Court Opinion

ID: 9445783
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:38:12.567789+00
Date Added: 2024-06-11T17:30:24.517036
License: Public Domain

JOHN R. BROWN, Circuit Judge
(dissenting in part).
I must, with deference, dissent from the Court’s action on the issue of reinstatement. As I view it, the decision ignores the fact that the language used can be read in at least two ways. With that choice open, the decision seems to me to abandon the Florida and universal rule of choosing the construction which broadens, not lessens, coverage. And Worse, as I read it, it adopts a construction which produces incongruous absurdities with no real benefit to either party but which cause the policy to fail in the historic function of insurance to meet the needs of the business being insured.
At the outset, the contract itself prescribes its own standard of “payable” for the Payment of Loss clause, note 7, court’s opinion, supra, states that:
“ * * * claims under this policy shall be due and payable sixty (60) days after presentation and acceptance of proofs of * * * loss * * -X- »
Since the second casualty occurred 22 days after the first and long prior to the 60-day period, the claim for the first loss was not “payable” and no court wit a a full arsenal of writs could have compelled payment prior to 60 days after August 5.
If we must look to the contract terms, why should we not start here? Why may *514we not say that the Insurer has prescribed its own definition of “payable”?
Next, while the Court asserts that construction here is merely applying the words used, the force of its main argument results in the words being ignored. The Court argues that it would be unreasonable to expose the Insurer to addi-tional liability during the interim between the occurrence of the loss and the date of its actual payment (or acknowledgement of liability) since there would be no basis for imposing an obligation on the Assured for the added premium. To avoid this, it holds the Assured must notify the Insurer at the time of the loss or, at the latest, at the time of submission of the claim. And it requires that at the time of notification the Assured must simultaneously, either expressly or impliedly, agree to pay the added premium when computed. But the effect of this is to change the contract altogether. The contract says the assured shall notify and pay the added premium when the claim is “paid or payable.” Whatever the term might mean, it is certain that “paid or payable” is not synonymous with the “time of the occurrence of the loss” or the “time of the submission of the claim.”
In its zeal to take the words used, “according to the law of the Medes and Persians which altereth not,” the Court unavoidably abandons them altogether.
But since what seems so clear to me is apparently neither clear nor convincing, I feel compelled to analyze it further to demonstrate that a proper “interpretation” or “construction” of the policy leads back to this same result.
The first thing is that this is something more than mere notification of the Insurer. It is, of course, correct to say that since it is uncontradicted that up to the time of the second loss (August 27), no formal request for reinstatement was made, the problem actually concerns the time such a request must be made under the reinstatement clause, note 3, supra. But a much more important reflex of this is the time the reduction in coverage becomes operative. For if, as the Insurer contends and the Court now holds, the term “claim payable hereunder” means a demand for which the company may ultimately be determined to be liable, the amount of the insurance is automatically reduced at the time of the occurrence 1 *giving rise to the loss no matter how long the process of claim adjudication, nor what the position, attitude, or contention of the Insurer may have been in the interim.
This produces incongruities2 of the kind which, reflecting the wisdom and *515non-punitive purpose of the traditional rule on construction of insurance contracts where the wording warrants two intrepretations, Poole v. Travelers Insurance Co., 130 Fla. 806, 179 So. 138; New York Life Insurance Co. v. Jones, 5 Cir., 224 F.2d 33; Globe & Rutgers Fire Ins. Co. v. Baylen Street Wharf Co., 5 Cir., 38 F.2d 197, persuasively demonstrates, not that the Insurer cannot write a contract merely because its terms might seem to a court harsh or stringent, but that it is not likely that such a result was intended by an Insurer issuing policies whose purpose is to meet a business need.
And choosing between these alternates, the interpretation that the terms, “every claim payable hereunder” and the “sum actually paid, or payable” refer to those prior losses (a) for which the Insurer has in fact already made payment or (b) in which it has authoritatively acknowledged to the Assured that it is liable, meets both the practicable needs of the trucking business and subjects the Underwriter to no disadvantage whatsoever. This is so because the sole purpose of reinstatement is to allow the Insurer to charge and receive an additional premium, a right which is preserved inviolate by requiring application for reinstatement and payment of added premium when conditions (a) or (b) are satisfied.
