Kessler Export Corp. v. Reliance Ins. Co. of Philadelphia

• Decision Date: 14 May 1962
• Docket Number: No. 60-C-1094.,60-C-1094.
• Citation: 207 F. Supp. 355
• Parties: KESSLER EXPORT CORPORATION, a domestic corporation, Plaintiff, v. RELIANCE INSURANCE COMPANY OF PHILADELPHIA, PENN., and American Insurance Company of Newark, N. J., Defendants.
• Court: U.S. District Court — Eastern District of New York

207 F. Supp. 355

KESSLER EXPORT CORPORATION, a domestic corporation, Plaintiff, v. RELIANCE INSURANCE COMPANY OF PHILADELPHIA, PENN., and American Insurance Company of Newark, N. J., Defendants.

No. 60-C-1094.

United States District Court E. D. New York.

May 14, 1962.

William A. Stetter, Jr., New York City, for plaintiff; Robert Heller, Brooklyn, N. Y., of counsel.

Greenhill & Speyer, New York City, for defendant Reliance Ins. Co. of Philadelphia, Pa.; Simon Greenhill, John M. Speyer, New York City, of counsel.

Abrams & Bleich, New York City, for defendant American Ins. Co. of Newark, N. J.; Benjamin M. Haber, New York City, of counsel.

BARTELS, District Judge.

This action, predicated upon two policies of marine insurance, one issued by Reliance Insurance Company of Philadelphia, Penn. (hereafter "Reliance") and the other by American Insurance Company of Newark, N. J. (hereafter "American"), both in favor of the plaintiff, arises out of the theft of a shipment of surplus sunglasses loaded upon a carrier's truck stationed upon plaintiff's premises.

Upon the calendar call the parties appeared before the Court and indicated that there was one issue, i. e., coverage of the policies, which required decision before the trial could proceed and they thereupon waived a trial by jury and agreed to submit the resolution of this issue to the decision of the Court upon a stipulation of facts signed by them, which was made part of the record as Exhibit I. From this exhibit the pertinent facts appear as follows.

FACTS

The relevant portions of the Reliance policy provide as follows:

"12. Warehouse to Warehouse Clause. This insurance attaches from the time the goods leave the Warehouse and/or Store at the place named in the policy for the commencement of the transit and continues during the ordinary course of transit, including customary transshipment if any, until the goods are discharged overside from the overseas vessel at the final port. Thereafter the insurance continues whilst the goods are in transit and/or awaiting transit until delivered to final warehouse at the destination named in the policy or until the expiry of 15 days (or 30 days if the destination to which the goods are insured is outside the limits of the port) whichever shall first occur. The time limits referred to above to be reckoned from midnight of the day on which the discharge overside of the goods hereby insured from the overseas vessel is completed. Held covered at a premium to be arranged in the event of transshipment, if any, other than as above and/or in the event of delay in excess of the above time limits arising from circumstances beyond the control of the Assured."

"MARINE EXTENSION CLAUSES

* * * * * *

"1. This insurance attaches from the time the goods leave the warehouse at the place named in the policy, certificate or declaration for the commencement of the transit and continues until the goods are delivered to the final warehouse at the destination named in the policy, certificate or declaration, or a substituted destination as provided in Clause 3 hereunder."

Plaintiff also relies upon the following clause:

"16. Warehousing & Forwarding Charges, Packages Totally Lost Loading etc. Notwithstanding any average warranty contained herein, these Assurers agree to pay any landing, warehousing, forwarding and special charges for which this policy in the absence of such warranty would be liable. Also to pay the insured value of any package or packages which may be totally lost in loading, transshipment or discharge."

The relevant portions of the American policy provide as follows:

"4. This insurance covers only while the insured property is in transit within the limits of the Continental United States and Canada in the custody of:

"(a) Any railroad or railroad express company (including the risk while on ferries or in cars on transfers or lighters);

"(b) Public truckmen, land transfer or land transportation companies.

"This Policy also covers while on docks, wharves, piers, bulkheads, in depots, stations or on platforms, but only while in the custody of a common carrier incidental to transportation.

"This insurance attaches from the time the goods leave factory, store or warehouse at initial point of shipment, and covers thereafter continuously, in due course of transportation, until same are delivered at store or warehouse at destination."

Plaintiff, whose office and warehouse is located in Brooklyn, arranged for the shipment of certain merchandise (consisting of surplus sunglasses) to Casablanca, Morocco. Accordingly plaintiff engaged Abraham Rosen of Rosen's Trucking to pick up the shipment at plaintiff's warehouse and to deliver the same to a vessel located at Pier 1, Erie Basin, Brooklyn.

