American Credit Indemnity Co. v. Jung

PARDEE, Circuit Judge (after stating the facts as above). On a policy similar to the one in this suit, this court in Peden Iron & [179] Steel Company v. Ocean Accident & Guarantee Corporation, 151 Fed. 992, 81 C. C. A. 178, said: “Plaintiff in error further .contends that the provision in the rider, to wit, ‘the net amount of loss on such debtors thus ascertained shall be added to the losses covered by the terms and conditions in the body of this contract, and shall be adjusted In accordance with the provisions in lines 53 to 67 of said contract,’ should be construed as though the words ‘as far as practicable’ were written therein, and that accordingly, as there was no loss on rated accounts equal to the initial loss provided for in the contract, the said initial loss is irrelevant and immaterial and so far inapplicable, and not to be taken into consideration in determining the loss on unrated accounts; and therefore, as the loss on unrated accounts exceeded the amount of the guarantor's liability thereon, the plaintiff in error is entitled to a judgment for the full amount of the limit. If this contention cannot be maintained, the plaintiff in error further contends that the proper adjustment under the contract would lie to deduct the initial loss from the combined loss on rated accounts under the policy and on unrated accounts under the rider, which would leave $4,525.89 as the proper amount for plaintiff in error to recover. Neither of these contentions is well founded. With the exception of the involved sentence in the rider (the matter heretofore discussed), the policy and rider attached are plain and unambiguous. In fact, there is only one policy in the case. Under that, as we construe it, the liability of the guarantor to the insured is limited to 810.000 on both rated and unrated accounts, the liability on unrated accounts not to exceed S5.000. The initial loss of one-third of one per cent, on the whole business of the insured is to be deducted from the net loss or Insolvent accounts coming within the terms of the agreement before any liability of the company cam attach. The method of adjustment is specially provided for in the lines 53 to 67 of the contract, and it is adopted and made applicable by the last provision in the rider.” Following that case, we hold that there is only one policy, and tinder the plain terms of that policy the liability of the indemnity-company is limited to $4,000 on both rated and unrated accounts, the liability on unrated accounts not to exceed $3,000. And it seems to be clear under the contract that, before the indemnity company shall be liable for any loss, N. fí. Jung is to bear an initial loss, which in this case is agreed to be $5,174.72. The rider provides that the aggregate net loss to be included in the adjustment coming within the provisions of the rider shall be limited to 75 per cent, of $4,000—that is to say, $3,000—and that such net amount of proven losses covered by the rider shall enter with the net amounts of all other losses covered and proven under the policy in calculating under-section No. 6 the amount from which the initial loss shall be deducted. And section 6 provides as follows: “From the aggregate amount of the net covered and proven losses thus ascertained there shall be deducted the agreed initial loss to be borne by tile indemnified and the balance, if any, not exceeding the amount of this bond, shall be the amount due to the indemnified.” It is agreed that the net amount of losses on rated accounts covered by the policy amounts_ to $954.73, and the net amount of losses on unrated accounts that can be considered and enter into the adjustment and determination of liability is $3.000, making the sum $3,~ 954.73 as the aggregate of the net covered and proven losses of the indemnified within the meaning of and during the term of the policy. As the agreed initial loss exceeds the aggregate amount of the net covered and proven losses ascertained under the provisions of the [180] contract, there is no balance due to the indemnified under the policy in suit. We think that counsel are misled in construing the provisions of this policy because credit insurance is unlike most, if not all, other kirids of insurance, in that the insured has to carry an agréed initial loss before the indemnifying company is liable for any loss, and that, where such insurance is made or purports to be made to also cover losses incurred on unrated accounts, some provision has to be made limiting the terms under which losses on such unrated accounts can be considered in determining the proper amount of initial loss to be borne by the insured or else the premium to effect such insurance would be prohibitive. To answer.the contention made by counsel in this case that the construction claimed by the indemnity company and herein given by this court is practically to deny the insured any insurance on unrated accounts, it is only necessary to say that under the particular facts in this case, if the insured did not have any insurance on unrated accounts, it results from the particular facts, and not from ambiguity in the terms of the contract. If Jung had shown a loss of $5,174.72 on rated accounts, he would be entitled to receive $3,000 on unrated accounts. On the admitted facts in this case, the verdict of the jury in the court below should have been directed for the indemnity company. The judgment is reversed, and the cause is remanded, with instructions to award a new trial.