New Haven Steamboat Co. v. Providence Washington Insurance

Rumsey, J.:

• On the 4th day of January, 1890, the defendant issued to the plaintiff a policy of insurance upon the plaintiff’s steamer C. H. Northam. The policy contained a provision for the substitution of another steamer, which will be referred to more at length later.

On the 24th day of February, 1890, the plaintiff gave notice to the defendant that the steamer Continental .had on that day taken the place of the steamer Wortham. On the 4th day of September, 1890, the Wortham was injured in a collision, and the defendant, if its policy of insurance was then in force as to the Wortham, became liable to pay as indemnity for the damages suffered by the collision a certain amount of money which is not here in dispute. Hotice was given by the plaintiff to the defendant of the loss, but liability was repudiated by the insurance company, and thereupon, after considerable delay, this action was brought. Upon trial at the Circuit a verdict was ordered for the defendant, and the exceptions taken by the plaintiff were ordered to be heard in the first instance in the Appellate Division, and thereupon the plaintiff makes this motion for a new trial upon the exceptions.

It is claimed on the part of the defendant that, when another steamer was substituted for the Wortham on the 24th of February, 1890, and notice of that substitution given, the policy of insurance attached to the steamer thus substituted, and that there could be no resnbstitution, or at least none by virtue of which the policy would reattach to the Wortham, until notice of that resubstitution had been given to the defendant. It is claimed, on the contrary, by the plaintiff that the substitution of another steamer in place of the Wortham only lasted so long as the other steamer should be running upon the line in her place, and when that ceased to be the case the policy again attached to the Worthann without notice of the resubstitution ; or that, if a notice of the resubstitution was necessary, there were facts from which the giving of such notice could be inferred, and, therefore, the case should have been sent to the jury. It is clear that this dispute is to be decided purely by a construction of the policy in the light of the facts which were made to appear upon the trial.

It is conceded that, on the 24th of Eebruary, 1890, a notice was given by the plaintiff to the insurance company that the Wortham was taken off the line, and that the steamer Continental had taken its place; and it is conceded also that, upon the giving of that notice, the policy of insurance which before that time had stood upon the Wortham became attached to the steamer Continental. The effect of that substitution is to be decided by an examination of the terms of the policy. Upon that examination it is to be seen that the policy in the first place purports to insure the plaintiff in the sum of $12,500 on the steamer C. H. Wortham, from the 4tli day of January, 1890, until the 4th of January, 1891. By a rider attached to the policy it is provided that the insurance shall be upon the steamer C. H. Wortham, her hull, engines, boilers, etc., “ or whatever steamer may be employed upon the line in place of said steamer ‘ C. W. Wortham.’ ” If that were all there were of the policy it would be quite clear, we think, that the contract between the parties provided for a substitution of any other steamer which should be put upon the line in the place of the Wortham, but it did not provide for any resubstitution, or that the policy should again attach to the Wortham after it had once been, diverted from her. The policy, contains, however, the further clause “ privilege to substitute any other steamer owned or chartered by the assured, to run on said line in place of said steamer ‘ C. H. Wortham,’ and this policy shall attach to such steamer, her hull,” etc., “ to the same effect as if this policy were originally and specifically written upon the steamer so substituted, instead of upon said steamer. Notice of such substitution to be given this insurance company at the time it is made, or as soon thereafter as practical.” It is under this provision in the policy that the substitution was made. Upon examination of this clause in the policy it will be seen that it does not provide in any way for a resubstitution of the Wortham after another steamer has been put in her place. The attaching of the policy upon the substituted steamer is not limited so that it shall continue “ only so long as she runs upon the line,” or “ until the Wortham, shall resume her place upon the line,” or equivalent words, but the policy after the substitution, by its express terms, attaches to the substituted steamer to the same effect as if it were originally and specifically written upon her instead of upon the Wortham. The policy was originally written upon the Wortham for one year from the 4tli day of January, 1890, and when the policy attached upon the substituted steamer it is quite clear that it attached upon that steamer to the same extent and for the same time as it had been originally written upon the Wortham; that is, until the 4tli day of January, 1891. There is nothing in the words of the policy from which it can be inferred that there was any general and standing right of resubstitution of one steamer for another, but if we stand upon the words of the policy it is quite clear that, when there has been a substitution, the policy attaches upon the substituted steamer once for all during its life. But, as in all cases where a contract is to be construed, the action of the parties under it may be referred to as throwing light upon their intention wi-tli regard to it, so in this case it is proper that we should refer to the evidence to ascertain whether the contract, had been construed by the parties to permit a resubstitution of steamers from time to time. It is fairly to be inferred from the testimony of Mr. Lethbridge, an agent of the company, that it was the custom of the plaintiff to give notice, from time to time, that one steamer had been withdrawn from the line and that another steamer had taken her place, and that upon the receipt of such notice it was permitted that the insurance should be changed from the steamer upon the line to the substituted steamer. One of such notices is produced in the case, and it appears that there had been various other resubstitutions from time to time of one steamer for another. In view of this course of business, we think it is fair to construe the contract as permitting a resnbstitution of one steamer for another when the substituted steamer shall have been withdrawn from the line and the original steamer resubstitnted in her place. But the same evidence shows that notice was always given to the defendant of the resubstitution, and the construction thus given by the parties to their own contract is of great weight to show that such notice was required. In view of these facts, it seems to us that there could be no resubstitution without a notice to the defendant of that fact. It is expressly provided in the contract that notice of the first substitution must be given to the insured, and until that notice has been given, the substitution clearly cannot take effect. As we have seen, when that substitution takes effect, the policy is withdrawn from the JVortham and attached to another steamer, to the same extent as it had been originally attached to the Ifortham. While the defendants áre undoubtedly charged with knowledge of the customs of business of the insured (1 Phil, on Ins. *f 140), and, therefore, it may be claimed that they were bound to know that the plaintiff was in the habit of substituting one steamer for another, they were not bound to know that any particular steamer W'as running upon the line at any particular time. Neither were they bound to know that one of the three steamers of the plaintiff was running upon the line, because the policy provides that the -substitution may be not only of any steamer that is owned by the plaintiff, but- of any steamer that is chartered by the plaintiff. They have no means of knowing, therefore, what is the situation of any one of the steamers, and they had a right to rely upon the situation of affairs as disclosed to them by the information which they received from the plaintiff from time to time, as indicating to what steamer the risks they had written applied. When one steamer was substituted for another under any given policy, the resubstitution, if there was one, was to be made by the assured. Unless notice of it was given to the insurer, it would be utterly impossible for them to ascertain upon what steamers their risks had applied at any given time, or what was the nature of the risks which they were insuring. It is obvious that any construction of the contract which would place the insurers in such a condition as that, with reference to the policies they had issued, would be a hard and unreasonable one, and ought not to be adopted unless • it necessarily follows from the acts of the parties themselves or from the words of the policy. But when we examine the acts of the parties themselves, to the meagre extent to which they have been shown by this evidence, it seems that they gave notice of resubstitution as well as of the original substitution. In the only case in which there is any proof that there was a resubstitution, notice of it was given to the insurer. We are quite clear, therefore, that, even if there could be, under the policy as construed by the acts of the parties, a resubstitution after the first substitution had taken place, notice of that resubstitution must be given to make it effectual and binding, precisely as notice of the original substitution must have been given.

