Norwood v. Resolute Fire Insurance , 4 Jones & S. 552 ( 1873 )

By the Court.—Sedgwick, J.

The Lorillard Fire Insurance Company insured ■ ££ Gage Bros. & Bice i£ against loss or damage hy fire to the amount of fifteen i£ thousand dollars ” on specified property. The defendant, The Besolute Fire Insurance Company, made its policy in which they do ££ re-insure Lorillard Fire Insurance Company on property of Gage Bros. & Bice. “ against loss or damage by fire to the amount of five “thousand dollars,” the property being that specified in the policy made by the Lorillard.

In the policy of re-insurance there was written the words “loss, if any, payable pro rata with the re-assured.” The other conditions and agreements of the policy were printed. One of these was “re-insurance in case of loss to be settled in proportion as the sum re-insured shall bear to the whole sum covered by there-insured company.”

The controversy relates to the construction of the written clause “loss, if any, payable pro rata with the reassured.” Evidently this is elliptical, and words must be supplied to find its meaning. There is no sense in the words “ the loss is to be paid with the Lorillard Insurance Company, ” “or the loss is to be paid proportionally with the Lorillard Fire Insurance Company.” If you suppose that this obscurely, although by an incorrect use of words, intimates that the Resolute Company is to pay the loss with or.proportionally with the Lorillard Company, there would then be a reference to but one loss, viz. : that which was the subject of the policy of re-insurance. It is not meant that this should be paid to the Lorillard by the Resolute and the Lorillard, each paying a certain portion of it. The loss mentioned it was intended should be payable pro rata with something else than itself. The parties had in view two losses: one, and that which was specified, was provided for by the policy of re-insurance ; the other, and which must be understood, was provided for by the primitive policy.

“Loss payable” is a technical term. The insured suffers a loss. The insurer of course does not pay this loss itself. A sum of money is paid, or agreed to be, as an indemnity for the loss. Policies provide how this sum shall be fixed, and when it is paid the usage is to say that it pays the loss, although it may be that the sum paid is not in fapt a compensation for the whole loss. The clause in question had in view this character of the two losses payable. It should be read as follows: the loss under this policy is payable by the Resolute pro rata with the loss payable by the Lorillard under the primitive policy.” It is the equivalent of saying that the Resolute is bound to indemnify the Lorillard in the same proportion that the Lorillard is bound to indemnify Gage Bros. & Rice.

Other cases which have involved the construction of a clause partly like this, differ from it because the words in these were “pro rata and at the same time.” We have not to consider what would be meant by these latter words. They are not before us. The clause here simply says that the Lorillard loss is payable prorata or proportionally with the loss payable to Gage Bros. & Rice. The defendants here insist that the stipulation refers to the fact of payment by the Lorillard— that the Resolute is to pay with the Lorillard, i. e. at the same time with or cotemporaneously. This is supported only by th e use of the word ‘ ‘ with. ’ ’ If the word “as” had been used, or “in proportion to,” instead of “prorata with,” I do not think there would be any doubt that the reference was to the amount of the loss to be paid, and not to the time of its payment.

It is, however, argued that the amount to be paid by the re-insurers is meant to be fixed by the fact of payment of the loss under the primitive policy, and that until the latter is paid there is no way of fixing what the defendants are to pay. The defendant’s counsel contend that the claim means “that the loss is to be “ paid by the re-assurers in the same ratio as it is paid “by the re-assured.” We think that the first mistake here is not making the clause refer to the two losses that we have noticed. There is, however, another mistake that more closely concerns the immediate point considered. “Payable” is expressive of obligation to pay. “Loss payable” means loss to be paid, inasmuch as the insurer contracts that the loss shall be paid. The same element is present in the “loss payable” by the Lorillard ; so that instead of saying “ the same ratio as it is paid” it should be, “in the same ratio as it is to be paid” by the Lorillard, i. e. in the same ratio as the Lorillard is bound to pay the loss of Gage Bros. & Rice.

Therefore, if in case of loss under the primitive policy the Lorillard should be bound to pay, not the whole of the sum insured, but a percentage of that, then the Resolute is bound, in paying the loss of the Lorillard, to pay, the same per-centage of the sum covered by the policy of re-insurance. This construction sustains the rulings made by the learned judge at the trial, the exceptions to which are the subject of this appeal.

We do not see how any other construction can be maintained. The other only alternative would be to reject the claim altogether as uncertain and vague. It is said that the clause should not be interpreted in this way because such a provision is made in other parts of the policy which are printed, and this should be held to mean something more, especially as it is in writing. Without going into unnecessary particulars, we say that from a survey of the whole policy, it does not appear that it has been framed with the purpose of giving to the provision separately a separate meaning, so that each shall do a particular service. The contrary appears. The clause in question is so obscure, that we cannot see that it was meant intentionally to vary the general obligation of the re-insurer, that is, to pay the sum which it became bound to. pay, before the re-insured had made any payment on the policy issued by it. And in its obscurity if we give it any interpretation, it is one which presents no ambiguity. We could not, therefore, simply because the other parts of the policy make a similar provision, decide that the clause should he made to signify what in fact it does not.

The exceptions should he overruled, and the plaintiff have judgment on the verdict, with costs.

Monell, and Curtis, JJ., concurred.