Cont'l Ins. Co. v. Aetna Ins. Co. of Hartford

• Decision Date: 11 April 1893
• Citation: 138 N.Y. 16,33 N.E. 724
• Parties: CONTINENTAL INS. CO. v. AETNA INS. CO. OF HARTFORD.
• Court: New York Court of Appeals Court of Appeals

138 N.Y. 16

33 N.E. 724

CONTINENTAL INS. CO.

v.AETNA INS. CO. OF HARTFORD.

Court of Appeals of New York.

April 11, 1893.

Appeal from supreme court, general term, first department.

Action by the Continental Insurance Company against the Aetna Insurance Company of Hartford, Conn., to recover on a policy of reinsurance. A judgment for plaintiff for a portion only of its claim, and a dismissal of the complaint as to the other causes of action stated, was affirmed at general term, (17 N. Y. Supp. 106,) and plaintiff appeals. Reversed.

Root & Clarke,(Elihu Root and Samuel B. Clarke, of counsel,) for appellant.

Wing, Shoudy & Putnam,(Joseph A. Shoudy, of counsel,) for respondent.

O'BRIEN, J.

The plaintiff sought to recover upon an open policy or contract of reinsurance made by defendant and two other companies, in which they assumed certain obligations that are now in dispute, and bound themselves ‘severally, and not jointly, nor the one for the other, to the assured.’ The plaintiff had issued in each case an open policy of insurance to Twombly & Co., the New York Lighterage & Transportation Company, and John H. Starin, on account of whom it may concern, bearing date, respectively, September 1, 1881, February 1, 1883, and December 6, 1882, ‘loss, if any, payable to assured upon all kinds of lawful goods and merchandise laden on board the good lighter or lighters, as indorsed hereon, or in a book kept for that purpose, for the several amounts, and on the goods and merchandise, as specified in the said indorsement; the said assured agreeing to enter for insurance all goods carried by them at the full value thereof, and to report the same to this company on Monday of each week, (or at such times as they may require.) At and from point or points in the harbor of New York as far south as the Narrows, and the inland waters of New Jersey, adjacent and tributary thereto, and on the North river as far as Piermont, and the East river as far as Throgg's Neck. * * * The said loss or damage to be estimated according to the true and actual cash value on the day of the disaster.’ On March 17, 1885, merchandise on board the lighter Chase was indorsed by Twombly & Co. for the amount to be insured of $16,000 in the book referred to in their policy, and the same was reported by them to the plaintiff at the time required. The cargo was lost by perils covered by the policy, and the loss adjusted upon the basis of the actual cash value of the cargo on the day of the disaster in the sum of $12,058.48. On the 19th of March, 1885, merchandise on board the barge James W. Eaton was indorsed by the New York Lighterage & Transportation Company for the amount to be insured of $15,900 in the book referred to in their policy, and the same was reported by it to the plaintiff at the time required, and in conformity with the contract. The cargo was lost by perils within the policy, and the amount adjusted upon the actual cash value of the cargo on the date of the disaster at $12,451.26. On October 7, 1885, goods on board the lighter Warren were indorsed by John H. Starin in the book referred to in the policy for the amount to be insured of $16,000, and the same duly reported to the plaintiff. There was a loss upon the goods included in this cargo, which was subsequently adjusted at $710. It is not questioned that the plaintiff in each of these cases had made with the shippers valid contracts of insurance, and was liable for the loss as adjusted. The plaintiff claims that these losses were covered by the contract of reinsurance with the defendant and the other two companies, bearing date January 1, 1885, and by which they agreed to reinsure the plaintiff, on account of whom it may concern; loss, if any, payable to them pro rata, ‘upon all kinds of lawful goods and merchandise laden on board the good lighter or lighters, as indorsed hereon, or in a book kept for that purpose, for the several amounts, and on the goods and merchandise, as specified in the said indorsement; the said assured agreeing to enter for insurance all goods at the full value thereof, and to report the same to the assurers on Monday of each week, (or at such times as they may require.) The said loss or damage to be estimated according to the true and actual cash value on the day of the disaster.’

The true meaning and construction of the following indorsement, made upon this policy, and bearing date February 2, 1885, raises the only question presented by this appeal: ‘On and after this date this policy covers the Continental Insurance Company as reinsurance to the extent of one half of the amount of each and every risk which equals or exceeds in value the sum of $15,000, and which the said Continental Insurance Company may have on cargo of any one barge or lighter, and insured by them under their open policies issued to the following named persons, viz.: Twombly and Company, John H. Starin, New York Lighterage and Transportation Company. * * * On cargoes of the value of $50,000 and upwards, this policy is to cover the excess of $25,000, not exceeding the sum of $50,000 on any one cargo. John Newman, Agent.’ The defendant's contention is that, as the value of the several cargoes which were lost, proved in each case, upon the adjustment, to be less than $15,000, the loss is not covered by the contract of reinsurance; and this view has been sanctioned by the courts below. The plaintiff, on the other hand, claims that as the entered or written value of the cargo in each case exceeded that sum, the defendant's contract covers the plaintiff's risk, and it is bound to make the plaintiff good for that part of the loss stipulated for in the contract of reinsurance. The plaintiff in each case treated the risk as reinsurance, and it indorsed in the book referred to in defendant's policy the cargo for one half the amount entered by the shippers, and reported the same to the defendant. The controversy, therefore, turns upon the meaning of the word ‘risk,’ as used by the parties in the above indorsement, which is the material part of the contract. In ascertaining the sense in which that word was used, the intention of the parties must govern, and the precise contract relations that each occupied to the other become important. The plaintiff, by its open policy issued to the carriers or shippers named, insured goods, the nature, character, and value of which were not known, and could not be known, when the policy was issued; but the kind and value thereof were to be particularly specified thereafter, from time to time, as occasion required, by indorsement, or in a book kept for that purpose, to be reported to the plaintiff once in each week, as required. When the goods were laden, and certainly when so entered at their full value, the contract was completed in every case, and the liability of the plaintiff began. When the goods and their value were reported to the plaintiff, it could then know the character and extent of its risk under the policy; and the true value of the goods at the time of any disaster was to be the basis of its liability. The defendant and the two other reinsuring companies agreed with the plaintiff to share one half its liability for a certain class of those risks. That class was to be specified and defined, not by the result of a disaster, but by indorsement on the policy of reinsurance which the plaintiff held. Accordingly the parties limited the operation of the contract to ‘each and every risk which equals or exceeds in value $15,000.’ The defendant's liability was not to attach to any other risks that the plaintiff might take. It must be presumed from the nature of the business and the purpose of the contract that both parties intended to define the class of...