Lachs v. Fidelity & Casualty Co. , 306 N.Y. 357 ( 1954 )

Conway, J.

This is a motion by defendant insurance company for summary judgment in an action by the daughter beneficiary named in an airplane trip insurance contract. Special Term denied the motion and the Appellate Division affirmed, ruling that “ the language of the coverage was not so plain and unmistakably clear as to compel dismissal of the complaint as a matter of law on the merits and the granting of summary judgment in defendant’s favor.” (281 App. Div. 633, 635.) The Appellate Division granted leave to appeal upon two certified questions.

There are some undisputed facts. Thus, it is clear that the day before her death, the decedent, a resident of New York City, visited a tourist agency in New York City and made arrangements to fly on the following day to Miami, Florida. She received an “ exchange order ” which she brought to Newark Airport at 8:00 a.m. on the following morning. She purchased “ AIRLINE TRIP INSURANCE ” in the sum of $25,000 from an automatic vending machine. She then went to the Consolidated Air Service counter and completed her flight arrangements, with one McManus of the agency, to fly to Miami on a Miami Airline, Inc., plane and mentioned to him her purchase of the insurance and her hopes for a good flight. She later entered the plane, after a delay, the reason for which is not disclosed in the record, and in less than an hour was dead as the result of a crash.

Plaintiff claims that the vending machine was situated in front of the Consolidated Air Service counter at which decedent obtained her transportation ticket. Pictures of the machine and affidavits indicate that in letters ten times larger than any other words on the machine and in prominent lighting, appeared the words “ AIRLINE TRIP INSURANCE ”. Over those words was a well-illuminated display of airplanes flying round and round, and in large characters appeared the words and numerals “ 25$ For Each $5,000 Maximum $25,000 ”. Below that on a placard, in letters many times the size of the other words thereon, we find:

“ 'DOMESTIC ’

AIBLINE TBIP INSUBANCE

25 ^ fob each $5,000 maximum $25,000 ”.

Below in much smaller print on the same placard appears:

££ Covers first one-way flight shown on application (also return flight if round trip airline ticket purchased) completed in 12 months within or between United States, Alaska, Hawaii or Canada or between any point therein and any point in Mexico, Bermuda or West Indies on any scheduled airline. Policy void outside above limits. For 1 international ’ coverage see airline agent.”

The application mentioned on the placard is obtained by inserting 25^ in a slot for each $5,000 of insurance desired. Upon such insertion, a small slot of approximately one inch opens and the application for insurance is presented. It reads as follows:

££ I hereby apply to Company named below for Airline Trip Insurance to insure me on one Airline trip between: Point of Departure ?......Destination?......And return......Beneficiary’s hornet......Beneficiary’s Street Address?......Beneficiary’s City?........Beneficiary’s State?........Name of Applicant (please print) Signature of Applicant ”.

Upon completion of the application, the applicant presses a button and there comes from the machine a policy of insurance. The policy is approximately eleven inches in height and is printed on both sides — thus there are twenty-two inches of printed matter. However, the purchaser does find across the front of the policy in type many times larger than all the other printing on the page and obliterating some words of the policy: ££ THIS POLICY IS LIMITED TO AIBCBAFT ACCIDENTS BEAD IT CABEFULLY ”. There is also an envelope in the machine to mail to the beneficiary, for the insured is not expected to read the policy on the plane. The envelope has printed on it: ££ AIBLINE TBIP INSUBANCE ”.

Plaintiff says that some but not all machines have a specimen policy attached and that it has not been established that the machine from which decedent purchased her policy had a specimen attached. Be that as it may, the defendant has presented as an exhibit a specimen policy and the words quoted (supra): “ THIS POLICY IS LIMITED TO AIRCRAFT ACCIDENTS READ IT CAREFULLY ” obliterate the words: “Civilian Scheduled Airline ” in the coverage clause so that they cannot be read.

