Markline Co., Inc. v. Travelers Ins. Co.

Decision Date27 July 1981
Citation424 N.E.2d 464,384 Mass. 139
PartiesMARKLINE COMPANY, INC. v. The TRAVELERS INSURANCE COMPANY.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

John P. Linehan, Boston, for defendant.

Barry Y. Weiner, Boston, for plaintiff.

Before HENNESSEY, C. J., and BRAUCHER, WILKINS, LIACOS and NOLAN, JJ.

NOLAN, Justice.

The defendant issued a policy of insurance called Storeowners 700 (policy) to the plaintiff for the period May 1, 1974, to May 1, 1975. It furnished coverage for property damage, general liability, and automobiles. The policy was in force at 2:03 P.M. on June 15, 1974, when the burglar alarm was activated at the plaintiff's store. Police and alarm company personnel arrived on the scene at approximately 2:42 P.M. The judge found that the plaintiff's president and one of its employees had closed and locked the plaintiff's store at 1 P.M. on June 15, 1974. In early July, when the owner first learned the alarm had been actuated, an inventory was taken. Ultimately, the judge found for the plaintiff in the amount of the inventory loss, which he determined to be $19,380, plus costs. This was error.

The plaintiff had purchased burglary coverage. The policy defines burglary as follows: " 'Burglary' means the felonious abstraction of insured property: (a) from within the premises by a person making felonious entry therein by actual force and violence, of which force and violence there are visible marks made by tools, explosives, electricity or chemicals upon, or physical damage to, the exterior of the premises at the place of such entry; (b) from within a showcase or show window outside the premises by a person making felonious entry into such showcase or show window by actual force and violence, of which force and violence there are visible marks thereon; or (c) from within the premises by a person making felonious exit therefrom by actual force and violence as evidenced by visible marks made by tools, explosives, electricity or chemicals upon, or physical damage to, the interior of the premises at the place of such exit." The judge found that "there were no visible marks of entry or exit by tools, explosives, electricity or chemicals or physical damage to the entry or exit." Therefore, there could be no recovery under burglary coverage. See Shattuck & Jones, Inc. v. Travelers Indem. Co., 323 Mass. 146, 147, 80 N.E.2d 313 (1948). It is the plaintiff's burden to prove that its loss was within the description of the risks covered. Tumblin v. American Ins. Co., 344 Mass. 318, 320, 182 N.E.2d 306 (1962). The reason for the visible marks restriction is to protect insurers from "inside jobs". 10 G. Couch, Insurance, § 42:129 (2d ed. 1962).

The plaintiff presses the argument that the trial judge read the policy as providing coverage for theft, in addition to burglary coverage. The judge's findings and conclusions do not include his reasons for finding for the plaintiff. If the plaintiff is correct in its assumption of the judge's basis for recovery, the judge made a clearly erroneous ruling. The policy specifies the plaintiff's purchase of burglary coverage but not coverage for theft. The relevant provisions of the policy are reproduced in the margin. 1

There is no merit to the plaintiff's claim that the policy is sufficiently ambiguous to permit us to read "theft" coverage into the contract between the parties. Before we can apply the settled principles of law that any obscurity or vagueness must be construed against the defendant, see Slater v. United States Fidelity & Guar. Co., --- Mass. ---, ---, a 400 N.E.2d 1256 (1980), we must conclude that there is an ambiguity. We are unable to do so. Rare, indeed, is the insurance policy which permits easy reading. The language is generally forbidding, if not esoteric. However, as insurance policies go, the one under review is reasonably clear in this respect. We have read those sections of the policy which define and limit "theft," but they do not solve the threshold problem of the coverage purchased by the plaintiff. In short, the plaintiff did not buy "theft" coverage.

