Ell Dee Clothing Co. v. Marsh

• Court: New York Court of Appeals Court of Appeals
• Writing for the Court: ANDREWS
• Citation: Ell Dee Clothing Co. v. Marsh, 247 N.Y. 392 (N.Y. 1928)
• Decision Date: 14 February 1928
• Parties: ELL DEE CLOTHING COMPANY, INC., Appellant, v. FREDERICK A. MARSH, Respondent.

247 N.Y. 392

160 N.E. 651

ELL DEE CLOTHING CO., Inc.,

v.MARSH.

Court of Appeals of New York.

Feb. 14, 1928.

Action by the Ell Dee Clothing Company, Incorporated, against Frederick A. Marsh. From a judgment of the Appellate Division (220 App. Div. 701, 221 N. Y. S. 817), affirming a judgment of nonsuit at the Trial Term, plaintiff appeals.

Reversed, and new trial granted.Appeal from Supreme Court, Appellate Division, First Department.

Leopold Blumberg, of New York City, for appellant.

Grant Horner and Henry Herzbrun, both of New York City, for respondent.

ANDREWS, J.

In November, 1923, the receiver of the plaintiff applied to his broker for a policy of burglary insurance to cover the stock of goods which had come into his possession. In turn, the broker passed on the application to another firm of brokers. They endeavored to place the insurance, and finally succeeded in making some arrangement with the defendant.

Mr. Marsh was the agent in New York of the ‘London Lloyds.’ Precisely what were his powers is not clear; but, when the application was handed to him, it was understood by all parties that a ‘Lloyds' policy was to be received.

The application had been made out upon a form appropriate to marine insurance. On the back were printed the clauses relating to that class of risk and immaterial here. It was headed, ‘Underwriters' and Brokers' Emergency Agreement,’ and the form was stated to be ‘Provisional.’ The application was said to be made by the brokers for the receiver of the Ell Dee clothing store. The amount of the insurance was to be $15,000. It was to protect against burglary for 60 days, ‘at and from 189 Stanton street, New York’ (where in fact the goods were located), and then follows: ‘Amount under deck, $101.50.’ That sum was in fact the agreed premium for the policy. Then follow the words ‘Binding’ and the signature ‘Marsh-for Company.’

This paper was delivered to the receiver. He drew a check for $101.50, which was received by the negotiating brokers. On December 6 there was a burglary at 189 Stanton street; clothing in the receiver's hands being taken. Shortly thereafter Marsh was notified of the burglary, and about January 21 he received proofs of loss made out to ‘F. A. Marsh, Representing Lloyds.’

No formal policy was ever executed by any one, and the plaintiff, having been vested with all the rights of the receiver in the subject-matter upon his discharge, brings this action to recover the loss directly of the defendant. It claims that he is personally liable upon the so-called ‘binder’ executed by him.

[1][3][4][6] Some preliminary matters must be considered before we reach the more important question involved in this case. It is said that the plaintiff has failed to show that Mr. Marsh ever received the check for the premium. It is true. But, if the defendant considered it important and intended to rely on a missing bit of proof that might have been supplied, he should have called attention to the defect. No reference to it was made on the trial. It is said the goods supposed to be covered by the binder are not described. But the application is against burglary made by the receiver of the Ell Dee Clothing store at 189 Stanton street. This would seem to cover the personal property, held by Mr. Derby as receiver of the corporation, at that place. It is said there is here no complete contract. The binder is intended to be superseded by a formal policy. Such a policy contains conditions to be performed by the assured. In its absence the nature of the risk assumed is not shown. So there is a failure to prove a meeting of the minds of the parties and a contract. A ‘binder’ is a present contract of insurance, issued to protect the assured temporarily while the assurer investigates the risk and determines whether or not to issue a permanent policy. Imported into it, however, are all the obligations ‘according to the terms of the policy in ordinary use by the company.’ Sherri v. National Surety Co., 243 N. Y. 266, 153 N. E. 70. If the form of the policy is fixed by the state, then its provisions are held to be included in any binder. If there is proof that the company has adopted any particular and customary form, the same thing is true. But it is for the company to show this fact. In the absence of legislative direction, it may use such a policy as it chooses. It may adopt many or few conditions. In the absence of all testimony, there is no presumption that in its policy it has inserted any conditions precedent. If it has adopted conditions subsequent, it is for it to show that fact and that they have been broken by the assured. There is no reason why it may not simply agree to indemnify for the loss by burglary of certain goods in return for a consideration. So whether the binder is to be interpreted by itself or with the addition of implied conditions, the minds of the parties meet. And in the absence of state regulations, it is for the assurer to show that conditions are implied and what they are. Such seems to be intimated in Underwood v. Greenwich Ins. Co., 161 N. Y. 413, 55 N. E. 936. There may be an exception to this rule. Some conditions may be so well understood as universally entering into...