This was the “ coverage ” clause in the policy on page 1: “ This insurance shall apply only to such injuries sustained following the purchase by or for the Insured of a transportation ticket from * * * a Scheduled Airline during any portion of the first one way or round airline trip covered by such transportation ticket * * * in consequence of: (a) boarding, riding as a passenger in, alighting from or coming in contact with any aircraft operated on a regular or special or chartered flight by a Civilian Scheduled Airline maintaining regular, published schedules and licensed for interstate, intrastate or international transportation of passengers by the Governmental Authority having jurisdiction over Civil Aviation * *

Defendant on its part points to the fact that there was hanging on the wall at the right hand end of the counter where decedent picked up her ticket, a fairly large sign — approximately three feet by four feet — bearing the caption in large size capital letters:

“ NON SCHEDULED AIR CARRIERS AUTHORIZED TO CONDUCT BUSINESS IN THIS TERMINAL ”

and that there followed a list of ten carriers, among which was included on a separate line,

“ MIAMI AIRLINE ”.

In answer, the plaintiff has presented an affidavit from McManus, the representative of the tourist agency at the Consolidated Air Service counter, that the sign was on one wall of a waiting room near the counter and not at the counter. Plaintiff claims that the sign was on a wall of a public waiting room at an extreme end of the Newark Air Terminal, at an exit where persons leaving the airport obtain taxis. Plaintiff further claims that to get to the Consolidated counter, the decedent had to enter through the main entrance of the airport hundreds of feet away from the waiting room. There is, of course, no proof that decedent ever saw the sign.

Little, if anything, turns on the sign or what it said or where it was, for applicants for insurance are not affected with notice by reason of wall signs nor do they incorporate words or definitions from wall signs into their insurance contracts. It does serve the purpose of showing that the parties here are in disagreement on nearly everything except a few undisputed facts.

What contract of insurance, then, did the decedent purchase? She intended to buy coverage for her flight to Miami. The defendant says it did not intend to cover her on that flight. We all know that a contract of insurance, drawn by the insurer, must be read through the eyes of the average man on the street or the average housewife who purchases it. Neither of them is expected to carry the Civil Aeronautics Act or the Code of Federal Regulations when taking a plane. We have never departed from our statement in Kenyon v. Knights Templar & Masonic Mut. Aid Assn. (122 N. Y. 247, 254): “It may preliminarily be observed that, as a general rule, the construction of a written instrument is a question of law for the court to determine, but when the language employed is not free from ambiguity, or when it is equivocal and its interpretation depends upon the sense in which the words were used, in view of the subject to which they relate, the relation of the parties and the surrounding circumstances properly applicable to it, the intent of the parties becomes a matter of inquiry, and the interpretation of the language used by them is a mixed question of law and fact.” (See, also, Hartol Products Corp. v. Prudential Ins. Co., 290 N. Y. 44, 49; Rappaport v. Phil Gottlieb-Sattler, Inc., 280 App. Div. 424, affd. 305 N. Y. 594.) Was the decedent entitled to believe that she had purchased “ AIRLINE TRIP INSURANCE” through a policy “ LIMITED TO AIRCRAFT ACCIDENTS ”? It seems to us that a jury could find that when decedent purchased her policy on an application for “ AIRLINE TRIP INSURANCE ” from a machine having in prominent lighting those same three words, before obtaining her ticket from a counter in front of which the machine stood, she was covered on her flight, since the minds of the decedent and the company had met on that basis. In other words, since defendant put one of its automatic vending machines in front of the ticket counter of the Consolidated Air Service which, according to an affidavit submitted by defendant, “ was utilized by all non-scheduled airlines operating-out of the Newark Airport, as a processing point for their passengers, and before any passenger on a non-scheduled airline could receive his ticket he was required to present his ‘ exchange order ’ at said counter” we think a jury might find that the defendant was inviting those passengers to insure themselves by its “ AIRLINE TRIP INSURANCE ”.