Next, the plaintiff asks us to sustain the judgment below because of its "reasonable expectation" of coverage for this type of loss. The plaintiff concedes that no Massachusetts case can be found to support this position. It appears that the trial judge did not rely on this theory. We are not prepared to make this the first case in which this court adopts such an approach to the purchase of insurance. In any event, the testimony of the plaintiff's president that it was his understanding that the "(c)overage was complete fire, theft and liability insurance" falls fatally short of evidence to support the plaintiff's claim of "reasonable expectation" of coverage for this loss. Even if we were to adopt the theory of reasonable expectation, the plaintiff would not prevail. In the Restatement (Second) of Contracts, § 237, Comment f (Tent. Draft Nos. 1-7, 1973), the following description of "reasonable expectation" appears: "Although customers typically adhere to standardized agreements and are bound by them without even appearing to know the standard terms in detail, they are not bound to unknown terms which are beyond the range of reasonable expectation. A debtor who delivers a check to his creditor with the amount blank does not authorize the insertion of an infinite figure. Similarly, a party who adheres to the other party's standard terms does not assent to a term if the other party has reason to believe that the adhering party would not have accepted the agreement if he had known that the agreement contained the particular term. Such a belief or assumption may be shown by the prior negotiations or inferred from the circumstances. Reason to believe may be inferred from the fact that the term is bizarre or oppressive, from the fact that it eviscerates the non-standard terms explicity agreed to, or from the fact that it eliminates the dominant purpose of the transaction. The inference is reinforced if the adhering party never had an opportunity to read the term, or if it is illegible or otherwise hidden from view. This rule is closely related to the policy against unconscionable terms and the rule of interpretation against the draftsman." There is nothing in the record before us to bring this case within the sweep of this language.

Equally without merit and authority are the plaintiff's arguments based on an implied warranty, see the Uniform Commercial Code G.L. c. 106, § 2-315, and a consumer violation, G.L. c. 93A, § 2. An attentive reading of the transcript fails to reveal any evidence to support these arguments. Further, the warranty section of the Uniform Commercial Code on which the plaintiff relies, at least by way of analogy, applies only "to transactions in goods." G.L. c. 106, § 2-102 as appearing in St.1957, c. 765, § 1. The term "goods" is not sufficiently protean to include an insurance policy. See G.L. c. 106, § 2-105(1). The defendant's conduct does not offend either the principles of unconscionability recognized at common law (see Hodge v. Mackintosh, 248 Mass. 181, 184-186, 143 N.E. 43 (1924)), or provisions not entirely dissimilar, codified in G.L. c. 106, § 2-302.

Judgment reversed. Judgment for defendant.

LIACOS, Justice (dissenting).

The plaintiff purchased a "Storeowners 700" policy from the defendant through its agent. This policy purported on its face to provide coverage for (1) personal property damage, (2) general liability, and (3) crime, specifically "burglary." The word "burglary" is defined in later pages of the multipage policy to require "visible marks" before recovery might be had. 1 The fact of loss is not in dispute.

The trial judge found there were no "visible marks" of entry or exit yet found for plaintiff without further explanation in the written findings and rulings. This court now sets aside that finding for reasons which seem to me to have little relevance to what occurred at trial. While the court's opinion discusses the possibility that the judge may have thought plaintiffs had theft coverage, the judge's findings do not mention that theory. Additionally, plaintiff submitted extensive requests for findings of fact and rulings of law, none of which are based on a theory of "theft" coverage. Those requests reflected instead alternative theories of recovery in which the reasonable expectations of the plaintiff as to the coverage he had secured played a prominent part. 2 The judge made no explicit findings under this theory, but it appears that his findings were based on the theory of reasonable expectations. 3 Despite this state of the record, the court now concludes as to the issue of reasonable expectations that "(i)t appears that the trial judge did not rely on this theory." Supra at 465. a This conclusion of the court is warranted neither by the record nor by the evidence adduced at trial. In my view, this conclusion is unjust to the trial judge as well as to the parties.

It is not apparent which of five premises of law advanced by trial counsel was the basis for the judgment of the judge. I would agree that the judge erred if he relied on the language of the insurance policy and concluded that the plaintiff had theft coverage. I do not believe he did so. I would also agree that a claim based on G.L. c. 93A, § 2, is without merit here, supra at 466, b because the plaintiff has failed to demonstrate that he followed the procedural requisites of that statute. See Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85, --- - ---, c 390 N.E.2d 243 (1979); Slaney v. Westwood Auto, Inc., 366 Mass. 688, 691, 704, 322 N.E.2d 768 (1975). There were, however, three other possible bases for this judgment, viz., the reasonable expectations doctrine, the unconscionability of the liability exclusion, or the breach of an implied warranty of fitness. See C & J Fertilizer, Inc. v. Allied Mut. Ins. Co., 227...

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