Opinion
No. 19372
Decided February 8, 1927.
Credit insurance — Credit rating of debtor at date of shipment and delivery — Time of actual delivery to debtor or to carrier, controls — Losses not recoverable unless debtor has required credit rating.
1. Where a credit insurance policy by its terms covers only losses occurring "on bona fide sales of merchandise * * * shipped and delivered in the usual course of the insured's business," and contains a provision that no account is covered unless the debtor, at "the date of shipment and delivery," had a stipulated credit rating in the published report of a specified mercantile agency, the date of shipment and delivery therein referred to is the time of actual delivery to the debtor or to the carrier for transportation to the debtor.
2. The insured cannot recover on such policy for losses occasioned by reason of shipment and delivery of merchandise to a debtor, who, at the time of such shipment and delivery, did not have the required credit rating as provided in the policy.
ERROR to the Court of Appeals of Cuyahoga county.
This action was instituted in the court of common pleas of Cuyahoga county by the Empire Plow Company against the London Guarantee Accident Company, and they will be hereafter referred to as plaintiff and defendant as they there appear. It is a suit to recover upon a policy of credit insurance whereby the defendant insured the plaintiff against actual loss to an amount not exceeding $20,000 in excess of an initial or own loss to be first borne by plaintiff of 1/4 of 1 per cent. (but not less than $2,500) of plaintiff's total gross sales and deliveries made between the 25th day of February, 1921, and the 24th day of February, 1922, which period is defined as the policy period, such loss occurring through the insolvency of the debtors, as defined in said policy, between the 18th day of March, 1921, and the 24th day of February, 1922, both days inclusive.
The claim asserted by the plaintiff in its petition is that during said policy period the plaintiff sustained a loss amounting to $1,556.30 by reason of the insolvency of the Bailor Plow Company, one of its customers, and that it sustained a loss amounting to $16,273.72 through the insolvency of the Midwest Engine Company, another of its customers, the insolvency of the latter company having occurred on February 15, 1922. The policy is attached to the petition, and the portions thereof pertinent to the consideration and disposition of the questions presented are as follows:
"In consideration of the payment of a premium of one thousand 00/100 dollars, and of the representations and warranties made in the application for this or any prior policy of credit insurance issued to the insured by this company, copy of which application is made a part of the contract, the London Guarantee Accident Company, Limited, of London, England (herein called the company), insures as herein provided the Empire Plow Company of Cleveland, Ohio (herein called the insured), against actual loss, to an amount not exceeding twenty thousand 00/100 dollars in excess of an initial or own loss to be first borne by the insured being 1/4 of 1 per cent. (but not less than $2,500) of the insured's total gross sales and deliveries made between the 25th day of February, 1921, and the 24th day of February, 1922, both days inclusive (which shall be the period of this policy); such loss to occur through the insolvency of debtors, as herein defined, between the 18th day of March, 1921, and the 24th day of February, 1922, both days inclusive, and to be proven under the terms, conditions and limitations of this policy on bona fide sales of merchandise, owned by or consigned to the insured, shipped and delivered in the usual course of the insured's business of manufacturers' agricultural implements, during the period of this policy, notices of which losses shall have been filed as required by Section 3, with the company's agent, the Credit Insurance Adjustment Company (herein called the adjustment company).
"Conditions Under Which This Policy is Issued and Accepted."Section 1. Coverage. No account is covered under this policy unless the debtor had at the date of shipment and delivery one of the capital ratings and its accompanying credit rating, tabulated herein below in the latest published book of the Bradstreet Mercantile Agency; said book, for the purposes of this policy, shall be considered as published on the first day of the month borne by said book, and the ratings in said book are to govern on all shipments and deliveries made on and after the first day of the month borne by said book to the first day of the month borne by the next subsequent book."
The answer of the defendant, after making what is equivalent to a general denial of the averments of the petition, other than the issuance of said policy, asserts, that, at the date or dates of shipment and delivery of merchandise by the plaintiff to the Midwest Engine Company, that company did not have one of the capital ratings, and its accompanying credit rating, tabulated in said policy, in the latest published book of the Bradstreet Mercantile Agency, and that for that reason the account of the Midwest Engine Company was not covered under the policy. While also denying that the Bailor Plow Company account was covered under said policy, defendant asserts that, even if that loss was covered, there is no liability because it is less than the amount which was agreed should be plaintiff's own loss and be borne by it.
Plaintiff by reply avers that the goods, wares, and merchandise shipped by plaintiff to the Midwest Engine Company were specially manufactured and fabricated by the plaintiff for the Midwest Engine Company, and that at the time when the orders therefor were received by plaintiff, and at the time specified in said orders for delivery, and at the time of the manufacture and fabrication of the material called for by said orders, the Midwest Engine Company had one of the capital ratings and its accompanying credit ratings set forth in the Bradstreet Mercantile Agency; that, within the meaning of said policy, the terms "shipment and delivery" were tantamount and equivalent to the fabrication and setting aside of the said material by the plaintiff for the Midwest Engine Company, and that from and after the time of fabrication of said material by the plaintiff for the Midwest Engine Company said material became and was the property of the Midwest Engine Company, and within the meaning of said policy was shipped and delivered to the said the Midwest Engine Company. It is further asserted that during the time of said credit rating plaintiff had completed the manufacture of said merchandise, and was ready, willing, and able to deliver same, but that the Midwest Engine Company refused to accept the same at the time specified in its orders for delivery.
