Phenix Ins. v. Wilcox & Gibbs Guano Co.

MORRIS, District Judge (after stating the facts). The question of law raised hy the defendant’s exceptions in this case is, what is the effect of the words “subject to coinsurance clause” in the policy of insurance in the item of $2,000 on their wharf and tramway thereon “subject to coinsurance clause,” and what was the legal effect of the testimony of the agent of the insurance company with regard to it? . The condition which the defendant contended was imposed upon the policy by these words was a restrictive condition, depriving the assured of something to which it was entitled under the general terms of the policy. Such restrictions are to be taken most strongly against the party for whose benefit they are intended. Palmer v. Insurance Co., 1 Story, 360, Fed. Cas. No. 10,698; First Nat. Bank v. Hartford Fire Ins. Co., 95 U. S. 673, 678; Thompson v. Insurance Co., 136 U. S. 287, 297,10 Sup. Ct. 1019. It devolves upon such party to express the restriction in language which conveys the meaning intended. The party who accepts the policy should be informed by it what is the contract for which he has paid the premium and upon which he relies for indemnity. Ang. Ins. §§ 20-22. We can see no ground for the defendant’s first exception, which is to the court’s instruction that, if there was doubt as to the construction .of the policy, it should be solved in favor of the assured, and we can see nothing in the instruction to mislead the jury. [729] The meaning of words which have a special trade or technical significance, or clauses in a policy which are ambiguous or indeterminate, may be explained by usages which are so general, uniform, or notorious that the party to be bound may be presumed to have known them. But no evidence of any usage was offered which would tend to explain the meaning of “subject to coinsurance” or “subject to coinsurance clause.” The only witness for the defendant was its local agent at Charleston. He did not testify to any usage, but simply to his understanding of these words in this policy. He further testified that the policy, if delivered without the coinsurance clause, which he had intended to attach to it and which he had attached to prior policies on the same risk, was incomplete, showing that the policy was not relied upon as expressing the contract lie had intended the company should make, but that contract would have been expressed in the clause which he alleged had been attached to earlier policies, and which would have been attached to this but for the oversight of Ms clerk. It appeared, further, from the evidence, that there were various coinsurance clauses which are attached to policies by different underwriters, some requiring the assured to become coinsurers for the deficiency if the insurance did not amount to 75 per cent, of the whole value of the property, and others stating a different percentage. It further appeared that the clause which the insurance agent would have affixed to the policy, if he had completed it as he had intended, was a printed clause applicable to a loss by fire, and not a loss by cyclone. It would appear, therefore, as the words “subject to coinsurance clause” had no definite meaning in themselves (unless they applied to the coinsurance clause contained in the body of the policies with reference to other insurance!, and had no definite meaning by usage, but referred to some particular clause which, the company’s agent, intended to affix, that the court committed no error of which the defendant can complain in saying to the jury that if they found the policy not a complete contract they were to ascertain what it was that was left out, and which, if inserted, would have explained or varied the terms of the policy as delivered. The court then called the attention of the jury to the fact that, if the very clause had been attached which the insurance agent testified had been omitted, it was one which was applicable only to a loss by fire, and instructed them that it would not have affected this loss, which was by cyclone. It does not appear that there was any error in this instruction of which fhe insurance company can complain. Unless there was some restriction by which the assured was prevented, it was entitled under the general terms of the policy to the whole sum insured. The insurer claimed that the restriction was contained in the words “subject to coinsurance clause” of themselves. We think the court right in holding this not to be so, and that the words had no definite meaning. The insurer was then (against the objection of the plaintiff) allowed to explain what was the clause it would have attached but for an oversight. Surely the defendant could not ask to he placed in a better plight tban if the policy had been completed as was intended. Attention had been called to the fact that the [730] printed slip had reference to fire, hut the agent’s testimony was clear that it was the slip he had áttached to fire policies which he intended to attach to this. Treating the policy as if the slip was there, the defendant asked the court to say that it was not to have its literal meaning, but was to be construed contrary to its obvious meaning, in order to make it consistent with a verbal agreement alleged to have been had with the assured two years before this particular policy was issued. This certainly is not the rule in an action at law. If the slip had been attached to the policy when delivered, and by mistake failed to express the actual agreement, a court of equity was the only jurisdiction in which the policy could be reformed and corrected. Insurance Co. v. Mowry, 96 U. S. 547; Graves v. Insurance Co., 2 Cranch, 419; Andrews v. Insurance Co., 3 Mason, 6, Fed. Cas. No. 374. The policy as delivered and accepted is conclusively presumed, in an action at law, to express the entire contract of the parties. Insurance Co. v. Mowry, 96 U. S. 547. If the slip intended had been attached to the policy, there would have been, no room for construction; the insurer would have used the word “fire,” and would have been presumed to have meant “fire.” The court, then, in substance, told the jury if they should find that this particular slip with the word “fire” on it was not the one intended to be attached, but some other, then the evidence left it doubtful which other slip was intended, as the various slips produced showed there were several of different import in use. This instruction was entirely justified by the testimony. The sixth exception was to that part of the charge which instructed the jury that, in order to bind the defendant by the special meaning which the agent of the insurance company contended he had explained in the original negotiation to be the import of insuring the wharf and tramway “subject to coinsurance,” the jury must find that this explanation was made to some person whose connection with the plaintiff corporation was such that he had authority to make and alter contracts on its behalf. In this policy the words “subject to coinsurance clause” would seem to import that there was some clause, either in the policy or to be attached thereto, by which coinsurance was to be regulated and the contract controlled either as to the extent of the risk or the basis of the settlement of the loss. This idea is favored by the provision “subject to freshet clause,” and the attaching of a clause with regard to freshets to form a part of the policy. There was no evidence sufficient to submit to the jury to find that the words “subject to coinsurance” had any fixed technical meaning in the business of insurance. By the special explanation claimed to have been made to Mr; Murphy, Jr., before the first policy was issued, it was attempted to interpret the contract in such a manner as to add to it a clause which it did not contain, or else to show that the policy did not express the previous verbal understanding. If this could in any case be permissible, it would seem that the understanding which was to control the written contract should be between persons authorized to bind the parties to the contract. But, in our opinion, these verbal explanations, no matter to whom made, were incompetent testimony [731] for this purpose. The testimony might have been admissible in an equity suit to correct the policy, if there was a mutual mistake or omission, hut was not proper to be considered by the jury in this suit. It was an attempt to prove a parol understanding prior to issuing the policy, thus giving meaning to words in it which of themselves expressed nothing; not to explain a latent ambiguity, hut to insert a clause by giving the oral understanding of the parties as to something which should he in (he policy for the benefit of the insurer, but was not there. It is obvious, therefore, that the instruction to which the sixth exception applies could not be prejudicial to the defendant. We find the whole charge was sufficiently favorable to the defendant, and that there is no error of which it can complain. The judgment is affirmed.