Petition for A Writ of Certiorari — Nieschlag & Co. v. Atlantic Mutual Insurance

Supreme Court of the United States

October Term, 1941.

No Joba 116

NIESCHLAG & CO., INC,,

Petitioner,

AGAINST

ATLANTIC MUTUAL INSURANCE COMPANY,

Respondent.

Petition and Brief for Writ of Ceviiorari to

the United States Circuit Court of

Appeals for the Second Circuit.

Harotp T. Epwasrps,

Cuarues A. Exuis,

Counsel for Petitioner.

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INDEX.

PAGE

| ay eee PrP ra anya re tn CMO Re NT Pa meres 1

Summary Statement of Matter Involved ...... 1

Statement as to Jurisdiction .................. 3

DU Ne hap iiis ks Seis esa ley 5 haenbous 4

ee ee rear eA 7

Reasons for Granting the Writ .............. 21

TUE is ex ken dhe ek kas Ae kb bd Os ROOD 24

Summary of conflicting evidence as to surround-

ing circumstances, facts and intent; defend-

ant’s suppressions of evidence thereof and of

witnesses; and the admissions and issues made

but ignored by the Court .................. 24

Point I.—The court erred in the construc-

tion and effect given to the bankruptcy

reclamation proceedings order .......... 33

Point II.—Contrary to Rules 56, 38, 39 and

the Seventh Amendment, the Court sub-

stituted itself for the jury, determined

issues depending on credibility of wit-

nesses, effect and weight of evidence and

contractual intent, ignored defendant’s

suppression of facts and witnesses, and

ignored and failed to treat petitioner’s

opposing papers as proving the facts, cir-

cumstances and intent shown therein.

—

MON IE IM PR fT TIE IE ELIT eT

il

INDEX.

Petitioner’s cross-motion did not waive

its opposition to defendant’s motion, nor

its right to jury trial; and the evidence

either entitles petitioner to judgment as

matter of law or requires trial by jury

Pornr I1].—The meaning of ‘‘non-delivery”’

under warehouse receipts, other commer-

cial contracts and applicable law and trade

usage is either a conclusive or an admis-

sible meaning; and either entitles peti-

tioner to judgment as matter of law, or

requires trial by jury under Rules 56, 38,

39 and the Seventh Amendment ........--

Point IV.—The court committed error in

treating the broad meaning of the spe-

cially added clauses of the negotiable cer-

tificates as being qualified and cut down

by recourse to clauses of the open policy

having to do with insurances such as fire

Por V.—The court erred in holding in-

applicable the principle that the form used

should be construed most strongly against

the insurer ........-eeeecsccceseserreees

Pe | un con ann bess eae ners eis seseseescaseee's

ax Se ad VETOty CEC ra cern aT Fee

PAGE

35

INDEX. iii

CASES CITED.

PAGE

Aetna Ins. Co. v. Kennedy, 301 U.S. 389 ....2, 4, 9, 11, 36

Aetna Casualty & Surety Co. v. National Bank

of Tacoma, 59 F. (2d) 493 ........... 2, 3, 12, 15, 16, 17,

19, 20, 35, 36, 37,

38, 41, 48, 44

Aetna Ins. Co. v. Willys Overland, Inc., 288 Fed.

Mh Gg Gin 05k sed bk 04 EEE A EY ORES NA 9, 14, 45

Aldrich v. N. Y. Life Insurance Co., 235 N. Y. 214 14

Armours v. Michigan Central R. R. Co., 65 N. Y.

Ee a ea ad is 10, 16, 35, 43

Aschenbrenner v. v. S. F. & G. Co., 292 U. S. 80... 16, 42

Assets Realization Co. v. Roth, 226 N. Y. 370 .... 19,44

Baldwin v. Childs, 249 N. Y. 212 ............ ere 20

Baylis v. Travellers Ins. Co., 113 U. S. 316 ....12, 20, 37

Bekins v. Lindsay-Strathmore Irr. Dist., 114 F.

(2d) 680, cert. den. 312 U. S. 693, rehearing den.

UE A We SO cau k st hevdevewkaneiescchevacacs 15

Bidwell v. North Western Ins. Co., 24 N. Y. 302 15

Bird v. St. Paul F. & M. Ins. Co., 224 N. Y. 47 ..... 19, 44

Bowman v. Loperena, 311 U. S. 262 ............. 4

Brooks v. People’s Bank, 233 N. Y. 87 ...... 12, 36, 45

Bushey & Sons v. American Ins. Co., 237 N. Y.

RRR PONE ip tiSy e yepiee We et pe ea emey trae ee 7, 10, 20, 30, 46

Columbian Nat. Life Ins. Co. v. Rodgers, 116 F.