A motion of the defendant for judgment on the pleadings was overruled and the case went to trial. A motion of the defendant to direct a verdict, duly made, was overruled, and the cause was submitted to the jury, which returned a verdict in favor of the plaintiff, upon which judgment was rendered, and that judgment was affirmed by the Court of Appeals. Thereafter, upon motion, the cause was ordered certified to this court for review.
Messrs. Grossman Grossman and Mr. Louis H. Winch, for plaintiff in error.
Messrs. Mooney, Hahn, Loeser Keough, Mr. John A. Cline and Mr. Irvin N. Loeser, for defendant in error.
It is to be observed that the claim of plaintiff is based upon losses sustained by it upon accounts with two of its customers. We are concerned here only with one of them, and the question presented is whether the losses claimed to have been sustained through the insolvency of the Midwest Engine Company are covered by the policy sued upon.
The answer to that question is to be determined from an examination of the terms of the policy, which is the contract between the parties. There was no disputed extrinsic evidence which would control or affect the construction of the contract; the issue therefore was and is one for the court.
The particular question presented is the meaning of the term, "date of shipment and delivery," as used in the policy. It is elementary that all the provisions of a contract are to be taken into consideration in determining the meaning and effect of the instrument. It seems necessary, however, to consider only the portions of the policy set out in the foregoing statement to arrive at a conclusion which is determinative of the issue here presented.
The first paragraph of the policy clearly specifies the loss insured against, for it is there stated:
"Such loss to occur * * * on bona fide sales of merchandise * * * shipped and delivered in the usual course of the insured's business * * * during the period of this Policy."
Immediately following this paragraph with a heading entitled, "Conditions Under Which This Policy is Issued and Accepted," is a paragraph entitled, "Coverage," which must be regarded as a provision of exclusion and limitation. It is there specified that:
"No account is covered under this Policy unless the debtor had at the date of shipment and delivery one of the capital ratings and its accompanying credit rating, tabulated herein below in the latest published book of the Bradstreet Mercantile Agency; said book, for the purposes of this Policy shall be considered as published on the first day of the month borne by said book, and the ratings in said book are to govern on all shipments and deliveries made on and after the first day of the month borne by said book to the first day of the month borne by the next subsequent book."
It is disclosed that the shipments and deliveries of the merchandise embraced in plaintiff's account against the Midwest Engine Company were made subsequent to the time when that company lost its credit rating, under the terms of the policy, and that the remainder of plaintiff's claim here sued upon, except an insignificant item which of itself cannot affect the issue, is not based upon merchandise shipped and delivered at any time, but is based upon the cancellation agreement made and entered into on March 9, 1921, and a further cancellation charge entered upon the books of the plaintiff March 26, 1921, both of which concededly were subsequent to March 1, 1921, when the Midwest Engine Company lost its required credit rating, in the absence of which, under the specific terms of the coverage clause, "no account is covered under this policy."
The contention of the plaintiff that the loss it sustained upon said account is covered by the policy is based upon the view that "the date of shipment and delivery" has reference, not to the date of actual shipment and delivery by the plaintiff to the Midwest Engine Company, but to the time specified in its contract with the Midwest Engine Company for completion and delivery of the merchandise in question. Such conclusion, however, is wholly unjustified from any consideration of the terms of the policy. It nowhere refers to a contract for manufacture, or for future delivery, or to any other contract between the insured and any of its debtors or customers. Under the clear and specific terms of its policy, the defendant insures only against loss which occurs from bona fide sales of merchandise shipped and delivered in the usual course of the insured's business, and then when such policy subsequently provides that the credit rating report referred to is to govern on all shipments and deliveries there seems no escape from the conclusion that the insured is indemnified against loss only in the event of shipment and delivery of merchandise to its customer while such customer has the required rating, as expressly provided in the policy. Shipments and deliveries of merchandise to a customer who did not then have the required rating could be made by the insured only at its own risk.
It is further contended that the merchandise in question was manufactured upon orders from the Midwest Engine Company, and that actual shipments and deliveries were delayed by reason of the refusal of the Midwest Engine Company to accept deliveries at the times specified therefor in the contract. It is disclosed that the Midwest Engine Company required deliveries to be deferred, but the plaintiff continued to accept orders from that company, and later, by mutual arrangement, retained the merchandise in question in its possession and under its control until after the Midwest Engine Company had lost its required credit rating. Damages may have been sustained by plaintiff by reason of breach of contract, but it cannot be claimed that such damage is covered by the terms of this policy. Nor can the claim be sustained that from and after the manufacture of said merchandise the same was set aside for and became the property of the Midwest Engine Company and thereby presents a situation "tantamount to shipment and delivery." No storage was charged or attempted to be charged against the Midwest Engine Company, and no charge for said merchandise was entered upon the books of the company until the same was actually delivered to the transportation company, which, as above stated, was subsequent to the date when plaintiff's debtor lost its required credit rating.
It is contended that because of the submission of certain interrogatories to the jury upon its request the defendant is conclusively bound by answers thereto and cannot question the correctness of such findings. Over the objection and exception of the defendant, the trial court submitted to the jury for its determination the meaning of the term, "date of shipment and delivery." The defendant, of course, was not concluded by the answer of the jury to an interrogatory so submitted wherein it found that "date of shipment and delivery," as used in the policy, meant "when merchandise was ready for shipment."
Under the undisputed facts, plaintiff was not entitled to recover upon the policy in question, and the trial court should have directed a verdict for the defendant.
Judgment reversed.
MARSHALL, C.J., DAY, ALLEN, KINKADE, ROBINSON and JONES, JJ., concur.