Summary
interpreting "liable" in interest clause to mean "responsible" and cover loss of customers' property due to fire without regard to whether the insured was liable in tort to its customers for the fire that caused the loss
Summary of this case from Mass. Mut. Life Ins. v. Certain UnderwritersOpinion
No. 40725.
March 24, 1958.
1. Insurance — policy construed most strongly against insurer — any fair doubt resolved in favor of insured.
Where insurance policy is prepared by the insurer, policy must be construed most strongly against the insurer; however a court should not rewrite any provision of policy, but any fair doubt should be resolved in favor of the insured.
2. Bailment — liability or responsibility of bailee — generally.
At inception of bailment, the bailee becomes liable, or responsible, to account to the owner in accordance with the rules of law applicable to the bailment; but until the occurrence of some future event giving rise to an enforceable claim against the bailee there is no fixed legal liability and the liability or responsibility of the bailee consists of a mere exposure to a contingency.
3. Insurance — provision of standard fire policy covering "the property of insured or for which insured is liable" — construed.
In action by insured against insurer on standard fire policy covering "the property of insured or for which insured is liable" to recover losses to customer's property which insured was servicing and repairing at his place of business at time of fire, the liability of the insured referred to in quoted phrase should be considered as referring to the present and existing general liability of the insured as bailee of the property, and not to a particular fixed legal liability as a consequence of a fire.
4. Insurance — fire policy — provision "property of the insured or for which insured was liable" construed as covering fire damage to property of insured's customers which insured was servicing at time of fire.
Under fire policy covering the property of the insured or for which the insured was liable, policy covered property of insured's customers which insured was servicing and repairing; and when fire damaged customer's property, insured was entitled to recover for the losses holding the excess over its own interest in the property for the benefit of the owners.
Headnotes as approved by Gillespie, J.
APPEAL from the Circuit Court of Washington County; ARTHUR JORDAN, J.
Farish, Keady Campbell, Greenville, for appellants.
I. Rules governing construction of fire insurance policies. Boyd v. Mississippi Home Insurance Co., 75 Miss. 47, 21 So. 708; Great American Ins. Co. v. Bass, 208 Miss. 436, 44 So.2d 532.
II. It is well settled that a bailee has an insurable interest in property of others in his care and that in the absence of specific provisions in the insurance contract, the amount of interest possessed by the bailee or its exact character is not at all material. California Ins. Co. v. Union Compress Co., 133 U.S. 387, 33 L.Ed. 730; Hope Oil Mill Compress Manufacturing Co. v. Phoenix Assurance Co., 74 Miss. 320, 21 So. 132; 29 Am. Jur., Insurance, Secs. 322, 352 pp. 294, 309.
III. According to the great weight of the decisions which have construed insurance policies containing provisions identical or nearly so with those of the policy in the instant case, the bailee has been permitted to recover against insurance companies for fire losses occurring to property of third party bailors while at the insured location. American Eagle Fire Ins. Co. v. Gayle, 108 F.2d 116; Germania Ins. Co. v. Anderson, 15 Tex. Civ. App. 551, 40 S.W. 200; Globe Rutgers Fire Ins. Co. v. United States, 202 F.2d 696; Home Ins. Co. v. Peoria and P.U.R. Co., 178 Ill. 64, 52 N.E. 862; Johnston v. Charles Abresch Co., 123 Wis. 130, 101 N.W. 395; Pacific Fire Ins. Co. v. Murdock Cotton Co., 193 Ark. 327, 99 S.W.2d 233.
IV. Those cases in which it was adjudged that only the legal liability of the bailee was insured are distinguishable because of difference in policy provisions.
V. Appellee wrote property insurance for appellants insofar as may be concerned the property of their customers while at the insured location and in their care as bailees. This result is reached not only from the plain provisions of the policy, but also because of the applicable rules for construction of insurance policies as accorded by the majority of the decided cases. It follows as a matter of law that there was coverage for the customers' property sued for and that the Trial Court should have granted the peremptory instruction requested by appellants. The error in refusing to grant appellants a peremptory instruction was further compounded by the action of the Trial Court in granting a peremptory instruction to appellee.
