Curacao Trading Co. v. Federal Ins. Co.

Decision Date18 August 1943
Docket NumberNo. 286.,286.
Citation137 F.2d 911
CourtU.S. Court of Appeals — Second Circuit

Gustave Simons, of New York City (Theodore E. Wolcott, of New York City, of counsel), for plaintiff-appellant.

Bigham, Englar, Jones & Houston, of New York City (John M. Aherne, of New York City, of counsel), for defendant-appellee.

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The plaintiff in this action, the Curacao Trading Company, Inc., is a Netherlands corporation engaged in the import and export business in this country. On July 31, 1935, it obtained through William Stake & Company, Inc., an insurance brokerage corporation, an open policy of marine cargo insurance from the defendant, the Federal Insurance Company. The policy provided, among other things, for insurance "against physical loss or damage from any external cause, including non-delivery, * * *" and it also stated that "William Stake & Co., Inc., are the assured's brokers and agents and that this policy shall be continuous and covers subject to its terms * * *". On April 3, 1939 this policy was made to apply to 18,480 bags of cocoa beans which were understood to be located at Harbor Stores Corporation in Long Island City, New York. Coverage of the beans was made in the usual way by the issuance of a certificate which described the beans and which declared that the certificate was issued under the policy and subject to its terms.

Curacao desired insurance protection because of an agreement it had made with the Garcia Sugars Corporation whereby Curacao loaned Garcia a substantial sum of money against the security of the cocoa beans which were supposed to be in the Harbor Stores Warehouse. The agreement for the loan also warranted title in Garcia free and clear of all encumbrances and provided that the beans should be of a quality acceptable on the New York Cocoa Exchange. Curacao, which had received warehouse receipts for the cocoa, delivered these to the Grace Bank along with the insurance certificate in order to borrow the money which was then advanced to Garcia; and the bank then re-delivered the warehouse receipts and the insurance certificate to Curacao, having taken trust receipts in their stead. The security value of the cocoa beans was protected by a hedging operation by the sale of cocoa futures on the Exchange so that the only risk that Curacao undertook was that of the ownership of the beans themselves by Garcia. Curacao, however, claims that the defendant, the Federal Insurance Company, assumed that risk by the issuance of its certificate under the policy and from a course of dealing among those connected with the issuance of the certificate.

It is undisputed that conferences were had about the very transaction in controversy between Franz Vandervygh, the co-manager of Curacao, and James Christie, vice-president of Stake. After learning of the details of the Garcia contract in its unsigned form, Christie consulted William Bonner of Chubb & Son which acted as the manager of the defendant; and Bonner approved an extension of the coverage under the policy from $75,000 to $100,000. This much is conceded by the defendant. But the plaintiff alleges that more occurred in the conversations between Christie and Vandervygh and that Christie warranted that the honesty of the warehouse as well as the physical loss of the cocoa beans was covered by the insurance certificate issued under the policy or, alternatively, by a separate insurance policy in the form of the certificate. To substantiate this claim the plaintiff has shown that Stake had the power to countersign this certificate and others and had, from time to time, countersigned certificates which varied the risks in basic insurance policies. On one occasion, for example, Stake added war risk insurance to a policy held by Curacao. From this the plaintiff concludes that Stake had unlimited authority to bind the defendant in respect to the insurance.

Be that as it may, the plaintiff accepted the certificate as issued and the only question before us is whether the plaintiff was protected by what happened subsequent to the issuance of this certificate. On May 25, 1939, the plaintiff made a written demand on the warehouse which was refused. Shortly thereafter both Harbor Stores Corporation and Garcia Sugar Corporation were...

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18 cases
  • Groban v. SS PEGU
    • United States
    • U.S. District Court — Southern District of New York
    • July 23, 1971
    ...the delivery of the goods to the f. o. b. carrier. See Curacao Trading Co. v. Federal Ins. Co., 50 F.Supp. 441 (S.D.N.Y.1942), aff'd, 137 F.2d 911 (2d Cir.), cert. denied, 321 U.S. 765, 64 S.Ct. 521, 88 L.Ed. 1061 (1943). The assured need not have title to or legally enforceable in rem righ......
  • Balfour MacLaine Intern. Ltd., In re
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 30, 1996
    ...wrongful issuance of negotiable warehouse receipts. In support of this contention, INA relies on two cases, Curacao Trading Co. v. Federal Ins. Co., 137 F.2d 911 (2d Cir.1943), cert. denied, 321 U.S. 765, 64 S.Ct. 521, 88 L.Ed. 1061 (1944), and Nieschlag & Co. v. Atlantic Mutual Ins. Co., 4......
  • Parker v. Lester
    • United States
    • U.S. District Court — Northern District of California
    • April 21, 1953
    ...been joined. Pursuant to Rule 21, F.R.C.P., the motion to add them as parties respondent is granted. Curacao Trading Co. v. Federal Insurance Co., 2 Cir., 1943, 137 F.2d 911, certiorari denied, 321 U.S. 765, 64 S.Ct. 521, 88 L.Ed. 1061. See generally 2 Barron and Holtzoff, Federal Practice ......
  • Pacific Gas & Electric Co. v. Fibreboard Products
    • United States
    • U.S. District Court — Northern District of California
    • November 5, 1953
    ...v. Curran, D.C.S.D. N.Y., 87 F.Supp. 423. See also Curacao Trading Co. v. Federal Ins. Co., D.C. S.D.N.Y., 2 F.R.D. 265, affirmed 2 Cir., 137 F.2d 911. Rule 15(a), F.R.C.P., refers, in general terms, to the broad subject of changes in the pleadings, by amendment. Rule 21, F.R.C.P., refers, ......
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