
    Utica Canning Company, Respondent, v. Home Insurance Company, Appellant.
    Fourth Department,
    May 5, 1909.
    Insurance — policy of fire insurance construed — liability of insurer for goods stored with. insured—bailment for hire.
    Where a sale of goods is rescinded' with an agreement that no claim shall be made against the seller for breach of contract, that the buyer shall store the goods without cost' to the seller for a reasonable time so as to enable the latter to resell, and that in thé event of a resale the original buyer reshipping the goods on order should he entitled to hold the seller for the freight and cartage charges; the buyer becomes a bailee for hire.
    
      Hence, where such bailee is insured against loss by fire under a policy which covers all merchandise in its warehouse owned by it, or held “ in trust or on commission, or sold but not removed,” the bailor after the goods are injured by fire may recover against the insurer.
    A policy on goods held in trust or on commission covers all the goods with which the party procuring the policy is intrusted, and is not confined to goods held in trust in a strict technical sense, but extends to ordinary bailments.
    Spuing, J., dissented.
    Ápp.EAtí by the defendant, the Home Insurance Company, from a judgment of the County Court of Oneida county in favor of the plaintiff, entered in the office of 'the clerk of said county on the 29th day of December, 1908, upon the decision of the court, a jury having been waived.
    
      Thomas S. Jones, for the appellant.
    
      James H. Merwin, for the respondent.
   McLennan, P. J. :

The material facts are not in dispute and are stated in the opinion. In August, 1907, Lewis De Groff & Son, wholesale grocers, jobbers and warehousemen, doing business in the city of Hew York, entered into contracts with the plaintiff for the purchase of all the Ho. 1 and Ho. 2 Refugee beans which the plaintiff had packed or would pack up to and including August"16 and 17, 1907, the date when shipment was agreed to be made, and De Groff & Son agreed to pay therefor $1.75 a dozen for the Ho. l's and $1.40 a dozen for the Ho. 2’s, f. o. b., Hew York. The Sauquoit Canning Company, made a party defendant upon the ■ trial (it being agreed that the complaint and answer should be amended accordingly), was engaged in the same business and was under the same management as the plaintiff, and the contract of purchase made by De Groff & Son was understood to include the beans owned by the Sauquoit Company as well as those owned by the plaintiff, although the title to-the same was separate and distinct. The sale was not made by sample, but was a sale of a well-known trade article by a trade name. Pursuant to the agreement of purchase so made between De Groff & Son and the plaintiff, beans belonging to the plaintiff of the value of $816.20, and beans belonging to the Sauquoit Company of the value of $621.80, were shipped to De Groff &. Son under such contract of purchase, where they arrived prior to August' twenty-second, and were by De Groff & Son received and placed in their warehouse in the city of Hew York. The beans thus shipped were stored as one lot, practically as if purchased ■ from a single- seller, both lots being alike and not distinguishable from each other. A few days after the beans had been received by De Groff & Son and placed in their warehouse, they made complaint to the plaintiff that the beans were not of such quality as they supposed they were buying and, in substance, that they did not fulfill as to quality the requirements of the contract of purchase, and De Groff & Son indicated their desire or purpose of repudiating or canceling such purchase by them. Thereupon such negotiations were had between De Groff & Son and the plaintiff that it was consented by the- plaintiff that the contract of purchase might be rescinded, upon condition, however, that no claim should be made by De Groff & Son against the plaintiff as for breach of contract, and also upon condition that De Groff & Son would continue to store the beans in their storehouse, without cost to the plaintiff, for such reasonable time as would enable plaintiff'to resell the same, the only charge to be made by De Groff & Son in case of such resale and upon receiving orders of shipment from the plaintiff was the cartage and freight charges. Under such stipulation and agreement the matter of dispute between De Groff & Son and the plaintiff was settled and the beans were permitted to remain in the warehouse of De Groff & Son under and pursuant to such agreement. Thereafter and on the twenty-third day of September, and while the beans in question were thus being stored in the warehouse of De Groff & Son, a fire occurred in such warehouse which resulted in in jury to' the beans owned by the plaintiff in the sum of $737.43, and to the beans owned by the Sauquoit Company in the sum of $542.8.2, and the question presented by this appeal is whether or not the plaintiff is entitled to recover the loss sustained by it because of such fire.'

At the time of the fire Lewis De Groff & Son were inéured against loss by fire in the amount of $140,000 by policies issued by sixteen different insurance companies, defendant being one of them. The defendant had issued to De Groff & Son two policies of $5,000 each. All of the policies so issued and in force at the time of the fire were the standard Hew York policies, and were exactly alike, except a$ to the names of insurers and amounts, and each' had a typewritten slip pasted thereon, and which was made a part thereof, indicating the risks which the policy covered, which was as follows: On merchandise hazardous, not hazardous and extra-hazardous, including boxes, labels and other supplies, the property of the assured, or held by them in trust or on commission, or sold but not removed, contained in the brick building situate Ho. 75 Beach Street and Hos. 386-388 Washington Street, Borough of Manhattan, Hew York City.” The whole loss on the contents of the warehouse owned by De Groff & Son was $88,325.11, and settlement was made upon that basis with all of said insurance companies, each paying its proportionate share. Such settlement was made by the defendant with actual knowledge on the part of each of said insurance companies of plaintiff’s claim. The plaintiff and the Sauquoit Company served proofs of loss in proper time, and on the 18th day of Hovember, 1907, upon the defendant and upon each of the other insurance companies, and the loss sustained by De Groff & Son was not settled, and payment was not made therefor until December 30, 1907. Upon the payment to De Groff & Son of the amount of their loss by the defendant and by all the other companies, they consented to the cancellation of the policies issued by them, and gave their receipt, which was indorsed upon each of such policies and were exactly alike, except as to name and amount, as follows:

“ $3,154.47. “ New York, Dec. 30, 1907.

