Prsdt. and Directors of Balto. Fire Ins. Co. v. Loney

This suit was brought on a policy of insurance, issued by the appellant on the 27th of August 1855, and continued by successive renewals to the 1st of July 1857, by which the appellees, as co-partners, were insured to the amount of $5,000 against loss by fire on goods contained in the 3rd story of a brick warehouse on Hanover St., in the City of Baltimore. The policy contains a condition that it should not cover goods held in trust or on commission, unless they were so declared, and also clauses providing that other insurances on the same property should be endorsed upon it; and in case of such other insurance and of subsequent loss, that the appellees should not be entitled to demand or recover any greater portion of the loss or damage sustained, than the amount thereby insured should bear to the whole amount of the several insurances effected. On the 25th of December 1855, the appellees obtained another insurance on the same goods to the amount of $10,000, afterwards increased to $15,000, by a policy containing the same clauses and conditions, issued by the Fireman's Insurance Company of Baltimore. The property insured was subsequently removed, by permission of that company and the appellant, to No. 35, S. Charles St. Prior to the 14th of April 1857, the appellees had affected, and then held, in addition to these insurances, six other policies for an aggregate amount of $65,000, issued by foreign companies, containing clauses requiring goods held on commission to be so specified, and in which the goods insured were substantially described as their own, or held by them for sale on commission. On the date last mentioned, the stock of goods amounting in value to $88,113.38, on which these several insurances were obtained, was destroyed by fire. A portion of the goods amounting to $16,855.02, belonged to the appellees, and the remainder, valued at $71,258.36, on which they had a lien for commissions and advances to the amount of $36,909.39, were held by them for sale on commission. The loss was $3,113.38 in excess of the whole amount of insurance, and the portion covered by the foreign policies was paid without reference to apportionment or contribution, leaving the balance of the loss $23,113.38 to be satisfied by the policies of the two Baltimore companies, to the extent of their respective liabilities. The conditions of the policy as to preliminary proof, were complied with, and a demand made for payment of the whole amount insured by it on the 7th day of May 1857; but the appellant, contending that its liability was limited to loss on the appellees' own goods, and proportional thereon to the aggregate amount of all the policies, offered, in satisfaction thereof, to pay the sum of $991.13, which the appellees refused to accept. Evidence was offered at the trial without exception, showing that the appellees were Commission Merchants chiefly engaged in selling goods consigned to them for sale on commission, that they were generally known to be so engaged, and the custom of such merchants, of keeping large quantities of commission goods in store, and also tending to show, that the appellant received the application for this insurance, and issued this policy with a knowledge of these facts.

Several prayers, involving the construction of the policy, were offered on both sides, all of which depend on the determination of two questions: 1st, as to the extent of the risk covered by the policy; and 2nd, as to the amount of the appellants' liability upon it.

The appellees contended, on the hypothesis that the appellant knew their application was intended to be for insurance on all the goods destroyed, both their own and those held on commission, that the policy should be so construed as to give effect to that intention; or in other words, that the extent of the risk underwritten should be ascertained from that fact, and not from the terms of the policy. The rule presented in this proposition, we think, cannot be applied here. The authorities referred to in support of the construction sought, present facts so far different from those in this case, as to involve other principles. In all of them the construction turned either upon the meaning of terms, which by usage or custom had acquired a particular sense, or on evidence that the insurer, after a full disclosure of facts material to the risk, and in violation of an obligation implied therefrom, neglected to insert in the policy such a reference to those facts as was essential to its validity as a contract of insurance. Parol evidence was admitted in one class, not to change or vary the contract, but to explain the meaning of the terms used, and in the other to prevent the insurer from obtaining the advantage of a contract, which, through its default, would otherwise have been without obligation and void.

