Richard D. Brew & Co. v. Auclair Transp., Inc.

• Decision Date: 21 July 1965
• Citation: 211 A.2d 897,106 N.H. 370
• Parties: , 27 A.L.R.3d 978 RICHARD D. BREW & COMPANY, Inc. v. AUCLAIR TRANSPORTATION, INC.
• Court: New Hampshire Supreme Court

Page 897

211 A.2d 897

106 N.H. 370, 27 A.L.R.3d 978

RICHARD D. BREW & COMPANY, Inc. v. AUCLAIR TRANSPORTATION, INC.

Supreme Court of New Hampshire.

Argued March 3, 1965.

Decided July 21, 1965.

McLane, Carleton, Graf, Greene & Brown and John A. Graf, Manchester, for plaintiff.

Sheehan, Phinney, Bass, Green & Bergevin and Robert E. Dastin, Manchester, for defendant.

PER CURIAM.

The defendant carrier emphasizes the provisions of s. 2(c) of the bill of lading and contends according to its terms that it is liable only for the amount of the premium on the insurance policy procured by the plaintiff shipper. The insurance company, which is subrogated to the rights of the plaintiff shipper, emphasizes the provisions of the insurance policy that the insurance shall not 'inure directly or indirectly to the benefit of any carrier,' and contends that it is not subject to the limitation of liability contained in the bill of lading. These contentions are neither novel nor new and there is some logical support for each. The struggle between insurer and carrier as to which will bear the ultimate burden when the insured goods are damaged or lost in transit has been a protracted one. Phoenix Ins. Co. v. Erie & Western Transportation Co., 117 U.S. 312, 6 S.Ct. 750, 29 L.Ed. 873; Luckenbach v. W. J. McCahan Sugar Refining Co., 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170; The Turret Crown, 297 F. 766 (2d Cir. 1924); Note, Subrogation of an Insurer: The Burden of the Loss of Insured Goods in Transit, 37 Harv.L.Rev. 901 (1924); Vance, Insurance 794-796 (3d ed. 1951). 'In the beginning, the insurer of goods in transit was, on paying the insured, subrogated to the insured's claim, as shipper, against the carrier. Then the carrier inserted a stipulation in the bill of lading requiring the shipper to give it the benefit of any insurance that he might have, and this clause was held to cut off the insurer's right of subrogation even though the loss was due to the carrier's negligence. [Phoenix Ins. Co. v. Erie & Western Transp. Co., 117 U.S. 312 [6 S.Ct. 750, 29 L.Ed. 873] (1886)] This decision, which caused all the trouble, was an erroneous application of the perfectly sound principle that the insurer is subrogated only to the extent of the insured's claim against the third party. The carrier did not and could not by stipulation extinguish his liability to the shipper; and if the idea of subrogation is sound, the loss should ultimately fall upon the person who had the greater measure of control over it. However, the decision stood, and the insurers countered by inserting a condition, in policies on goods in transit, that the policy should be void if the insured should contract with the carrier that the latter should have the benefit of the insurance. The carrier has not been successful in counteracting the effect of these stipulations; and under most recent decisions, the ultimate loss falls upon the carrier.' Patterson, Essentials of Insurance Law 150 (2d ed. 1957).

Contradictory provisions and stipulations in contracts of insurance and carriage must be resolved in spite of logical difficulties. 'The apparent circularity of expression may be resolved by interpreting the provision in the bill of lading as entitling the carrier to the insurance if there is no opposing stipulation in the policy or contract of insurance, that is, no warranty or provision for avoidance; and not, if there is. Consequently, the insured may recover from the insurer; the insurer is effectively subrogated to his cause of action against the carrier; and the carrier is not entitled to the insurance.' Campbell, Non-Consensual Suretyship, 45 Yale L.J. 69, 85 (1935). See Adams v. Hartford Fire Ins. Co., 193 Iowa 1027, 188 N.W. 823, 24 A.L.R. 182; Graysonia N. & A. R. Co. v. Newberger Cotton Co., 170 Ark. 1039, 282 S.W. 975; An...