Hood v. Manhattan Fire Insurance — 11 N.Y. 532

Majority

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Hood against The Manhattan Fire Insurance Company.

Headnote

A policy of insurance against loss by fire, which describes the subject matter as a barque on the stocks, near a ship in a ship yard, being built for Howes, Godfrey & Co., does not cover timbers not united to the keel or structure thereon of the contemplated barque, although they are intended and completely prepared to be used in its framework, are lying in the yard in the proper place to be conveniently applied to that use, and are valueless for any other vessel. Such a policy covers the structure made from time to time on the stocks, which, when completed, will constitute the barque.

Action brought in the Hew-York superior court upon a policy of insurance against damage by fire. On the trial, before Mr. Justice- Oakley, the following facts appeared. The firm of James M. Hood &c Co. were ship builders, having a ship yard in Somerset, Massachusetts; and on or about the 8th of September, 1849, the defendant, by a policy dated on that day, in-, sured the firm against loss or damage by fire, to the amount of seven thousand five hundred dollars, “ on a ship on the stocks, in a ship yard on the west side of Taunton river, in Somerset, Mass.” Such insurance was to continue until the first day of Hovember ensuing. On the 20th of September, 1849, the insurance was by the parties transferred to another subject, by a writing entered upon the policy under the above description of the ship, in the following words: This insurance is transferred to cover a barque {on the stocks near said ship) building for Howes, Godfrey &p Co., with privilege to build another vessel alongside. On the 26th of the same September, the firm of Hood &• Co. effected an insurance against loss or damage by fire, in the Hew-York Fire and Marine Insurance Co., upon “ the lumber and building materials contained in the ship yard” aforesaid. On the morning of the 17th of October, 1849, a fire originated inside of a ship on the stocks, the keel of which was about sixty feet north from the keel of the barque. At this time the keel for the barque was blocked and in its place, and a part of the frame was moulded, hewn and leveled, and

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some of it had been laid across the keel and fastened to it; the whole frame was in the yard, and from two thirds to three fourths was moulded; the stern frame and stem frame were alongside the keel, and had been fastened together, and were ready to be put up. The fire consumed four hundred and sixty-two sticks of timber which had been prepared and were intended to be put in the barque. This timber would have made forty-four frames and was ready for framing. Nothing remained to be done to or with it, except to put it together in frames, and place them upon the barque. These frames were not to be fastened to the keel by bolts; they were to be shoved between the keel and kelson. This timber had been so far adapted to the barque that it was useless for any other vessel. When consumed it was in the yard north of the keel of the barque, and in the usual place for laying timber for a vessel like the barque, which was being constructed. Neither the keel of the barque, or the frames fastened to it, or the stern or stem frames, or any timbers lying south of the keel, were injured by the fire. It appeared that the firm of Hood & Go., in their proofs furnished to the defendant in support of their claim for loss by the fire, described this timber as “ lumber and timber prepared to be placed in a barque in the process of being builtas “ four hundred and sixty-two pieces of timber prepared and ready to be put into the frame of said barque of the value of $5.50 each.” The plaintiff was a member of the firm of James M. Hood & Go., and became the exclusive owner of the policy of insurance and the claim against the defendant thereon, by an assignment from his copartners made subsequent to the loss.

The counsel for the defendant insisted that the plaintiff was not entitled to recover, because the policy did not cover the property proved to have been destroyed by the fire, and that there was no proof that the property mentioned in and insured by the policy had been injured by fire. But his honor the said justice decided that the defendant was liable for the loss sustained by the destruction of said timber so prepared and ready to be placed in said barque as aforesaid, and directed the jury to find a ver

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diet for the amount of said loss and interest. To'which decision and direction the counsel for the defendant excepted. The jury rendered a verdict in favor of the plaintiff for $2,869.44, upon which judgment was entered. A bill of exceptions was made, and the judgment having been affirmed by the superior court at general term, (see' 2 Duer, 191 ,)- the defendant appealed to this court.