(2d) 705, cert. den. 313 U.S. 561 ............4.- 13, 40

Compania de Navegacion v. Firemens Fund Ins.

a es a a eT eer rrr ee 11, 37, 38, 42

Comptoir National d’Escompte de Paris v. The

Law Car & General, reported in Macgillivray

on Insurance Law, 2d Ed. 504 .............. 15, 17, 41

Cone v. Niagara Fire Ins. Co., 60 N. Y. 619 ...... 19

Conrow v. Little, 115 N. Y. 387 ................ 13, 39

iv INDEX.

PAGE

Davis v. Roper Lumber Co., 269 U. ee Bee uses acces 16, 42

Donohue v. Vosper, 243 U. S. 59 ...----eeeeees 10, 34

Eddy v. Farmers Mutual Ins. Co., 20 App. Div.

G0 WE Ws ca a kn en aes rents one nes 14

Equitable Life Ins. Co. v. Halsey Stuart, 312

Th. We We: cic ca ctaccscaskswirp cueesss se 14, 25, 26, 41

Empire Development Co. v. Title G. & Tr. Co.,

Oe BE ck ccahekenrsnv ees teseses shee wees 19

Fidelity & Deposit Co. v. Queens Co. Trust Co.,

a Ae errr tere 13, 40

Filley v. Pope, 115 U.S. Oe acacia seh to 19

First National Bank v. National Surety Co., 228

ee Oe BOM re ere TT The i 19, 44

Frost, A. C. & Co. v. Coeur D’Alene Mines Corp.,

a a Arn rs retrace Sire 19

General Interest Ins. Co. v. Ruggles, 12 Wheat.

£95 We BP GOO cow onc eee ee cas ceren ee cnees 15, 18, 19, 41

Georgia, Fla. & Ala. Ry. Co. v. Blish Milling Co.,

Cie & Sereerrrrre ter oa 16, 42

Glanzer v. Shepard, 233 N. Y. 236 ...---+--++-+: 13, 38

Great Lakes Transit Corp. v. Interstate Steamship

Co., 301 U. S. 646 ....--- eee e ee eeces 18, 19, 36, 39, 44

Guaranty Co. v. Pressed Brick Co., 191 U. S. 461.. 13, 41

Gunning v. Cooley, 281 ee MS Bererrererre re. © 11, 36

Gypsy Oil Co. v. Escoe, 975 U.S. 498 ....---eeee 4

Hancox v. Fishing Insurance Co., 3 Sumn. 132 ... 19,42

Hanover National Bank v. American Dock & Trust

Cg, 200 Mi. FAS on nkngs gs ererene ses ses eto 16, 48

Harrison v. Fortlage, 161 U. S. DD caseven sanders 19

Hazard’s Adm. v. New England Marine Ins. Co.,

8 Pet. [33 U. S.] 567 ....-ceeeeeceecececceees 43

Hooper v. Robinson, 98 TT, BGO chissnvdetevens 18

a Te

INDEX. v

PAGE

Imperial Shale Brick Co. v. Jewett, 169 N. Y. 143.. 14, 45

i ee ee ee rr 19

In re Kaplan v. Myers, 241 F. 459 .............. 10, 35

In re BOG, SD Fs. TIRE: Bee ac oividvcccssnecescione 10, 34

Interstate Cireuit v. U. S., 806 U. S. 208. .12, 14, 25, 26, 41

Insurance Cos. v. Thompson, 95 U. S. 547 ......... 19

Insurance Co. v. Transportation Co., 12 Wall [79

1 oe | ORT ee re re rer rr re ry errr err 19, 44

Jacob v. City of New York, No. 389, decided March

A Sika cane dca dedasekeeteny eens eetees 20

Joseph v. P. Viane, Inc., 118 Mise. (N. Y.) 344,

affd. SOG Aen Drv. (IR. TH) OD icc cnc iscveuces 16, 43

Kavanaugh v. Kavanaugh Knitting Mills, 226 N. Y.

OE PAR Rr ee Oren ane oe per eae 12, 37

Keyes v. Andersen, 203 FP. 766 2... 0 occ cee ceccais 14, 41

Knott v. Security Mutual Life Ins. Co., 161 Mo.

Bp. TP ion 65 oan Kas Hea hae as A Ree 15

Karns v. Thomson & McKinnon, 22 F. Supp. 442

App. dism’d., 102 F. (2d) 993 ........ REA 10, 35

Little, et al. v. General Insurance Co. of America,

decided by Hulbert, D. J., D. C. S. D. N. Y., May 7,

1942 [net yet. POOTOOED iiciccvauces sesiuacs 6, 10, 33

Lucena v. Crawford, 2 Bos. & Pul. 75, 7 Term. 13 18

Luikart v. Mass. Bonding & Insurance Co., J29

Mae: FTE. kus Kink vasbankeetheneeekteseumans 17

Maine Lumber Co. v. Maryland Casualty Co., 216

App. Div. (N. Y.) 35, aff’d 244 N. Y. 537 ....17, 19, 44

Maryland Casualty Co. v. Washington Loan &

Bankine Os., IGT Ge. SOE sc ac casdvusesscdussces 16, 43

McNamee v. Hunt, 87 Fed. 298 .............ee0: 11, 34

MeWilliams v. Mason, 31 N. Y. 294 .............. 15, 41

vi INDEX.