Watkins Eager, Jackson, for appellee.
I. In the absence of negligence, a bailee has no liability for property destroyed by fire. Black v. Stone County Lbr. Co., 216 Miss. 844, 63 So.2d 405; Edwards Hotel Co. v. Terry, 185 Miss. 824, 187 So. 518; Hornsby v. Logaras, 210 Miss. 512, 49 So.2d 837; Meridian Fair and Exposition Assn. v. North Birmingham Railway Co., 70 Miss. 808, 12 So. 555; Yazoo M.V.R. Co. v. Hughes, 94 Miss. 242, 47 So. 662; Annos. 9 A.L.R. 559; 71 A.L.R. 767; 151 A.L.R. 716.
II. The policy of insurance covered only the property of others for which appellants were liable. Allen v. Royal Ins. Co. (Tex.), 49 S.W. 931; American Life Accident Ins. Co. v. Springfield Dyeing Co., 109 F.2d 533; Bergholm v. Peoria Life Ins. Co., 234 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416; Bernheim v. Beer, 56 Miss. 149; California Ins. Co. v. Union Compress Co., 133 U.S. 387, 38 L.Ed. 730; Cannon Mills, Inc. v. Flynn Gray, 82 Pa. Super. 298; Cauthen v. National Bankers Life Ins. Co., 228 Miss. 411, 88 So.2d 103; Collette v. Long, 179 Miss. 650, 176 So. 528; Federal Land Bank of New Orleans v. Thames Lbr. Supply Co., 160 Miss. 335, 134 So. 154; Globe Rutgers Fire Ins. Co. v. United States, 202 Fed. 696; Griffin v. Maryland Casualty Co., 213 Miss. 624, 57 So.2d 486; Holmes v. Bluebird Cab, Inc., 227 N.C. 581, 43 S.E.2d 71; Johnston v. Charles Abresch Co., 123 Wis. 130, 101 N.W. 395; Lavender v. Volunteer State Life Ins. Co., 171 Miss. 169, 157 So. 101; McCoy v. Home Ins. Co. (Pa.), 84 A.2d 249; Michigan Fire Marine Ins. Co. v. National Surety Corp., 156 F.2d 329; Millers Mutual Fire Ins. Assn. v. Warroad Potato Growers Assn., 94 F.2d 741; Mississippi Mutual Ins. Co. v. Ingram, 34 Miss. 215; New Amsterdam Casualty Co. v. Perryman, 162 Miss. 864, 140 So. 342; Orient Ins. Co. v. Skellet Co., 28 F.2d 968; Pacific Fire Ins. Co. v. Murdoch Cotton Co., 193 Ark. 327, 99 S.W.2d 233; In Re Podolsky, 115 F.2d 965; Sagransky v. Tokio Marine Fire Ins. Co., 92 Pa. Super. 500; Travelers Fire Ins. Co. v. Price, 169 Miss. 531, 152 So. 889; 45 C.J.S., Insurance, Sec. 919.
Appellants, plaintiff below, sued appellee, defendant below, on a fire insurance policy. The court gave appellee a peremptory instruction and entered judgment denying recovery.
Appellants were engaged in the business of selling and servicing office machines and kept on display and for sale machines owned by them. They also kept in their place of business machines belonging to their customers which they brought there for service and repair.
Appellee issued to appellants a standard fire insurance policy covering the contents of the building wherein appellants operated their business. The policy covered: "Contents while contained in the above described building (1 2 story, brick, composition roof building, occupied as. . . . Office Machine Sales Service 1 2nd, and situated #232-234. . . . Washington Ave.) usual to the occupancy of Office Machines Sales and Service."
Under the caption "Mercantile Form", the policy provided in part as follows: "Furniture, Fixtures, Equipment and Supplies Coverage — When this policy covers on FURNITURE, FIXTURES, EQUIPMENT and SUPPLIES it shall include all such items usual or incidential to the business of the occupancy described on the first page of this policy including property for which the insured is liable (except motor vehicles, boats and aircraft), while contained in the described building or while within 100 feet thereof if in the open or in vehicles on land, including building improvements (if the insured is not the owner of the building and the improvements are not covered jointly with others), except as otherwise excluded.
