Court Opinion

ID: 3487008
Source: CourtListenerOpinion
Date Created: 2016-07-05 21:14:18.413297+00
Date Added: 2024-06-11T13:54:02.372849
License: Public Domain

We have carefully considered the elaborate brief filed in support of the motion for a reargument of this case, and after mature reflection on the part of each judge who sat in the case and after full discussion in the consultation room, we are constrained to deny the motion.
The main ground relied on in the brief submitted to sustain the motion is that this Court fell into an error when it held in the opinion heretofore filed, that Strouse Brothers were properly chargeable with an initial loss of six thousand two hundred and fifty dollars under the New Jersey certificate in addition to an initial loss of ten thousand dollars under the New York bond. The precise thing decided was that as to claims which the bond covered the indemnified were required to bear an initial loss of ten thousand dollars before the indemnitor became liable at all under the bond; and that as to the claims which a renewal of the certificate would have covered, the indemnified were required to bear an initial loss of six thousand two hundred and fifty dollars before the indemnitor would become liable at all under the rider attached to the bond. A close and thorough re-examination of this subject has not led us to doubt the accuracy of the conclusion announced in the opinion. *Page 280 
If there had been no rider affixed to the bond, indemnity would have been afforded to the extent of twenty thousand dollars after the indemnified had borne an initial loss of ten thousand dollars. Consequently, a total loss of thirty thousand dollars would have been divided between the indemnified and the indemnitor in a proportion which would have thrown one-third upon the former and two-thirds upon the latter. For losses aggregating a less sum, the same ratio would not have been preserved, because, however small the total loss might have been in excess of ten thousand dollars, the indemnified were required to sustain the initial loss of ten thousand dollars, and the indemnitor would only have been bound to make good the amount over and above the initial gross loss. If there had been no bond issued by the Credit-Indemnity Company (the New York Company), but the indemnified had simply procured a renewal of the New Jersey certificate, the defendant in this case would not have been answerable for anything; but the other company would have been liable up to the sum of twenty thousand dollars for losses in excess of an initial loss of six thousand two hundred and fifty dollars and other abatements which need not be alluded to. Now, if the rider brought into the bond and put under the protection of the bond certain accounts which would have been covered by a renewal of the New Jersey certificate, it gave to the holder of the bond the right to demand from the maker of the bond the payment of claims which grew out of transactions antedating the bond, and therefore not included in but added to the class of claims which the bond standing alone would have protected. As a consequence of this, and upon the assumption that the rider brought under the bond claims which would have been payable under a renewal of the certificate, the liability of the indemnitor — the New York Company — was enlarged by the rider. To the liability under the bond there was added a liability which would have existed under a renewal of the certificate, but would not have existed under the bond without the rider; and it became not at all *Page 281 
improbable that the sum of the two might reach a total far in excess of a loss under the bond alone. This superadded liability imposed upon the indemnitor by reason of the rider bringing under the protection of the bond claims with which, but for the rider, the bond would have had nothing to do, was assumed without an increase of the premium paid for insurance under the bond. So the effect of the rider was to enlarge the liability of the indemnitor without increasing the amount of the premium paid by the indemnified. As there was an enlargement of the indemnitor's liability by the addition to the liability under the bond of a liability under the certificate, because the terms of the certificate were imported by the rider into the bond, there was likewise an increase of the initial losses to be borne by the indemnified, if the claims brought under the bond by the rider were claims which were subject to abatement by an initial loss. But this enlargement of the initial loss did not produce a decrease in the amount of indemnity afforded by the bond; it constituted simply an addition of two distinct initial losses, distributively applicable to two separate classes of claims. The aggregate of these initial losses was not applicable to the bond any more than to the certificate. The initial loss provided by the bond continued, despite the rider, to be applicable only to losses covered by the bond; and the initial loss fixed in the certificate continued to be applicable only to losses which would have been covered by a renewal of the certificate. No loss covered by the bond could be lessened by the initial loss for which the certificate made provision; and no loss covered by a renewal of the certificate could be diminished by the initial loss fixed in the bond.