PAGE

Moore v. Capital National Bank of Lansing, 274

ee ng ieee On eA RE RHE NS FEM REET ENE 19, 44

M. & T. Trust Co. v. Export S. S. Corp., 262

N. Y. 92, cert. den. 290 U. S. 650 ......--+++. 16, 42

National Bank v. Ins. Co., 95 U. S. 673 ...-.+.++-: 13, 39

National Bank of Tacoma v. Aetna Casualty &

Surety Co., 161 Wash. 239 ....-.--.+eeeeer eres 17, 19, 44

National Filtering Oil Co. v. Citizens Ins. Co.,

OG N. Ye GOB 2... cc cssccncvccccvccscesccesnee 19

Nellis v. Western Life Indemnity Co., 207 ro

COREE e Eee rns fo we eter ei er 13, 14, 39

O’Brien v. North River Co., 212 F. 102 ...... 14, 15, 41

Ocean Accident & Guarantee Corp. v. Old National

Bank, 4 F. (2d) 753 ....-. eee eee cece eee ceees 10, 34

Oceanic Steam Navigation Co., Ltd. v. Evans, 40

Comm. Cas., 108 Revg. 50 L. T. R. 206 ...... 15

Phoenix Ins. Co. v. DeMonchy [H. L.], 49 : mere 8

543 [C. of A.] 44 T. L. R. 364 .....--0--- +e 9, 14, 45

Piedmont Hotel v. Nettleton Co., 263 5... ...:. me

Pitney v. Glens Falls Ins. Co., G6 N.Y. 6 2.000 12, 37

Poswick v. Cutten, 258 App. Div. (N. Y.) 218 affd.

i a oe. | ae er ee 10, 35

Pratt v. N. Y. Central Ins. Co., 59 N. Y¥. 505 .... 13,3

Queen Ins. Co. v. Globe, 263 U. S. 487 ...---- +++: 45

Rankin v. Tygard, 198 F. 795 ....+--eeeee seers 10, 35

Rey v. Simpson, 22 How. (63 U. S.) 341 ....--- 12, 37

Reynolds v. Commerce Fire Ins. Co., 47 N. Y. 597.. 18,39

Rice Oil Co. v. Atlas Assur. Co., 102 F. (2d) 561.. 18,39

Richardson v. City of Boston, 19 How. (60 U. 8S.)

Oe oh ls VANE RR eH as Uae E LOTT Sed eST ERS 11, 34

Roberts v. Chittenden, 88 N. Y. 33 ....--+-++++00> 16, 42

Rochester & C. T. R. Co. v. Paviour, 164 N. Y.

CSO eRe MD OEE PETE TT 2 ra ie Ae L 13, 40

INDEX. vii

PAGE

Rohrback v. Germania Fire Ins. Co., 62 N. Y. 47... 18

Rosenberg v. P. Viane, Inc., 109 Mise. (N. Y.) 215 16, 43

Rosenkranz v. Schreiber Brewing Co., 287 N. Y.

WE RO buds pac cua es cok aN ak choc eein ee 12, 37

Rothchild v. Frank, 14 App. Div. (N. Y.) 399 ..... 15, 40

Runkle v. Burnham, 153 U.S. 216 .......... 14, 25, 26, 41

Russell v. Place, 94 U. S. 606 ................... 10, 34

Ryan v. U. S., 19 Wall. [86 U. S.] 514 ...... 1, 15, 16, 17,

20, 41, 43

Schreiner v. High Court of I. C. C. of F., 35 Il.

MN IPG te er syns dees oe da vases. 10, 34

Skinner v. Norman, 165 N. Y. 565 ............... 13, 39

Boma vy. Tigmareia, 277 NW, Y. B58: occ vcw cs 13, 40

Stewart v. Southern Ry. Co., 86 L. E. 548 (ad-

i ye A, AR SNe A rg aE 14

Stirling v. Vaughan, 11 East. 529 ............... 19

mock W. Emmeee, 10 GO TE Bb icc ck oseecccnce 19

Supreme Lodge, K. P. v. Kalinski, 163 U. S. 289 .. 13, 40

mee Maree Zamen, T00 U Ie. oo oo ee be ks ccs 45

ae Wm © MUI OE his o5 be ideo kb dew ds 16, 42

The G. BR. Booth, 171 U. 8. 450 ......... 6, 9, 16, 17, 42, 44

Thomas v. Taggart, 209 U. S. 385 .............. 10, 34

Thompson v. Taylor, 6 Term., 478 ............... 19

Ultramares Corp. v. Touche, 255 N. Y. 170 ...... 13

Union Trust Co. v. wae o7 Ma Es RR i ws 12, 37

OU. @. Patevan, B00 VoD: Bib cos oss cick cckaccs 18

U. S. Rubber Co. v. Silverstein, 229 N. Y. 168 ... 12,37

U. S. v. Seminole Nation, 299 U. S. 417 ........ 4

Utica City National Bank v. Gunn, 222 N. Y. 204 12, 37

woortie ¥. Clmetend, G6 BF TG ooo sbivccas 13, 39

Waters v. Merchants Louisville Ins. Co., 11 Pet.