M. S. Bidwell, for the appellant,

I. The sticks of timber were not covered by the policy. 1. They were not a barque. Though intended and partially prepared to be put into the barque which was the subject of insurance, they had not become a part of it, and were not ready to be put into it, nor were they even framed together; and they could not have become a part of the barque until more work had been done upon them. A barque, like a: house, is essentially different from its materials collectively; as water is different'from its component gases. It is a result of their combination in certain proportions. Though the materials exist, it would be absurd to say that the barque or house exists, until the materials are put together; or that the materials are a part of the barque or house, until they are affixed to the nucleus of the structure while in progress. The ship results and begins to exist when the materials are adjusted and put together in certain permanent positions. The materials lose the character of lumber, &c., and become barque or ship, &c., as fast as they are worked in and thereby incorporated in it. 2. The insurance was confined to a structure on the stocks. There was, at the time of the insurance, a barque on the stocks; otherwise, the policy would not have taken effect.- But these sticks were not on the stocks, never had been on the stocks, and at the time of the fire were not ready to be put on the stocks. The policy did not cover timbers or other materials, although intended or prepared for the barque, until actually inserted and built in the barque on the stocks. If these sticks were the barque, then the barque was not on the stocks, and the defendants are not liable. (2 Duer on Ins. 644, 646; 1 Phil, on Ins. 285,

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347; 2 John. Cas. 127, 173; 8 John. 307 .) 3. The other words inserted in the policy, as a part of the designation of the subject, lead to the same conclusion; all of them confine the risk to a particular locality, and exclude a liability for loss to matter in a different place. The subject insured was, a barque on the stocks near the ship, with the privilege of building another vessel alongside. This privilege would be nugatory, if the barque, wherever situate or scattered, was covered by the policy; and the provision would be absurd to speak of a vessel’s being alongside the barque, if the barque consisted of sticks of timber scattered, as these were, all over the yard. 4. Confining the risk to this structure on the stocks, was important. If the policy had covered these scattered sticks, the premium would have been greater, and the risk would have been greater. In fact, if the sticks had become a part of the barque on the stocks, no loss would have been sustained: the barque on the stocks was not injured. 5. A different construction would leave it matter of the greatest uncertainty what was the subject insured; whether it was the timber for the barque, as soon as it was felled ? or, only as soon as it was brought into the ship-yard ? or, only as soon as work was commenced on it to fit it for the barque ? or, only as soon as the materials were ready to be framed together ? or, only as soon as they were entirely ready to be put into the structure on the stocks ? or whether, if it was thus ready, but was not in the ship-yard, it would be covered by the policy'? or, whether it would be covered if in any part of the ship-yard, or only if in a particular part of it, and in such a case, within how many feet it must be of the stocks 1 It is to be presumed that the parties could not have intended to enter into such a vague, doubtful and uncertain contract, when they fixed with so much care and precision the very moment of the termination of the risk. 6. The insured themselves, in their preliminary proof under oath, deliberately and carefully made, described the property injured as “ timber and lumber,” as “ 462 pieces of timber,” as “ ready to be put into the frame of the barque,” and as “ alongside of the barque.” This language shows that the property destroyed constituted, not

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a part of the barque, but pieces of timber and lumber alongside of it, and designed to be put into it. The plaintiff himself evidently felt that he could not, consistently with truth, swear that the barque was partially or totally injured. This proves that, according to the ordinary use of language, these pieces of timber had not become a part of the barque on the stocks mentioned in this policy of insurance, any more than the moulds, for which also the insured made a claim. 7. This construction is in conformity with analogous cases. (Sillsbury v. McCoun, 3 Coms. 395; S. C. 6 Hill, 427 ; Fryatt v. Sullivan Co., 5 id. 117; Johnson v. Hurst, 11 Wend. 135 ; Gregory v. Stryker, 2 Den. 628 ; Year Book, 5 H. 7 , fo. 15, cited 4 Denio, 335 , 336, note; Wood’s Civil Law, 157, 159.) 8. Finally, it is in conformity with an express judicial opinion in a similar case. (Mason & Leap v. Franklin Ins. Co., 12 G. & John. 469.) II. The property déstroyed was covered by the subsequent policy. It was “ timber and building material.” The insured could have recovered for its destruction under this policy. It had been “ timber and building materials” within the meaning of that policy, and had been covered by that policy. When did it cease to be 7

Daniel Lord, for the respondent.

