26 Misc. 2d 548 | N.Y. Sup. Ct. | 1960
The substance of the complaint follows:
Joseph Faroll & Co. (to whose interests the plaintiffs succeeded, and who will be called plaintiffs hereinafter) were stockbrokers. Their address was New York City. In 1956, one Albert J. Gould of Toronto, Canada, posing as a reputable and financially responsible businessman, caused himself to be presented to the plaintiffs. In order to gain their trust and confidence, Gould introduced to the plaintiffs several persons who executed some minor transactions and.promptly met their obligations. During May and June, 1957, Gould obtained from the president and directors of Cabanga Developments, Ltd., all of the capital stock of that company owned by them. Gouid paid for this stock by fraudulently misappropriating Cabanga \s bank account. On June 26, 1957, after Gould had obtained the Cabanga stock, he (in Toronto) telephoned the plaintiffs (I shall assume, in New York) and stated that he was representing several named individuals who wished to sell certain American securities and that the proceeds from such sale were to be used by these individuals to purchase shares in Cabanga. Actually, the persons so named by Gould had never authorized him to act on their behalf and had no knowledge that he was so acting. Proceeding with the transaction under usual stock exchange custom in such cases, the plaintiffs made the requested sale of the American securities without asking that the certificates be delivered to them before the sale thereof. The plaintiffs also purchased the Cabanga stock ordered, the certificates for which
Prior to these transactions, the defendant, for a valuable consideration, had issued to the plaintiffs certain policies of insurance known as “ Brokers Blanket Bonds ”, in which the defendant undertook to indemnify the plaintiffs against certain losses set forth in the policies. There are various types of losses covered— entitled as “fidelity”, “on premises”, “in transit”, “ forgery or alteration”, and “ securities ”. The only provision concededly applicable is that called “On Premises” — known as clause B, which, in its relevant part, reads as follows: “(B) Any loss of Property through robbery, burglary, common-law or statutory larceny, theft, hold-up, or other fraudulent means, misplacement, mysterious unexplainable disappearance, damage or destruction, abstraction or removal from the possession, custody or control of the Insured (whether effected with or without violence or with or without negligence on the part of any Employee), and any loss of subscription, conversion, redemption or deposit privileges through the misplacement or loss of Property, while the Property is (or is supposed to be) lodged or deposited within any offices or premises located anywhere, except while in the mail or in any of the Insured’s offices specifically excluded from the coverage of this bond or with a carrier for hire other than an armored motor vehicle company for the purpose of transportation. ’ ’ There were certain limitations on the defendant’s liability expressed elsewhere in the bonds, in that they did not cover “ [a]ny loss the result of any loan made by the Insured”, or “ [a]ny loss resulting directly or indirectly from trading * * # whether or not represented by any indebtedness or balance shown to be due the Insured on any customer’s account, actual or fictitious ”. The applicability of these limitations is disputed.
Whether the plaintiffs will be able to prove the allegations of their complaint is not my present concern (Howard Stores Corp. v. Pope, 1 N Y 2d 110), for this is a motion by the defendant to dismiss the complaint on the ground that it fails on its face to state facts sufficient to constitute a cause of action (Rules Civ. Prac., rule 106, subd. 4). On such a motion, the allegations of relevant fact in the complaint are deemed to be true (Sutton v. Hearst Corp., 277 App. Div. 155, motion for leave to appeal denied 277 App. Div. 873; Goddard v. Gladstone, 4 Misc 2d 227, 229) and they are to be viewed most favorably to the pleader (Mesiano v. Mazzeo, 12 Misc 2d 858, 859; Russell v. Marboro Books, 18 Misc 2d 166, 183). However, even on a motion such as this, I am not to supply pertinent allegations needed to make the complaint sufficient.