Ge ee Se 0.5 ie WARY eae as 19

—P

viii INDEX.

PAGE

Western N. Y. Life Ins. Co. v. Clinton, 66 a F

ae eee pe ret re yee Tony etn, 14, 15, 39, 41

Wolfe v. Security Fire Ins. Co., 39 N. Y. 49 .... 13, 39

Wood v. Guarantee Trust & Safe Deposit Co., 128

oe Se Se rer ee ets nce 12, 37

Wood, E. K., Lumber Co. v. Andersen, 81 F. (2d)

161 cert. den. 297 U. S. 723 «2... ee cece e ee eens 11, 36

OTHER AUTHORITIES CITED.

Federal Rules of Civil Procedure, Rules 56, 38, 39

1, 4, 7, 8, 9, 12, 21,

22, 35, 36, 41, 42

Constitution of the United States, Seventh Amend-

ee aco came xen Renee en 1, 4, 12, 21, 22, 35, 36, 41, 42

ae) ) ee Pe ee Eee Te 4

Winter on Marine Insurance, First Edition (1919) 17

Winter on Marine Insurance, Second Edition

(1929) ......s. kis wacvsauss hevebeasan 17, 18, 26, 29, 39

Webster’s New International Dictionary ....... 31

RRMA Reeth

Supreme Court of the United States

Ocroser Term, 1941.

Niescuiac & Co., Inc.,

Petitioner,

AGAINST

Atuantic Mutruaut Insurance

Company,

Respondent.

Petition for Writ of Certiorari to the United States Circuit

Court of Appeals for the Second Circuit.

To rue HonoraBLte THE CHIEF JUSTICE AND ASSOCIATE

JUSTICES OF THE SUPREME CouRT oF THE UNITED States:

Summary Statement of Matter Involved:

This case is the first to reach this Court involving

(1) negotiable ‘‘non-delivery’’ insurances (cf. Ryan v.

U. S., 19 Wall. [86 U. S.] 514); (2) an omnibus reclama-

tion proceedings order in bankruptcy collaterally pleaded

by a ‘‘non-delivery’’ insurer; (3) the right of a Federal

Court, under Rules 56, 38 and 39 of the Federal Rules

of Civil Procedure and the Seventh Amendment to the

Constitution, to determine issues of fact and intent on

contested motion and cross-motion for summary judg-

ph cs *

NCR A Rt RT MORAN OT ME NORM IN NI

2

ment made in a jury case (cf. Aetna Ins. Co. v. Kennedy,

301 U. S. 389).

The action (between corporations having diverse citi-

zenship, f. 11) is against an insurance company for plain-

tiff’s damage by ‘‘non-delivery’? on May 24, 1939, of

47,480 bags of cocoa beans, for delivery of which, and

for indemnity against loss by ‘‘non-delivery’’ of which,

respectively, plaintiff held as endorsee-pledgee-transferee

for value ten negotiable or ‘‘order’’ warehouse receipts

of Harbor Stores Corporation, incontestible under New

York law, and the sixteen negotiable or ‘‘order’’ insur-

ance contracts sued on, by which, in addition to under-

writing other perils and risks, defendant agreed by spe-

cially added clauses ‘‘also to insure’’, effective on their

respective dates, the risk of ‘‘damage a.

delivery’? of 47,480 bags of cocoa beans, identically de-

scribed in the two sets of documents.

The making and issuance of both sets of instruments,

the warehouse receipts and the insurance contracts, had

been procured by a third party corporation, Garcia

Sugars Corporation, in negotiable or ‘‘order”’ form, and

endorsed to plaintiff for value. The certificates were so

obtained for the purpose, disclosed by the Garcia Com-

pany to defendant, of being endorsed over and pledged

to plaintiff, as a bona fide holder for value, as collateral

security and indemnity to plaintiff (cf. Aetna Casualty

& Surety Co. v. National Bank of Tacoma, CCA 9, 59 F.

|2d] 493, 495), for loans to and contracts assumed for

Garcia Sugars Corporation by plaintiff (viz., for loans

totaling $216,200 and contracts by which plaintiff was

bound under the rules of the New York Cocoa Exchange

to members thereof for delivery in September of 47,480

bags of cocoa beans); and pursuant to defendant’s own

purpose to induce plaintiff to forego obtaining from

other insurers contracts insuring these broad risks and

eww a = a. Se, ee el —— ss ee eee, Te Ne oe we we ee Te ee

3

conditions, which would cause Garcia’s brokers and de-

fendant to ‘‘both lese the business’’ (ff. 378-379).