The policy in this case is entirely consistent with the terms of the application, free from ambiguity, and susceptible of a consistent construction in all its parts, and if there was mistake or error in the insurance effected, it does not appear to be one attributable to the appellant, nor such as to authorize us to look beyond the terms of the policy in ascertaining its meaning and legal effect. We think it cannot be excepted from the operation of the general rule requiring written contracts to be interpreted by their own terms, without regard to extrinsic facts. Mumford vs.Hallet, 1 Johns., 439. Mellen Nesmith vs. National Ins.Co., 1 Hall, 452. Phil. Ins., 47, 319.

The appellees appear to have obtained this insurance without making any specific statement of the nature of their interest in the goods destroyed, and had there been no express condition to the contrary, their interest in the goods held on commission, might have been covered by the policy, for upon that state of fact, the material question would have been, whether the failure to inform the insurer that the goods were held on commission, would have affected the risk, and the admission, that the communication of that fact, would not have changed the rate of premium, might have been relied on as concluding it. But that is not the question here. This policy expressly provides that it was not to cover goods held on commission unless they were so declared, or as we understand it, so expressed as to appear, in some form, in the description of the goods intended to be covered by it. The right of the insurer, to limit the extent of the risk by that condition, cannot be doubted.Phillips vs. Knox County Ins. Co., 20 Ohio, 174.Briehta vs. Lafayette Ins. Co., 2 Hall, 372. 2 Am. L. Ca., 642. And as we must presume, from the acceptance of the policy by the appellees, that they had knowledge of that condition, we think it should have the contemplated effect of limiting the risk to the goods which belonged to them.

The next inquiry is as to the amount of liability on the policy, for the loss sustained on those goods. As we have before stated, the appellees held seven other policies, six of which, issued by foreign companies, covered the goods owned by them as well as those held on commission, on blended risks to the amount of $65,000, the remaining one for $15,000, issued by the Fireman's Insurance Company of Baltimore, covering their own goods only. There is no question in regard to the latter policy, but as the others covered the goods of the appellees, although blended in the risk with those held on commission, the appellant insists that they are insurances within the meaning and effect of the covenant relating to other insurances; and, therefore, that it is not liable for any greater portion of the loss on those goods, than the amount insured on this policy bears to the aggregate amount of all the policies. In considering this proposition, it is proper to observe that the contract of insurance is one of indemnity, intended to protect the insured from loss, to the amount of the risk assumed, whether it be on one or several policies, and in general, that the provisions of the contract are favorably construed for the insured in furtherance of that principle.

The covenant in this policy limiting the liability upon it to a share of the loss in proportion to the amount of all the policies, was not intended to impair the right of the appellees to the full indemnity which would otherwise be afforded by them, but to ascertain the amount of the appellant's liability, subject to that right, by an apportionment of the loss among such of the insurers of the same goods, as by the terms of their contracts should stand in the relation of co-sureties for any loss upon them. To establish that relation the policies should cover distinct and specific risks on the same subject, and in that sense constitute a double insurance, upon which, without the covenant in question, the liabilities of the several insurers, except as to the differences in the amounts underwritten, would be identical, and their rights to contribution reciprocal. The right to contribution is based upon the concurrence of the policies, and the necessary incident of its existence is that the several insurers should be bound with equal certainty, and in the same sense, for the same loss. Lucas vs.Jefferson Ins. Co., 6 Cow., 635. AngelIns., 134, 135. As we understand the authorities, this covenant relates only to policies which constitute a double insurance, or in other words, it contemplates only such insurances as fix upon the insurers liabilities for this loss, which the insured could not resort to for the satisfaction of other losses, and the question here is, whether the foreign policies were insurances of that character. The loss of the appellees, on the goods held on commission, exceeded the whole amount of their insurance on those policies, and if the covenant relating to other insurances be permitted to have the effect claimed, it is obvious that the right of the appellees to indemnity upon them, would be defeated to the extent of the apportionment to them of the loss sustained on their own goods. Those policies, as we have seen, covered both classes of the goods without any specific apportionment of the amounts insured to either, and the application of them under the covenant to one class only, in derogation of the right of the insured to indemnity for loss on the other, could be effected only by an arbitrary restriction of the scope and terms of the policies.

