F.S. Royster Guano Co. v. Globe & Rutgers Fire Ins. Co.

• Decision Date: 19 November 1929
• Citation: 252 N.Y. 75,168 N.E. 834
• Court: New York Court of Appeals Court of Appeals
• Parties: F. S. ROYSTER GUANO CO. v. GLOBE & RUTGERS FIRE INS. CO.

252 N.Y. 75

168 N.E. 834

F. S. ROYSTER GUANO CO.

v.GLOBE & RUTGERS FIRE INS. CO.

Court of Appeals of New York.

Nov. 19, 1929.

Action by the F. S. Royster Guano Company against the Globe & Rutgers Fire Insurance Company. From a judgment of the Appellate Division (226 App. Div. 178, 234 N. Y. S. 685) unanimously reversing as matter of law a judgment of the Trial Term entered upon verdict of jury in favor of plaintiff and dismissing the complaint, plaintiff appeals

Affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

Charles R. Hickox, Robert S. Erskine and Henry P. Elliott, all of New York City, for appellant.

Robert Kelly Prentice, Myron T. Townsend and Erwin R. Lillard, all of New York City, for respondent.

CARNE, J.

On April 16, 1924, the Globe & Rutgers Fire Insurance Company issued an open policy of insurance to W. E. Hedger Company, Inc., insuring any and all goods or merchandise while being transported by barge or barges, owned and operated by the said W. E. Hedger Company, Inc. The plaintiff in this case, the F. S. Royster Guano Company, is a Virginia corporation, with its principal office in Norfolk, Va. In 1925 this plaintiff and the Hedger Company entered into a contract of transportation. The Hedger Company operated a freight forwarding service by means of barges. It contracted or arranged for taking phosphate rock from the steamer or steamers at New York, and transporting it on four barges through the Hudson river, New York State Canal, the Great Lakes, to plaintiff's plant at Toledo, Ohio.

The phosphate rock was owned by the plaintiff. The barges were owned, or under the control of, the W. E. Hedger Company, Inc. By the open policy of insurance, above referred to, the W. E. Hedger Company, Inc., arranged for the insurance on the plaintiff's property while in transportation. This was done by the issuance to the plaintiff of certificates by the Hedger Company with the authority of the defendant. This certificate of insurance, one for each of the four barges, certifies that W. E. Hedger Company, Inc., is insured under and subject to the conditions of open policy No. 377,173 of the Globe & Rutgers Fire Insurance Company, on an amount specified and on a specified number of tons of phosphate rock on board the named barge ‘at and from New York to Toledo, Ohio.’ Loss, if any, is payable to the insured, or its order, upon the surrender of the certificate. The following paragraph is contained in the certificate: ‘It is understood and agreed that this certificate represents and takes the place of the policy and conveys all the rights of the original policy holder (for the purpose of collecting any loss or claim), as fully as if the property were covered by a special policy direct through the holder of this certificate, and free from any liability for unpaid premiums.’

It also contains some of the warranty clauses which are contained in the open policy, or the customary form of marine insurance policy. We also find a provision that the insurers are to be subrogated to all the rights of the assured under their bills of lading or other contracts of carriage.

Much might be said in favor of the claim that these certificates as to the owners of the cargo constituted the insurance agreement or contract with the insurance company free of any of the conditions or terms contained in the original or open policy issued to the Hedger Company. De Monchy v. Phoenix Ins. Co. of Hartford, 44 Times Law Rep. 364, March 5, 1928; Brandyce v. Globe & Rutgers Fire Ins. Co., 252 N. Y. 69, 168 N. E. 832.

The words of the policy and the rider, however, will not stand this strain; such a construction becomes too attenuated. The insurer and the insured at the inception of the risk intended all the attached papers to be read together. Only after loss does the hope arise that the certificate may stand by itself. We must consider the conditions of the open policy as part of the certificates issued on the cargo, except as inconsistent therewith.

The four barges with the phosphate rock, on the 19th of October, 1925, left the port of New York, proceeded up the Hudson river in tow of a tug furnished by the W. E. Hedger Company, Inc. The destination of these barges was at all times Toledo, Ohio. On November 7, 1925, the barges started from Buffalo to cross Lake Erie, and suffered damage and loss in a storm. The plaintiff has brought this action on its certificates of insurance to recover for the loss of its phosphate rock. The defendant has resisted payment under a clause of its open or original policy referring to an approval required of Capt. Weisbeck. The point in this case is the meaning of the application of this approval. What was it that Capt. Weisbeck was to approve, and whatever it was, did the captain do it?

The schedule of rates annexed to the policy refers to trips from New York to Buffalo, from New York to Hamilton, Ontario, from New York to Cleveland, Ohio. In other words, it was within the contemplation of the parties that the barges of the Hedger Company were to go to other places that Buffalo, after passing through the Hudson river and the canals. The trips on the lakes were to be made only between May 1st and November 1st. A provision of the special form attached to the policy provided: ‘Warranted all trips on Great Lakes approved by Captain Weisbeck, as to tug, barges, number of barges in tow, weather, etc.’ On May 15, 1925, the Globe & Rutgers Fire Insurance Company, by another rider, referring to policy No. 377,173, provided that ‘trips on Great Lakes to be approved by Surveyor Weisbeck.’

Capt. Weisbeck did not give his approval to this trip starting November 7th of the barges on the Great Lakes. The plaintiff does not claim that it obtained or that the Hedger Company obtained any such approval. How the approval of Capt. Weisbeck was to be obtained and how it was to be given or recorded is not stated in the policy or any of the riders. Capt. Weisbeck was stationed in Buffalo. No written approval was required; apparently it could have been given personally by word of mouth, or by a nod, by telephone, or any other means indicating consent. The whole matter was left in a very vague and unsatisfactory condition. Apparently Weisbeck kept no record of his acts in this particular and never communicated any of his approvals or disapprovals to the insurance company. All we have in the case is the statement or warranty that trips on the Great Lakes are to be approved by Capt. Weisbeck. The shippers of the phosphate rock, the F. S. Royster Guano Company, were in Norfolk, Va. The insurance was taken out by the defendant's agent, the W. E. Hedger Company, Inc. The open policy issued by the defendant authorized the Hedger Company to issue these certificates of insurance to its customers. In placing the insurance the Hedger Company was therefore acting in behalf of the insurance company. There is no claim, however, that in placing the insurance the Hedger Company acted improperly or contrary to custom. The Virginia shipper might have insured the cargo for itself. It left the matter, however, to the owner of the barges or to the corporation handling the transportation. We therefore are dealing with this policy of insurance, or this kind of insurance as contracted for by the parties. That it may have been foolish or reckless for the owners of the transported property to leave the fulfillment of future obligations, sometimes called promissory warranties, to the carrier, or, in other words, to make promissory warranties, the keeping of which was beyond their control, is a matter outside our field of discussion. This is a matter of business and not a matter of law. The insurance was taken out with the warranty that the insurance would terminate unless trips on the Great Lakes were approved by a certain selected individual named Capt. Weisbeck. So long as shippers are willing to take these so-called certificates of insurance, binding them to conditions in open policies of which they know nothing, there will necessarily arise as a consequence losses which were never anticipated and could readily have been avoided. An insured is...