Wheeler v. Ætna Ins.

MANTON, Circuit Judge. Appellants built and sold motorboats, hava P^an£ ^ Brooklyn, N. Y., and a factory branch, dock, and showroom at Syracuse, N. Y.; also a dock and repair shop 14 miles from Syracuse, at Brewerton, N. Y. They built a 40-foot double cabin motorboat, known as Hull 304, in the Brooklyn yard, exhibited it in January, 1930, at a motorboat show, and then launched and demonstrated it in New York Harbor until May 6,1930, when it was prepared for a trip to Syracuse to be shown, for disposal, in appellant’s factory branch. The triP was started on the evening of May 6th but before reaching Albany on May 7th, f andef1’ “T* damaf to ^ engines and propeller. It managed to navigate to AIbany, and was later taken to Watervliet, N. Y., where partial repairs were made, and then it was taken to appellants’shipyard at Brewerton for further repairs. Here one engine .was removed, overhauled, and replaced, and on testing it was found to have a bad knock, After these major repairs, it was necessary to navigate the vessel to try out the engine [31] by running it for 30 or 40 hours at slow speed, This test was recommended by tbe mechanic, It was considered necessary before the boat could be demonstrated or offered for sale. At this time there were college boat races at Ithaca, and the appellants had loaned a 36-foot motorboat to the regatta committee to be available for these races. The No. 304 made its test run by accompanying the 36-footer to Ithaca. The two boats proceeded slowly, reaching Baldwinsville at the end of the first day. At that place the captain of the No. 304 look on board his wife and two friends, It -was not a demonstration trip. After arrival at Ithaca, the motorboat was taken out on the lake and then back into an inlet,^ on May 24, 1930, to load a supply of gasoline. After loading the gasoline, the captain attempted to start the engine, and the boat blew up and became a total loss except a salvage value of about $1,000. A policy of insurance was issued against this risk in November, 1929. Originally it was for one month, but was extended by in-dorsements from time to time and the payment of additional premiums. The insurance was for $11,500, and was built up by riders and indorsements on the basic form. This bar sic form, known as “A. I. A. Inland Vessel Form,” had a rider attached known as the “Builders’ Risk Form No. 50.” On May 6, 1930, an indorsement was made to cover the trip from Brooklyn to Syracuse; on May 16, 1930, while the vessel was still at Brewerton, another indorsement was made extending the policy another month, and gave the same eov-erage as obtained while in Brooklyn. This indorsement carried the same premium as the original policy and prior indorsements for use about Brooklyn. Among the clauses of the policy was a provision voiding the policy if any other insurance was made upon the interest insured. It was “Warranted by the assured limited to the navigation and use of the-as per form attached-Wheeler Shipyard for account of themselves * * * commencing November 12, 1929 at noon New York time and ending December 12, 1929 at noon, New York time, or until delivery at Brooklyn, Aew York if delivered at an earlier date. * ^ this policy may he extended at pro rata monthly additional premium provided notice of extension be given to this Company prior to December 12, 1929. “Touching the adventures and perils which we, the said assurers, are contented to hear and take upon us, they are of the Seas, Man-of-War, Fire, * * * barratry of the Master and Mariners, and all other perils, losses and misfortunes that have or shall come to the hurt, detriment or damage of the said ship, &e., or any part thereof. * * * With leave to sail with or without pilots, to tow and be towed, and to assist vessels and/or craft in all situations and to any extent, and to go on trial trips. With liberty to discharge^ exchange and take on board * * * passengers, and stores wherever the vessel may call at or proceed to. * * * “This Insurance is also to cover all risks, including fire, while under construction and/or fitting out. '* * * “This insurance is also to cover all risk 0£ trial trips, ioa¿e¿ ox otherwise, as often ag require^ and jji risks -whilst proceeding to ancj retUrning fTom the trial course but warranted that all trials, and proceedings to and roturning therefrom shall be carried out withjn a ¿istanee by water of 100 nautical miles the place of construction or held covered at a rat° to be arranged. * * * “This Insurance also specially to cover loss of or damage to the'hull or machinery, through negligence of Master, Mariners, Engineers or pilots, or through explosions, bursting of boilers, breakage of shafts, or through any latent defect in the Machinery, or Hull, or from explosions or other causes, arising either on shore or otherwise, causing loss