Case ID: ad_89/html/0001-01.html
Source: Caselaw Access Project
Author: {"author": "_ MoLaughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Home Insurance Company and Phœnix Insurance Company of Hartford, Appellants, v. Continental Insurance Company, Respondent.
    
      Oral evidence — inadmissible to explain a reinsurance clause in a policy which is unambiguous and which has already been construed by the courts.
    
    A clause in a policy of reinsurance providing, “ Loss, if any,payable pro rata at the same time and in the same manner as by said companies (the original insurer),” is not ambiguous, and parol evidence is not admissible to establish that a retainer clause must be used in order to hold the company writing the original insurance to any stated amount in .case of loss; that in the absence of such clause the original insurer is at liberty to agree to any increase or diminution of its policy without consulting the reinsurers; that contribution is to be estimated upon the basis of the amounts of insurance subsisting at the time of the fire.
    "Where the legal effect of words used in a contract has been determined by the court, parol evidence is not admissible to change such meaning.
    Appeal by the plaintiffs, Home Insurance Company and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the :22d day of January, 1903, upon the report of a referee.
    The judgment, while in form in favor of the plaintiffs, was virtually a judgment in favor of the defendant.
    
      
      George Richards, for the appellants:
    
      William C. Trull, for the respondent.
   _ MoLaughlin, J.:

There have been two trials of this- action. On the first the plain" tiff's had a judgment for the amount claimed, but on defendant’s appeal the same was reversed and a new trial ordered (62 App. Div. 63). The second trial resulted in a judgment substantially as contended for by the defendant, from which the plaintiffs have now appealed.

The facts are substantially the same as those presented on the former appeal. They are set out at length in the opinion then delivered, and it is, therefore, unnecessary to restate them. On the former appeal this court held that, by the terms of the policy of reinsurance, the defendant was only liable to pay onedialf of the loss sustained by the plaintiffs ; that its policy so provides; that the words : ss, if any, payable fro rata at the same time and in the same manner as by said companies,’ * * * clearly and unmistakably contemplates that the defendant is not bound to pay the full amount reinsured but only such a proportion of the amount of the loss as is in the ratio of the amount of the reinsurance to the amount originally insured ; ” that the contract of reinsurance was to idemnify the plaintiffs to this extent and nothing more. On the first trial testimony was received by the referee as to the legal effect of this clause, when construed according to custom and usage in the trade, but before the close of the trial the saíne was stricken out, because the words used were not ambiguous and custom and usage could not be received to control the legal effect of them. ■ On the second trial- the plaintiff sought to introduce testimony of a similar character to establish that a retainer clause must be used in order to hold the company writing’the original insurance to any stated amount in case of loss; that in the absence of such clause the original insurer is at liberty to agree to any increase or diminution of its policy without consulting 'the reinsurers ; that contribution is to be estimated upon the basis of the amounts of insurance subsisting at the time of the fire, and that the referee erred in granting the defendant’s motion to strike out all of the testimony of this character

We are of the opinion that this testimony was not admissible and that the referee did not err in granting defendant’s motion to'strike it out. There is nothing in the contract of reinsurance, according to the former decision of this court, which is ambiguous. The words used in it plainly state the rights of the parties. Upon every well-settled rule relating to the construction of written instruments, parol evidence was, therefore, inadmissible to vary, modify or change its terms. (Mutual Safety Ins. Co. v. Hone, 2 N. Y. 235 ; Bigelow v. Legg, 102 id. 652.) In addition to this, the words in question had been passed upon and the legal construction of the policy determined by this court. The rule is too well settled to require the citation of authorities to show that where the legal effect of words used in a contract has been determined, and the contract itself judicially construed, parol evidence is inadmissible to change such meaning or construction.

. It follows, therefore, that under the former decision of this court the judgment appealed from must be affirmed, with costs.

Van Brunt, P. J., O’Brien and Laughlin, JJ., concurred.

Judgment affirmed, with costs. •