
    Thomas Neilson v. The Commercial Mutual Insurance Co.
    A policy of insurance upon cargo exempted the defendants, as insurers, from all liability for losses arising from “ leakage on molasses or other liquids, unless occasioned by stranding or otherwiseand by a special clause, endorsed on the policy, the insurance was expressed to be “ on spirits of turpentine in cans, packed in boxes, on deck, free from loss by wet, breakage, leakage, or exposure.” In the course of the voyage a heavy sea swept the deck of the vessel, struck the cans and caused them to leak, so that, upon the arrival of the vessel at her port of destination, nearly their whole original contents were found to be lost.
    
      Held, that the above recited clauses, by their true construction, exempted the insurers from any liability for losses of which “ leakage” should be the proximate cause, although the leakage itself might be occasioned by a peril insured against, and consequently that the defendants were not liable for the loss that had arisen.
    Where a controversy is submitted under the Code, the court can only determine the questions of law that arise upon the facts agreed upon, and has no power to send the cause to a jury for the determination of questions of fact, that, upon the face of the submission, may appear to be doubtful. The court must itself construe the submission.
    (Before Duer, Campbell, and Hoffman, J. J.)
    June 16;
    June 26, 1854.
    This was the submission- of a controversy under § 372 of the Code.
    The following is the statement of facts agreed upon by the parties.
    
      City omd County of New York, ss.:
    
    The parties to this controversy hereby mutually agree upon, and submit to this court, the following statement of facts:—■
    First. The defendants herein are a corporation, organized under a charter granted by the Legislature of the State, and are now, and on the 4th day of December, 1852, were, engaged in a general marine insurance business in the city of Hew York.
    Second. On the 4th day of December, 1852, Thomas Heilson, the plaintiff, effected an insurance with.the defendants, and took out a policy for,the. same of $1,300, upon a quantity of spirits" of turpentine, in cans packed in boxes, and at the insured value of $1,300, then stowed, or to be stowed on the deck of the ship “ Jacob Bell,” for the voyage from the city of Hew York to San "Francisco, California, and for the period of thirty days after her arrival there.
    Third. The premium was paid upon the policy by the plaintiff. A copy of the policy issued to him by the defendants is hereto annexed, and made a part of this statement. 1
    Fourth. On the second day of February, 1853, the ship “ Japob Bell,” then being in the regular course of her .said voyage, fn latitude 45° S., longitude 56s W., met with heavy gales and tremendous seas, and at 4 p.m. of that day, she shipped a heavy sea amidships, which started her deck load, stove six boxes of turpeptine, carried fiyp boxes overboard, and .caused it all to' leak more or less.
    On the arrival in San Francisco, it was found that only 141 gallons of the turpentine remained in the cans, the damage and lpss having been .occasioned by the heavy sea .aforesaid, .strik- ' ing the ship .amidships as ahoye stated, causing the cans to" ¡leak.
    Fifth. The insured value of the turpentine shipped was $1,300. The value of the 141 gallons remaining was $246.75, The, value of the five cans carried overboard was $131.57, with expenses added.
    And the defendants received proof of the loss and interest of the plaintiff, on the 25th day of Hay, 1853. The plaintiff; .claims $1,098.94, with interest from the 24th day of .June,1 1853, and if he is entitled to recover, the defendants admit the same to be the amount due him.
    The defendants hereby offer to pay and allow the said sum of $131.57, for the loss of the five .cans carried overboard, as above stated, by the sea, to have the same .effect as an offer in the answer, to allow judgment for that sum, but they deny that iby ,the .terms of their policy, they are liable for .any loss by wet, breakage, leakage, or exposure, or for any other or greater sum, or that they have any other liability than for the five cans aforesaid in the premises.
    
      And the parties herein mutually pray for the judgment of this court herein.
    Dated New York, April 8th, 1854.
    Judahs & Diokehsoh,
    
      Attys. Plaintiff.
    
    War. D. Booth,
    
      Atty.for Defendants.
    