But it is said that, upon the evidence, there was sufficient to require the court to submit to the jury the question whether such notice had not been given to the insured. The evidence relied upon to produce that effect is a letter of May 10, 1890, sent to the agent of the defendant, advising him that the Elm City would, on Monday, be withdrawn from the route and that the Continental would resume her place for the season, and containing the clause, “ the policy which you hold on the latter boat will then apply.” It is claimed that the jury might infer from this evidence that the insurance company had notice that the Continental had ceased to run upon the route in the place of the Northam, and the Elm City had been substituted in her place, and that the Continental was again to go back, and it is said that the necessary inference of fact was that the Northam, was running upon the line. We do not see that any such inference follows. The defendant was not called upon, nor was it supposed to know the exact situation of any steamer upon the plaintiff’s line. For aught which was made to appear to it, the Northcwn, which was laid up in February, was still laid up, and was not running. There is nothing in the evidence to show that it had any reason to suppose that the Northam had gone back upon the line, and for that reason it seems to us that the letter of May tenth could not by any inference be construed to be a notice to it that the Northam had been resubstituted, under her policy of insurance, for the Continental.

But it is said that, unless that notice is to be implied, it would be necessary to say that there were two policies of insurance upon the Continental at the same time. Admitting that to be the case, it is a matter of no particular importance unless the defendant took advantage of it. It might well be that, in the various changes back and forth, there would be at some time double insurance upon one or other of the ships. But if the defendant made no objection to it, the policy was still valid so far as it was concerned, and no inference of notice one way or the other can be drawn from it.

For these reasons it seems to us that the Wortham had not been effectively resubstituted in the place of the steamer to which the policy attached by the notice of February twenty-fourth, and that there was nothing from which the defendant could infer such a resubstitution, and the action of the court in ordering a verdict for the defendant was proper.

The motion for a new trial should be denied, with costs, and judgment ordered for the defendant upon the verdict.

Van Brunt, P. J., and O’Brien, J., concurred; Barrett and Ingraham, JJ., dissented.