"Stock Coverage — When this policy covers on STOCK of merchandise it shall include all such items usual or incidental to the business of the occupancy described on the first page of this policy (except motor vehicles, boats and aircraft); the property of the Insured or for which the Insured is liable while contained in the described building or while within 100 feet thereof if in the open or in vehicles on land, except as otherwise excluded.
"When the term `contents' is shown on the first page of this policy it shall include coverage as shown in paragraphs above captioned `Furniture, Fixtures, Equipment and Supplies Coverage' and `Stock Coverage'." (Emphasis ours)
A fire occurred in the building occupied by appellants while the policy was in force. There was damage to appellants' own machines and those of their customers. Appellee settled for the losses to appellants' own machines and this suit involves only losses to the machines belonging to appellants' customers, the amount of which was agreed upon.
The sole question is whether the policy covered fire losses to machines owned by appellants' customers which were in the building for service and repair without regard to whether appellants were liable to their customers as a consequence of the fire.
Both parties agree that appellants, as bailees of the machines owned by their customers, had an insurable interest in such machines, and that appellants were not liable to their customers for the fire losses to such machines absent negligence proximately causing the loss. We assume, although appellants do not concede, that appellants were not negligent in connection with the losses in the fire involved in this suit.
The key phrase in the policy as far as this suit is concerned is "property for which the insured is liable." Admittedly, this phrase afforded some kind of insurance pertaining to property of others contained in the building described in the policy. Appellee contends, and the lower court held, that as to property of others the policy insured against appellants' liability only — in other words, indemnity against fixed legal liability of appellants in connection with a fire loss to property of others.
Several considerations bear upon the solution of the question.
(Hn 1) The policy was prepared by the insurer and the universal rule is that it must be construed most strongly against the insurer. This does not mean that a court should rewrite any provision of an insurance policy, but that any fair doubt should be resolved in favor of the insured.
(Hn 2) The controversy revolves around the word "liable" used in the phrase "property for which the insured is liable." According to Webster's International Dictionary, "responsible" is a synonym for "liable", and "liable" is defined as "exposed to a certain contingency or casualty of an undesired character." At the inception of a bailment, the bailee becomes liable (or responsible) to account to the owner in accordance with the rules of law applicable to the bailment; but until the occurrence of some future event giving rise to an enforceable claim against the bailee there is no fixed legal liability and the liability (or responsibility) of the bailee consists of a mere exposure to a contingency. (Hn 3) The liability of the insured mentioned in the policy should be considered as referring to the present and existing general liability of the insured as bailee of the property, and not to a particular fixed legal liability as a consequence of a fire.
The policy is a standard fire policy and the entire language deals with and points to insurance on property rather than on liability. The controversial phrase is contained in that part of the policy identifying the property covered. There is no doubt that one purpose for including this phrase was that of identification, and we think that was the principal purpose. It also served the purpose of eliminating from the coverage of the policy property on the described premises as to which appellant had no responsibility.
(Hn 4) While there is some authority to the contrary, we hold that the policy covered property of appellants' customers and that appellants are entitled to recover for the losses thereto, holding the excess over their own interest in the property for the benefit of the owners. This accords with what appears to be the weight of authority. Globe Rutgers Fire Insurance Company v. United States (5CCA), 202 F.2d 696; affirming District Court opinion in 104 F. Supp. 632; American Eagle Fire Insurance Company v. Gayle (6CCA), 108 F.2d 116; Pacific Fire Insurance Company v. Murdoch Cotton Co., 193 Ark. 327, 99 S.W.2d 233; Germania Insurance Company v. Anderson, 15 Tex. Civ. App. 551, 40 S.W. 200; Home Insurance Company of N.Y. v. Peoria P.U. Railway Company, 178 Ill. 64, 52 N.E. 862; Johnston v. Charles Abresch Company, 123 Wis. 130, 101 N.W. 395.
The lower court erred in granting a peremptory instruction to appellee and in refusing such instruction to appellant.
Reversed and judgment here for appellant.
McGehee, C.J. and Lee, Arrington and Ethridge, JJ., concur.