Egisto P. Fabbri et al., Respondents, v. The Phoenix Insurance Company, Appellant

Egisto P. Fabbri et al., Respondents, v. The Phoenix Insurance Company, Appellant. To make clear any ambiguity or indefiniteness ¡in, an application for a policy of fire insurance, proof of the course of business and dealing between the parties and between the applicants and other companies with the knowledge and concert of the insurer, is-competent. In an action to -enforce- an accepted application for a-policy of marine insurance, “for not to exceed $10,000 in .gold,”' upon -.the:-cargo of a vessel then at Valparaiso, the defence was based ¡upon-a - clause in defendant’s policies providing that, if there was prior assurance upon the property, defendant should only be liable for so much as the amount of the prior assurance failed to cover the risk. Plaintiffs were permit- . ted to prove that it was the- course of dealing between plaintiffs and', defendant, and with other companies, the same being known to defendant, where insurance was wanted upon a cargo, the value of which was not known, to estimate the value and to make applications to ,the amount of the estimate, and, upon ascertaining the actual value, to apportion the risk in the proportion that the amount of each application bore to the estimated value, and to change the applications accordingly, and policies were then issued for the corrected amounts. It appeared that this cargo was estimated at $152,500, for which amount applications were made and accepted; that its real value was $56,253; that the Vessel and cargo were destroyed by Are. Held, that the proof of the course of dealing was competent, and that defendant was bound to issue its policy and to pay its proportion of the loss ascertained in accordance therewith. (Argued November 17, 1873; decided November 25, 1873.) Appeal from judgment of the General Term of the Supreme "Court in the first judicial department, affirming a judgment in favor of plaintiffs, entered upon the report of a referee. This action was brought to compel defendant to issue its policy to plaintiffs for $3,688.72 gold, and to recover that amount on the cargo of the ship Flora McDonald. On the 5th. of March, 1867, the said ship was lying at the port of Valparaiso, South America, taking in a cargo for plaintiffs. Mot knowing the value of the cargo, but estimating it at between $150,000 and $160,000, plaintiffs’ agents were directed to effect insurance there. Written applications were made to and accepted by different companies, including defendant’s, amounting in all to $152,500. The applications were similar to those accepted by defendant, the principal part of which is as follows: “ Insurance is wanted by Fabbri & Chauncey, for account of whom it may concern, loss payable to them or order. “ On wool, val. at 18c, per pound, until otherwise agreed. “ Ores, &c., val. at invoice cost, and 15 p. c. added. “ Privileged to load not exceeding 25 p. c. over registered ores. “ Per ship Flora McDonald. “ At and from port or ports on W. O. S. Am. to Mew York. “ Warranted by the assured, free from claim for loss or damage arising from seizure, detention or the consequences of any other hostile act of the government or people of any seceding or revolting State of this Union. For not to exceed $10,000 in gold.” The vessel and cargo were burned at Callao; the value ascertained, at the prices stated in the applications, amounted to $56,253. Applications, nominally for more than this amount, had been accepted by other companies prior to acceptance by it. The defence was based upon a clause in the policies issued by defendant, known as the “ prior and subsequent insurance clause,” which is as follows: “ Provided always, and it is hereby further agreed, that if the said assured, shall have made any other assurance upon the premises aforesaid, prior in date to this policy, then the said Phoenix Insurance Company shall be answerable only for so much as the amount of such prior assurance may be deficient towards fully covering the premises hereby assured; and the said Phoenix Insurance Company shall return the premium upon so much of the sum by them assured as they shall be by such prior assurance exonerated from; and in case of any insurance upon the said premises, subsequent in date to this policy, the said Phoenix Insurance Company shall, nevertheless, be answerable for the full extent of the sum by them subscribed hereto, without right to claim contribution from such subsequent assurers, and shall accordingly be entitled to retain the premium by them received, in the same manner as if no such subsequent assurance had been made.” Plaintiff offered evidence, upon the trial, which was received under objection, proving that prior to the said applications there existed a custom or course of dealing between the parties and between plaintiffs and other insurance companies, which last was known to defendant, it acting in concert with such other companies, in substance, that, in effecting marine insurance upon property belonging to plaintiffs, when the precise value thereof was not known at the time, plaintiffs were accustomed to make written applications to the different companies for insurance in different sums, ’amounting, in the aggregate, to what they supposed might be the value of the property which would be at risk; and it was stated in the applications that insurance was wanted upon the said property for “ about,” or “ not exceeding,” ór “ not to exceed,” the sum stated therein, and such applications were accepted and made binding for such indefinite sums, with the understanding that, when the value of the'-prbperty “at risk should be ascertained, the amount ho insured should be declared and apportioned, so that the amount insured by each should bear the same proportion to the property’actually at risk as the amount stated bore to the estimated value or to the aggregate of all the indefinite insurances thereon; and that, after' the' amount had beeh so 'ascertained and fixed, a policy in the form then in use was issued by the respective underwriters for the sum so ascertained and adjusted as aforesaid. After ascertaining the value of the property at risk at the time of the loss, plaintiffs declared and made known to ’defendants and the other insurers such value, and