Phoenix Ins. Co. of Brooklyn v. Wilcox & Gibbs Guano Co.

• Decision Date: 05 February 1895
• Docket Number: 99.
• Citation: 65 F. 724
• Parties: PHENIX INS. CO. OF BROOKLYN v. WILCOX & GIBBS GUANO CO.
• Court: U.S. Court of Appeals — Fourth Circuit

65 F. 724

PHENIX INS. CO. OF BROOKLYN v. WILCOX & GIBBS GUANO CO.

No. 99.

United States Court of Appeals, Fourth Circuit.

February 5, 1895

This was an action at law brought by the Wilcox & Gibbs Guano Company against the Phoenix Insurance Company to recover on a policy against loss by windstorms, cyclones, or tornadoes on property damaged by the cyclone which prevailed at Charleston, S.C., on the 27th and 28th of August, 1893. The material portions of the policy are as follows: 'By this policy of insurance the Phoenix Insurance Company, of Brooklyn, N.Y., in consideration of thirty-eight dollars, do insure the Wilcox & Gibbs Guano Co. against loss or damage by windstorm, cyclone, or tornado to the amount of sixty-five hundred dollars, as follows: $2,000 on their wharf and tramway thereon, subject to coinsurance clause; $1,500 on 3-story tin-roof mill building and shed on north side adjoining and communicating; $1,500 on 1-story frame tin-roof warehouse, adjoining and communicating on south side of their premises; $1,500 on 1-story frame tin-roof warehouse on north side of their premises,-- all of the above situated east side of Concord street, foot of Hasel street, Charleston, So. C Subject to freshet clause. ' The words 'subject to coinsurance clause' and the words 'subject to freshet clause' were written and not printed upon the policy. Immediately over the words 'subject to freshet clause' there was a printed slip pasted to the margin of the policy, reading as follows:

'It is hereby distinctly understood and agreed that this company is not liable for any loss or damage to the property herein insured which may occur by reason of freshets, floods, or high water; said insurance being limited to loss or damage by cyclone, windstorm, or tornado. Attached to and forming part of tornado policy No. 953 of Phoenix Insurance Co.

'(Signed) S. Y. Tupper & Sons, Agents.'

In the policy produced and put in evidence by the plaintiff there was no slip attached over the words 'subject to coinsurance clause.' The particular subject-matter of insurance drawn in question is the item, '$2,000 on their wharf and tramway thereon, subject to coinsurance. ' It was conceded that the damage was caused by the cyclone, and that the damage to the wharf and tramway had been rightly ascertained by arbitration to be $2,510.68, and the sound value of the wharf and tramway before the damage to be $3,529.50. The question litigated was whether under the policy the insurance company was liable for the full amount insured, viz. $2,000, or only for such proportion of the loss as the amount of the insurance bore to the sound value of the property. In the one case the plaintiff would be entitled to recover the full amount insured, viz. $2,000; in the other only about $1,420.

The general manager of the plaintiff company testified that he first effected cyclone insurance for one year with this defendant company to cover the same risks two years before the date of this policy; that each was an annual policy, and upon each renewal he received a new policy; that he had never had his attention called to the coinsurance clause by any one before the loss; that the business was in the first instance solicited by Mr. Tupper, the agent of the insurance company and that nothing was said about the conditions; and that about the time of the expiration of each policy the agent asked if the insurance was to be continued, and upon getting an affirmative reply sent a new policy. Upon cross-examination he was asked if he had ever seen a printed slip like this: 'Average or Coinsurance Clause. Charles, So. Ca., . . ., 188-. It is understood and agreed that, in case of loss under this policy, the company shall be liable only for such proportion of the whole loss as the amount of this insurance bears to the cash value of the whole property hereby insured at the time of the fire. Attached to and forming part of policy No. . . . of the . . . Insurance Company. . . ., Agent.' He said he had examined the first policy since this suit was instituted, and it had on it such a slip, with the word 'fire' in it; that he had lost the other expired policies, and did not know whether they had such a slip; and that the policy in suit never had such a slip on it.

On behalf of the defendant, Mr. Tupper, the agent of the insurance company, testified that the insurance was originally, in 1890, applied for by the son of the manager of the plaintiff company; that witness told him the whole insurance would have to be subject to the freshet clause, and the wharf and tramway subject to the coinsurance clause, and showed the printed slip, and explained to him how in case of loss the calculation would be made, and the son said he would consult his father, and afterwards he came back and said he would accept the insurance; that witness was confident the printed slip had been attached to the other policies; if it was not attached to this one, it was an oversight of his clerk; that the slip intended to be attached was a printed slip similar to the slip above set out. The son of the agent of the plaintiff company, on cross-examination, denied that he ever had the meaning of the coinsurance clause explained to him, or ever had any conversation or knowledge about the intention to put that clause in the policy, or any condition as coinsurance. It was shown that there were other printed slips in use by underwriters to be attached to policies which were called 'coinsurance clauses,' some requiring not less than 75 per cent., and some not less than 50 per cent., of the sound value to be insured, and by failing to do so the assured becomes a coinsurer to the extent of the deficiency. The testimony with regard to the particular coinsurance clause which the agent of the insurance company claimed to have explained to the son of the plaintiff company's manager, and intended to be attached to the policy, was objected to by the plaintiff, and his objection overruled. There was in the body of the printed policy a clause as follows: 'In case there shall be any other tornado insurance on the property hereby assured, whether valid or not, the assured shall recover of this company only such proportion of the loss as the sum hereby insured thereon shall bear to the whole amount of insurance.'

The court, inter alia (Simonton Circuit Judge), instructed the jury as follows: '(1) The policy is a contract between the parties, and in construing this contract, if there be any doubt of its construction, the doubt should be solved in favor of the insured. Policies are prepared by the companies themselves, and are generally of a stereotype form and character, and as a general rule are never examined by the insured until the loss occurs, and are delivered frequently after the premium has been paid. ' To this instruction the defendant excepted, contending that the tendency of such instruction was to impress the jury that unless the plaintiff examined the policy before the loss it would not be strictly bound by its provisions, terms, and conditions, whereas the acceptance of said policy by the defendant, without examination, operated as an assent on its part to all the conditions and provisions therein contained.

The court further instructed the jury as follows: '(2) Is this policy, as proved in this case, the contract between the parties? Was it prepared by the insurance company, and delivered by its agent to the insured, and by the latter received and accepted as a complete contract, or was there something left out, which both parties agreed and understood should be put in, which would explain and vary the terms of the policy? ' To this instruction the defendant excepted, contending that the court thereby held, and so impressed the jury, that the printed slip upon which the coinsurance clause was written was introduced to vary the terms of the policy, whereas it was offered only to explain the terms 'subject to the coinsurance clause,' written into and forming part of the contract of insurance.

The court further instructed the jury as follows: '(3) I call your attention to the fact that there does not appear in the evidence any clause claimed to be omitted from the policy but that one Mr. Bryan has read. I understand that it is claimed that a clause like that had been in the previous policies and was omitted from this one. This clause is as follows: 'Average or Coinsurance Clause. Charleston, So. Ca., . . ., 188-. It is understood and agreed that, in case of loss under this policy, this company shall be liable only for such proportion of the whole loss as the amount of this insurance bears to the cash value of the whole property hereby insured at the time of the fire. Attached to and forming part of policy No. . . . of the . . . Insurance Company. . . ., Agents.'' To this instruction the defendant excepted, contending that the court thereby withheld from the consideration of the jury the expert testimony of Mr. Tupper as to the meaning of the term 'coinsurance clause,' and his...