Talcott v. National Credit Insurance — 9 A.D. 433

Majority

p. 433

James Talcott, Plaintiff, v. National Credit Insurance Company, Defendant.

Headnote

Contracts — construction of a bond of indemnity against losses in business.

In an action brought to recover upon a bond which provided “that in case the said second party [the plaintiff] should suffer losses in his business during the said period of this bond [viz., between noon of the 11th of March, 1892, and noon of the 11th of March, 1898], by reason of the insolvency by legal process of any party or parties to whom the said second party [the plaintiff] shall have sold and delivered goods during the period of this bond * * * or by reason of any judgment or decree of court obtained for goods so delivered within the said period of this bond upon which execution shall have been returned' unsatisfied over and above said losses,” etc., then that theObligor would indemnify the plaintiff as stated in the bond. Upon his part the plaintiff covenanted to notify the company within ten days after receiving information of any insolvency or loss, and it was provided that the final proof of loss should be made at the home office of the company within thirty days after the expiration of the bond, and that in the event of a loss occurring within the life of the bond, of which the obligor had not received notification before the termination of the bond, such loss should not be provable thereunder.

Held, that, upon the trial of the action, proof of claims in cases where the goods, had been sold -during the period covered by the bond, but on which no judgment had been obtained nor execution returned unsatisfied until after the-expiration of the term of the bond, was properly excluded;

That the provision that, in the event of a loss occurring within the life of the. bond, of which the obligor had not received notification before the termination of the bond, such loss should not be provable, clearly indicated that a loss, which resulted from an unsatisfied judgment or decree of the court must, in order to be provable, have been suffered during the period of the bond.

Motion by the plaintiff, James Talcótt, for a new trial upon a. case containing exceptions, ordered to be heard at the Appellate Division in the first instance, upon the verdict of a jury rendered by direction of the court after a trial at a Trial Term of the Supreme Court held in and for the county of New York on the-27th day of March, 1896.

Theron G. Strong and Charles F. Mathewson, for the motion.

Rufus W. Peckham, Jr., and John B. Green, opposed.

This action was brought to recover $2,139.80, claimed to be due under a bond issued by the defendant, then known as the American Credit Indemnity Company, in March, 1892. By its. terms the operation of this bond commenced at noon on the 11th of March, 1892, and ended at noon on the 11th of March, 1893.

The condition of the bond, after reciting the fact that the plaintiff was engaged in business, contained a covenant and agreement upon the-pajt of the American Indemnity Company with the plaintiff, “ that in case the said second party [the plaintiff] should suffer losses in his business during the said period of this bond [viz., between the 11th of March, 1892, and the 11th of March, 1893], by reason of the insolvency by legal process of any party or parties to whom the said second party [the plaintiff] shall have sold and delivered goods during the period of this bond • * . * * or by reason of any judgment or decree of court obtained for goods so delivered within the said period of this bond upon which execution shall have been returned unsatisfied over and above said losses,” etc., that it would indemnify the plaintiff as stated in said bond.

The plaintiff covenanted to notify the company within ten days after receiving information of any insolvency or loss, and the' bond contained a provision that failure to give such .notice, within said time should exclude such accounts and loss from the indemnity of the bond.

The bond also contained the provision that the final proof of loss should be made at the home office of the company within thirty days after the expiration of the bond, and the further provision that in the event of a loss occurring within the life of the bond, of which the company had not received notification- before the termination thereof, such loss should not be provable thereunder.

The bond contained other provisions which it is not necessary here to notice.

Upon the trial of this action proof was offered of claims-in cases , where the goods had been sold during the period covered by the bond, but no judgment had been obtained or execution returned unsatisfied until after the expiration of the term of the bond. Proof of these claims was excluded, and the question presented for consideration is whether they came within the terms of the bond.

p. 435

It, seems to us upon a consideration of the language of the bond, that by no process of construction can any such claims be brought within its terms. The language of the bond is “ that in case the said •second jjarty [the plaintiff] should suffer losses in his business during the said period of this bond,” etc. Here the time is mentioned. The losses must be suffered during the period of the bond, namely, between noon of the 11th of March, 1892, and noon of the 11th of March, 1893. Then follows a statement of the kind of loss which must be sustained. The language of the bond is “ by reason of the insolvency by legal process * * * or by reason of any judgment or decree of court obtained for goods so- delivered within the said period of this bond upon which execution shall have been returned unsatisfied.”

The second class of losses consists of those which occurred by reason of a judgment or decree of court upon which execution shall have been returned unsatisfied, and those losses must' have been suffered during the period of the bond.

If there were any doubt on this question of construction, the eleventh clause of the bond seems to settle it. That clause provides that “ in the event of a loss occurring within the life of this bond [namely, from noon of the 11th of March, 1892, to noon of the 11th of March, 1893], of which said first party [the company] has not received notification before the termination hereof, such loss shall not be provable hereunder.”

. If the conditions precedent, which constituted a loss under the provisions of the bond, had not occurred prior to its expiration, of course no notice could be given, and under this clause no recovery •could be had. It does not seem to us that the question of liability is in any manner a question of punctuation. The events which, by the terms of the bond, constituted the loss are, by its very language, required to happen within the time mentioned as being the period of the existence of the bond; and those things must happen, not only within that period, but the right to the judgment or decree must be founded upon a sale of goods occurring within the same period.

It is conceded that the final proofs of loss must necessarily be furnished within thirty days after the expiration of the bond, and that the notification of loss must be given before the expiration of

p. 436

the bond. If there is no limitation upon the time when the. judgment or decree is to be obtained and the execution returned unsatisfied, how .can the other conditions in regard to. the thirty-day requirement of final proofs of loss and the notification of loss during the life' of the bond be Conrplied with ? The liability of the defendant being thus limited to the period mentioned in the bond,' and it providing that such liability' must be evidenced by events transpiring within the like period, it does not seem that there is any' room for an extension of the period during which, losses may: occur, which period has been expréssly limited by the terms of" the. bond.

. .The motion for a' new trial should be denied and the exceptions overruled and judgment ordered for the defendant upon tlie verdict,with costs.. ■ ' ' .

Barrett, Bijmsey, Williams and Patterson, JJ., concurred. '

Motion for new trial denied, exceptions overruled and judgment ordered for the defendant on the verdict, with costs.