of or injury to the property hereby insured, provided such loss or damage has not resulted from want of due diligence by the Owners of the Ship or any of them, or by the Manager, and to cover all risks incidental to steam navigation, or in graving docks.” On May 6,1930, in consideration of an additional premium, the insurance was extended to cover one trip from the yard in Brooklyn í<v^a Portor pHee to Syracuse, N. Y. sailingem or about May 6th, 1930 against the Perilg covered by this policy. On May 16th, for mother premium paid, it was extended to eover “this vessel whilst at Brooklyn, N. Y., and/or Syracuse, N. Y., and that this policy extended for a further period of one month, OT until Jme 12th> 1980> Mon-” This basic form and its indorsements riders are to fog read together and construed liberally so as to indemnify the insured, there js a provision of application to any risk whare the has suffiered loss, then they are entitled to recover. Ætna Ins. Co. v. Houston Co., 49 F.(2d) 121 (C. C. A. 5); Wright v. Ætna Co., 10 F.(2d) 281, 46 A. L. R. 225 (C. C. A. 3); Atlantic Basin Iron Works v. Amer. Ins. Co., 250 N. Y. 322, 165 N. E. 463; Underwood v. Globe Indemnity [32] Co., 245 N. Y. 111, 156 N. E. 632, 54 A. L. R. 485. Ambiguous clauses, which may be read, in different ways so that on one construction there may be valid insurance protection and on the other no protection must be construed favorably to the insured. The J. L. Luckenbach, 65 F.(2d) 570 (C. C. A. 2); Rogers v. Ætna Ins. Co., 95 F. 103, 106 (C. C. A. 2); Marine Ins. Co. v. McLanahan, 290 F. 685 (C. C. A. 4). The risk insured against was not confined ,to the risk of building the boat, launching it, and giving it one trial. While such clauses are included in the policy and so it may be called a builders’ risk poliey, still it is clear enough that the clauses extended beyond one tnal. The intention that risk from an expíosion was included is plain. The policy referíe«”u° . negation and use” and stated that “all risks incidental to steam navigation” are among the rusks covered. A builders’ rusk policy m general users liberal m its phrasing and represents the nearest approach to full protection. Huebner, Marine Insurance (1920) c. XIII. pp. 144, 145; Dover, A Hand Book to Marine Insurance (1929) pp. 397-399; Ira S. Bushey & Sons v. Amer. Ins. Co., 237 N. Y. 24, 142 N. E. 340. The appellants were the owners of the vessel, and it is dear that they intended, as such, to insure during the period 'of construction and thereafter, covering at least trial trips as such. The appellee was informed that the vessel was completed in January and that it was going to Syracuse and its navigation there was to be covered. It was granted the same insurance risks while in Syracuse that it had while in Brooklyn. The use of the clause prohibiting other insurance, coupled with the general fire, theft, and marine clause; indicated the intention of the parties that one poliey was to cover all the risks common to the owner’s business in connection with the boat covered. Such construction is the reasonable one and will give effect to all the clauses of the poliey. The clause referring to the trial trips reads “with leave to sail ■ * * »d to go « tal trips,” indioat-ing that the trial taps were an additional risk coverage and not an exclusive or restricted coverage. This was indicated by the clause covering trial taps which has been quoted, and which covered the vessel for a distance of 100 nautical miles to the trial course. The mileage from Brewerton to Ithaca was less than the allowed distance. No limitation or condition was placed upon the use of the boat while she was proceeding on the trial course, Nothing in the poliey prevented the owner taking the boat the 60 miles from Brewer-ton to Ithaca and commencing and conducting its trial there. Before leaving Brewerton, it was determined to undertake this trip to Ithaca as a trial. Below it was beld that tbe poliey eovcred trial tripg ^ tbat tMg was not sueb a trip,. that from Brewerton to Baldwinsville was a trial trip., bll£ Beyond, that the vessel was not protected by the poliey. The trip started at Brewerton; it was intended to pass by the en-trance to Syracuse and go beyond Baldwins-ville. The uses made of the boat were well within the privileges reasonably afforded the owner in making such trial trip, We ^ referred to correspondence between tbe appelIailt ^ the Cornell Regatfca Committ to whom the appeUants suppli6d ^ 36_footer ^ tbe referees> boat for tbo but notMng bl tbis eorresp0ndence disteg a llaats> elaim tbat the No. 304 was on a trial M when ghe w to Itbaea. Nor wag it bei used ^ d(Jlnonstration purposes. The trip was undertaken to try out the re- ^ ^ ^ Brewerton £or dam. * d • , , , • f . • "f* trial trip, T f7 ^ p?^’ “ 7a3 the trlp when the vessel was first launched. Judgment reversed,