German-American Ins. Co. v. Commercial Fire Ins. Co.

Decision Date17 May 1892
Citation11 So. 117,95 Ala. 469
PartiesGERMAN-AMERICAN INS. CO. v. COMMERCIAL FIRE INS. CO.
CourtAlabama Supreme Court

Appeal from city court of Montgomery; THOMAS M. ARRINGTON, Judge.

Action on a contract by the German-American Insurance Company against the Commercial Fire Insurance Company. Defendant had judgment, and plaintiff appeals. Affirmed.

Watts & Son, for appellant.

Tompkins & Troy, for appellee.

MCCLELLAN J.

This is an action by the German-American Insurance Company against the Commercial Fire Insurance Company on a contract by which it is alleged, the defendant reinsured certain risks taken by plaintiff on property in New York city. The property was destroyed by fire, the loss paid by plaintiff, and reimbursement to the pro rata extent of reinsurance is now sought to be enforced from defendant. Trial below was had by agreement without jury, the issues of fact were found for defendant, and judgment went accordingly. This appeal presents for review the conclusions of the city judge on the evidence and the judgment rendered. There is no material controversy as to what the facts are. The contracts of reinsurance sued on were made in this way: The Commercial Fire Insurance Company, on May 26, 1887, signed, and mailed to the German-American Insurance Company, what is known as a "reinsurance compact," which was duly received and acknowledged by the latter. This compact, with its attached lists and schedules, authorized the German-American Company to reinsure itself in the Commercial Company, within certain limitations as to classes and amounts of risks, by entries thereon or therein, followed by certain ad interim and final reports to the reinsuring company, setting forth the term, amount, and class or risk, rate of premium, and location of property insured. Among other risks which the compact, as modified by subsequent correspondence, authorized the German-American Company to reinsure in or "cede" to the Commercial Company were nonfiber goods in brick stores or warehouses, in amounts not to exceed $5,000 in any one building or risk. Claiming to proceed under this authorization, and within its limitations, the German-American Company made and reported entries on the compact aggregating $12,500 on nonfiber goods stored in Rossiter's stores Nos. 1, 2, and 3, severally. The first entry and report was of $2,000 of reinsurance on goods in "Rossiter's store No. 2, foot W. 60th St., N.Y. city;" the next, of $3,000 on goods in "Rossiter's store No. 1, N.Y. city;" third, of $2,000 on goods in "Rossiter's store No. 1, N.Y. city;" fourth of $3,000 on goods in "Rossiter's store No. 2, N.Y. city;" and last, of $2,500 on goods in "Rossiter's store No. 3, N.Y. city." Previous to these entries and reports, plaintiff, for the purpose of inducing defendant to increase its maximum limit on amount of reinsurance on storage stores, had sent the latter a schedule showing the amounts of net risks it carried on a number of such stores in New York city and elsewhere, and among the other items in this list is the following, "Rossiter's stores, ft. 60th St., N.Y. city, $30,000."

On proof of loss, defendant paid plaintiff about $5,000, and refused to pay the balance claimed under the reinsurance contracts, amounting to something over $6,000, on the ground that, as it insisted, Rossiter's stores Nos. 1, 2, and 3 constituted but one building or risk, within the meaning of the said reinsurance compact, and, in consequence, plaintiff was without authority to bind defendant beyond the maximum limit of $5,000 on goods stored in said stores, and its entries and reports as to and of all reinsurance in excess of this limitation were abortive and invalid. It cannot be doubted, on the evidence found in this record, consisting of minute descriptions and diagrams of Rossiter's stores Nos. 1, 2, and 3, that they, in the ordinary sense of the term, constituted "one building." It appears that the building was five stories in height; that the outer wall was common to each of the stores; that the several floors were, respectively, on the same level; that, while two partitions walls divided the building into three rooms or compartments on each floor, there were doors about eight feet square in each of these walls between the several compartments in each of the five stories; that the whole structure was under one management, and devoted to the same uses, the storage of nonfibrous merchandise; and that the partition doors were used for the purposes of the passage of persons and the removal of goods from one store to another or others on each floor. It was also shown that double iron shutters were provided for closing these apertures in the partition walls; that these were generally closed; and that the partition walls extended five feet above the roof. It is not seriously, and cannot be successfully, contended that, upon this showing, the three stores in question were distinct buildings, or that they did not constitute "one" and the same building, as that word is commonly understood. Fair v. Insurance Co., 112 Mass. 320; Blake v. Insurance Co., 12 Gray, 265; Cargill v. Insurance Co., 33 Minn. 90, 22 N.W. 6; Sampson v. Insurance Co., 133 Mass. 49; Carr v. Insurance Co., 2 Mo. App. 466; Hochstadler v. State, 73 Ala. 24.

It is equally manifest, we think, that these stores, or the goods stored therein, constituted but "one" risk, in the sense of the compact under consideration, unless the word is to take on a different significance from the usage and custom proved in this case, and to be presently considered. It is most clear from the record before us that the Commercial Company conceived it to be of the utmost importance to it that its exposure to loss under the reinsurance compact should in no case exceed $5,000. When the German-American Company advised and requested it to raise its maximum list from $2,500 to $7,500 or $10,000 on nonfiber storage, it replied that "we think that the line suggested by you is rather too large for us. We have, however, concluded to authorize an increase on the 'nonfiber' stores to $5,000; that on 'fiber' to remain $2,500, as heretofore." And the purpose of the company evidently was to guard against the possibility or probability, in case of any loss, of losing in any one fire more than it could afford to lose, having in view its relatively small capitalization and assets. The means adopted to effectuate this purpose was the stipulation of the compact against being bound beyond a stated sum on any one building or risk. How this means could accomplish the end to which it was addressed, if the stipulation be construed so as to admit of reinsurance to three times the maximum limit, upon the mere circumstance that there are three rooms, stores, or compartments in the building proposed to be insured, while the probable consequence of a fire in any one of these stores would be the destruction of the contents of all three of them, and where the risks arising from the possibility of misconduct on the part of the insured would, of course, be equally incident to the goods in all and each one of the stores, it is difficult to perceive. With the probability that a fire starting in either of the stores would consume the contents of the others, and the certainty that incendiarism by the owner for the purpose of collecting insurance money-a risk which must be reckoned in all fire insurance-would go to the destruction of all the property kept by him in the building, there is every reason for the conclusion that the Commercial Fire Insurance Company intended the limitation to $5,000 to obtain with respect to property stored in different compartments, rooms, or stores in the same building, as in the case at bar; and we...

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