Maxwell Textile Co. v. Globe & Rutgers Fire Insurance of City of New York, Inc.

O’Malley, J. Plaintiff, as assignee, seeks recovery on a policy of insurance issued by the defendant. The policy was for the sum of $5,000 and covered shipments made by the Maxwell Silk Mills, Inc., plaintiff’s assignor, against loss by fire on shipments in transit while in the possession of a carrier. The loss covered by the policy is conceded, but the defendant has avoided liability upon a defense of breach of warranty and breach of covenant by the assured whereby the defendant claims it has lost its right of subrogation against the carrier. The policy required the payment of an original premium of fifty dollars, and an additional premium based upon the value of shipments to be made. To this end it was provided that the shipments were to be “ Valued at' invoice less discounts on date of shipment, or cash value when not invoiced.” There was contained in the policy the following warranty: “ Warranted by the assured that he has not or will not enter in any special agreement with the carriers releasing them from their common law or statutory liability.” In addition to the above warranty there was also contained the following clause: “ In case of any agreement by the Assured, prior or subsequent hereto, whereby any right of recovery of the Assured for loss of or damage to any property insured hereunder, against any person or corporation, is released, impaired or lost, which would on acceptance of abandonment or payment of loss by this Company, have inured to its bentefi, but for such agreement or act, this Company shall not be bound to pay any loss, but its right to retain or recover the premium shall not be affected.” Breach of the above warranty and covenant is asserted by the defendant in that the assured by undervaluing the two shipments involved in the loss made the special agreement prohibited, thereby releasing the carrier from liability. While conceding the undervaluation, the plaintiff denies any [281] breach of warranty or covenant and asserts that under the terms of the policy undervaluation of shipments was permissible. In support of this contention reliance is had upon the following language contained in one clause of the policy: “ It is understood and agreed that the assured may accept without prejudice to this insurance the ordinary Bills of Lading issued by carrier * * *.” Immediately following the above provision and as a part of the same clause there is a warranty made by the assured to the effect that the insurance shall not inure to the benefit of the carrier “ by stipulation in bill of lading or otherwise, and any breach of this warranty, and any act or agreement by the assured, prior or subsequent hereto, whereby any carrier or party liable for, or on account of, loss of or damage to any property insured hereunder, is given the benefit of any insurance effected thereon, shall render this policy of insurance null and void.” The two shipments made at the same time through the same carrier were of an actual value of $5,100.18 and $3,706.32, respectively. One was valued at the sum of $390 and the other at the sum of $250 in the bills of lading issued by the carrier. It appears that these bills were the customary or ordinary form of contract of carriage used between the insured and the carrier corporation. They had a blank space for the declaration of value by the shipper and the face of each bill contained at the right thereof in bold face type the following: “ Note. The company will not pay over $50 per shipment in case of loss, unless a greater value is declared and charges for such greater value paid.” But the carrier agreed to “ carry upon the terms and conditions printed on the back hereof, to which the shipper agrees, and as evidence thereof, accepts and signs the receipt.” The first of these conditions was: “1. In consideration of the rate charged for carrying said property, which is dependent upon the value thereof and is based upon an agreed valuation of not exceeding fifty dollars for any shipment, unless a greater value is declared at the time of shipment, the shipper agrees that the Company shall not be liable in any event for more than fifty dollars for any shipment, unless a greater value is stated herein. Unless a greater value is declared and stated herein the shipper agrees that the value of the shipment is as last above set out and that the liability of the Company shall in no event exceed such value.” The declared value of each shipment was inserted in the blank space on each bill of lading and in addition each bill was signed by the insured through its duly authorized agent. When the policy is read as a whole, it is evident that the defendant was attempting to preserve to the fullest extent its right of subroga [282] tion against the carrier and to guard itself against any special agreement on the part of the assured, whereby its right of action against the carrier might be released, impaired or lost. The contract must be construed so as to make of it a harmonious whole. To this end the specific prohibition against destroying or impairing the defendant’s right of subrogation must be deemed an exception to words of general permission to accept ordinary bills of lading. It is to be noted that there are other provisions in such ordinary bill restrictive of liability to which these general words of permission were intended to apply. Unless caused by its own negligence, the carrier was not to be liable for loss in certain contingencies; and in others, unless caused in whole or in part by its own negligence. In addition the carrier was protected against liability for loss or damage of any character unless claim in writing was made within a specified time, and unless actions on claims were commenced within ten months from date of shipment. Against such provisions the defendant had not protected itself when it agreed to permit the use of the ordinary bill of lading. In this view of the case we are unable to agree with the dictum of the learned justice at Trial Term to the effect that had no value been written in by the assured, the policy would not have been avoided upon the facts before us. Undervaluation, whether by filling in the blank space provided for value, or by failing to declare value, and thus limiting such to the sum of fifty dollars, would be a bar to recovery. The prohibition was against making a special agreement. The manner of such making was immaterial. It follows that the judgment should be affirmed, with costs. Dowling, P. J., and Merrell, J., concur.