Atlantic Basin I. Works v. American Ins. Co. , 250 N.Y. 322 ( 1929 )

Atlantic Basin Iron Works is a ship repairing concern. It insured itself with the defendants against "legal liability" in the sum of $150,000. This term is broad enough to cover the loss sued on, subject to the limitations contained in the policy. The standard policy of marine insurance is specifically made a part of the policy as a printed rider. The typewritten rider, which covers builders' risks alone, is made "subject to the terms of the Builders' Risks Clauses" contained in the printed rider. Assured owned no ship nor interest in a ship. It had an interest in its work on vessels. The standard form in terms covers only ships or loss or damage due to an interest in a ship. Obviously, the insurers carelessly used a blank form of policy which was applicable only to hull insurance without troubling themselves to adapt it to the nature of the transaction. The printed words "upon the good" before the written words "legal liability" so indicate. The blank following the printed words would normally be filled in with the words, "ship Mary Jane," or something of the kind, descriptive of the "good ship" upon which the insurance was written. Yet the policy unquestionably insures "against legal liability" to some extent. Insurance "Upon the good legal liability," read literally, is meaningless.

The policy provides, among other things, under the head of "Protection and Indemnity Clause," as follows:

"It is further agreed that if the assured shall by reason of his interest in the insured ship become liable to pay and shall pay any sum or sums in respect of any responsibility, claim, demand, damages, and/or expenses arising from or occasioned by any of the following matters or things during the currency of this policy, that is to say: —

"Loss of or damage to any other ship or boat or goods, merchandise, freight, or other things or interests, whatsoever on board such other ship or boat caused approximately or otherwise by the ship insured in so far as the same is not covered by the running down clause set out above."

The same carelessness is manifested here but the underlying purpose is protection and indemnity against a specified group of legal liabilities. The words should, if possible, be given a meaning and applied to the facts. When insurance companies undertake to insure a ship repairer against "legal liability" and make a standard form of policy of ship insurance a part of the contract, it must be that they have in mind some sort of protection for the assured arising therefrom. Otherwise why was not the coverage limited in terms to builders' risk? Having before us the relations of the parties, the clause may be fairly read (rejecting all superfluous words) so as to give the assured herein protection and indemnity against loss or damage to any other ship caused proximately by the assured by reason of its work on a ship in its hands. The intention of the parties is fairly expressed by the language, read in the light of the surrounding circumstances. (Aldrich v. N.Y. Life Ins. Co.,235 N.Y. 214; Bushey Sons v. American Ins. Co., 237 N.Y. 24. )

The judgment should be affirmed, with costs.

CARDOZO, Ch. J., LEHMAN, KELLOGG and O'BRIEN, JJ., concur with CRANE, J.; POUND, J., dissents in opinion in which HUBBS, J., concurs.

Judgment reversed, etc.