removed from that dock and moored in the Duwamish river, a tributary of Elliott Bay. On December 15, 1907, the Vashon sank at her moorings. To the libels brought by the insured against the appellants to recover on the policies, the appellants answered, denying liability thereon, and alleging a violation of the express warranty therein contained that during the term of the policies the vessel would be and remain employed in the general freight and passenger business on Puget Sound, within a radius of 30 miles from Seattle. The trial court construed the warranty otherwise, and ruled against the appellants, and entered a decree to enforce their liability upon the policies.

A court should give to a written contract that reasonable construction which it is to be assumed intelligent business men would give it.

'Contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms' which the parties have 'used; and, if they are clear and unambiguous, their terms are to be' taken and 'understood in their plain, ordinary, and popular sense ' Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452-463, 14 Sup.Ct. 379, 38 L.Ed. 231.

'Rules established for the construction of written instruments apply to contracts of insurance equally with other contracts. ' Liverpool, etc., Ins. Co. v. Kearney, 180 U.S. 132-135, 21 Sup.Ct. 326, 328 (45 L.Ed. 460).

We find written on the margin of the policies involved in this case the following:

'Vessel warranted employed in the general passenger and freighting business on Puget Sound, within a radius of thirty miles from Seattle. Warranted no lime under deck.'

These warranties cannot reasonably be construed to be other than what their terms plainly import: First, a warranty that during the term of the policy the vessel is to be navigated in the general passenger and freighting business, and on Puget Sound within a radius of 30 miles from Seattle; second, that during that time no lime shall be carried under deck. They are expressed in no unusual form. They are similar in phraseology to other warranties in marine insurance policies, examples of which are found on the margin of policies which were introduced in evidence in this case, such as 'warranted free from capture, seizure, and detention,' etc. 'Warranted confined to Pacific Coast trade not north of Comox nor south of Valparaiso. ' All such warranties are inserted for the purpose of limiting and defining the risk. Before insuring a vessel, it is important to the insurance company to know in what business the vessel is to be engaged, and upon what waters she is to be navigated. Said Lord Watson, in Birrell v. Dryer, 9 App.Cas. 345:

'To define the limits within which the vessel is to be navigated, for the purpose of a time policy, is in principle precisely the same thing as to describe the voyage for which a vessel is insured under an ordinary policy.' But it is urged that the words of the warranty do not necessarily mean what they purport to say, but that another meaning may be found in them, and the rule is invoked that, where a provision of a policy of insurance is ambiguous, it is to be construed in the sense most favorable to the assured, since the instrument is prepared by the insurer, and it is contended that the warranty first above quoted may be construed to mean that the vessel, at the particular time of taking out the policy, was warranted to be engaged in the passenger and freighting business on the waters of Puget Sound within a radius of 30 miles from Seattle, or that she had prior thereto been so engaged. To this it is to be said that such a warranty would be of no value to either party to the insurance contract. It would not in any way affect the risk, and it is not conceivable that such a representation would have been embodied in the form of warranty. If it had been the intention to specify the business in which the steamer was or had been engaged, the warranty would have been that the vessel 'is now carrying passengers between Seattle and Alki Point. ' The construction contended for by the appellee would be strained, unnatural, and unreasonable. By a like process of reasoning, most, if not all, warranties could be explained away. Thus the warranty 'no lime under deck' might be said to mean that there never had been lime below the deck, and the warranty 'no St. Lawrence,' construed in Birrell v. Dryer, above cited, might be construed to mean that the vessel was not then navigating or had not navigated the waters of the St. Lawrence, and the warranty construed in Kirk v. Home Ins. Co., 92 A.D. 26, 86 N.Y.Supp. 980, 'warranted confined to the use and navigation of the waters of New Haven Harbor, and adjacent inland waters,' could be explained to mean only that the vessel was warranted to have been theretofore confined to the use of those waters. In Birrell v. Dryer, the policy contained the words 'warranted no St. Lawrence between the 1st of October and 1st of April. ' It was held that there was no ambiguity or uncertainty in these words sufficient to prevent the application of the ordinary rules of construction, and that, according to those rules, the whole St. Lawrence navigation, both gulf and river, was within the fair and natural meaning of those negative words. Lord Watson, discussing the contention that the words 'no St. Lawrence' were ambiguous and must be applied to the river only, because underwriters are the proferentes with regard to a policy of insurance, said:

'That the underwriters may be rightly held to be the proferentes with regard to many conditions in a policy, I do not doubt; whether they ought to be so held depends, in each case, upon the character and substance of the condition. In the present case there are many considerations which lead to the inference that the clause in question is not one constructed and inserted by the appellants alone, and for their own protection merely. It was, in point of fact, inserted in the contract by the agent of the respondents; and it is in form a warranty by them that their vessel will not be navigated in certain waters, a matter which it was entirely within their power to regulate. These

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