
    Continental Ins. Co. v. Ætna Ins. Co. of Hartford, Conn.
    
      (Supreme Court, General Term, First Department.
    
    December 31, 1891.)
    Marine Reinsurance—Interpretation of Policy.
    An indorsement on a policy of reinsurance provided that the reinsurance should cover “one-half of the value of all cargoes shipped” by one T. A later indorsement provided that the reinsurance should he “to the extent of one-half of the amount of each and every risk which equals or exceeds in value the sum of 815,000, ” ■ on cargoes insured by the reassured under open policies to T. and_ certain other persons, and “on cargoes of the value of $50,000 and upwards this policy is to cover the excess of $25,000, not exceeding the sum of $50,000 on any one cargo. ” The policy to the assured provided that he should “ enter for insurance all goods at the full value thereof. ” Held that, construing the indorsements together as in pari materia with the terms of the policy of insurance, the word “risk” did not mean “loss, ” nor did it mean the arbitrary value of the cargoes as fixed in the policies, hut rather the actual liability assumed, which was the real, and not the estimated, value of the cargoes insured.
    Exceptions from circuit court, New York county.
    Action by the Continental Insurance Company against the .¿Etna Insurance Company of Hartford, Conn., to recover on a policy of reinsurance. Plaintiff’s exceptions were ordered to be heard in the first instance at general term.
    Exceptions overruled.
    Argued before Van Brunt, P. J., and Daniels and Barrett, JJ.
    
      Root & Clarke, {JElihu Root and Samuel B. Clarke, of counsel,) for appellant. Wing, Shoudy & Putnam, (J. A. Shoudy, of counsel,) for respondent.
   Barrett, J.

This action is upon a policy of reinsurance made by the defendant, jointly with two other companies, to the plaintiff. The sole question is as to the proper construction to be placed upon the following indorsement, which was made upon the policy: “On and after this date this policy •covers the Continental Ins. Co., as reinsurance, to the extent of one-half of the amount of each and every risk which equals or exceeds in value the sum ■of $16,000, and whicli the said Continental Ins. Co. may have on cargo of any one barge or lighter, and insured by them under their open policies issued to the following named persons, viz.: Twombly & Co., John H. Starin, N. Y. Lighterage & Transportation Co., New Jersey Lighterage Co., F. W. Jarvis & Co., Johnson & Hammond, S. Haff & Co., and F. Lawson. On cargoes of the value of $50,000 and upwards this policy is to cover the excess of $25,-000, not exceeding the sum of $50,000 on anyone cargo.” The plaintiff claims that the words italicised refer to the amount of liability specified by the assured, while the defendant contends that they refer to the real value of the cargo insured; in other words, to the actual fact on that head, rather than to the estimate of the assured. If the plaintiff’s construction is correct, then the restriction in question might be rendered practically useless; for the assured could then in all cases specify $15,000 as the amount of insurance, and that specification, rather than the real risk, would then serve as the sole guide. We agree with the plaintiff that the word “risk” in this connection does not mean “loss.” But does it for that reason mean any arbitrary sum which the assured or reinsured may fix? We think not. Force must be given to the words which here follow the word “risk,” namely, the words, “which equals or exceeds in value the sum of $15,000.” The plaintiff says this means in value to the insurer; that is, as a premium-producing sum. The defendant construes it as though it read, “which equals or exceeds in value of cargo $15,000.” We think the latter is the true construction, and that this view not only gives real effect to the limitation plainly contemplated, but is in harmony with the rest of the contract. Thus, it is in harmony with the provision of the policy that the insured shall “enter for insurance all goods at the full value thereof.” This expression negatives the idea that the assured may enter goods for insurance at any amount they please, however greatly in excess of the full value. The object is to specify the true value in •advance of any disaster, as it is also the object, under another provision, to require payment, in case of loss, of the true value on the day of the df-aster. By a previous indorsement upon this instrument, it is provided that the policy should cover “one-half of the value of all cargoes shipped by Twombly & •Co.” on certain barges. What is there meant is plain enough. The indorsement in question is apparently a supplement to this earlier indorsement. It extends the subject of reinsurance to others besides Twombly & Co. who are holders of the plaintiff’s open policies, but it limits such reinsurance to risks which equal or exceed in value the sum of $15,000. It is reasonable to conclude that the value contemplated in the later indorsement is, in substance, the same as that specified in the previous. The subjects are cognate, and the two indorsements are in pari materia. Again, the last words in the indorsement under consideration fortify this construction. Here again we find an extension combined with a limitation. And the extension is not to reinsurance based upon a specification of value by the assured, or upon a specification of the company’s outside liability to be impressed upon the face of the policy, but upon the real fact, namely,' “on cargoes of the value of $50,-000 and upwards.” There is nothing whatever in the policy, or in the indorsement thereon, to justify the belief that it was the intention to reinsure one-half of the plain tiff’s liability to each of the assured whenever such assured chose, as between themselves and their insurer, to specify $15,000 or upwards as the value of the cargo laden. If such had been the intention, it would have been easy to express it. The substitution of the words “face amount” for the word “value” would then have been natural; but in that case we would have expected to find in the last provision of this indorsement a similar change; that is, instead of the words, “on cargoes of the value of $50,000 and upwards,” some such words as, “on insurance to the face amount of $50,000 and upwards.” As it is, the “value of the risk” was plainly the amount of actual liability assumed by the company, namely, “the full value” of the cargo; that is, the real, and not the estimated, value. Indeed, that risk attached as soon as the merchandise was laden, and it could not be varied by a subsequent specification of value in excess of the fact. In the case at bar, it is conceded that in none of the instances referred to in the complaint did the value of the cargo equal the sum of $15,000. That fact brings the case within the restrictions contained in the indorsement in question, and that restriction cannot be evaded by the act of the assured in specifying a value in excess of the “full value” of the merchandise laden. If even a substantial compliance with the requirement as to valuation—which is all that the law exacts—should lead to uncertainty in this business, then the reinsuring companies should at least be permitted to say whether they are willing to be bound blindly by the specification of value given by the assured, and the contract to that effect should be plain and conclusive. The ruling at circuit was right, the exceptions should be overruled, with costs, and judgment should be entered accordingly. All concur.  