I. The subject insured was a barque in the course of being built, from the commencement of its construction; and embraced all the parts of the commenced structure, which had become so far identified with it as to have lost all value except as such parts. 1. This is the fair and natural extent of the subject described. The several parts of any machine, fitted for use in combination as such machine, and having no value except as fitted to each other in the machine, constitute the unfinished machine. The fact that they need some work to put them together, no more prevents their being the unfinished machine, than the want of additional work or parts, after some of the parts are put together. It is the unfinished machine which was insured. 2. If all the parts necesr sary to form a particular carriage, or watch, or steam-engine, or

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house, were collected together, and had, by their being fitted to each other, become useless for any other purpose, they would naturally and properly be described as an unfinished carriage, &c. Every particular piece would be a part of such carriage and building. 8. Supposing all such parts to have been put together, and then taken apart and separated, the parts thus separated would not cease to be described by the name of the completed article; nor would they be more entitled to its name than before they were put together. 4. The shipment to the Pacific of houses, lighthouses, steamboats, steam-engines, are well known instances of such descriptions. Whether they had been put together and then separated, or had only been fitted to be put together, could make no difference. 5.. The very idea of an unfinished house or machine supposes parts not yet attached, as well as parts attached or combined and not yet completed. That additional labor is required upon the subject, may show it to be unfinished, but does not show that its parts are no part of it. 6. The keel, blocked and fitted to receive the frames, was in no higher sense a part of the barque than the frames moulded and fitted for it, and only needing to be put together. The keel was worthless without the frames, and the frames without the keel; neither was the barque; each was a part of the barque. Tet it would not be contended that the keel was not covered by the policy. So of a rudder fitted, but not hung. 7. The frames destroyed, being useless for any other purpose, would be of no value as timber or building materials, in' a general sense. If they were not parts of the barque, they were nothing.

II. There are no restrictive words in the description of the subject, varying the natural meaning as above claimed. 1. The place of the subject insured, is “ the ship yard.on the west side of Taunton river, Somerset, Massachusetts.” This makes fully certain the locality of the subject insured, and is the only needed and fair limitation of the place of risk. 2. The phrase, on the stocks, near said ship, was to identify the vessel whose parts were covered by the policy, from the ship actually building at the same time and the vessel which the insured secured the

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privilege to build. It was like the phrase, “ building for Howes, Godfrey & Co.”—an indicating of the particular vessel, and not precluding that which was fitted as a part of the vessel. 3. The “ privilege to build apother vessel alongside” has no bearing on the question of description. These words are introduced out of caution against the condition, that if after insurance the risk shall be increased by any means whatever, within control of the insured, the insurance shall be void. The materials and the more and less finished parts of the vessel would lie around in the ship yard, and of course the greater the quantity of them the greater the risk. But the risk was not diminished by their being put together; wood in a heap or pile is not in less risk than wood spread on the ground. 4. To contend that the frames moulded were not on the stocks and therefore were not parts of a barque on the stocks, is a mere begging of the question, and contrary to the fair import of the language.

III. The policy should have the broadest construction that any fair interpretation of its language can embrace. 1. Such is the well established rule of construing policies of insurance. (Palmer v. Warren Ins. Co., 1 Story’s Rep. 360 ; Donnell v Col. Ins. Co., 2 Sumner’s R. 380; Yeaton v. Fry, 5 Cranch, 335 .) Rigging and provisions covered by a policy on the ship, are protected while severed from the ship and on shore in usual and proper places. (Pelly v. Roy. Exch. Assur. Co., 1 Burr. R. 341; Brough v. Whitmore, 4 T. R. 206.) On this principle, where averages are not to be paid under 5 per cent, successive averages on the same voyage may be added. (Blackett v. Roy. Exch. Assur. Co., 2 Crompt. & Jer. 251.) This rule not only results from the great object of the contract being an indemnity in the common and popular acceptation, but because the policy is the language of the insurers. 3. The premium was on the whole sum insured from the commencement: the insurers are paid for the risk upon the whole value of all the parts of the unfinished subject from its inception.