Decedent was invited to purchase “ AIRLINE TRIP INSURANCE ”; she applied for “ AIRLINE TRIP INSURANCE ”; on the envelope to carry the policy to her daughter beneficiary was “ AIRLINE TRIP INSURANCE ” but defendant says that was not what decedent purchased. Shall the defendant, which wrote the policy, be permitted to say that “ AIRLINE TRIP INSURANCE ” “ means just what I choose it to mean ” and therefore means that a flight on a “ non-scheduled ’ ’ airline is not covered by the policy? Defendant concedes that the “ action is brought by the plaintiff to recover upon defendant’s Airline Trip Insurance policy ” but “ defendant contends that the policy did not cover the alleged loss of life of the said Sadie Bernstein because she lost her life in the crash of an aircraft which was not a flight operated by a Civilian Scheduled Airline.” (Emphasis by defendant.) That draws the line of construction very finely. Plaintiff claims that Miami Airline, Inc., maintained regular, published schedules of fares and schedules showing passenger mile rates and that it held itself out as maintaining regular schedules of flights and tickets were sold for stated hours of departure and that it was licensed by the Civil Aeronautics Board to carry passengers and freight with large aircraft in interstate, overseas and foreign air transportation. We think there is a question of fact presented. As we pointed out in Hartol Products Corp. v. Prudential Ins. Co. (supra), the burden in such a case as this is on the defendant to establish that the words and expressions used not only are susceptible of the construction sought by defendant but that it is the only construction which may fairly be placed on them. The defendant in its large illuminated lettering and in its application could have added proper, unambiguous words or a definition or could have avoided allowing its vending machine to be placed in front of the ticket counter “ utilized by all non-scheduled airlines operating out of the Newark Airport ”, thus removing the ambiguity or equivocal character of the invitation to insure, of the application for insurance and the contract of insurance itself. Perhaps we should point out here that even that might not have helped, for if decedent had engaged a lawyer to examine the Civil Aeronautics Act of 1938 as amended and the Code of Federal Regulations before purchasing her policy, she would have learned, and the defendant concedes, that the term “ Civilian Scheduled Airline ” cannot be found in them and there is no such terminology used. There is also no reference to nor mention of the words “ Scheduled Airline” in the Code of Federal Regulations. There is no definition of “ Scheduled Airline ” or of “ Non-scheduled Airline ” in the Civil Aeronautics Act of 1938 as amended.

No doubt it is advisable, if not indeed necessary, as a matter of business competition to sell insurance policies from automatic vending machines. It may save money to have a number of machines instead of a salesman. It may be wise because people hurrying to planes will not wait on a line to buy insurance. However, there must be a meeting of minds achieved between the applicant and the company through an application and signs and lettering, for while the applicant has a mind the machine has none and cannot answer questions. If the defendant had paid for a living salesman, the decedent would not have purchased the insurance if it did not cover her trip or she might have purchased it and changed her plane. So there must be additional care taken. While all this makes it more difficult for the insurance company, there is another side to the question. If the rule here was not made strict when machines are utilized it would mean that in this large terminal all persons who put money into the machines there and then, thinking they were insured, went off on one of the ten so-called “ non-scheduled air carriers,” would have no insurance for their beneficiaries and the company would be in receipt of contributions for which no service was ever rendered.

As we pointed out earlier, neither Special Term nor the Appellate Division made any finding. It is urged upon us that the term “ scheduled airline ” has gained such wide and general currency that it has become part of the speech of the average man even though it is not defined in any statute. That may or may not be so as to air-travelers but we do not know whether the decedent had ever been on a plane before. At any rate this court has no power to make findings here. Even the definition suggested by defendant in its brief seems to require more knowledge than the average layman has. According to defendant a “ Civilian Scheduled Airline ” is an “ air carrier which obtains a certificate of public convenience and necessity as provided in Section 401 of the Civil Aeronautics Act ”. It should be noted that the defense is not that a particular flight is not scheduled but that the airline is not a civilian scheduled one. The attempt of defendant to establish that the term “ Civilian Scheduled Airline ” has a clear and definite meaning has caused it to bring forward and present an enormous amount of proof extrinsic to the policy including a statute, regulations, newspaper and magazine articles, etc. By this mountain of work it seems to us that defendant has established that “ Civilian Scheduled Airline ’ ’ is not at all free from ambiguity and vagueness — if it were not so the contract of insurance itself would disclose within its four corners the intent of the parties in entering into it.

The order of the Appellate Division should be affirmed, with costs, the first question certified answered in the affirmative and the second question certified answered in the negative.