    A copy of the policy of insurance was annexed to this statement, but it is unnecessary to state its entire contents. It is sufficient to say that it was a policy upon a cargo, in the usual form and against the usual sea perils, on a voyage from. Philadelphia to San Francisco, and that it contained a clause declaring that the company should “not be liable for leakage on molasses, or other liquids, unless occasioned by stranding, or collision with another vesseland that by a special clause, endorsed on the policy, the insurance was declared to be “ on spirits of turpentine in cans, packed in boxes, on deck, free from loss by wet, breakage, leakage, or exposure.” The right of the plaintiff to recover the loss that was claimed, depended upon the construction to be given to these clauses, in their application to the facts contained in the statement submitted.
    
      S. B. H. Judah, for the plaintiff, in demanding judgment in his favor, relied upon the following points and authorities.
    I. The clause in the defendants’ policy stipulating the cans of turpentine to be “ free from loss by wet, breakage, leakage, or exposure,” is but a declaration of the principle which exempts the insurers ordinarily from liability for ordinary losses in articles, which, by the quality of the subject, suffer deterioration more or less; and the defendants would, from the customary construction of the policy, have been free from such liability, notwithstanding the clause referred to had not been set out in words in their policy. (1 Phil, on Ins., § 619, 1090, 1091, &c., 3d ed.; 2 Arnold on Ins., § 282, p. 756.) Insurance against perils of the seas does not cover an ordinary loss or deterioration incidental to the nature of the article which may arise from a cause difficult or uncertain to be traced, such as from bad stowing, wastage, or from the article itself, either its perishable nature or its value, depreciating from wet or exposure. This exemption, however, does not extend to an extraordinary loss, caused by shipwreck, storm, or other perils of the seas. (2 Phil. on Ins., § 1468; 2 Arnold on Ins. 282.) The underwriter undertakes to indemnify the insured only against loss caused by the direct operation of the perils insured against, and not against the ordinary wear and tear of the voyage. (2 Arnold on Ins., § 282.) The loss and damage for which the plaintiff seeks a recovery was occasioned by the perils insured against—it was caused by perils of ■ the seas. (Smith’s Mer. Law, 220, Law Liby., vol. xvii.; Abbott on Shipping, 251.) It occurred by the storm of the 2d February, 1853.)
    H. The policy in this case is to be construed the same as other contracts, if possible, to give effect to the intent of the contracting parties, and not according to the strictest meaning . of the words. (Park on Ins. 40 ; Dow v. Whitten, 8 Wend. R. 160; Irwin v. Sea Ins. Co., 22 Wend. 380 ; Yeaton v. Fry, 5 Cranch. 335-341.) If there are exceptions in a policy they are to be construed strictly against the insurer. (1 Duer on Ins. 56, lec. 2, part 1.) The intent of the plaintiff in this case was to insure against the destruction of his property by the perils of the seas—it could never have been intended that a total destruction of the article, caused by the seas, should have been excepted. The word “ leakage,” if applied in the sense which the defendants contend, would exempt them from liability for loss had the waves, by their dashing in the ship in the storm, broken all the cans of turpentine to pieces at one “ fell swoop,” and the turpentine had instantaneously flowed out on the deck or ran overboard. The word “ leakage” means to let out, as well in large as small quantities, and the exemption contended for would free the defendants from all liability, notwithstanding the ship itself was totally lost, if it could be ascertained that in the shipwreck the cans were broken and the turpentine flowed out.
    IH. The word “leakage,” in the policy, applies only to a loss caused by accident other than the perils of the seas, such as was incidental to the nature of the article and its manner of transportation. The word “ leakage,” as applied to commerce, means “ an allowance in the customs granted to importers of wine for the.waste and damage the goods are supposed to receive by keeping.” (Brande, Dic. of Arts and Science.) The meaning of particular words in policies of insurance is to be made applicable to the subject, nature, or business insured, so as to effectuate the object intended. Thus death by suicide, excepted in a life policy, does not cover suicide committed by an insane man; in such case the insurer is liable. (2 Phil. on Ins., § 1794; Breasted v. Farmers' Loan and Trust Co., 4 Hill R. 73.) A condition in a policy, not permitting the storing of liquors, does not comprehend the keeping of liquors to retail to boarders and others. (Rafferty v. New Brunswick Fire Ins. Co., 3 Harr. 480.) Nor does the keeping a bar-room, to sell liquors, constitute a tavern-keeper, within the meaning of a provision against that occupation. (Ib.) Plate and paintings, though excluded by the conditions of a policy, except specially insured, still applies to and covers silver spoons in use, and family portraits, without a specification. The term stock in trade, when used in a policy, in reference to the business of a mechanic, includes not only the materials used by the mechanic, but the tools, fixtures, and implements necessary for carrying on his business. (Moadinger v. Mech. Fire Ins. Co., 2 Hall, 490.) Linen, in a policy, preceded by the words household furniture, means household linen. (3 Camp. 422.) And ships’ furniture includes provisions in the ship. (4 T. R. 206.) And where there was a representation that no spirits would be allowed on board a ship, and it turned out there were two kegs of spirits on board, but not for use, the policy was not invalidated. (Irwin, survivor, &c., v. Sun, Ins. Co., and to the same point, 22 Wend. R. 380; 4 Camp. 76, 77 ; 2 Caines, 288; Langdon v. N. Y. Equitable Ins. Co., 1 Hall R. 166.) And in the case of Crofts v. Marshall (7 C. & P. 597, referred to in Arnold on Ins., p. 759, § 282) it was held that the underwriter was liable for extraordinary “ leakage” or breakage, caused by the violent pitching and laboring of the ship, though the stowage had not been disturbed.
    IV". If there can be any doubt as to the meaning of the word “ leakage,” in the policy, in the case, the court will not decide against the construction of the plaintiff, but send the question to a jury to see whether there has been, or is, any usage as to themanner in which this word has been "construed. "Where the' known usage of trade in use and practice, as between assurers and assured, has given an appropriate sense to terms used in a policy, they are to be construed according'to that sense. Thus proof has been allowed to show that boys meant seamen. (Bean v. Shepard, Doug. 12.) That a certificate of proof of ownership of a vessel is a sea-letter, although in fact not a sea-letter. (2 John. R. 531.) That sarsaparilla, although a root, is not a root within the meaning of a policy. (7 John. 385.) That bearskins with fur on :are not skins, as enumerated in memorandum articles. (7 Cow. 202; and to the same point, Parke on Ins. 112; 5 Bos. & Pul. 213; 2 Esp. p. 633; 1 Phil. Ins. 466; 4 Phil. Evid., Cow. & Hill’s notes, 495, note 263 to p. 293.)
    Y. The plaintiff contends there is -no ambiguity in the term “ leakage,” as mentioned in the policy; that his loss occurring by the perils insured against, the defendants are liable to pay the amount claimed.
    
