Crown Fabrics Corp. v. N. Assur. Co., Ltd.

• Decision Date: 25 January 1940
• Docket Number: No. 15.,15.
• Citation: 124 N.J.L. 27,10 A.2d 750
• Parties: CROWN FABRICS CORPORATION et al. v. NORTHERN ASSUR. CO., Limited.
• Court: New Jersey Supreme Court

10 A.2d 750

124 N.J.L. 27

CROWN FABRICS CORPORATION et al.

v. NORTHERN ASSUR. CO., Limited.

No. 15.

Court of Errors and Appeals of New Jersey.

Jan. 25, 1940.

Syllabus by the Court.

1. Plaintiffs, customers of a named assured who was, by defendant's policy, protected against loss by sprinkler leakage to property owned by it and indemnified against liability on customer-owned goods for like cause, sued the defendant insurer for damage to their goods by sprinkler leakage while on the assured's premises, claiming direct benefit under the policy. Held, the plaintiffs were strangers to the contract and to the consideration, that the contract was not made for their benefit, that any benefit accruing to them thereunder was only incidental and that the complaint set up no cause of action.

2. Before a claimant may claim favor as an assured under a policy contract he must establish his status as an assured.

3. To enable a person who is not a party to a contract to bring suit upon it, it must appear that the contract was made for his benefit; it is not enough that a possible benefit will come to him from the performance.

Appeal from Supreme Court.

Action by the Crown Fabrics Corporation and others against the Northern Assurance Company, Limited, to recover under policy insuring personalty against enumerated hazards, including sprinkler leakage. From a judgment of the Supreme Court in favor of the defendant, the plaintiffs appeal.

Judgment affirmed.

Laurence Semel, of Newark, for plaintiffs-appellants.

Horace F. Banta and Winne & Banta, all of Hackensack, for defendant-respondent.

CASE, Justice.

The appeal is from a judgment entered in the Supreme Court in favor of the defendant and against the plaintiffs following the striking of the complaint upon the ground that it did not disclose a cause of action. The question is whether the plaintiffs were insured under a policy issued by the defendant to D. & S. Processing Company.

The complaint contains three counts stating, respectively, the claims of the several plaintiff corporations. The major allegation, common to all of the counts, is that the defendant entered into a written agreement with the D. & S. Processing Company, a corporation of this state, wherein it agreed to insure the personal property of all of the customers of the D. & S. Processing Company against enumerated hazards, including sprinkler leakage, while that property was on the premises of the named assured at Clifton, and that while merchandise belonging to the plaintiff corporations was in the possession and custody of that company at the mentioned premises for the purpose of being processed it was damaged and destroyed as a result of sprinkler leakage.

The policy was issued to the D. & S. Processing Company. A clause therein contains this warranty: "Ownership. Warranted that the property insured hereunder is at all times owned solely and unconditionally by the Assured, unless endorsed hereon in writing to the contrary." There is no doubt that, stripped of endorsements, the policy insured only the D. & S Processing Company. The loss, if any, was made "payable to the Assured". In the repeated use throughout the original policy of the word "assured", it is always spelled with the initial letter capitalized, viz: "Assured", thereby individualizing the named person as the one, and the only one, who carried the benefit of the insurance and who could collect the loss, if any, thereunder. We start, therefore, with the distinct understanding that insured interest is that of the contracting party, namely, the D. & S. Processing Company, and that that interest was only in those goods which were owned solely and unconditionally by that company unless endorsed on the policy to the contrary. So we pass to the endorsements to ascertain whether they enlarge the insured interest of the D. & S. Processing Company to goods which it does not own solely and unconditionally; and we find these endorsements:

"In consideration of an Additional Premium of $178.00, it is hereby understood and agreed that this policy is extended to cover for not exceeding $25,000 against the risks of Theft, Burglary, Pilferage, Larceny, Robbery and Holdup, on the following property:

"Customers' Merchandise (including assured's changes for processing and/or handling and/or storage), sheet copper, copper sleeves, copper sleeve patterns, steel dies, being the property of the assured and/or others, also all materials and supplies owned by...