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Automobile Ins. Co. v. Springfield Dyeing Co.

February 2, 1940


Appeal from the District Court of the United States for the Eastern District of Pennsylvania; Kalodner, Judge.

Author: Jones

Before BIDDLE, JONES, and BUFFINGTON, Circuit Judges.

JONES, Circuit Judge.

On April 1, 1937, Automobile Insurance Company of Hartford, the appellant, issued its "Bailees' Customers Policy" in the principal sum of $20,000 to Springfield Dyeing Company, Inc., the appellee. Springfield was a dyer and finisher of silk or silk products belonging to others; and ninety-eight per cent. of its business came from Roxborough Knitting Mills, Inc., a manufacturer of silk hosiery.

The policy insured Springfield "for account of whom it may concern, on all kinds of lawful goods and/or articles * * * being the property of its customers while in possession of the Assured * * * against direct loss or damage to such goods and/or articles while this policy is in force, by the perils specifically insured against". The goods or articles were described by the policy as "consisting principally of hosiery accepted by the assured for * * * dyeing, or finishing, the property of its customers, * * * and while being transported by private or public conveyance to and from its customers", etc. Among the perils insured against were "Theft, Burglary and Hold-up". The policy specified that it did not insure against, - "Loss, if, at the time of the loss or damage, there be any other insurance covering against risks assumed by this policy which would attach if this insurance had not been effected."

A further condition of the policy provided in material part with respect to other insurance, as follows: "* * * if at the time of loss or damage there be other insurance (whether collectible or uncollectible) on the damaged or destroyed goods covering against any one hazard or combination of hazards assumed by this policy, then this policy will not indemnify for such loss or damage until such other insurance (whether collectible or uncollectible) shall have been exhausted, and then shall cover only the excess over such other insurance (whether collectible or uncollectible)."

As of June 1, 1937, Roxborough took out a policy of insurance in the Westchester Fire Insurance Company of New York in the principal sum of $10,000 on merchandise of Roxborough against loss or damage thereto from burglary, hold-up or theft while in transit. In the usual conduct of thirty-five to forty outside mills to which it shipped its silk and cotton.

Roxborough's policy with Westchester provided "that this insurance shall not cover to the extent of any other insurance provided "that this insurance shall not cover to the extent of any other insurance whether prior or subsequent hereto in date, and by whomsoever effected, directly or indirectly, covering the same property, and this Company shall be liable for loss or damage only for the excess value beyond the amount of such other insurance." The policy also contained a similar provision with respect to payment of losses where there was such other insurance. The coverage under the Westchester policy was extended by endorsement of July 16, 1937 to merchandise of Roxborough while in transit in "trucks of any dyer, finisher, throwster, converter, weaver or similar custodian", etc., against "all loss or damage of whatsoever kind or nature from any physical and/or external cause". Roxborough warranted in the endorsement that "in the event of loss the Assured shall proceed with full claim against the custodian". The endorsement further provided that, "In the event that the custodian for any reason is unable to pay the full loss within sixty days from date of same the assured shall be protected under this contract for said loss up to not exceeding the amounts stipulated * * *."

On October 26, 1937, both policies then being in force, a truck belonging to Springfield and under the control of its employees, while engaged in transporting a load of unfinished hosiery, the property of Roxborough, to Springfield's place of business for dyeing and finishing by the latter, was held up by armed highwayman who stole the truck's entire cargo of hosiery. The value of the stolen hosiery, to the extent that the same remained unrecovered, was $11,073.59, for which amount Springfield made claim under its policy.

Automobile Insurance, contending that it was not liable to Springfield under its policy for the whole of the loss but only so much thereof as was in excess of Roxborough's insurance for loss or damage to its goods from the same risk, refused to pay Springfield's claim for the damage in full; hence, this suit, which was tried to the court below without a jury.

At the trial, facts and documentary evidence to which we have referred were stated by the parties without objection or dispute. Springfield also proved, and the trial court found as a fact, that "By oral contract with Roxborough Knitting Mills, Inc., the plaintiff [Springfield] agreed to be responsible to Roxborough for any loss occurring to Roxborough's merchandise while in the possession of the plaintiff, and to maintain insurance upon the said merchandise for any loss". The evidence further showed that the agreement between Springfield and Roxborough was entered into when Springfield first solicited business from Roxborough shortly prior to the issuance of the policy by Automobile Insurance to Springfield.

It was also stipulated that, more than sixty days after the loss, Westchester loaned to Roxborough, as evidenced by loan receipt dated January 24, 1938, $10,873.88, without interest, to be "repayable only out of any net recovery [Roxborough] may make from any carrier, bailee or others upon or by reason of any claim for loss or damage to the property described * * * or from any insurance effected by any carrier, bailee or others on said property"; and, "as security for such repayment" Roxborough pledged to Westchester "all such claims and any recovery thereon". The property described was the "certain lot of hosiery, upon which loss and damage has been determined at $10,873.88" due to the theft from the truck of Springfield.

The court below rejected the defendant's contention and entered judgment for Springfield for the full amount of its claim with interest. We entertain no doubt as to the correctness of the court's action.

The policy in suit is a "Bailees' Customers Policy" and is so labelled by the insurer. By its plain terms it insured Springfield against loss or damage to goods belonging to its customers while in its possession. The policy contains no suggestion that the protection thereunder was limited to some qualified or partial interest because the insured was a bailee. Springfield had an insurable interest in the hosiery for the full value thereof up to the face amount of the policy and that is what appellant insured. California Insurance Co. v. Union Compress Co., 133 U.S. 387, 10 S. Ct. 365, 33 L. Ed. 730; Phoenix Insurance Co. v. Erie & W. Transportation Co., 117 U.S. 312, 6 S. Ct. 750, 29 L. Ed. 873; Home Insurance Co. v. Baltimore Warehouse Co., 93 U.S. 527, ...

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