In Dealers Dairy Products Co. v. Royal Ins. Co. (1960), 170 Ohio St. 336, 10 O.O.2d 424, 164 N.E.2d 745, paragraph one of the syllabus, the court established that "[a] policy of insurance is a contract and like any other contract is to be given a reasonable construction in conformity with the intention of the parties as gathered from the ordinary and commonly understood meaning of the language employed."Summary of this case from Andersen v. Highland House Co.
Nos. 36111 and 36112
Decided February 10, 1960.
Insurance — Policy a contract and construed as such — Insuring against loss of goods while being transported — Goods not removed from transportation by incidental stops — Goods removed from transporting conveyance — Conveyance used for other purpose — Goods thereby removed from protection of insurance.
1. A policy of insurance is a contract and like any other contract is to be given a reasonable construction in conformity with the intention of the parties as gathered from the ordinary and commonly understood meaning of the language employed.
2. A policy insuring against loss of goods while in transit or while being transported ordinarily covers the movement of the goods on a transporting conveyance from the starting point to the point of delivery, including stops along the way incidental to the carriage.
3. Where, at the direction of an insured covered by a transportation policy, goods in transit are unloaded from the transporting conveyance and deposited on designated premises and left there in order to devote the transporting conveyance to another transportation project of the insured foreign to the original shipment, there is an abandonment of the initial transportation, even though such interruption is temporary, and, while the goods are at rest over a period of time awaiting further transportation on the same conveyance to the point of delivery, they are in storage and while so stored are removed from the protection of the policy which insures against loss only while the goods are in transit or are being transported.
APPEALS from the Court of Appeals for Cuyahoga County.
In these two actions instituted in the Cleveland Municipal Court by the Dealers Dairy Products Company against the Royal Insurance Company, Limited, and the Phoenix Insurance Company, respectively, recovery is sought upon contracts of insurance issued jointly by the two insurers, each assuming one-half of the obligation, and covering partial or total loss of goods while in the course of transportation. On their faces, the insurance policies are described as a "transportation policy" and a "transportation floater policy."
The actions were consolidated, and upon trial, at the close of plaintiff's case, defendants' motions to withdraw the cases from the jury and to enter judgments in their favor were sustained and judgments were entered accordingly.
There were appeals on questions of law to the Court of Appeals for Cuyahoga County, which court reversed the judgments below and remanded the causes for further proceedings. The causes are now here on their merits pursuant to the allowance of motions to certify the records.
Pertinent portions of the Royal insurance policy in issue, which are stipulated to read the same as like provisions in the Phoenix policy, are as follows:
Endorsement clause 1.
"This policy covers all kinds of lawful goods and merchandise, including packages, consisting principally of milk, cream, milk products, and supplies, their own or held by them in trust, or on commission, or on consignment, or on which they have made advances, or sold but not delivered, in transit from premises of the assured to the points and places in the United States and/or Canada, and vice versa * * *."
Endorsement clause 3.
"This policy does not insure:
"* * *
"(h) Any loss or damage or expense due to delay, loss of market or profits."
Endorsement clause 5.
"This insurance attaches from the time the goods or merchandise are loaded upon vehicle(s) to leave the initial point of shipment and covers continuously thereafter until safely delivered to destination, but only while incidental to transportation. In no event shall this policy cover any goods after they have ceased to be at the risk of the assured."
As disclosed by the bill of exceptions, the Dealers Dairy Products Company, the Mt. Vernon Foods Company of Mount Vernon, Ohio, and the Cool Meadow Milk Company of Buffalo, New York, are interrelated organizations, and all were insured under the policies described. In July 1956 the Dealers Dairy Products Company, plaintiff herein, purchased certain machinery and equipment from the Jersey Creamery Company of Detroit, a customer of plaintiff. On or about July 9, 1956, plaintiff delivered by truck a shipment of ice cream to the Jersey Creamery Company in Detroit and there picked up the machinery and equipment mentioned for transportation and delivery to the plaintiff in Buffalo. Enroute to Buffalo with this shipment, the driver of the truck telephoned plaintiff, and he was advised by it that the Jersey Creamery Company was in urgent need of more ice cream and was further instructed to unload the machinery and equipment, leave it at the plant of the Mt. Vernon Foods Company and return with the truck to Cleveland. This he did at about midnight of July 9, 1956, and in Cleveland picked up a load of ice cream and delivered it in the truck to Detroit. On July 12, 1956, some two days after the deposit of the machinery and equipment in Mount Vernon, the driver with his truck returned there for the purpose of reloading the machinery and equipment and delivering it to the plaintiff's terminal in Buffalo. Unfortunately the machinery and equipment were missing, probably the subject of theft. The loss was reported to the insurers and claim for payment made. They refused to respond on the ground that the loss was not covered by the policies, and the instant actions followed.
Mr. H.P. Fetterman, Mr. R.E. Fetterman and Mr. J.R. Kistner, for appellee.
Messrs. Hauxhurst, Sharp, Cull Kellogg, Mr. Michael R. Gallagher and Mr. Forrest A. Norman, for appellants.
As is apparent from the statement of the case, the problem confronting us is the meaning of the words, "in transit" and "transportation," as used in the policies of insurance in issue, interpreted in the light of the undisputed facts.
A policy of insurance is a contract and like any other contract is to be given a reasonable construction in conformity with the intention of the parties as gathered from the ordinary and commonly understood meaning of the language employed.
The words, "in transit" and "transportation," contained in an insurance policy, such as the ones involved herein, comprehend the carriage of goods from one point to another and ordinarily mean the movement of the goods on a transporting conveyance from the starting point to the point of delivery, including stops along the way incidental to the carriage. Of course, minor deviations from the customary route and temporary stops, even overnight, for the convenience of the operator of the conveyance and for other purposes connected with the carriage, will not remove the goods from the transportation.
But the words, "in transit" and "transportation," as they appear in the policies before us and as construed under the circumstances here involved, do not embrace a period of days during which, for the convenience of the insured and to divert the transporting conveyance to other business of the insured, the goods are unloaded and deposited on designated premises and left there at rest while the transporting conveyance departs and is used on another transportation project foreign to the original shipment. An abandonment of the original transporting process thereby occurs, even though such interruption is temporary.
In circumstances as related, a storage of goods occurs and while in storage they are removed from the protection of a policy which insures against loss only when the goods are in transit or are being transported.
The case most nearly in point supporting the position taken is that of Mayflower Dairy Products, Inc., v. Fidelity-Phenix Fire Ins. Co. of New York (Supreme Court, Appellate Term), 170 Misc. 2, 9 N.Y. Supp. (2d), 892. Other cases leaning in the same direction are Exchange Lemon Products Co. v. Home Ins. Co. (C.C.A. 9), 235 F.2d 558; Koshland v. Columbia Ins. Co., 237 Mass. 467, 130 N.E. 41; Williams v. Mannheim Ins. Co., 237 Mass. 477, 130 N.E. 45; and San-Nap-Pak Mfg. Co. v. Firemen's Ins. Co. of Newark, N.J., 47 N.Y. Supp. (2d), 542, affirmed, 51 N.Y. Supp. (2d), 754.
Therefore, the judgments of the Court of Appeals are reversed and those of the Municipal Court affirmed.
WEYGANDT, C.J., TAFT, MATTHIAS, BELL, HERBERT and PECK, JJ., concur.