The Seventh Defense (f. 262) was withdrawn on argu-

ment in the District Court; and the only theories of de-

fense involve no dispute of plaintilf’s bona fide status,

genuine non-delivery risk and non-delivery loss, but the

contention that defendant intended only to insure

‘‘goods’? and not (as its certificates state, ‘‘also to in-

sure’ from date) the ‘‘risk of non-delivery’’ alleged by

plaintiff (ef. Comp. pars. 45, 46, ff. 66-68 and Amended

Answ., pars. 14, 15, ff. 286-239), and defendant’s plea of

a reclamation proceedings order, which it contends but

offered no other proof to show to be res adjudicata as to

insurable interest in ‘‘goods’’. Defendant does not con-

tend that plaintiff had no insurable interest in the risk

of non-delivery (Cf. Aetna Casualty & Surety Co. v.

National Bank of Tacoma, CCA 9, 59 F. [2d] 498).

Petitioner prays that a Writ of Certiorari issue to

review a decision and judgment of the United States

Cireuit Court of Appeals for the Second Circuit, which

affirmed ‘fon opinion below’’ an order and judgment of

the United States District Court for the Southern Dis-

trict of New York, which granted a motion by defendant

made under Rule 56 for summary judgment, and dis-

missed plaintiff’s complaint with costs, and denied a

cross-motion by plaintiff under Rule 56 for summary

judgment. Petitioner seeks review thereof in both re-

spects, on fundamental and important novel questions

strikingly presented by the record,

Statement as to Jurisdiction.

The order and judgment of the Circuit Court of Ap-

peals was entered on the 7th day of March, 1942 (R., p.

/8( 48%). The said Court had previously filed its opinion

of affirmance, February 14, 1942 (R., p. 161); petitioner

4

thereafter had filed, pursuant to Rule XXVII of said

Court, a petition for rehearng February 28, 1942 (R., p.

162), which the Court had denied March 5, 1942. The

Court’s jurisdiction to entertain and grant this petition

is provided by Section 240 (a) of the Judicial Code as

amended by the Act of February 13, 1925, Chapter 229,

Section 1, 43 Stat. 938, 28 U. S. Cc. A., Section 347 (a)

(Gypsy Oil Co. v. Escoe, 275 U. S. 498; U. S. v. Seminole

Nation, 299 U. S. 417, 420-421; Bowman v. Loperena, 311

U. S. 262, 266).

Decision Below.

The only affidavits defendant filed were those ‘‘in

support of said motion for defendant’? (f. 453); it filed

no subsequent affidavits opposing plaintiff ’s cross-motion

nor denying the different facts shown in plaintiff’s aff-

davits, and appears to concede that if under the facts

shown in plaintiff’s undenied papers the insurances are

interpretable as special agreements ‘‘also to insure”’

from date the plaintiff’s ‘‘risk of non-delivery’’, as al-

leged by plaintiff, or if the reclamation proceedings order

is not itself res adjudicata or conclusive evidence of lack

of insurable interest, defendant is liable and makes no

defense.

But the affidavits filed by plaintiff, as the notice of

cross-motion, the principal affidavit and the Order for

Judgment show, were submitted both in opposition to the

motion made by defendant and in support of plaintiff’s

cross-motion, plaintiff praying specifically for denial of

defendant’s motion (ff. 336, 354, 494; ef. Aetna Ins. Co. v.

Kennedy, supra).

The Court’s opinion (ff. 435-450; 43 F. Supp. 797; 126

F. [2d] 834), contrary we submit to Rules 56, 38 and 39

and the Seventh Amendment, is replete with findings of

fact, painting as the surrounding facts and circumstances

ate

_—

5

the incomplete and misleading picture painted in Smith’s

affidavit for defendant (ff. 296-315); and conclusions in-

compatible with facts suppressed by defendant ‘but

proved by plaintiff are drawn as though the case did not

involve such facts.

The parts taken by defendant’s subordinate under-

writers Thurnall and Brust, their understanding of the

risk, their refusals and reasons for refusing to under-

write it before Smith stepped in (ff. 399-400, 403), their

subsequent acts in drafting and issuing the certificates

(ff. 404, 407, 408), insisting on and obtaining from the

Garcia Company ‘‘lost policy’’ release indemnities against

secretly outstanding prior insurances describing the same

quantities of beans and pledged to others (ff. 394-395,

406, 408-409), as shown in plaintiff’s opposing affidavits

and undenied, and the failure of Thurnall and Brust to

file any affidavits, are not noticed by the Court. The

pretense of inspections actually made are mentioned (f.