“ Received of the Home Insurance Company of Hew York Three Thousand One Hundred Fifty-four and 47/100 Dollars in full for loss and damage by tire of 23rd September, 1907, to the property covered by this policy, and policy is hereby canceled from this date.

“ LEWIS De GROFF & SON.

“ A. R. Pierson.”

As we have seen, such settlement and cancellation of the policies issued by the said insurance company was made with De Groff & Son with full knowledge on the part of said insurance company of plaintiff’s loss and of the loss of the Sauquoit Canning Company, proofs of loss having been served by the plaintiff and the Sauquoit Canning Company on all of said insurance companies on Hovember 18, 1907, and the settlement with De Groff & Son and the assumed cancellation of such policies did. not occur until December 30,1907 and was made, as we have seen, with full knowledge of plaintiffs loss and demand.

The plaintiff and the defendant Sauquoit Company made demand on De Groff & Son that they include the value of the goods of plaintiff and of the Sauquoit Canning Company, destroyed by the fire, in their proofs of loss and collect the same from the insurance companies for their benefit, but De Groff & Son refused so to do. Prior to the bringing of this action plaintiff made demand upon said De Groff & Son to bring a suit on said policies for the plaintiff’s benefit, or; in lieu thereof, to permit the plaintiff to sue in the name of said De Groff & Son on said policies, and said De Groff & Son refused to bring such suit or to allow, the use of its name. Thereupon this action was brought by. the plaintiff against the defen d-ant insurance company to recover the proportionate share of the loss sustained by the plaintiff, which the defendant became obligated to bay, assuming plaintiff’s goods were protected against loss by fire under the policy issued by the defendant.

The learned trial court has found, upon competent and sufficient evidence, that the sound value of both lots, of beans, at the time of the fire,, was $1,437.80 ; that the value of the salvage- of both lots was $151.71, which should be divided equally'between both owners, and that the net loss to the plaintiff occasioned by the fire was $737.43, and that the share of such loss which should be paid, by the defendant insurance company, because of the two policies issued by it of $5,000 each, is ten one-hundred-fortieths of said $737.43, plaintiff’s net loss, with interest from September 23,1907, or $52:67, with interest thereon from the date of the fire, for which amount judgment was rendered against the defendant, with costs.

Under the facts disclosed we think it clear that Lewis De Groff & Son weye bailees for hire as to the plaintiff’s goods, and that under the slip attached to defendant’s policies it had insured plaintiff’s goods and was liable to it for the damages sustained by reason of the fire.

The general rule of laiv is stated in American and English Encyclopaedia of Law (Vol. 13 [2d ed.], p. 216) as follows“This form of policy (on goods in trust or on commission)' is .similar in.its legal effect to the policy for whom it may concern, and arises in much the same way. The insurance is taken out by an agent, consignee or third party, and inures to the benefit of the real owner Of the goods, who need not have given original authority therefor, nor need he adopt the policy prior to a loss; hut an adoption within a reasonable time after the loss is sufficient to bind the insurer. * * ' * A policy on goods held in- trust or on commission will cover all the goods with which the party procuring the policy is •intrusted, and is not confined to goods held in trust,, in the strict technical sense, but extends to ordinary bailments. Nor does the policy apply simply to the personal interest of the one who takes out the insurance, but to the whole value of the goods.”

The rule thus stated is amply supported by authority. (De Forest v. Fulton Fire Ins. Co., 1 Hall, 94; Lee v. Adsit, 37 N. Y. 78 ; Waring v. Indemnity Fire Ins. Co., 45 id. 606;. Home Ins, Co. v. Baltimore Warehouse Co., 93 U. S. 527.)

We think the case of Burke v. Continental Ins. Co. (184 N. Y. 77) is not in conflict with the decisions to which attention has been called. In that case the assured held goods for the owner and by special contract Was to be liable for their safe storage^ etc., except loss by fire, and while the 'court approved the earlier decisions on the subject, it held that the goods were not protected against loss by fire owing to the limitation clause in the policy and in plaintiff’s, own contract with the assured.

In the- case at bar we think it clear that ’ under the terms of the policy it was intended by the defendant that everything which De Groff & Son should have in their warehouse in 'the course of their business was to be insured, and this would seem to-be the only purpose of the slip or clause which was added to the policy. Such slip was added to obviate the necessity of covering all sorts of different bailments with separate policies. We think that the fair interpretation and meaning of the policies was that they were intended to cover whatever property De Groff & Son had in their warehouse in the course of their business. Plaintiff’s goods were there in the course of such business, the.goods were lost and the plaintiff is now entitled to the protection of the policies. De Groff & Son were bailees of plaintiff’s goods for hire, and Under the authorities to which we have called attention, we think it clear that the defendant was liable to the owners of such goods for the loss which occurred to them by reason of the fire against which they were insured by the policies issued to De Groff & Son.

We think there is no forcé in the objection made to the evidence and the exceptions taken thereto tending to show the relations which existed between De Groff & Son and the plaintiff in respect to the manner in .which the goods of the plaintiff came into the possession of De Groff & Son and were held by them at the time of the fire. The other exceptions, to which attention has been called, have been considered, and we conclude that they present no error which requires a reversal of the judgment.

We, therefore, reach the conclusion that the judgment appealed from should be affirmed, with costs.

All concurred, except Spring, J., who dissented.

Judgment affirmed, with costs.  