Insurance Company of North America v. W. B. Delafield

278 F.2d 683

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 13, 1960
• Docket: 18154
• Status: Published

Opinions

TUTTLE, Circuit Judge.

This appeal involves simply and solely the construction of a rider to an insurance policy. Appellant issued a policy to Appellee in the latter's interstate trucking business to protect shippers of cargo against loss or injury to the cargo. The printed form of insurance contract ex-eluded coverage for damage to cargo unless such damage resulted from an accident to the carrier’s vehicle.

Under requirements of the Interstate 'Commerce Commission, Delafield, the carrier, was required to have his insurance policy contain an endorsement (Form BMC 32) insuring the shipper’s cargo against this excepted casualty. Delafield complied with this requirement and Appellant attached the BMC endorsement to the policy. However, Appellant did more than this. It affixed a rider to the policy which, by its terms, protected the cargo even against injury not caused in an accident to the vehicle. This part of the rider was in the following language: “1. Coverage is provided hereunder on the Assured’s liability as a carrier while the described property is in the custody of the Assured in transit in or on motor trucks or trailers owned, operated by, leased or hired by or for the Assured, or while held pending delivery, transfer, or instructions from the shipper or consignee in or on docks, depots, terminals or similar points used by the Assured within the limits of the Continental United States.”

Paragraph 10 of the rider provided as follows: “Whereas the undersigned Assured is required by the provisions of State and Federal Laws to file, in accordance with such laws, a policy of insurance containing an endorsement as provided in such, it is not the intent of this Insurance Company or the undersigned Assured that this Insurance Company in consideration of the rate of premium charged for such policy shall ultimately sustain any loss or damage to property in consequence of the attachment of such endorsement, it being understood and agreed that the undersigned named Assured shall pay such losses to prevent judgment being rendered or in the event of judgment shall at all times indemnify and hold the said Company harmless from and against any and all claims for damages, loss, costs, charges and expenses of whatever kind or nature including counsel or attorney’s fees, it being understood and agreed that this Company shall only be liable in accordance with the terms and conditions of this policy.”

The cargo on the trip here involved struck an overhead obstruction and was damaged. The insuror paid for the damage to the shipper and in the ensuing action sought to recover this amount, some $6,500, from Delafield. This effort was based by the “insuror on the terms of Paragraph 10, it being contended that the loss paid by the insuror was one arising “in consequence of the attachment of such endorsement”.

Appellee contends that the undertaking of the insurance company to pay for the damage to the cargo arose, not from the endorsement, but rather from Paragraph 1 of the rider, above quoted. Thus arguing, Appellee says that payment for such loss or damage was not sustained “in consequence of the attachment of such endorsement”.

We agree with the conclusion of the Trial Court that the language of the policy, including the rider, is so clear as to require without proof of any external facts, a holding that the payment by Appellant was not sustained “in consequence of the attachment of (the I.C.C.) endorsement.” There can be no quarrel with Appellant’s premise that a carrier may validly or legally bind itself to reimburse the insuror for any payments made by the latter as to which the parties may wish to exclude protection as between themselves. This is all the cases of Wheeler v. American Fidelity & Casualty Company, Inc., 5 Cir., 164 F.2d 590 and Bennett v. Preferred Accident Insurance Company of New York, 10 Cir., 192 F.2d 748 hold. Neither of these cases is concerned with the question presented here, that is, whether, when the I.C.C. requires coverage by a particular endorsement, and the insuror provides such coverage by a rider to the policy, and, to a limited extent, by the I.C.C. endorsement, an agreement to reimburse the insurance company for any payments made in consequence of the attachment of the endorsement would obligate the insured to make reimbursement for payments made in consequence of the obligations created by the rider.

The endorsement (Form BMC 32) limited the liability of the insuror to a maximum of $1,000 in respect of the loss or damage here involved. Recovery was had against the insurance company in the total sum of $5,600. It is clear that the insurance company’s obligation to pay was not based upon the limited obligation provided by the I.C.C. endorsement, but was based rather upon the obligation it assumed under Paragraph 1 of the rider. It is true that Paragraph 10 of the rider strongly indicates that the additional coverage, whether by Paragraph 1 of the rider or by the I.C.C. endorsement, was furnished only because of the requirement of the Interstate Commerce Commission, nevertheless, having assumed the obligation under Paragraph 1 the company could not provide for indemnity for payments arising under that obligation without expressly saying so. Instead of saying so it clearly stated that it was to be indemnified only for any losses it might sustain in consequence of the attachment of the endorsement.

Appellant strongly urges that it is the duty of the court to attempt to find the intent of the parties by reading the entire contract. Appellant cites the Louisiana case of Muse v. Metropolitan Life Insurance Company, 193 La. 605, 192 So. 72, 125 A.L.R. 1075, and Nyman v. Monteleone-Iberville Garage, Inc., et al., 211 La. 375, 30 So.2d 123. There can be no question but that this is the law in Louisiana as it is everywhere. But the court is not at liberty to speculate that the parties intended something different from what they actually said in their contract. A strong argument could doubtless be made that the parties would not have included the coverage contained in Paragraph 1 of the rider into the contract at all if they had realized that they were thus undertaking by the contract of insurance itself to give all the protection and more than required by the I.C.C. regulations. Nevertheless, this action was not brought for the purpose of reforming a contract entered into by mutual mistake. No testimony was tendered seeking to prove mutual mistake. In such circumstances we must recognize that if the language of the contract is clear the court does not have the power to speculate on why the parties drew it as they did. The Louisiana Supreme Court in the last cited case said at 30 So.2d 125, “it is provided that ‘courts are bound to give legal effect to all * * * contracts according to the true intent of all the parties,’ and such ‘intent is to be determined by the words of the contract, when these are clear and explicit and lead to no absurd consequences’ ” citing Article 1945 LSA-C.C. We are constrained to find that since the payment and loss suffered by the insurance company was not sustained “in consequence of the attachment of” the BMC 32 endorsement but was sustained in consequence of the separately undertaken risk in Paragraph 1 of the rider, the insurance company does not bring itself within the provisions of Paragraph 10 which would entitle it to be indemnified.

The judgment is affirmed.