449) as indicative of defendant’s considering the risk

limited; with no mention by the Court of defendant’s

original insistence on a special ‘‘complete inspection’’ to

be made by outside inspectors at Garcia’s expense (ff.

383, 402-403), with opposite implication, and its volun-

tary waiver (f. 383). Defendant’s purpose to induce

plaintiff to forego obtaining or demands that ‘‘non-

delivery’’ insurances be obtained elsewhere lest defend-

ant thereby lose the Garcia Company’s business (f. 379),

is ignored.

Despite defendant’s admissions that it wrote for

Garcia, to enable paper pledge to plaintiff, and not on

any representations or inducements from plaintiff (ff.

237-238, 239; pars. 13, 14, 16), it is held factually ‘‘rea-

sonable for defendant to believe’’ (f. 444) that the in-

surances were to be as on goods which plaintiff ‘‘owned

or title to which it held’’ (ff. 449, 445); thereby burden-

ing plaintiff with conditions and warranties inconsistent

with the facts, and which defendant admits were not

made (f. 237).

The omnibus reclamation proceedings order made in

bankruptcy proceedings of the warehouseman, collaterally

pleaded by defendant, and which adjudged only that of

the residue of goods in general still in the bankrupt

warehouseman’s possession ‘‘on the 29th day of May,

1939, the date when the above named bankrupt was duly

adjudicated as such, or at any time thereafter’’ (f. 277),

viz., five days after the non-delivery on May 24, 1939

(Comp., par. 59, ff. 71-72; undenied) none were plain-

tiff’s, is treated as decisive (cf. Little, et al. v. General

Ins. Co. of America, decided by Hulbert, D. J., D. C. 8.

D., N. Y., May 7, 1942, holding the opposite).

Despite the fact that defendant’s own ‘‘inspection’’

evidence showed that ‘‘the only inspections’’ (ff 320, 327)

were made in March and April, 1939, the last more than

a month previous to bankruptcy, and without any evi-

dence whatever as to what beans were in the warehouse

on May 29, 1939, affected by the order, it is treated at

the outset as establishing, contrary to its terms, that

plaintiff had no insurable interest in ‘‘the beans’’ (f.

440). The issue then is treated, not as that of what

‘<non-delivery”’ itself means as risk and cause of loss in

the specially added clauses, and not of whether plaintiff's

undisputed ‘‘non-delivery”’ risk and ‘‘non-delivery”’ loss

and valid cause of action therefor were indemnified, but

as solely whether the insurances protected plaintiff

‘‘against non-delivery of goods in which it did not have

any insurable interest”’ (ff. 441-442) or ‘‘against the

fraudulent issuance of warehouse receipts’’ (f. 446).

The meaning of ‘‘non-delivery”’ under warehouse re-

ceipts and similar commercial contracts, including other

forms of indemnity insurance contracts, as an admissible

construction (The G. R. Booth, 171 U. S. 450, 459-460),

is ignored.

7

Although ignoring throughout its opinion those ‘‘sur-

rounding cireumstances’’ shown by plaintiff and most elo-

quent of the intent of the insurances, the court states

that ‘‘the question is close as to whether or not the

meaning of ‘non-delivery’ in the light of the surrounding

circumstances should be left to the jury for interpreta-

tion’’ (ff. 449-450), i. e., even ‘‘in the light of’ the in-

complete and false picture painted by Smith, which the

Court accepted. And the decision concludes, contrary

to the evidence, that ‘‘In addition the plaintiff itself

insisted upon the form used. For these reasons, the

principle that tlre form should be construed most strongly

against the insurer should be held inapplicable’’ (f. 450;

ef. contra, Bushey & Sons v. American Ins. Co., 237 N. Y.

24, 29).

Questions Presented.

Broadly stated, the principal questions are:

First: Where in an action on negotiable ‘‘non-deliv-

ery’’ insurances defendant pleads as a defense, and on

motion for summary judgment under Rule 56 offers as

sole proof of lack of insurable interest, risk and loss, an

order made in bankruptcy proceedings of the warehouse-

man, in omnibus reclamation proceedings therein, which

merely adjudged that of the residue of goods in the

warehouse on May 29, 1939, the date of the adjudication

of bankruptcy (five days later than the non-delivery on

May 24, 1939), and which came into the possession of the

Receivers or Trustees, none were cocoa beans of which

plaintiff was owner or entitled to possession (ff. 277-278),

but did not purport either to pass on the ‘‘non-delivery’’

damage claim of plaintiff or to identify any of the beans

then on hand as those described in plaintiff’s receipts or

insurances;

Does such order constitute either (1) res adjudicata

or evidence conclusively rebutting or (2) any evidence

whatever rebutting plaintiff’s undenied bona fide interest,

risk and actual loss by ‘‘non-delivery”’, or showing lack

of insurable interest and loss?

