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Crown Fabrics Corp. v. Northern Assurance Co.

Decided: January 25, 1940.

CROWN FABRICS CORP., A CORPORATION OF THE STATE OF NEW YORK, M. LOWENSTEIN & SONS, INC., A CORPORATION OF THE STATE OF NEW YORK, AND CLARENCE S. BROWN & CO., A CORPORATION OF THE STATE OF NEW YORK, PLAINTIFFS-APPELLANTS,
v.
NORTHERN ASSURANCE COMPANY, LTD., A CORPORATION, DEFENDANT-RESPONDENT



On appeal from the Supreme Court.

For the plaintiffs-appellants, Laurence Semel.

For the defendant-respondent, Winne & Banta (Horace F. Banta).

Case

The opinion of the court was delivered by

CASE, J. The appeal is from a judgment entered in the Supreme Court in favor of the defendant and against the plaintiffs following the striking of the complaint upon the ground that it did not disclose a cause of action. The question is whether the plaintiffs were insured under a policy issued by the defendant to D. & S. Processing Company.

The complaint contains three counts stating, respectively, the claims of the several plaintiff corporations. The major

allegation, common to all of the counts, is that the defendant entered into a written agreement with the D. & S. Processing Company, a corporation of this state, wherein it agreed to insure the personal property of all of the customers of the D. & S. Processing Company against enumerated hazards, including sprinkler leakage, while that property was on the premises of the named assured at Clifton, and that while merchandise belonging to the plaintiff corporations was in the possession and custody of that company at the mentioned premises for the purpose of being processed it was damaged and destroyed as a result of sprinkler leakage.

The policy was issued to the D. & S. Processing Company. A clause therein contains this warranty: "Ownership. Warranted that the property insured hereunder is at all times owned solely and unconditionally by the Assured, unless endorsed hereon in writing to the contrary." There is no doubt that, stripped of endorsements, the policy insured only the D. & S. Processing Company. The loss, if any, was made "payable to the Assured." In the repeated use throughout the original policy of the word "assured," it is always spelled with the initial letter capitalized, viz., "Assured," thereby individualizing the named person as the one, and the only one, who carried the benefit of the insurance and who could collect the loss, if any, thereunder. We start, therefore, with the distinct understanding that insured interest is that of the contracting party, namely, the D. & S. Processing Company, and that that interest was only in those goods which were owned solely and unconditionally by that company unless endorsed on the policy to the contrary. So we pass to the endorsements to ascertain whether they enlarge the insured interest of the D. & S. Processing Company to goods which it does not own solely and unconditionally; and we find these endorsements:

"In consideration of an Additional Premium of $178.00, it is hereby understood and agreed that this policy is extended to cover for not exceeding $25,000 against the risks of Theft, Burglary, Pilferage, Larceny, Robbery and Hold-up, on the following property:

"Customers' Merchandise (including assured's charges for processing and/or handling and/or storage), sheet copper, copper sleeves, copper sleeve patterns, steel dies, being the property of the assured and/or others, also all materials and supplies owned by the assured consisting principally of dye stuffs, flock, paints, lacquers and other materials all while on the premises of the assured, situate Ann & Grunwald Streets, Clifton, N.J.

"In consideration of an Additional Premium of $100.00, this policy is extended to cover for $150,000.00 on customer's merchandise, including processing charges and/or handling and/or storage charges thereon while on the premises of the assured, situate Ann & Grunwald Sts., Clifton, N.J., against the risks of fire, Lightning and Sprinkler Leakage, including tank precipitation, explosion, water damage, aircraft, tornado, ...


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