Indeed, a contrary interpretation leads to absurdities for the Underwriter as well. It is plain from the provision that the additional premium is to be calculated at “pro rata rates” that, so long as the policy is effective and until authoritatively cancelled, the Assured has a right to reinstatement and it is not the case of an application for new insurance which the Insurer can or may reject.3 If then the only concern is the amount of the added premium, how can it be determined until the prior loss has been reduced to tangible terms? Until that prior loss satisfies condition (a) or (b) above, mere notice that the Assured invokes his right to reinstatement and will pay when and as the added premium is determined is of no utility to the Underwriter. All the Insurer could do would be to acknowledge the anticipatory request with assurances that when and as the added premium could be calculated, it would so treat it. That, of course, would be merely to repeat, in different words, what, I think, it is the policy now states.
I have written so extensively because, as is the genius of the Anglo-American concept of a common law growing from decision and stated reason by court opinions, this case, in the flood of insurance litigation, the first and only English or American decision on this problem of reinstatement which my research has uncovered, may have transcendent impor*516tance for the future. Not only that, an extended research in available texts,4 English and American, both legal and practical, reveals that this matter has apparently not precipitated any particular problems in the day-to-day operation of one of the world’s largest business activities comprehending, as it does, the tremendous expansion of inland marine coverages in which classification motor truck liability policies fall. Since we may have the unique distinction of making, with the imprimatur of law, the sole deliverance on the subject, we should, when alternates inflicting no real detriment on the Underwriters are reasonably open, be loathe to launch a construction which fails to offer the coverage which businessmen need and leads only to a superficial unreal paper benefit to the Insurer.
Application of these principles to this case demonstrates, I think, their soundness. Almost immediately upon the commencement, August 5, of the investigation by the Insurer’s agent of the first loss, the Insurer questioned liability. First it was because the vehicles involved were not scheduled and hence not covered. This was apparently resolved when an endorsement dated August 24, 1953, (but whose date of delivery to the Assured is nowhere shown) was issued specifically covering the vehicles in the first accident. But notwithstanding this, the claim was not paid until December. And the jury, observing and hearing the head Claims Manager of the Insurer who, between Scylla and Charybdis, tried to assert that all issues were resolved upon the execution of the August 24 endorsement, but then, though pressed vigorously on cross examination, had no reason for delaying payment three more months, had ample ground to infer that, for good or bad reason, the Underwriter, despite pressure from the Assured and his shippers, was persisting in a denial of liability. And, at the most, the first and only act whichever approached an acknowledgement of liability or a communication of that fact to the Assured was the endorsement5 of October 22, 1953, note 6, Court’s opinion, supra, which, in stating that the “ * * * limits of this policy are reduced to the extent of the amount of claim paid” was patently inaccurate with payments still a month or more removed and may well have been thought by the jury to be a mere self-serving document in the Company’s plan, shortly followed with no-statement of its reasons, by a cancellation of the policy altogether as of November 4, 1953 just ten days before its normal expiration.
*517The Insurer took the flat position that the limits had been reduced and reinstatement was not open to the Assured. It did not seek, as is clearly due, the added premium if this position were untenable. But believing that the rule which I expound would begin its life with an' unfortunate congenital infirmity if the Insurer were held to have increased coverage on the expectation of an added premium, and yet was denied it by the technical rules of procedure, I would exert the power, 28 U.S.C.A. § 2106, regardless of technical appellate rules, and remand the case to determine the amount of the additional premium at pro rata rates.
I think the construction urged and adopted defeats the business purpose which underwriters and insured set out to achieve. With the legitimate need for, and an opportunity of, choosing, we have taken a course which means that the insurance sold, bought and paid for, does not meet the known needs of a business activity. Only the plainest of words should compel or authorize such result.
Such words, I think with deference, are lacking here, and I accordingly dissent on the issue of reinstatement.