If in the case at bar every loss sued for had been a loss on sales made after the date of the bond, no other initial loss than that fixed by the bond, viz: ten thousand dollars, could have been deducted; and if every loss sued for had been a loss occurring under the certificate no other initial loss than that provided by the certificate, viz., six thousand, *Page 282 
two hundred and fifty dollars, could have been considered. When both classes of losses, those under the bond and those which would have fallen under a renewal of the certificate, were combined in one suit, the initial loss applicable to each class should be dealt with separately; that is to say, the one suit must be viewed as if it were two distinct suits — one on the bond and one on a renewal of the certificate — and no part of the initial loss belonging to one suit can be borrowed from the other to diminish the amouut recoverable in either. Of course, therefore, if the total loss sustained on claims covered by the certificate were less than the initial loss of six thousand two hundred and fifty dollars, the difference between such total and such initial losses could not be brought over and deducted from the amount recoverable under the bond; and so, if the total loss on sales and shipments covered by the bond were less than the initial loss of ten thousand dollars, the difference between such total and such initial loss could not be brought over and deducted from the amount recoverable under the certificate. Thus to deal with these initial losses does not uninsure the indemnified. The argument is this: If the bond requires an initial loss of ten thousand dollars, the addition of the other initial loss of six thousand two hundred and fifty dollars under the certificate takes away just six thousand two hundred and fifty dollars of insurance or indemnity given by the bond, and thus the very instrument which professes to afford insurance, at the same moment of time uninsures to the extent of six thousand two hundred and fifty dollars. But the fault of this argument lies in its assumption that both initial losses are applicable to the same thing. They are not, in fact, aggregated and applied to losses covered by the bond — they are distributed, the one of ten thousand dollars is applicable to losses under the bond; the other of six thousand two hundred and fifty dollars is applicable to losses provable under a renewal of the certificate; and no part of that fixed in the bond can be taken from claims covered by a renewal of the certificate, *Page 283 
just as no part of that fixed by the certificate can be taken from claims covered by the bond.
If you say that the rider brought under the bond every claim that might have been proved under a renewal of the certificate, and that such claims were not subject to abatement by any
initial loss; then, undoubtedly the addition of an initial loss to the ten thousand dollar initial loss fixed by the bond, woulduninsure the indemnified to the extent of the amount of such additional initial loss. But this way of stating the question assumes the very point in controversy, for it assumes that no initial loss can be charged to the indemnified on losses provable under a renewal of the certificate, though the losses arose after the expiration of the certificate on sales made while the certificate was in force. The precise thing to be ascertained is this, what are the losses which would have been provable under a renewal of the certificate? If they were losses in excess of an initial loss of six thousand two hundred and fifty dollars, then only such losses as were in excess of that initial loss were losses which would have been provable under a renewal of the certificate; and as the rider did not bring under the bond any other loss than a loss which would have been provable under a renewal of the certificate, it obviously did not uninsure any sum that had been insured, if the sum insured was only a sum in excess of the initial loss prescribed by the certificate. That the sum insured was only a sum in excess of the initial loss was discussed in the opinion filed in this case, and but little more need be added to what was there said.
To ascertain precisely what the rider embraces assume, for the moment, that the New York Company's bond had not been issued, but that the New Jersey Company's certificate had been renewed. What would then have been the extent of the New Jersey Company's liability? This inquiry is pertinent, because, as the rider brings into the bond only losses which occurred subsequent to the expiration of the certificate and which would have been provable under *Page 284 
a renewal of the certificate, it becomes necessary in measuring the extent of the liability imposed by the rider to ascertain exactly what losses would have been provable under a renewal of the certificate, without regard to the provisions of the bond. Losses resulting from sales and shipments made during the life of the certificate, though not occurring until after the expiration of the certificate, are the losses which a renewal of the certificate would have covered. But does this mean all losses? Could the indemnified have recovered any of those losses without abating the initial loss of six thousand two hundred and fifty dollars? Or, stating the question another way, could the indemnified have recovered any of those losses if the aggregate of them had not exceeded six thousand two hundred and fifty dollars? Obviously not, because the express stipulation of the contract embodied in the certificate was that no recovery at all could be had against the company issuing the certificate until an initial loss of six thousand two hundred and fifty dollars had first been borne by the indemnified. About this there ought to be no dispute. It is manifest, then, that the losses which the New Jersey Company would have been liable for under the certificate, or rather under a renewal of it, would have been only losses in excess of the prescribed initial loss. And this being so, how could the rider, which brought under the protection of the bond only losses that would have been provable under a renewal of the certificate, expand and enlarge the indemnitor's liability and cause it to include something which would not have been recoverable at all under the certificate or under a renewal of the certificate? It manifestly could not.
The way a proposition is stated may sometimes be misleading. In the face of a stipulation limiting the initial loss to ten thousand dollars it sounds singular to say that there may be another initial loss of six thousand two hundred and fifty dollars added on, whereby the very instrument professing to insure actually uninsures the indemnified. But when it is remembered that the rider only brings under the *Page 285 
bond such claims as would be provable under a renewal of the certificate, and that claims so provable are those in excess of six thousand two hundred and fifty dollars, it at once becomes apparent that there is no uninsurance of a sum previously insured. If none other than claims in excess of six thousand two hundred and fifty dollars were brought under the protection of the bond, then claims to the extent of six thousand two hundred and fifty dollars were necessarily excluded; and if excluded it would be inaccurate to say that they ever had been included, and if they never had been included, obviously, they were not simultaneously included and excluded.
(Filed July 18th, 1900.)