Home Ins. Co v. Gwathmey

• Decision Date: 17 February 1887
• Parties: Home Ins. Co. v. Gwathmey and others.
• Court: Virginia Supreme Court

1 S.E. 209

(82 Va. 923)

Home Ins. Co.

v.Gwathmey and others.

Supreme Court of Appeals of Virginia.

February 17, 1887

Fire Insurance—Policy—Goods on Storage—Double Insurance—Contribution.

Where a policy of fire insurance, by its terms, limits the company's liability to the loss affecting the interest of the assured, not to exceed the sum agreed on as the amount of the policy, and not to exceed the interest of the assured, and also provides that "goods on storage must be separately and specifically insured." and the depositors of goods on storage had specifically and separately insured their own goods; in an action by the assured warehouseman for the benefit of the owners of merchandise on storage, held, that the company is not responsible for goods on storage in which the assured had no interest, and there could be no contribution, there being no double insurance.

Error to corporation court, city of Norfolk.

Tunstall & Thom, for plaintiffs in error.

Walke & Old, for defendant in error.

Lacy, J. This is a writ of error to a judgment of the corporation court of the city of Norfolk, rendered on the third day of August, 1885. The action is upon a policy of insurance by the assured, commission merchants and licensed warehousemen, for the benefit of owners of merchandise on storage in their warehouse, and destroyed by fire. The said depositors had other insurance of their own, taken out by them, to cover, and more than covering, the entire value of all the goods stored by them in the warehouse; but their insurers, claiming that as the said warehousemen had insurance on their warehouse, and their own goods therein, greater than the value of their own losses, the insurers of the said warehousemen, of whom theappellant company is one, were compellable to ratably contribute to the losses of the said depositors; and upon that ground refused to settle in full with the said depositors for their losses until they bad exhausted their legal rights and remedies against the appellant company and others, the insurers of the warehousemen. The appellant company having refused to recognize any such demand upon them, the suit was brought by the warehousemen, upon the requisition, for the benefit, and at the costs of the said depositors, disclaiming for themselves all of their losses by the fire, and all of their own claims under the policy sued on having been paid. The case was tried in the said corporation court of Norfolk city, and judgment was rendered for the plaintiffs, for the benefit of the depositors, against the appellant company, for their due contributory rate, upon the principle that they were bound for contribution, the insurance being double upon the goods destroyed, and greater than their entire value. From this judgment the case is here by writ of error.

The whole question here is upon the construction of the policy sued on. The principles of interpretation applicable to contracts of insurance are the same as those which obtain in the case of other contracts. The same rule of construction which applies to other instruments applies also to these. They are to be construed according to the sense and meaning of the terms used, and, if these are clear and unambiguous, parol evidence will not be admitted to contradict, vary, or to explain them. Their terms are to be understood in their plain, ordinary, and popular sense, unless they have generally, in respect to the subject-matter, as by the known usage of trade, acquired a peculiar sense, distinct from the popular sense, rendering it necessary to resort to extrinsic proof in order to determine in which sense they are used, and so to explain their ambiguity; or unless the context evidently points out that they must, in the particular instance, and in order to effectuate the immediate intention of the parties, be understood in some special and peculiar sense. Lord Ellenborough, in Robertson v. French, 4 East, 135.

As was said by Lord Abinger in Cornfoot v. Fowke, 6 Mees. & W. 358: " A policy of insurance is a contract, and is to be governed by the same principles as govern other contracts. Its language is to receive a reasonable interpretation. Its intent and substance, as derived from the language used, should be regarded." There is no more reason for claiming a strict, literal compliance with its terms than in ordinary contracts. Full legal effect should always be given to it, for the purpose of guarding the company against fraud and imposture. Beyond this, we would be sacrificing substance to form; following words rather than ideas. Nelson, C. J., in Turley v. North American Fire Ins. Co., 25 Wend. 374. Indeed, a moment's reflection will render it apparent, says a learned writer, that there is nothing about an agreement about insurance intrinsically more sacred or inviolable than in an agreement about any other subject-matter.

In a case in the supreme court of the United States, much relied on in the argument here, the learned justice who delivered the opinion of that court said on this subject: " The most important question in this case relates to the proper construction of the defendants' policy of insurance. It is contended on their behalf that it covered only the warehouse company's interest in the goods contained in the warehouse." " Blanket and floating policies are sometimes issued to factors or warehousemen, intended only to cover margins uninsured by other policies, or to cover nothing more than the limited interest which the factor or warehouseman may have in the property which he has in charge. In those cases, as in all others, the subject of the insurance, its nature and extent, are to be ascertained from the words of the contract which the parties have made." It is true of policies of insurance, as it is of other contracts, that, except when the language is ambiguous, the intention of the parties is to be gathered from the policies alone. There are cases in which resort may be had to parol evidence to ascertain the subject insured, but they are cases of latent ambiguity; so, in the construction of other contracts, parol evidence is admissible to explain such ambiguities. In this particular the rule for the construction of all written contracts is the same. Lord Mansfield said, long ago, that courts are always reluctant to go out of a policy for evidence respecting its meaning. Loraine v. Thomlinson, 2 Doug. 585; Astor v. Insurance Co., 7 Cow. 202; Murray v. Hatch, 6 Mass. 465; Levy v. Merrill, 4 Greenl. 180; Insurance Co. v. Loney, 20 Md. 36; Arnould, Ins. 1316, 1317; 2 Greenl. Ev. 377; Home Ins. Co. v. Baltimore Warehouse Co., 93 U. S. 527. But there are cases where resort is necessary to parol evidence, to ascertain to whom the terms of the policy apply; as, when the policy is for or on account of the owner, or on account of whomsoever it may concern, evidence beyond the policy is then received to show who are the owners, or who were intended to be insured thereby. In such cases the policy fails to designate the real party to the contract, and, without resort to extrinsic evidence, there is no contract at all. Home Ins. Co. v. Baltimore Warehouse Co., supra; Finney v. Bedford Com. Ins. Co., 8 Mete. 348.

Let us look, then, to the terms of the contract now here drawn in question. This...