Srconp: In such an action, wherein a jury trial has

been duly demanded, when on contested motion by de-

fendant and cross-motion by plaintiff for summary judg-

ment under Rule 56 both parties file affidavits on defend-

ant’s motion, purporting to show surrounding facts and

circumstances relied on to establish the intent and mean-

ing of the insurances, and the opposing affidavits for

plaintiff show a picture of surrounding facts and cir-

cumstances, negotiations, underwriting, persons taking

part therein, facts known and risks apprehended by three

of defendant’s underwriters (two of whom gave no affi-

davits for defendant), precautions taken or knowingly

waived by them in checking the risk and procuring indem-

nities in connection therewith, their motives and purpose

in underwriting the risk, and the large special premiums

charged therefor, which is radically different from the

picture represented in defendant’s papers, is inconsistent

with any theory of defense asserted, strongly supports

the construction of the insurances pleaded and urged by

plaintiff, and shows suppression by defendant of vital

facts and its best informed witnesses;

May a Federal Court, under Rules 56, 38 and 39 and

the Seventh Amendment eliminate or ignore plaintiff’s

undenied evidence or determine the issues of fact and

intent by adopting as credible and complete the picture

of surrounding facts and circumstances represented in

defendant’s refuted affidavits, and the theory a single

defendant’s underwriter now professes to have enter-

tained, and grant defendant summary judgment, denying

plaintiff a trial by jury?

—

9

Under Rules 56, 38 and 39 did plaintiff’s cross-moving

authorize this or constitute a waiver of jury trial of the

issues involved on defendant’s opposed motion (Aetna

Ins. Co. v. Kennedy, 301 U.S. 389, 393-394) ?

Tarp: Does not the meaning, understood by and

favorable to the bona fide endorsee, which the word

‘‘non-delivery’’ has under the negotiable warehouse re-

ceipts and the law and trade usage applicable thereto,

and uniformly has under similar commercial contracts

such as bills of lading and the law and trade usage ap-

plicable thereto, and under indemnity insurances written

in the form of indemnity bonds, constitute an admissable

meaning of the word ‘‘non-delivery’’ in the specially

added clauses of the negotiable insurances (The G. R.

Booth, 171 U. S. 450, 459-460), which the Court cannot

disregard or reject as matter of law on contested motion

for summary judgment under Rule 56?

Fourtu: Is the meaning of specially added clauses of

negotiable certificates of insurance, broadly insuring

from date and by their own terms against ‘‘non-deliv-

ery’’, to be qualified, cut down or confused as to a bona

fide endorsee by recourse to clauses of an open policy

having to do with insurances such as fire, from which

‘‘non-delivery’’ was excluded, and which are neither re-

produced nor clearly referred to in the specially added

clauses of the certificates (Phoenix Ins. Co. v. De Monchy

[H. L.] 45 T. L. R. 543 [C. of A.] 44 T. L. R. 364, 366,

368, 369. Aetna Ins. Co. v. Willys Overland, Inc., 288

Fed. 912)?

Firtu: Contrary to the evidence, the Court below held

“‘the plaintiff itself insisted upon the form used”’ (f. 450).

Assuming that be so, does that justify holding ‘‘inap-

plicable’’ the principle that the form used should be con-

10

strued most strongly against the insurer? Should not the

insurances nevertheless be most strongly construed

against the insurer for profit who ‘‘adopted the lan-

guage’’ in covering the risk (Bushey & Sons v. American

Ins. Co., 237 N. Y. 24, 27, 29)?

In holding that the omnibus reclamation proceedings

order (ff. 272-279) adjudged that plaintiff did not own

and was not entitled to possession of ‘‘the beans’’ and

requires holding plaintiff had no insurable interest (ff.

439-440), the decision conflicts directly with such order

itself (ff. 277-279) ; conflicts with the subsequent opposite

decision by Hulbert, D. J., in Little, et al. v. General Ins.

Co. of America, supra, decided May 7, 1942; conflicts

with Armour v. Michigan Central R. R. Co., 65 N. Y. 111,

113, 117, 124, wherein the highest New York Court held

that a replevin judgment pleaded had no effect on the

enforceable right to ‘‘non-delivery’’ damage; conflicts

with the following decisions Ocean Accident & Guarantee

Corp. v. Old National Bk., C. C. A. 6, 4 F. (2d) 753, 755;

Schreiner v. High Court of I. C. O. of F., 35 Tl App.

576; Donohue v. Vosper, 243 U. S. 59, 69; and Russell v.