The question in this case is, what was the subject insured; was it the barque, as its materials should from time to time be put together in their appropriate positions in the 1 process of its construction, or was it also such materials as were completely prepared to enter into its structure, though not united to it, and which by reason of such preparation were rendered valueless for any other use. These questions must be answered by the language of the parties, which is to be read and interpreted in its plain and ordinary sense, subject to the rules of interpretation applicable to written instruments, to ascertain the intention which they by its use have expressed. That language designates “ a barque ” as the subject insured, and adds to this designation certain descriptive particulars, viz. that it was on the stocks near a ship before mentioned, and that it was building for Howes, Godfrey & Co. The clause gives, further, a privilege to build another vessel alongside. The term, “a barque,” standing by itself, has for its primary signification a completed vessel; but as the context shows that it could not in this case have been used by the parties in that sense, we are in the next place to see in what secondary or modified sense it has been used. To this inquiry the context affords an answer, as it discloses that the word is used, not in reference to a completed vessel, but with reference to a vessel of that class then about to be built, or then in course of actual construction; and that its construction was to be carried on at the pleasure .of the insured, during the continuance of the risk, and that the insurance was to apply from time to time, not only to such part of the barque as at the inception of the risk was capable of designation by the term used, but also to such materials as from time to time should become part of the barque. It is plain that the keel of the intended vessel, when it had been blocked, and was in its place to be built upon, furnished a subject embraced by the language of the policy; it is equally plain that timbers in the rough, brought into the yard to be worked and put into the vessel, would not be covered by the policy. The inquiry then is, at what point in the process of building the vessel will such timbers cease to be

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materials for the barque, and become a part of the barque. The answer, I think, is, when they have entered into the structure which,, when completed, will be a barque. This construction accords with the- ordinary use of language upon such subjects. If a man had entered this ship-yard and asked to be shown the barque building for Howes, Godfrey & Co., he would have been shown the structure upon the keel, irrespective of how far the work had progressed, as being the barque; and it would have occurred to no one to point out materials not annexed to the keel, although completely prepared for that use, as being the barque. It is true that, in a technical sense, neither the keel, with the incomplete structure thereon, nor any of the materials intended for the vessel, is a barque, but in the ordinary use of language, the former would be so spoken of, and the others, though the work on them was all done, would not. It is in this ordinary sense that the language of parties is to be interpreted: I do not think it necessary to place any reliance upon the words “ on the stocks near said ship,” nor upon the expression of a “ privilege to build another vessel alongside." for though those words perhaps confirm the view which I have taken, indicating as they do an estimate of the amount of risk with reference to the precise locality to be occupied by the subject insured, yet the broader ground is more satisfactory that the language used in its ordinary acceptation, embraces the structure which, when completed, will be the barque, and does not embrace materials which are not become a part of the structure, by being fixed to or in it.

The decision below is objectionable in another aspect. If it be upheld, it follows that timber so far completed becomes thereupon part of the vessel, and consequently loses its character of “ materials,” and could not be insured under that name. It" frequently happens that one man owns the keel and employs another, the ship builder, to furnish materials and finish the ship. Such materials, though completely finished, remain the property of the builder until they actually become a part of the structure of the ship. (Johnson v. Hunt, 11 Wend. 135 ; Merritt v.

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Johnson, 7 John. R. 473 ; Andrews v. Durant, 1 Kern. ante, 35.) In such a case, upon a loss by fire, the ship owner could not recover upon a policy on the “ ship building ” for lack of interest, nor the ship builder upon a policy on “ materials,” because the property has lost the character of “ materials,” and become a part of the “ ship building.” This consequence must'follow, unless courts are at liberty to hold property to be properly described as “ materials” and not as “ parts of a ship,” or as “ parts of a ship” and not as “ materials,” according as one or the other description is necessary to give indemnity to the assured.

That the construction given ¡.accords with the law regulating the change of property when the owner and builder are different persons ; that the common use of language is in harmony with it, and that the test of liability is simple and easy of application, recommend it as fit to be adopted. The case of Mason v. Franklin Fire Ins. Co., (12 Gill & John. 468,) presented substantially the same question, and was decided in the same way by the court of appeals in Maryland. Ellmaker v. Franklin Ins. Co., (5 Barr, 183,) is analogous, and was decided on the same principle in Pennsylvania.

The plaintiff should have been nonsuited, and the judgment must be reversed and a new trial ordered ;■ costs to abide the event.

