Queen Ins. Co. of America v. Meyer Milling Co.

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: STONE and VAN VALKENBURGH, Circuit , and OTIS
• Citation: Queen Ins. Co. of America v. Meyer Milling Co., 43 F.2d 885 (8th Cir. 1930)
• Decision Date: 15 September 1930
• Docket Number: No. 8730.,8730.
• Parties: QUEEN INS. CO. OF AMERICA v. MEYER MILLING CO.

43 F.2d 885 (1930)

QUEEN INS. CO. OF AMERICA v. MEYER MILLING CO.

No. 8730.

Circuit Court of Appeals, Eighth Circuit.

September 15, 1930.

Lyon Anderson, of St. Louis, Mo. (Harold F. Hecker and Leahy, Saunders & Walther, all of St. Louis, Mo., on the brief), for appellant.

Harry L. Thomas, of Kansas City, Mo. (Dudley D. Thomas, Jr., of Carrollton, Mo., and E. C. Hartman and Fordyce, Holliday & White, all of St. Louis, Mo., on the brief), for appellee.

Before STONE and VAN VALKENBURGH, Circuit Judges, and OTIS, District Judge.

OTIS, District Judge.

The Meyer Milling Company, appellee here, owned a brick building at the northeast corner of Eighth and Howard streets in St. Louis, which was leased to and used as a trunk factory by the Rice-Stix Dry Goods Company. By fire walls, one running east and west through the building and the other north and south to the center of the building, it was internally divided into three sections. One of these, the northeast section, on a certain fire map introduced in evidence was designated as "Building A." No street numbers were on the building, but it covered ground assigned, by the city's house and numbering department, odd numbers on Howard street from 717 to 729, inclusive. Building A was on ground numbered 723-729 Howard street.

The Queen Insurance Company of America, the appellant, on April 14, 1924, issued to appellee a policy of fire insurance in the amount of $24,000, the coverage in which was in the policy described as —

"On the * * * story composition roof brick building, including foundations, plumbing, electrical wiring and stationary heating, lighting and ventilating apparatus and fixtures thereon; also all permanent fixtures, stationary scales and elevators, belonging to and constituting a part of said building; occupied as mercantile, situated 723-9 Howard Street, City of St. Louis, State of Missouri. This insurance shall also cover under this item, if the property of the owner of building, door and window screens and storm doors and windows, belonging to above described building, while attached thereto or stored therein."

Other policies of fire insurance, admittedly covering the whole of appellee's building, had been issued previously, one by the American Alliance Insurance Company and the other by the Superior Fire Insurance Company.

A fire occurred in the appellee's building February 13, 1925, damaging the whole thereof in the amount of $28,972.03. The damage to that part which on the fire map was designated "Building A" was $1,510.44. The claim of appellant is that its liability is only in that amount. That amount it tendered appellee before trial. At the trial it asked the court to instruct the jury to find for the plaintiff in the amount of $1,510.44, with interest.

Of the two principal questions in the case, one is this: Did appellant insure the whole building or that part only designated in the fire map, Building A?

After the fire, when appellant denied liability (except in the limited amount), the agent for the two other companies paid appellee the total amount of its claim against appellant, less the $1,510.44 which the appellant admitted owing, taking, however, appellee's notes. Subsequently this agent was reimbursed by his principals for what he had thus paid, the agent turning over to his principals the notes appellee had given him. On these facts arises the second principal question in the case, which is: Was the appellee in this suit, within the meaning of section 1155, R. S. Mo. 1919, a real party in interest entitled to sue as such?

1. In connection with the first of the two principal questions, certain rules applicable to all contracts including contracts of insurance are to be kept in mind: First, if in the language used in a written contract there is no ambiguity, then matters extrinsic to the contract may not be considered in construing it. 13 Corpus Juris, 771. So, if in a contract of insurance there is no ambiguity as to the coverage, other evidence than the contract may not be received. 26 Corpus Juris, 77. Second, if in a written contract there is ambiguity, as in a contract of insurance as to the coverage thereof, at least if the ambiguity is a latent one, extrinsic evidence is admissible to discover the real intent of the contracting parties. 26 Corpus Juris, 77; Clark et al. v. Insurance Co., 8 How. 235, 246, 12 L. Ed. 1061; Scottish Union, etc., Ins. Co. v. McKone (8 C. C. A.) 227 F. 813, 815; Arlington Manufacturing Co. v. Insurance Co. (2 C. C. A.) 107 F. 662, 665; Still v. Insurance Co., 185 Mo. App. 550, 553, 172 S. W. 625. Third, a written contract if ambiguous is to be construed most strictly against him who drew it; if a contract of insurance, against the insurer who prepared it and liberally in favor of the insured. 26 Corpus Juris, 72; Liverpool, etc., Insurance Co. v. Kearney, 180 U. S. 132, 21 S. Ct. 326, 45 L. Ed. 460.