      D. Lord, for the defendants.
    The policy was on cargo from Philadelphia to San Francisco against the usual sea perils. The policy contained the following warranties, excepting certain risks or losses, out of the liability of the insurers, namely:—1. Against loss by seizure for trade, illicit or contraband. 2. Against loss on bar iron, &c., &c., from average, unless general. 3. Against loss on hemp and other articles under a certain per centage, unless general. 4. Against damage from dampness, &c., except by actual contact of sea water. 5. Against leakage on molasses or other liquids, unless occasioned by stranding or collision. 6. In addition to these exceptions was a special clause, endorsed, expressing the insurance to be “on spirits turpentine in cans, packed in boxes, on deck, free from loss by wet, breakage, leakage, or exposure.” On these clauses, five and six, the question in this case arises.
    I. As the insurers would not be liable for any losses, unless occasioned by the perils enumerated in the policy, they would, not, even without the exception, be liable for breakage Or leakage unless occasioned directly by- sea perils: There was, therefore, no scope nor object in the-exception, except to comprise-breakage and. leakage, for-which, without the- exception, they would have, been liable, i. e. breakage or leakage from sea perils.,
    II. The policy-in all theother warranties-or exceptions above-enumerated, by force of the exceptions, relieves the underwriters, in the excepted cases, from the effect of the perils generally insured, applied to the excepted cases.
    ITT. The reason of the exception, in the case of the articles in the memorandum, applies to the article now in question. The slightest sea damage to the cans, creating the smallest leak,-would, by inattention or undiscoverable neglect, waste the whole; and .it would be impossible to discriminate between the loss directly resulting from the sea peril, and that from the character of the article and its packages, or from .inattention to the progress of the leak.
    IV". The whole loss in- the case having arisen from leakage, was assumed by the insured, and excepted from the liability of the insurer, except only the five cans carried overboard, $131.57, for which the defendants offered to give judgment: for this alone, judgment must be rendered, with costs to the defendant.
   By the Court. Duer, J.

