Ira S. Bushey & Sons v. American Ins. Co.

• Decision Date: 20 November 1923
• Citation: 237 N.Y. 24,142 N.E. 340
• Parties: IRA S. BUSHEY & SONS v. AMERICAN INS. CO.
• Court: New York Court of Appeals Court of Appeals

237 N.Y. 24

142 N.E. 340

IRA S. BUSHEY & SONS

v.AMERICAN INS. CO. ^*

Court of Appeals of New York.

Nov. 20, 1923.

Action by Ira S. Bushey & Sons against the American Insurance Company. From a judgment of the Appellate Division (206 App. Div. 715,199 N. Y. Supp. 929) affirming a judgment of the Trial Term for plaintiff, defendant appeals.

Affirmed.

Hiscock, C. J., and Andrews, J., dissenting.Appeal from Supreme Court, Appellate Division, Second department.

George S. Brengle and Arthur W. Clement, both of New York City, for appellant.

Pierre M. Brown, of New York City, for respondent.

POUND, J.

The question is whether the insurance policy sued on covered the loss sustained. Plaintiff has a shipyard in Brooklyn where it repairs vessels and builds barges. It carried a small stock of lumber for use in its repair business, which was covered by a policy of general stock insurance. Being about to begin the construction of several scows, it obtained a policy from the defendant and six other companies jointly insuring it ‘for account of whom it may concern’ in the sum of $50,000 ‘to cover the legal liability of the assured, from any cause whatsoever, for loss and/or damage and/or expense, if any, to vessels and/or craft and/or their cargoes and/or their frieght, arising from or in connection with the operation of their plant, situated in Brooklyn, New York Harbor, including dry docks and/or marine railways used and operated in connection therewith.’ The policy also provides:

‘This insurance is also extended to cover, subject to the terms of the builders' risk clauses, as attached, the interest of the assured in work on such vessels, completed or in process of completion.’

These provisions are contained in a rider attached to the formal policy.

The first paragraph of the builders' risk clauses provides:

‘This insurance is also to cover all risks, including fire while under construction and/or fitting out, including materials in buildings, workshops, yards and docks of the assured. * * *’

Plaintiff, before obtaining the policy, had contracted to build the scows. The contracts provided that it should furnish the necessary timber. As the work progressed payments were to be made by the owners in installments. After the first payment was made plaintiff was to protect the owner under a specific policy on each vessel. Plaintiff had procured the stock required for each vessel and piled it separately in its yard where the work was to be done, but had gone no further than to shape up some material to be used in the construction of the scows, when a fire destroyed a quantity of the lumber. The total amount destroyed was 674,914 feet of a total of 1,266,914 feet. Of this quantity about 19,000 feet was fabricated timber. The courts below have held that, within the meaning of the policy, the work had been begun on each vessel, and that the insurer was liable for the loss.

[1] The language of the policy is not as clear and unequivocal as it might be, but it relates to loss to vessels ‘completed or in the process of completion,’ including materials assigned to vessels under construction. If it is fairly susceptible of two interpretations, one of which being that contended for by the insured, it should be most strongly construed against the insurer. Herrman v. Merchants' Ins. Co., 81 N. Y. 184, 188, 190, 37 Am. Rep. E. 810; Paskusz v. Philadelphia Casualty N. Y. 574, 576, 577, 57 N. E. 182;Michael v. Prussian Nat. Ins. Co., 171 N. Y. 25, 35, 63 N. E. ,810;Paskusz v. Philadelphia Casualty Co., 213 N. Y. 22, 26,106 N. E. 749, Ann. Cas. 1915A, 652;Thompson v. Phenix Ins. Co., 136 U. S. 287, 10 Sup. Ct. 1019, 34 L. Ed. 408.

The insurer contends that a vessel is not under construction or in the course of completion within the meaning of the policy until some of its parts are joined together in a definite manner, and that the mere fabrication of some of the timbers is not construction but preparation for construction. But, in construing the builders' risk covered by an insurance policy, we must take notice that, before the timbers are united so as to begin the erection of the structure within the strict meaning of the words, they are brought to the site with the intention in due course of putting the component parts together and are shaped before they are erected in place. When this work has begun, in a fair sense the construction of the building is begun and the builders' risk has attached. A proper consideration of the purpose of builders' risk insurance should be had. The policy should be read, if it can be without twisting words and rendering plain meanings nugatory, so as to make the scheme of the policy reasonable and to protect the builder if a loss to materials on the ground occurs before any of the timbers have been built into the structure.

‘A construction which makes the contract fair and reasonable will be preferred to one which leads to harsh or unreasonable results.’ Crane, J., in ...