102 Tenn. 264 | Tenn. | 1899
This is a suit on a policy of insurance. The complainant company carrying a risk on cotton in a compress at Greenville, Texas, secured from the defendant a policy of insurance by which it undertook to underwrite the complainant to the extent of one-half its risk. The cotton covered by the original policy was destroyed by fire on November 14, 1887, and proofs of loss were immediately furnished to the Royal Insurance Company, which company also notified the Vanderbilt Insurance Company. Controversy as to liability having arisen, litigation between the assured and the Royal Insurance Company ensued, and a final settlement with the owners of the cotton — the assured in the original policy— was not made until the year 1895. After the settlement the reinsured was called upon by the complainant to make good its contract of indemnity by paying the pro rata of the loss sustained, and, declining to do so, the present bill was filed. Recovery was in the Court below, and is now, resisted upon three grounds, first, the statute of limitations of six years; second, the contract limitation of twelve months,. and, third, that proof of loss had not been .furnished in time. The Chancellor, upon the hearing of the cause, dismissed the bill, and complainant has appealed. •
The original policy of insurance, issued by the
The stipulation in the policy, on which the defendant relies for defense as a contract limitation, is as follows: “13. It is furthermore hereby expressly provided that no suit for the recovery of any claim,
A contract of reinsurance is peculiar in its character, and differs from the ordinary policy of insurance. It creates no privity between the reinsurer and the party originally insured (Gantt v. Amer. Ins. Co., 68 Mo., 533); it is simply an agreement to indemnify the assured, partially or altogether, against a risk assumed by the latter in a policy issued to a third party (Commercial Mut. Ins. Co. v. Detroit F. & M. Ins. Co., 38 Ohio St., 16).
In such a case ‘‘ the assured is not the owner of the property at risk, ’ ’ and has ‘ ‘ no relation to it except as insurer under the original policy.” But in that relation the party issuing the original policy has an insurable interest which will support a contract intended to indemnify him against the hazard he has assumed. “But manifestly,” as is said in the Manufacturers' Ins. Co. v. Western Ins. Co., 145 Mass., 419, “many provisions appropriate to an ordinary agreement with the owner of property, for the insurance of it could have no proper application to a contract,” such as the one in question. In the course of the opinion in that case, it is further said: ‘c Whenever words are found in a contract which can have no proper application to the subject to which it relates, they cannot be regarded; and not infrequently the careless use of printed blanks compels recognition of this rule.”
In the case of Jackson v. St. Paul Ins. Co., 99 N. Y., 124, the distinct question here involved was raised. One of the contentions of the reinsuring
But should we concede that the principle announced by those authorities is unsound, there is another ground upon which this particular defense must fail. It is well settled that when a policy of insurance contains contradictory provisions or has been
Applying this rule to this policy of reinsurance, the Vanderbilt Company must fail on this point of its defense. Its contention is that the loss it insured against was a loss by fire. This is a mistake. It indemnified, to a limited extent, against the liability which the first insurer assumed by his contract, and, accepting this thirteenth clause or stipulation as a part of the contract, the loss which it refers to must be taken to be that which accrued to the party indemnified when it made payment to discharge its liability. This is the only construction which can be given to this stipulation to save the conditions of the policy from irreconcilable contradiction. For not only the slip already quoted, but the seventh clause or stipulation (this being the only one in the policy which in its original form refers to reinsurance) provides as follows: “Reinsurance to be on the basis that in no event will this company be liable for a sum greater than such portion hereby reinsured bears to the whole sum insured by the company reinsured, and in case of loss this company to pay pro rata at the same time and in the same manner as paid by the company rein-sured.”
Again, this was not the construction that either of these companies, during their dealings, put upon this contract. While the complainant notified defendant, immediately after the fire, of the loss, yet no formal proofs of loss or demand for reimbursement were then made. They were not made until after the complainant settled with the railroads in 1895. But complainant did give notice to the Vanderbilt Company of the resistance made by it to the payment of the loss, and that company clearly acquiesced in this resistance of its assured, because, as is said by its then secretary, Mr. Jones, it thought the position taken by the Royal Insurance Company was ‘ £ a proper one to take. ’ ’
In addition this witness said: “We-granted rein-suring policies often to the Royal Insurance Company- on its various risks, and my recollection is that, by the terms of these policies, we were subject to the same liabilities as that company was under its original policy, and we would settle our portion of the loss as they [it] settled under their
Again, in 1890, Mr. Parker, who was at the time secretary of the defendant company, addressed a letter to the agents of the complainant company, in which he assured them that though his company was then in process of liquidation, yet the claim of complainant was being provided for. Thus it will be seen that the construction put by us on this policy is that which these companies all the time placed upon it, and the one which regulated their dealings with one another. We think this construction was sound, and it is evident in adopting it, as we do, we reach the merits of this case. It follows, as this bill was filed within three months of the payment of the loss by the complainant company, the defense of limitation is in no particular well taken. As to proofs of loss, it is sufficient to say that those furnished were sufficiently full, were such as it was the custom of the two companies to supply and receive, and were accepted by defendant company, so far as this record shows, without objection. There is, therefore, nothing in this contention.