Koshland v. Columbia Ins. Co.

Decision Date04 March 1921
Citation130 N.E. 41,237 Mass. 467
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court


Exceptions from Superior Court; Suffolk County; William Cushing Wait, Judge.

Action by Abraham Koshland and others, doing business as J. Koshland & Co., against the Columbia Insurance Company, resulting in a finding for plaintiffs, and defendant excepts. Exceptions sustained, and judgment directed for defendant.

D. A. Ellis and S. M. Whalen, both of Boston, for plaintiffs.

Alfred Hemenway, of Boston, and Philip B. Buzzell, of Wilmington, for defendant.


This is an action of contract on a policy of insurance issued to wool merchants on or about April 2, 1906, for the term of one year. The policy consists of a printed form with general provisions and a typewritten rider called ‘Transportation Floater’ annexed to and made a part of the policy. The contract so far as material to this action is mainly set forth in the rider. The subject-matter of insurance was ‘goods and merchandise including packages consisting principally of wool and bags and bagging.’ The places, where the wool was to be covered by insurance, were

‘at and in transit between ports, and places in the United States and Canada covering same by railroads, ferries, Sound and/or other inland steamers and/or other conveyances, and by coastwise lines of steamers navigating Long Island Sound (not east of New Bedford) and/or Hudson river and/or New York Harbor and/or Boston Harbor.’

There was provision that the policy should not cover shipments over certain waterways not now material, but was to cover ‘risk by ferry or other transfer boats running in connection with all Rail routes.’ The risk insured against was described in these words:

‘To cover all risks of fire and navigation and transportation, including floods, including risks in and/or on docks, wharves, piers and/or bulkheads, landing sheds, depots, stations and/or platforms awaiting shipment and/or after arrival, from the time of leaving the warehouse, store or factory of shipper until safely delivered to warehouse, store or factory of consignee, or until the assured's risk ceases, whichever may first occur, but this policy to cover only while goods are actually in transit, and not including risk of craft to or from ocean-going vessel, on export or import shipments. It is understood that this policy also covers against loss by theft of entire shipping packages while in transit in the custody of any common carrier or other bailee, but this clause shall under no circumstance be construed to include pilferage. In the event of loss, for which claim may be made under this policy, the valuation of the merchandise insured hereunder shall be the actual invoice cost, together with such costs and charges since shipment as may have accrued and become legally due thereon, * * * but in the absence of an invoice the market value of the article insured, at point of destination on the day of the disaster shall be considered the valuation of the merchandise insured hereunder.’