apportioned the same according to the usual practice, as above ’stated; defendant’s proportion ‘ was $3,688.72. The referee decided that plaintiffs were entitled to a policy for that sum, 'and to'a judgment therefor, with interest. ' Judgment was entered accordingly. Townsend 'Seudder for the appellant. Defendant was entitled,' under the policy, to be exonerated from any claim for which prior insurance Companies had received the premium. (N. Y. Ins. Co. v. Thomas, 3 J. Cas., 1; Mumford v. Hallett, 1 J. R., 433; Wardsworth v. Alcott, 6 N. Y., 72; Schooner “Reside” 2 Sumn., 569; Howell v. Knick. L. Ins. Co., 44 N. Y., 282.) Plaintiffs' must lobk: to the insurance companies prior in point bf time for the loss ’they have-suffered. (Am. Ins. Co. v. Griswold, 14 Wend., 399 ; Brown v. Hart. Ins. Co., 3 Day [Conn.], 58 ; Potter v. Marine Ins. Co., 2 Mason, 475 ; ‘Wiggin v. Suff. Ins. Co., 18 Pick.,152.) George W- Soren for the respondents. The evidence of the practice or course of dealing, between plaintiffs and defendant, and the other companies, wa^ properly admitted. (Gibson v. Culver, 17 Wend., 305; 2 Phil. on Ev. [4 Am. ed.], 708, 729, 730, and cases cited; Rushforth, v. Hadfield, 7 East, 225; 6 id., 525 ; Broom’s Maxims, 601; Wigram Extrin. Ev., 57, 58; Boorman v. Johnston, 12 Wend., 573 ; Barnard v. Kellogg, 10 Wall., 383; Robinson v. U. S., 13 id., 363.) It was, no valid objection that the evidence offered did not prove general usage. (1 Duer on Ins., 57; Bourne v. Gatliff, 11 Cl. & Fin., 45 ; Rushforth v. Hadfield, 6 East, 526; 7 id., 228, 229,; Block v. Col. Ins. Co., 42 N. Y., 400, 401; Clinton v. Hope Ins. Co., 45 id., 460.) A contract may be made out by proof of general usage, or by evidence of acts of the parties in like cases. (Bac. Ab., Trover, 663; Green v. Farmer, Burr, 2221,2223; Rushforth v. Hadfield, 6 East, 619 ; 7 id., 225.) [MAJORITY — Folger, J.] Folger, J. It was competent for the plaintiffs to make clear any ambiguity or indefiniteness in their application for insurance. They could do this by proof of the course of business and dealing between them and the defendant (Russell Manufacturing Co. v. N. H. St. Boat Co., 50 N. Y., 121; S. C., on second appeal, May, 1873, 52 N. Y., 657); and also (as the one was connected and dependent upon the other) by the course, of business and dealing with other companies, with the knowledge and concert of the defendant. This did not contradict nor vary, by parol, the contract of the parties. Eor did it involve the defendant with the business of other companies, so as to make it liable for contracts with which it had no concern, apy farther than the course of business and dealing,, and the contract of the parties to this action, contemplated by it and framed upon it, had that effect. It is apparent that the application for insurance was, to some extent, indefinite in its expression of the aniount of insurance which was sought from the defendant. And such was the case with the applications made to the other insurers. The testimony was produced to show, and did show, that the amount would not and could not be fixed exactly until the ascertainment of another fact, to wit, the amount and value of the cargo to be laden upon the vessel. The course of business and dealing between the parties, and between the plaintiffs and other companies, as known to the defendant, showed that the formal contract between the insured and insurer was not used to be, and could not be completed, until that fact was ascertained, and, upon the basis thus furnished, the proportionate amount of the risk taken by each of the insurers, the defendant as well as the others, definitely arrived at. The terms of the contract to be delivered were not altered thereby, nor was any condition thereof expunged or varied; simply, the amount dependent upon the .contract was not, until then, possible to be stated with precision. The whole amount at risk was then made known, and the risk taken by each insurer was the proportionate part thereof, indicated by the application to it, and the application to all the insurers. No insurer was involved in the business of other companies, further than taking part in the same risk made it so, under the terms and conditions of its contract and the rules of law applicable to the ease. For. the defendant is in error, in the statement made by it upon its points, that the amount of insurance effected by the plaintiffs was greater than the value of the cargo, and that there was an amount of insurance greater than the value, prior in time to that made by the defendant. When the value of the cargo was ascertained, then the amount of the total and of the prior insurance was first ascertained. The total was no more than that value, and the prior insurance no more than the proportion of that total sought from the companies taking risks before the defendant took one. This is an action not only to recover an amount insured upon property of the plaintiffs, but to compel the defendant to make and deliver to the plaintiffs a policy of insurance for the amount. The negotiations between the parties for insuranee did not disclose the terms and conditions of the policy, nor did they disclose precisely the amount of insurance. Proof aUunde the application was proper, to show what should be the terms and conditions of the written contract; and so proof almmde the application was proper, to show the amount to be inserted in the written contract. And when this proof is admitted, and the terms and conditions and amount of the policy are established, no part of the contracts between the parties is varied, and all parts have their due force. The clause in the policy, that if the plaintiffs had made prior assurance the defendant should be answerable only for so much as the prior assurance failed to cover the value of the thing assured, is not changed or restricted, but has its due operation; for the proof received does no more than show what is that prior assurance, and what the value; and it was necessary to that end. These considerations cover the points presented by the learned counsel for the defendant, and show that there was no error at the trial, nor in the judgments of the courts below. The judgment appealed from should be affirmed, with costs to the respondents. All concur. Judgment affirmed.