The covenant proceeds on the theory, that the insurers are to be discharged from some portions of their respective liabilities by an apportionment of the loss to the several policies. In that respect, it proposes a mutual and common advantage to all the insurers affected by it, entirely consistent with the protection of the insured, and there is no apparent reason why it should be permitted to have effect upon other insurances, when from the nature of the case, the common advantage contemplated by it becomes impossible. An apportionment to the foreign policies of the loss on the goods covered by this policy, without any reciprocal operation in the way of releasing the foreign insurers from any portion of the amounts of their several liabilities, would effect a disproportionment of the risks to the rates of insurances on the respective policies by a practical reduction of the appellant's liability.

In that aspect of the case, the appellant alone would derive the benefits of a condition intended to operate for the common advantage of such other insurers as might be affected by it. It cannot be pretended in that view, that the the appellant and foreign insurers, were bound with equal certainty and in the same sense, for the loss on the appellees' goods, or that there was any mutuality in their relations and rights, as insurers of the same subject. We do not wish to be understood as saying, that the insurers on the home and foreign policies could under no circumstances have been equally bound and liable as co-sureties for that loss, for had the loss on the commission goods been less than the amount of insurance on the foreign policies, it might well be said that the excess of that insurance would have been applicable to the loss insured against by the home policies, and the liabilities and rights of the foreign insurers to the extent of that excess, identical with those of the home insurers. But in this case the loss on the commission goods was sufficient to exhaust all the policies covering them, and as the insurers on the home and foreign policies, in view of the right of the insured to full indemnity, became subject to different liabilities by the loss as it accrued, we think the foreign policies were not within the effect of the covenant relating to other insurances, and that the appellant is not entitled to any abatemeat of its liability on this policy by reason of them. Haley vs.Dorchester Mutual Ins. Co., 1 Allen, 536. Howard Ins. Co.,vs. Seribner, 5 Hill, 298.

The objection made to the allowance of interest from the 7th of May 1857, when payment was demanded, is founded on a clause contained in the 9th condition of the policy, providing for the payment of loss within sixty days after the same should be ascertained and proved. There was no dispute as to the right of the appellees, to interest after the time fixed for payment by that condition, it being an established rule that interest may be claimed from the time the principal sum becomes payable by the terms of the policy. McLaughlin vs. Wash. Co. Mutual Ins. Co.,23 Wend., 525. Hallet vs. Phoenix Ins. Co.,2 Wash. C. C. R., 279. The principle involved is the same as in cases where, by the expiration of the time limited for the payment of a principal sum, interest becomes payable for the time the sum due may be withheld; and the objection made to the allowance of interest in this case, presents the question, whether the amount to be paid on this policy, was due and recoverable on the day from which the interest allowed was computed. We have no doubt on that point. It appears from the statement of facts made by agreement of the parties, that the conditions of the policy as to preliminary proof, were complied with, and a demand of payment made on the date mentioned, and that the appellant thereupon admitted the loss, and offered payment of what it assumed to be the amount of its liability, but in fact a less sum than it was bound for, and then, denying all further obligation on the policy, refused to pay any other or larger sum.

Upon these facts we must hold that the condition as to the time of payment was waived, and that the sum for which the appellant was bound then became due and recoverable. In our opinion the allowance of interest is not open to objection.

From our examination of the whole case, we conclude that the 1st and 2nd prayers of the appellant, and the 6th of the appellees, were properly granted, and that there was no error in the rejection of the others.

Judgment affirmed.

This case having been tried in the Court below with the preceding case, upon the same evidence except as to the amounts of the insurances, and in this Court upon the same record and exceptions, the judgment from which this appeal was taken will be affirmed for the reasons stated in the preceding opinion.

Judgment affirmed:

(Decided May 5th, 1863.)