Although it is said that policies of insurance are to be construed liberally for the insured, (1 Story’s R. 360; 2 Sumner’s R. 380 ; 5 Cranch, 335 ,) yet where the words are not ambiguous, and the expression of the intent of the parties is full, I know of no reason why they should be excepted from the general rules of law applicable to the construction of all contracts. In deciding, therefore, whether the property in question is covered by the insurance, the language of the transfer is to be construed in its usual and popular sense, there being nothing to take it out of that general rule. The question to be decided is not, whether the property in question is covered by the first or the second policy. If it be excluded from the first,

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it does not necessarily follow that it is included in the second. But the question is, whether it is within the first policy, on which this action is brought; that is to say, whether the 462 sticks of timber burned were a part of the barque then building for Howes, Godfrey & Co.

The sticks were cut and ready to be framed, but they had not been framed. They did not constitute frames. They not only had never been annexed to the barque, but they were not ready to become a part of it, for they could not be annexed to the barque till they had been framed. They were sticks of ■ timber cut to be used in the contraction of the barque, but had never been so used in fact. These sticks were scattered about the ship yard, and a part of them lay on the opposite side of the ship in which the fire broke out. It is true, the proof- shows that these sticks, being cut for the frame of the barque, were useless for any other purpose. But I do not see how that fact tends to show that they were part of the barque. It only shows that in getting them ready to make them a part of the barque, they had been rendered unfit for any other use. That may be a misfortune to the owners, if they are not covered by the subsequent insurance on “ lumber and building materials,” but it is not an argument tending to show that they were part of the barque. If it were necessary, however, to .the decision of this case to decide which policy covered the sticks of timber in question, I should have no hesitation in. saying that they continued to be “ building materials” at the time they were destroyed. The insured, party seems to have taken a similar view of- this question,- and to. have selected appropriate words; when, in his preliminary proofs, he called the property “ timber and lumber,” and described it as “ 462 pieces of timber, ready to be. put into the frame of the barque.”

The. property insured was a barque- on the stocks building, that is to say, being built for Howes, Godfrey & Co. How, it was only the barque on the stocks which was insured. The sticks scattered around the yard, though they had been ready to be annexed, were not on the stocks. I suppose the term “ on

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the stocks” is descriptive of the whole property insured ; and that it would do violence to the language of the contract to make it extend to property, only part of which was on the stocks. The description of the barque as being near the ship, and the privilege being given to build another vessel alóngside of it, shows that it referred to what was on the stocks alone. Such language was not applicable to property scattered all over the yard.

Any other rule of construction than that I have adopted, would lead to great uncertainty and confusion. If the sticks became part of the vessel, before being actually incorporated in it by annexation, then when did they become so 1 At what point did they cease to be “ building materials” and become “ a barque ?” When the timber was cut in the forest ? It may have been so selected and cut as to be fit for no other vessel. Or was it when the sticks were brought to the yard 1 or when the work was commenced on them to fit them for the barque % or when they were ready to be framed ? or when they were framed and ready to be annexed ? If all this would make the sticks a barque, which I deny, it is one step more than had been taken in this case, for the sticks had not been framed. It is apparent that as soon as we leave the safe rule, which requires actual annexation, there is no point of preparation at which the thing changes its entire character. If it were the building of a house instead of a ship, none of the materials furnished would lose their character as personal property and become part of the realty, until actually annexed. (Ferard on Fix. 9, note a.) “ Ubi eadem ratio, ibi eadem jus.”

If we are at liberty to look beyond the naked words of this contract, it is plain that great injustice would be done by adopting the construction claimed by the plaintiff. The defendant’s counsel offered to show that the premium would have been greater, if the scattered sticks in question had been included in the policy. And that the risk is greater for such property, can hardly be doubted. In this case, the fact cannot be overlooked, that if the sticks had become part of the barque on the stocks, no loss

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would have been sustained; for the barque on the stocks was not injured.

The question presented is not at all like the cases cited, where rigging and provisions covered by a policy on a ship are protected, while severed from the ship and on shore in their usual and proper places. (1 Burr. 341; 4 Tenn. R. 210.) I concede that if the sticks had once been annexed, and had thus been made part of the vessel, they would not lose their character while severed for a temporary purpose. They would still, in that case, be part of the barque. Whether in such case they would have been excluded on the ground that they were not “ on the stocks,” is another question, and one not necessary to be determined in this suit.

I cannot distinguish this case from that of Mason & Leap v. Franklin Ins. Co., (12 Gill & John. 469;) and I think the judgment of the superior court should be reversed and a new trial awarded.

Judgment accordingly.