Court Opinion

ID: 5303816
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:20:22.824285+00
Date Added: 2024-06-11T08:29:06.752422
License: Public Domain

Proskauer, J.
(dissenting). This action is brought to recover, under a “ Transit Open Policy ” issued by defendant to plaintiff’s assignor, the value of a shipment of merchandise lost in transit. It was provided in the policy: “ Warranted by the assured that he has not or will not enter into any special agreement with the carriers releasing them from their common law or statutory liability.
“ It is understood and agreed that the assured may accept without prejudice to this insurance the ordinary Bills of Lading issued by carrier.”
A further provision in the policy reads: “ In case of any agreement by the Assured, prior or subsequent hereto, whereby any right of recovery of the Assured for loss of or damage to any property insured hereunder, against any person or corporation, is released, impaired or lost, which would on acceptance of abandonment or payment of loss by this Company, have inured to its benefit, but for such agreement or act, this Company shall not be bound to pay any loss.”
*283The shipments in question were made under a bill of lading which contained the conventional clause that the carrier’s liability was limited to fifty dollars, unless the shipper declared the consignment to be of greater value and paid an increased freight based upon this increased valuation. The shipper here did declare a value greater than fifty dollars, but much less than the actual worth of the shipments, and signed a form of receipt in which it agreed to the provisions limiting the carrier’s liability.
It is clear that in the absence of the above-quoted provision of the policy giving to the shipper the right to accept the ordinary bills of lading issued by the carrier, it would have no right of recovery. It does not follow, however, that under the policy as issued it has thus forfeited its rights. By the terms of the policy “ the assured may accept without prejudice to this insurance the ordinary Bills of Lading issued by carrier.” The shipper, therefore, had the right without prejudice to the insurance to accept a bill of lading limiting the amount of the carrier’s liability if that bill of lading was one of “ the ordinary Bills of Lading issued by carrier.” The evidence here discloses that the form of the bill of lading was one in common and ordinary use by the particular carrier, and in so far as the limitation of liability clause is concerned, the one which as a matter of common knowledge is employed almost universally in interstate shipments. It is to be noted that the clause giving to the assured the right to accept the ordinary bill of lading is followed immediately by a clause under which the assured warrants that the carrier shall not be subrogated to any rights against the insurance company. What was thus emphasized to the assured was that acceptance of the ordinary bill of lading should not be coupled with any act that gave the carrier any right against the insurer. A shipper reading this policy would not reasonably deduce from its terms that his acceptance of the ordinary bill of lading with the conventional limitation of liability clause would forfeit his right to insurance unless he did the further affirmative act of declaring actual value and paying increased rate.
In Kidd v. Greenwich Ins. Co. (35 Fed. 351) the plaintiff sued upon a policy which provided that any act “ waiving or tending to defeat or decrease ” any claim against the carrier “ whether before or after the insurance ” was to be a cancellation of the policy. Wheeler, J., writes: “ This provision in the policy is not, however, that all liability of the carrier which might arise shall be insisted upon and created and not diminished from what it would be without special contract, but that the claim against the carrier, as it actually exists in favor of the assured [shipper], shall not be waived or diminished, and shall inure to the benefit of the insurer. The policy *284does not provide that any liability of the carrier shall be perfected, but that, if one is perfected, it shall remain for the benefit of the insurer.” And it was held that the fact that the stipulated valuation in the bill of lading was below the actual value of the merchandise shipped was not a breach of the warranty contained in the policy, that would defeat the shipper’s rights under the policy.
If, therefore, the shipper had merely accepted this ordinary form of bill of lading without declaring any value upon the shipment, it would not have violated any of the terms of the policy. By making a declaration of insufficient value, it did nothing to prejudice the right of subrogation which the defendant might have had if the bill of lading had been accepted without such declaration. If it were the intention of the parties to throw upon the shipper the affirmative obligation of declaring the full value of every shipment and paying the increased freight thereon under penalty of loss of the benefit of its insurance policy, it would have been very easy to employ apt words to give unambiguous expression thereof. A shipper taking this policy from the insurance company was justified in believing that it could at all events safely take the ordinary form of bill of lading containing the limitation of liability clause in common use, and that what it could not safely do was to make any agreement which impaired the right the insurance company would have under that ordinary form of bill of lading. If the insurer meant that the shipper was in every case to declare the actual value and pay the increased freight thereon as a condition precedent to recovery on the policy, it should have said so.
I, therefore, vote for reversal of the judgment appealed from and for direction of a judgment in favor of the plaintiff.
Martin, J., concurs.
Judgment affirmed, with costs.