At approximately 2 P. M. on Friday, June 17, 1960, Rosen and his driver, Joseph Keezer, arrived at plaintiff's warehouse with the truck to pick up the shipment which was thereupon loaded onto Rosen's truck. At the inception of the loading the cab portion of the truck protruded from plaintiff's warehouse onto the sidewalk and the cargo section of the truck extended into the interior of the building. During the process of loading the truck was moved further out on to the sidewalk in order to permit the last portion of the cargo to be loaded onto the truck through the rear opening of the truck.¹ At all times, however, the actual loading took place totally within the confines of plaintiff's warehouse. When the truck was fully loaded, it was then backed completely into plaintiff's warehouse and the cargo portion secured. Rosen told plaintiff's president, Melvin Taks, that it was then too late to make the trip to the pier and that he would leave the truck in the warehouse and return Monday morning, June 20, 1960. Taks acquiesced and by mutual agreement the truck was left in the warehouse. After the truck was loaded Taks exhibited to Rosen a document purporting to be a bill of lading prepared by Taks and Rosen then affixed his signature thereto but Taks retained the document without Rosen receiving any copy thereof.

Rosen was to return on Monday morning, June 20, 1960, to pick up the loaded truck and a dock receipt which had also been prepared by plaintiff, and then make delivery to the pier. The truck (with its ignition key therein) and its contents were locked up inside of plaintiff's warehouse when plaintiff closed its building at about 5:15 P. M. on Friday, June 17th, and neither Rosen nor his driver at any time had the keys to the warehouse but the same remained in the possession of plaintiff. When the warehouse was opened the following morning, Saturday, June 18th, the truck and its contents had been removed by an unknown person who had made an illegal entry into the building and the same were never recovered by plaintiff.

THE ISSUE

The issue of law presented by the foregoing facts is whether plaintiff's alleged loss is covered by the "warehouse to warehouse" paragraphs under the two policies. While the terms of the policies are not identical, the intent in both seems to be the same. In the Reliance policy the "insurance attaches from the time the goods leave the Warehouse and/or Store" for the commencement of the transit, and in the American policy the "insurance covers only while the insured property is in transit" in the custody of a common carrier and attaches "from the time the goods leave factory, store or warehouse".

Therefore the question to be decided is whether under the wording of the policies the parties intended that plaintiff's property would be insured while loaded on the truck of the carrier upon plaintiff's premises, ready to leave for transportation to the pier after a period of repose. In other words, whether the goods left the warehouse and were in transit within the purview of the policies. The intention of the parties must be found in the contract and the circumstances surrounding the same. Gracie v. Marine Insurance Co. of Baltimore, 1814, 8 Cranch 75 at page 82, 3 L.Ed. 492; Reed v. Merchant's Mutual Ins. Co., 1877, 95 U.S. 23, at page 30, 24 L.Ed. 348.

Plaintiff claims that the merchandise was in fact in transit and had left its premises within the intendment of the policies since the goods had been delivered to the custody of the trucker for transportation to the pier and that it was immaterial as far as the policies were concerned, that the truck remained on plaintiff's premises. This, of course, places quite a strain upon the common meaning of the words as used in the policies and also gives a new meaning to the words "in transit". The argument implies that the goods were constructively in transit. It should be noted in passing that the Reliance policy does not refer to the custody of the carrier and that the American policy refers to the custody of the carrier only in the sense that it adds another limitation to the coverage of the policy when the property is in transit. "Custody of the carrier" and "in transit" are not synonymous. In support of its contention plaintiff cites a number of cases which, in effect, provide that under certain circumstances goods may be deemed to be in transit even though at the time of the loss they were not in motion, i. e., Gulf Ins. Co. v. Ball, Tex.Civ.App.1959, 324 S.W.2d 605; Koury v. Providence-Washington Ins. Co., 1929, 50 R.I. 118, 145 A. 448; J. G. Ries & Sons, Inc. v. Automobile Ins. Co., 1939, 121 N.J.L. 493, 3 A.2d 610.

In the above cases the merchandise had left the premises of the insured shipper and was in the legal custody and control of the carrier. The fact that thereafter there was a suspension or cessation of movement did not vitiate the inception of the transit or the custody or control of the carrier. The facts in those cases are not analogous to those here present. Goods may be "in transit" although they are not continuously in motion. Plaintiff also cites the following cases referring to the carrier's liability when the shipper has surrendered custody...