. Not to be forgotten is the nature of this insurance: carrier’s liability. The carrier as Assured must give prompt notice of occurrences likely to give rise to losses:
“Notice of Loss. The Assured hereby agrees that every loss or damage which may become a claim under this policy shall be immediately reported in writing with full particulars to this Company, or to the agent of this Company issuing this policy, and shall also fide with this Company or its agent within thirty (30) days after the date of loss, detailed sworn proofs of loss. Failure by the Assured to report the said loss or damage and to file written proofs of loss as herein provided, shall invalidate any claim under this policy.” (Emphasis supplied.)
.But when or where, whether, or to what extent, claims of liability against that carrier (the subject of the insurance) will be made depends on the action of third persons- — -the cargo shippers.

. For example: the carrier, for private contract carriage has a transportation contract signed by the shipper exonerating it from liability for damage caused by failure of mechanical equipment if due diligence were used to make it truck-worthy. At the time of the shipment, the loss, the making of claim by shipper and through all courts but the last one, the contract was valid. Years later the final court invalidates it and all similar contracts. See, e. g., Bisso v. Inland Waterways Corp., 349 U.S. 85, 75 S.Ct. 629, 99 L.Ed. 911; Boston Metals Co. v. The Winding Gulf, 349 U.S. 122, 75 S.Ct. 649, 99 L.Ed. 933. The effect is to revive a claim for the “first” loss which formerly had no real legal value.
For example: immediately on receipt of prompt claim for the first loss, the insurer categorically denies liability for any one or more of policy exclusions (a) *515through (k) or, as done here on September 2, 1953, for non-scheduled vehicles under an erroneous interpretation of the Substitute Vehicle Clause. Three years and two courts later, the defenses are overruled and the insurer is held liable.
For example: immediately after the prior claim for a total or substantial loss by deterioration of non-refrigerated perishables occasioned by the collision upset of the trailer, the Insurer denied liability under clause (d) excluding loss or damage “due to loss of market or delay * * * ” and liability is not fixed until years later then final court rules that the proximate eause of damage was the collision not the “delay.” E. g., Lanasa Fruit S/S & I. Co. v. Universal Insurance Co., 302 U.S. 556, 58 S.Ct. 371, 82 L.Ed. 422, 1938 A.M.C. 1.
For example: on a single trip, during non-office hours of the dead of one night, a truck on the outward trip has a slight traffic accident causing only superficial damage to the vehicle but producing partial cargo damage, the dollar value of which was then not ascertainable but subsequently fixed at $4,000. The driver, unable to reach his office, loads his return cargo and proceeds on when the vehicle and all cargo is a total fire loss ensuing from a blowout upset.

. This dovetails with the unlimited right of substitution of vehicles, note 2, Court’s opinion, supra, in which the Assured has the sole option and the Insurer is limited to fixing the added premium. Obviously the substantial underwriting factor is confidence in the business integrity of the Assured.

. Attesting, perhaps, that reinstatement clauses present no real problem when administered and applied in a practical manner from the viewpoint both of assured and underwriter, the texts merely refer to the particular reinsurance clauses generally under the heading of the type of insurance, marine, hull, marine cargo, fire, inland marine, etc., but in none is there any discussion even remotely related to our problem. See, e. g., Winter, Marine Insurance, Its Principles and Practice, McGraw Hill Insurance Series (3rd Ed.1952), p. 150, 151; Rodda, Inland Marine and Transportation Insurance, Prentice Hall Inc., 1949, p. 29, p. 411, p. 493; Appleman, Inland Marine Insurance, McGraw Hill Book Company, Inc., 1934 Chapter II, Transportation Policies, Sections 53, Chapter IV, Other Transportation Policies, Section 63f, Chapter VI, Section 94; Mowbray, Insurance, Its Theory and Practice in the United States, McGraw Hill Book Company, Inc. (3rd Ed. 1946), Chapter VI, Fire Insurance Contracts, p. 66, p. 84, Burglary, Robbery and Theft Insurance, p. 134; Annotation of the 1943 New York Standard Fire Insurance Policy, 1953, Section of Insurance Law, American Bar Association, p. 12; MacLean, Inland Marine Insurance Loss Principles and Practices, The National Underwriter Company, Cincinnati, Ohio, 1952, p. 131, 133, 141, 145, 162; Dover, Analysis of Marine and Other Insurance Clauses, H. F. & G. Witherby Ltd., London (6th Ed.1950), on institute reinstatement clauses, p. 108, 214, 314, 534.

. The endorsement is set out in note 6, Court’s opinion, supra. Of special interest is the phrase “are reduced” and “claim paid.” The phrase “are reduced” in the present tense indicates that it was intended to be presently effective. Nowhere is a retroactive date indicated nor is the “paid” loss identified as the occurrence of August 5, or otherwise.