The defendant contends that there is nothing in the complaint which states that the loss occurred “ On Premises” of the plaintiffs, which would bring it within the coverage of clause B of the policies in suit, and that even were the allegations otherwise in that respect, the loss is not covered because it appears from the face of the complaint that the loss was the result of a ‘ ‘ loan ’ ’, and is therefore excluded, or that it resulted from ‘ ‘ trading ’ ’, and is therefore excluded. In the view I take of this case, I shall limit my discussion to but one phase of one issue — the meaning and effect of clause B — headed “ On Premises ” — in the light of the allegations of this complaint. And, first, I shall state some applicable general principles of construction.
Where an insurance policy contains ambiguities they must be resolved against the insurer as the party who drafted the instrument (Fidelity & Cas. Co. v. Groth, 53 N. Y. S. 2d 623, affd. 270 App. Div. 976, affd. 296 N. Y. 788). The meaning to be given to a contract of insurance must be the meaning that the ordinary
The defendant argues that the fraudulent scheme was conceived and consummated in Canada, and not in New York at the plaintiffs’ offices, and that therefore there was not insurance coverage. I hold that, on the facts as pleaded, the loss was occasioned to the plaintiffs on their premises. True, the plot was conceived in Toronto. Gestation, too, was there. Gynecological attention by Gould was given to it in Toronto, as well, and also by way of long-distance communications with New York. But obstetrical results were effectuated in the plaintiffs’ premises in New York. In my view, the clause B here in question is not unlike that in issue in Federal Dep. Ins. Corp. v. Hartford Acc. & Ind. Co., 106 F. Supp. 602, affd. 204 F. 2d 933, and which was decided after trial. There, the court, while recognizing that there “ are terms [in clause B] that would indicate location is a consideration as to the property which is the subject of the loss ”, said that it was “ not in accord with the defendant that a fair construction of Clause B requires that the false representation be on the premises of the insured bank. As we read the clause there is no condition of place as to where the false representation be made ” (p. 604).
As I study the principal cases relied upon by the defendant, I do not find that they are authoritatively to the contrary on this issue. The defendant cites Kean v. Maryland Cas. Co. (221 App. Div. 184, affd. 248 N. Y. 534) where recovery was denied the insured. While it is true that one reason for the court’s determination was that the loss occurred off the premises, I am of the opinion, in agreement with the plaintiffs, that this case is
Insofar as the case of Degener v. Hartford Acc. & Ind. Co. (92 F. 2d 959) is concerned, I do not go along with the majority of the court if its holding is to be taken to mean that (as a matter of law, and on the pleadings) the abstraction by Gould on the plaintiffs’ premises by fraudulent means of a valid and valuable check from the plaintiffs is not covered by clause B because the loss of the plaintiffs ’ ‘ ‘ property ’ ’ occurred only when the check cleared the plaintiffs’ bank. In the case at bar, the property which was the subject of the loss was the valuable checks that the plaintiffs delivered at their premises in exchange for the comparatively worthless Cabanga stock received by them. Thus were the moneys abstracted from them. The scheme by Gould to consummate that result was nonetheless larcenous or fraudulent because it was devious. A “ simple plot” is an oft-used literary juxtaposition but these words are not, as a matter of law, necessarily required to describe a fraud coming within the somewhat complicated language used by the defendant in issuing a “ Blanket Bond ” intended to assure these stockbrokers that they were protected against, among other things, “ [a]ny loss of Property through * * * statutory larceny * * * or other fraudulent means * * * or abstraction * * * from the possession, custody or control of the Insured * * * while the property is (or is supposed to be) lodged or deposited within any offices or premises located anywhere ’ ’. I hold that it is a question for the jury to determine whether, under all the facts, the loss sued upon here comes within the coverage of the clause involved here.
That is to say, that I hold that there would be such a question (as to the meaning and effect of clause B) had I not made an assumption at the outset of my statement of facts. For, on that hypothesis, I could not say that there are lacking in this com
In the circumstances, the defendant’s motion to dismiss the complaint must be, and is, granted, but the plaintiffs may have 20 days after the service of a copy of the order hereon with notice of entry within which to serve an amended complaint.