Tuchman v. Public Service Mut. Ins. Co.

• Decision Date: 14 October 1976
• Citation: 88 Misc.2d 336,387 N.Y.S.2d 803
• Parties: Sam TUCHMAN, Claimant, v. PUBLIC SERVICE MUTUAL INS. CO., Defendant.
• Court: New York City Court

Page 803

387 N.Y.S.2d 803

88 Misc.2d 336

Sam TUCHMAN, Claimant, v. PUBLIC SERVICE MUTUAL INS. CO., Defendant.

Civil Court of the City of New York, New York County.

Oct. 14, 1976.

Sam Tuchman, pro se.

Julius Gantman, New York City, for defendant; Alan Levine, New York City, of counsel.

DECISION

FELICE K. SHEA, Judge.

In this Small Claims Court action, claimant has brought suit for $1,000 against defendant insurer on a policy denominated 'Yacht Policy (All Risks)'. The parties have agreed that claimant is the owner of a 17 foot long fiberglass pleasure boat, that claimant's 85 horsepower motor was stolen, and that the reasonable value of the motor is $1,000. The issues before the Court are (1) whether theft is a peril insured against by the contract of insurance between the parties, and (2) whether theft of claimant's motor is a loss for which recovery is excluded by the Machinery Damage Exclusion Clause in the policy.

In claimant's policy, theft is neither excluded as a covered risk, nor is it included specifically among the risks covered. 'Perils Insured' under the policy are defined as: '(1) All risks of physical loss or damage to the property covered from any external cause'. ¹ Is theft a risk insured against under the above language in a policy sold to the owner of a small pleasure boat where, as here, it is not specifically excluded elsewhere in the policy?

In what appears to be the only New York case which has passed upon the question of whether theft coverage was included in an 'all risk' marine policy, ² the Supreme Court held in 1930 that loss of a tugboat by theft was not a 'risk of the harbor' within a policy which insured against 'all risks, perils or dangers of the Seas, Bays, Harbors, Rivers and Fires'. Britannia Shipping Corp. v. Globe & Rutgers Fire Ins. Co., 138 Misc. 38, 39, 244 N.Y.S. 720, 721, Aff'd 232 App.Div. 801, 249 N.Y.S. 908. Unlike the Britannia case, however, where the term 'all risks' was qualified by the phrase 'of the Seas, Bays, Harbors, Rivers and Fires', the policy in the present case covers all risks 'from any external causes'. Further, the Britannia case is not controlling because the policy here, although called a 'Yacht' policy, is not in any true sense a policy of marine insurance. It is not a policy taken out by a commercial shipowner to insure against loss or damage to cargoes. See 4 Appleman, Insurance Law and Practice § 2101 (1969). In the Britannia case, the plaintiff was a shipping company, whereas the claimant here is the owner of a small pleasure boat. An 'all risk' policy available to small boat owners cannot be read in the context of policies of insurance covering commercial marine vessels. See Stecker v. American Home Fire Assur. Co., 299 N.Y. 1, 84 N.E.2d 797; Fantozzi v. Security Mutual Ins. Co., 247 App.Div. 686, 688, 289 N.Y.S. 458, 460.

The broad language of the 'all risk' clause of the instant policy, and the subject matter insured, bring the policy within the ambit of the law governing 'all risk' insurance issued to cover personal property from hazard, notwithstanding that the policy contains standard marine policy clauses as well. ³

An 'all risk' policy has been defined as one which 'provides coverage . . . against any loss without putting upon the insured the burden of establishing that the loss was due to a peril falling within the policy's coverage. Although there may be exceptions to such coverage, . . . it is incumbent upon the underwriter to demonstrate that the exception applies'. Redna Marine Corp. v. Poland, D.C., 46 F.R.D. 81, 86; Accord: Goix v. Knox, 1 Johns.Cas. 337, 340; Jewelers Mutual Ins. Co. v. Balogh, 5 Cir., 272 F.2d 889; Chase Rand Corp. v. Central Ins. Co., D.C., 63 F.Supp. 626, Aff'd 2 Cir., 152 F.2d 963; see Anno., 88 A.L.R.2d 1122, 1124.

The precise question of whether a broad 'all risk' clause encompasses theft appears to be one of first impression in this state. However, in at least three other jurisdictions, language substantially identical to that of the present policy has been construed to cover theft. Imperial Insurance Co. v. Ellington, Tex.Civ.App., 498 S.W.2d 368; Gottesman v. Mechanics & Traders Ins. Co., 196 Pa.Super. 109, 173 A.2d 763; Advance Piece Dye Works, Inc. v. Travelers Indemnity Co., 64 N.J.Super. 405, 166 A.2d 173.

It is clear, and this Court holds, that a small boat owner who takes out an 'all risk' policy which does not exclude theft has a right to assume he has purchased coverage for loss by theft.

The insurer, in disclaiming liability for the theft of claimant's motor, relies primarily on the Machinery Damage Exclusion Clause in the policy, which provides that the insurer is 'Not liable for loss of or damage to any rudder, propeller, strut, shaft or machinery, inside or outside the vessel, unless caused by burning, collision with another vessel, or sinking resulting from a peril insured against'. Does this clause deny coverage to claimant for loss by theft of his motor?

No New York case has been found which has construed language similar to the Machinery Damage Exclusion Clause, Supra, but in American Shops v. Reliance Ins. Co., 22 N.J.Super. 564, 92 A.2d 70, a New Jersey court considered a clause almost identical to the one herein. The New Jersey court rejected the defendant-insurance company's contention that the word 'machinery' embraced all the mechanical equipment on the boat. It held that the doctrine of Ejusdem generis compelled a construction 'limited to the same kind of machinery as 'rudder, propeller or shaft', Viz., underwater machinery. Obviously this would not include the engine'. At 566, 92 A.2d at 71. The court's reasoning, applicable here, was that if the exclusionary clause were construed to include the motor, then the words 'rudder, propeller or shaft' would have no significance since they are encompassed by the word 'machinery'. Such a construction would violate the established principle that every word in an insurance contract is deemed to have meaning, and each word is to be given effect if possible. Theatre Guild Productions, Inc. v. Ins. Corp., 25 A.D.2d 109, 267 N.Y.S.2d 297, Aff'd 19 N.Y.2d 656, 278 N.Y.S.2d 625, 225 N.E.2d 216; City Wide Knitwear Processing Co. v. Safeco Ins. Co., 80 Misc.2d 978, 366 N.Y.S.2d 81, Aff'd 44 A.D.2d 689, 354 N.Y.S.2d 601, Aff'd 36 N.Y.2d 717, ...