It is not contended that in the policy here there is patent ambiguity. To discover latent ambiguity it is, of course, necessary and for that preliminary purpose proper to go outside the instrument and to consider evidence, not yet to discover the real intent of the parties (which is a matter that must await determination that there is latent ambiguity), but to reveal the facts which existed when the words of the instrument were used, so that by comparing the words used with the facts it may be ascertained whether the words aptly fit the facts. 2 Corpus Juris, 1314. If they do not, then there is latent ambiguity. When that has been ascertained, extrinsic proof as to the real intent is competent.

We illustrate the foregoing general observation thus: A enters into a written contract with B by which he agrees to sell and B agrees to buy A's house for $5,000. There is no patent ambiguity in that contract. But the fact is, A has two houses. Proof of that fact shows a latent ambiguity in the written contract. It is then competent to prove by extrinsic evidence what house was really intended by A and B as the subject-matter of the written contract. For a similar illustration, see Lycoming Mut. Ins. Co. v. Sailer, 67 Pa. 108, 112.

Now the policy here purported to insure "the * * * building, including * * * stationary heating * * * apparatus * * *; also * * * elevators * * * situated 723-9 Howard Street. * * *" Going to that location, one would find no building bearing the numbers 723-9 or any numbers, but by consulting city maps he would find these house numbers had been given certain ground at Eighth and Howard streets. There he would find a building, one integral structure, a "composition roof brick building," such as that described in the policy of insurance. He would find only a part of this building on ground to which numbers 723-729 had been assigned, the whole covered ground assigned numbers 717 to 729, inclusive. In the part standing on 723-729 he would find no "stationary heating * * * apparatus." He would find in it no "elevators." He would find, indeed, that this part as a usable building was in no sense a unit. There were not even stairways connecting its several floors. Externally this part was separated from adjacent parts only by imaginary lines. He would find, in other words, when attempting to apply the description in the policy to the facts, that in part that description, construed strictly, fitted one thing, to wit, a section or subdivision of the building, and, in part, it fitted another thing, to wit, the building as a whole. He would find in the policy two possible meanings, that is, ambiguity — a latent ambiguity, because only to be discovered on attempting to fit the description in the policy to the facts.

Since there was latent ambiguity in the language of the policy setting out its coverage, then certainly it was proper to take evidence as to what the parties really intended should be covered. And if there were any substantial evidence to support a finding that both parties (not only one of them) intended that the policy should cover the whole building of appellee, then the court below did not err in submitting that issue to the jury. We are not here concerned with the weight of the evidence on this issue, but with whether there was any substantial evidence justifying the submission of the issue.

There was direct evidence (as well as circumstantial) as to what was the intention of the appellee. Appellant's agent who solicited the business himself testified that the only instructions he had from appellee were "to insure the building at the northeast corner of 8th and Howard." Nothing was said to him which could possibly be construed as restricting the insurance desired to the so-called "Building A" or to any subdivision of the whole building. By "the building at the northeast corner of 8th and Howard" appellee understood and meant the whole integral structure at that location.

While there was direct evidence, the testimony of the same agent of appellant, that the appellant intended to insure only Building A, there were certainly circumstances in evidence indicating an intention of insuring the whole building. The coverage in the policy of elevators and heating apparatus, already noted, none of which was in Building A, was one such circumstance. The amount of insurance written on the building, which very probably was greater than the whole value of Building A, was another. The reference in the coverage to "the building" and the omission of any express restriction to a subdivision of the building were other and quite significant circumstances. In these alone was certainly substantial evidence that appellant intended to insure the whole building. There was then no error in...