The only controversy between the parties is whether the loss of the plaintiffs or any part thereof took place under such circumstances as to be covered by the policy. The pertinent facts in that connection, stated summarily, are that the plaintiffs, being wool merchants, with a place of business at Boston, in their course of business buy wool either on the sheep or ‘in the grease’ (that is, in the uncleaned condition in which it is taken from the sheep), from growers in certain states of this country which lie west of the Mississippi river; such wool is usually transported to Boston, whence it is sold and delivered to the customers of the plaintiffs, but wool bought in California was at the time of these events customarily, and for greater economy, gathered from the various places of purchase and assembled at Stockton, Cal., where were the only available public scouring mill and other facilities for grading or sorting, blending and baling wool in that state, those previously existing at San Francisco having been destroyed in April, 1906. This scouring mill was situated about one-half mile from the railroad. Close by were two warehouses for the storage of wool awaiting treatment in the mill, wool in process of grading or sorting and blending, and wool awaiting transportation to its destination. Representatives of the plaintiffs from August, 1906, to March, 1907, bought wool in varying quantities at divers places in California, with the understanding and intention of sending it to Stockton for scouring and the other treatment, then forwarding it to Boston, save in the rare instances of sales in the West. The processes of grading, blending and scouring of the wool which were essential in order to make it salable to the plaintiffs' customers required the assembling of quantities of wool in one place and it was necessary to mix the wool in large lines so as to secure proper mixes to be scoured advantageously. About 20 per cent. of the wool was purchased in Stockton or its immediate neighborhood, and delivered at the scouring mill or one of the warehouses by team, being the vendees' property and at their risk from the time it started to be conveyed, they also paying the expense of conveyance. The remaining 80 per cent. of the wool was purchased at places so far from Stockton that transportation by rail was required, each lot being deliverable by the seller to the railroad at the nearest railroad station consigned usually to purchasers, at Stockton, title passing and the wool being at their risk after delivery to the railroad, and on arrival at Stockton being carried by team to the mill or ware-house, expense of rail transportation and teaming being borne by the buyers. The plaintiffs' representatives in Stockton attended to the transportation, grading, blending, scouring, baling and forwarding of this wool and in ordinary course all wool after treatment would have been teamed back to the railroad station in Stockton and shipped in carload lots to the plaintiffs at Boston, except in the extraordinary event of a sale of small lots in the West. Because of the destruction of the scouring mills at San Francisco, the mill at Stockton was much congested. Under ordinary conditions wool for such treatment would have been in Stockton from three to six months between receipt and reshipment, but at the time in question, by reason of these unusual conditions, some of the plaintiffs' wool had been in the Stockton warehouse more than eight months and the rest for varying lesser periods down to a few days. On March 18, 1907, and unprecedented flood overflowing the banks of the river at Stockton damaged a large quantity of the plaintiffs' wool. In the usual course of business, when wool was sent to the warehouses at Stockton with instructions to be scoured, as in the present case, only one charge was made for the entire treatment and this was nominally for scouring. There was no separate charge made for storage; and the charge was the same regardless of the time the wool was in the warehouses. If, however, wool was sent to the warehouses in the first instance without instructions for scouring, a separate charge for storage was made whether or not it was afterwards decided to have the wool scoured. All he wool in the present case was sent to the warehouses with instructions to be scoured and received there for that purpose and for the usual and necessary incidental purposes of grading, blending, and baling. It was not sent or received for purposes of storage, although the parties concerned knew that in the ordinary course of business the wool would be in storage for some time awaiting access to the scouring mill. The history of the wool in the present case was in accordance with the usual practice both of the plaintiffs and of the wool trade in general except for the unusual conditions as to scouring and storage facilities heretofore recited and except for the flood. By this practice wool was purchased by Eastern firms in various places in the West at various times and in various sized lots, the conditions as to purchase being similar to those in the present case, was assembled at available mills to be scoured, was there sorted, graded and blended so as to secure proper mixes and was then scoured, baled and forwarded to its destination in carload lots.

The case was tried before a judge without a jury, chiefly upon a written agreement as to the facts. An expert in marine insurance called by the defendant testified orally, but that is immaterial in the view which we take of the controlling principles of law.

Compliance with all conditions precedent to recovery under the policy to be performed by the insured in case of loss is admitted.

Confessedly the cause of loss was the flood, which was one of the risks included within the express terms of the insurance.

The finding was for the plaintiffs and the defendant's exceptions bring the case here. The question presented is whether on all the evidence the finding was warranted as matter of law. Frati v. Jannani, 226 Mass. 430, 115 N. E. 746.

A policy of insurance is a contract in writing. It is to be construed and interpreted according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed. When for any reason there is ambiguity in the terms employed in the policy, every doubt is to be resolved against the insurer and in favor of the insured. There are two reasons for this rule: (1) The purpose of such a contract is indemnity against the losses to which the insurance relates and every rational intendment is made by the law to effectuate the main design of the parties (Hatch v. United States Casualty Co., 197 Mass. 101, 83 N. E. 398,14 L. R. A. [N. S.] 503, 125 Am. St. Rep. 332,14 Ann. Cas. 290;Cutting v. Atlas Mutual Ins. Co., 199 Mass. 380, 382, 85 N. E. 174;Rosenfeld v. Boston Mutual Life Ins. Co., 222 Mass. 284, 287, ...

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