There is no sounder- maxim in the interpretation-of-a contract in writing than that effect must be given, if possible, to every clause, and no words be rejected, as unmeaning or superfluous, to which a- consistent meaning may be attached—verba aliqwid operand debent. And the rule is especially applicable when amew clause is introduced into a contract, which, as in the case of a policy of insurance, has an established form and settled construction. The presumption is, then, not to be resisted that the clause was designed to vary the usual construction, and to effect a particular object, which could not otherwise be attained. It is true the clause may be so framed as to express no more than, in its absence, the law would imply, but we apprehend that this narrow construction can only be adopted when the words are not susceptible of a different and wider application.

In the case before us the words in the contract endorsed upon the policy, “ free from loss,” &c., “ by leakage,” &c., it construed as referring only to losses from a leakage, not caused by a peril insured against, are wholly useless. If construed in this limited sense, they might as well be expunged from the policy, since it is quite certain, and is not denied, that for losses resulting from ordinary leakage, the underwriters, under the policy in its usual form, are not, and never have been held to be, liable. The clause has, therefore, no operation at all, unless understood in a sense as broad as its terms import, namely, as freeing the underwriters from all liability for losses of which leakage is the proximate cause, whatever may be the cause by which the leakage is itself occasioned, and, consequently, although occasioned by a peril insured against. It is wholly inoperative, unless the words create an exception from the general terms of the insurance, and exempt the underwriters from losses for which they would otherwise be liable.’ Hence it is this construction that we hold ourselves bound to adopt, nor do I at all doubt that it corresponds entirely with the real intention of the parties.

The clause in the memorandum part of the policy, declaring that the Company is “ not liable for leakage on molasses or other liquids, unless occasioned by stranding or collision,” is probably superseded by the more general words in the contract endorsed upon the policy. Yet, as throwing a clear light upon the true interpretation of those general words, it may with great propriety be referred to. Stranding and collision are certainly perils insured against. And the exception of these particular perils was manifestly needless, unless the declaration that the Company was not to be liable for leakage, it was understood would embrace them; in other words, unless by leakage was meant a leakage occasioned by any and every peril insured against. The words, “ not liable for leakage,” and “ free from loss by leakage,” have exactly the same meaning.

The reasons that have induced the insurance companies of late years to exclude entirely the risk of leakage, are doubtless those which were clearly stated by the counsel for. the defendants. There is a practical difficulty in determining, in many cases, whether a leakage, from which a loss is claimed, was merely ordinary, or was caused, in whole or in part, by a peril insured against; and when the controversy is whether the loss shall be borne by an individual or a corporation, juries are not much inclined to make the necessary distinction. The experience of the underwriters has probably convinced them, that, to secure the protection which the law gives them against losses from ordinary leakage, the risk must be wholly excluded.

The cases and authorities to which we were referred, on the argument, by the counsel of the plaintiff, have no application to the case before us; they only prove that when there is no special clause in the policy excluding the risk, and leakage is shown to have been caused by a peril insured against, the underwriters are liable for a resulting loss. If such were not the law a special clause to exclude the risk would not be necessary, and it is because such is the law that the clause has been introduced.

When a controversy is submitted under the Code, the court, at general term, can only determine the questions of law arising upon the facts agreed upon by the parties, and the only question of law arising upon the statement of facts in this case, in our opinion, is the question of- construction, which we have considered and decided. The fact that the whole loss now sought to be recovered, with the exception of the five boxes carried overboard, was a loss from leakage in the proper and usual sense of the term, although the leakage was itself occasioned by a peril insured against, we understand to be distinctly admitted. Indeed, unless this admission was intended to be made, the controversy ought not to have been submitted at all, and, unless it is made, there is no question of law that we can be required to determine.

At any rate, we must give our judgment upon the statement as we construe it, since we have no power to vacate the submission, or refer the facts to the determination of a jury. (Laing v. Ropke, 1 Duer, 702, 3.)

Our decision is, that the plaintiff is entitled to judgment only for the sum of $131.57, the admitted value of the five boxes carried overboard, and that the defendants, having offered to allow judgment for that sum, are entitled to their costs.  