23. On December 21, 1966, Messrs. Zinman, Grossman and Lichtenstein submitted to Federal an invoice covering additional items placed on the yacht VALERIE totaling $2,744.31.
24. Including tax, the total value of the yacht VALERIE at the date of loss was $66,686.64.
The issue presented in the instant case is whether a valid binder of insurance was created on October 25, 1966, by the various transactions between Charles Carideo, Sr. and his insurance broker Zinman, Grossman & Lichtenstein (Zinman) and the subsequent transactions between Zinman and Chubb & Sons, Inc., (Chubb), the authorized representative of Federal Insurance Co. (Federal). The facts adduced at trial indicate that on October 25, 1966, Charles Carideo, Sr. contacted his insurance broker Zinman and requested insurance on a forty-five foot pleasure yacht. Two handwritten memoranda confirm this fact and further briefly describe the subject-matter of the proposed contract of insurance (a forty-five foot Fishman sports yacht) and state the approximate amount of coverage needed, i.e., about $60,000. At this point, of course, no valid binder could have been created, as the initial conversation between Carideo and Zinman served merely as a request to Zinman to obtain the required approval for insurance from Federal. Furthermore, Mr. Zinman was not a general agent of Federal and had no authority to bind coverage on behalf of Federal. The express approval and acceptance of Federal's manager, Chubb & Sons, Inc., was required for insurance to be binding on Federal. Later that same day a binder, however, was requested of Federal by Morrie Zinman from Chubb & Sons, Inc., Federal's authorized agent. The substance of the transactions between Mr. Zinman and Mr. Vorhees, the manager of Chubb & Sons, Inc., is recorded by a contemporaneous memorandum made by Mr. Vorhees which contains the notations "EFF. October 25, 1966" and "O.K." The same general description of the yacht and its value contained in the prior memorandum from Mr. Zinman's office are also apparent on these notations by Mr. Vorhees. A subsequent confirming memorandum made by Betty Whitehill of Mr. Vorhees' office states "Spoke to Vorhees, -- O.K. he will bind".
Counsel for Federal argue that the above facts are insufficient to show that on October 25, 1966, a valid binder of insurance was created. Federal further argues that the contract of insurance, if any, which was created was merely an executory contract to insure in the future conditioned upon satisfactory performance upon final delivery of the yacht to Charles Carideo, Sr. This argument is based in part upon a provision in the Phoenix builder's risk policy which states that coverage thereunder was to be extended by Phoenix until a date certain or until delivery at an earlier date, thus indicating a lack of intent to have double insurance. Federal also argues that the binder of insurance, if any, is insufficient because it fails to detail with particularity the terms of the policy, the premiums, term of risk and other particulars concerning coverage.
An insurance binder is a contract of temporary insurance to be effective insurance coverage until a formal policy is drafted and issued. It is not a complete contract in a sense, but evidence of the existence of a contractual obligation to be expressed in complete written form at a later date. Lester v. Century Indemnity Co., 356 Pa. 15, 50 A. 2d 678 (1947). A binder is used when a policy is not immediately issued to evidence that insurance coverage attaches at a specific time and continues until the policy is issued or the risk is declined and notice thereof is given. Harris v. Sachse, 160 Pa. Super. 607, 52 A. 2d 375 (1947). Like all contracts, a binder requires agreement of the minds of the parties and must have in contemplation the terms to be incorporated later in the written policy. Harris, supra. In the instant case the evidence demonstrates that Charles Carideo by his agent, Morrie Zinman, requested a binder of insurance from Federal Insurance Co. through its agent, Chubb & Sons, Inc. Approval by Chubb & Sons of the request on its terms would constitute approval by Federal and would, therefore, make out the required meeting of the minds necessary to create a valid insurance binder.
This record indicates that such meeting of the minds took place as is evidenced by the written memoranda of phone conversations introduced and admitted into evidence. The subject-matter of the contract was generally but adequately defined as a new boat, 45 Fishman Sports, having an approximate value of $60,000, and being the property of the insured, Charles Carideo, Sr. The notations "O.K." and "EFF. October 25, 1966" indicate that the approval of Federal was given through its agent, Mr. Vorhees, and that the effective date of the binder was October 25, 1966. This is confirmed by the subsequent memorandum of Mr. Zinman's office by Betty Whitehill, "Spoke to Vorhees -- O.K. -- he will bind". Admittedly, the full particulars of coverage were not delineated at the time of loss nor had Mr. Carideo paid premiums upon the binder. However, it is not necessary that all the details of an insurance contract that may be finally expressed in the formal contract be specified in the binder; it is sufficient if the intention of the parties to the contract in these particulars can be gathered from the circumstances of the case. Rossi v. Firemen's Ins. Co., 310 Pa. 242, 165 A. 16 (1932). Nor is payment of premiums a necessary condition precedent to the validity of the binder. Rossi, supra. Such a contract, entered into without the issuance of a formal policy is to be regarded as made upon the terms and conditions contained in the company's standard policy. Here it has been conceded that Federal's standard Marine policy covers the precise risk which occasioned the loss of Mr. Carideo's yacht, namely, loss by fire.
As to the amount of insurance coverage, we have determined the amount to be $66,686.64 as of the date of the loss. In the usual course of proceedings respecting binders, the final amount of insurance would be determined upon completion of the application showing the value of the property involved in detail. In the meantime, the binder in the approximate figure of $60,000 was effective, but subject to adjustment for the final value of the yacht. The final value of the yacht according to extra items upon it at the time of loss was $66,686.64. As there was a valid binder by Federal covering the yacht VALERIE, and since Phoenix's policy also covered the same subject-matter, there was double coverage on decedent's yacht. Therefore, we will direct that payment be made on a pro rata basis with each carrier to pay $33,343.32 or one-half of the value of the yacht VALERIE as its proportionate share of the risk insured.
CONCLUSIONS OF LAW
1. The Court has jurisdiction of the parties and the subject-matter of the claim.
2. Federal Insurance Company, through its authorized agent, Chubb & Son, Inc., issued an effective binder of insurance on the yacht VALERIE, owned by plaintiff and plaintiff's decedent, on October 25, 1966.
3. Although Federal's binder was indefinitely stated in the amount of $60,000, it was thereafter properly amended by submission of detailed invoice covering costs to $66,686.64.
4. Since there was also a builder's risk insurance policy issued by Phoenix covering the same loss on the date in question, each insurance company defendant is liable to pay plaintiff one-half of the yacht's value on the date of loss; namely, $66,686.64 or $33,343.32, plus interest.