Place, 94 U. 8. 606, 608, 610, establishing that an adjudi-

cation pleaded collaterally which did not purport to de-

cide the questions raised by the suit in which pleaded is

neither decisive of nor pertinent to such questions; con-

flicts with the following decisions Thomas v. Taggart,

209 U. S. 385; In re Rose, D. C. S. D. Tex., 39 F. (2d)

942: In re Kaplan v. Myers, ©. C. A. 3, 241 F. 459; Korns

vy. Thomson & McKinnon, D. C., D. Minn., 3rd Div. 22

F. Supp. 442, app. dism’d C. C. A. 8, 102 F. (2d) 993;

Rankin v. Tygard, C. C. A. 8, 198 F. 795, and eases cited;

and Poswick v. Cutten, 258 N. Y. App. Div. 218, aff’d

983 N. Y. 660, establishing that claims in reclamation pro-

ceedings and orders made thereon are different, arising

under different sections of the Bankruptcy Laws, from

—_—_

11

proofs of claims (such as one by this plaintiff for ‘‘non-

delivery’? damage) for debts or liabilities, and neither

adjudicate nor bar the latter nor the claimant’s indemnity

rights against third parties when collaterally pleaded;

conflicts with Richardson v. City of Boston, 19 How. (60

U. 8S.) 263, 270 and McNamee v. Hunt, C. C. A. 4, 87 F.

298, 301, establishing that application of descriptive pro-

visions of written instruments ‘‘to external objects de-

scribed therein is the peculiar province of the jury’’;

and conflicts with the meaning of ‘‘non-delivery”’’ risk, as

the subject of special insurance.

The decision, assertedly based on surrounding facts

and circumstances, conflicts with Compania de Navegacion

v. Firemens Fund Ins. Co., 277 U. S. 66, 68-81, in that

special circumstances here of principal significance, under

the Compania decision, are those shown in plaintiff’s

opposing affidavits which the Court ignored.

Petitioner had duly demanded a trial by jury (f. 10)

and it did not waive by its ecross-motion its right in

opposing defendant’s motion to a jury trial on all the

issues if petitioner’s cross-motion were denied (Aetna

Ins. Co. v. Kennedy, supra). On defendant’s motion, peti-

tioner as the ‘‘opposing party’’ was entitled to have its

evidence treated as proving all that it reasonably may be

found sufficient to establish, and to have drawn in its

favor all inferences fairly deducible therefrom (Gunning

v. Cooley, 281 U. S. 90, 94); to have ‘‘all countervailing

evidence’ disregarded (FE. K. Wood Lumber Co. v.

Andersen, C. C. A. 9, 81 F. [2d] 161, 166, cert. den. 297 UT

S. 723); and to have issues that depend on the credibility

of witnesses, and the effect or weight of evidence decided

by a jury (Gunning v. Cooley, supra). Smith, whose

misleading assertions were adopted by the Court as

established and as complete, was an interested witness

whose testimony, even had it remained unrefuted, ‘‘should

12

have been submitted to the jury’’ (Brooks v. People’s

Bank, 233 N. Y. 87, 94). The silence of himself, Brust

and Thurnall on facts which plaintiff’s affidavits showed

Smith had misrepresented or suppressed, was itself

‘‘evidence of the most convincing character”’ (Interstate

Circuit v. U. S., 306 U. S. 208, 226) for plaintiff. The

Court had no right to substitute itself for the jury, pass

upon the effect of the evidence, find (or eliminate by

ignoring) the facts involved in the issue and render

judgment thereon; but “That is what was done in the

present case’’ (Baylis v. Travellers Ins. Co., 113 U. 8.

316, 320-321). This conflicts with the foregoing decisions

and is contrary to Rules 56, 38 and 39 and the Seventh

Amendment.

In determining intent, purpose and meaning as now

claimed by defendant it conflicts with the following de-

cisions establishing the rule applicable ‘‘narticularly to

insurance cases’? (Union Trust Co. v. Whiton, 97 N. Y.

172, 173) that the questions of intent, purpose and mean-

ing of particular words in a written instrument are ques-

tions of fact for the jury. Wood v. Guarantee Trust &

Safe Deposit Co., 128 U. S. 416, 424; Pitney v. Glens

Falls Ins. Co., 65 N. Y. 6, 17; U. S. Rubber Co. v. Silver-

stein, 222 N. Y. 168, 171; Utica City Nat. Bank v. Gunn,

999 N. Y. 204, 208; Kavanaugh v. Kavanaugh Knitting

Mills, 226 N. Y. 185, 198; Piedmont Hotel v. Nettleton

Uo., 263 N. Y. 25, reversing a summary judgment; Rosen-

kranz v. Schreiber Brewing Co., 287 N. Y. 322, 325; Rey

v. Simpson, 22 How. (63 U. 8.) 341, 347.

In failing to give effect to evidence that the specially

added clauses agreeing ‘‘also to insure’’ against ‘‘non-

delivery’’ caused and were designed to cause plaintiff to

rest satisfied the risk was fully covered and to forego

insuring it elsewhere, as it clearly could have done (Aetna

Casualty & Surety Co. v. National Bank of Tacoma, C. ©.

A. 9, 59 F. [2d] 493), defendant fearing that otherwise

13

it might ‘‘lose the business’’ (ff. 378-379), the decision

conflicts with the following decisions establishing that one

may not so entrap or mislead another and then avoid

liability; National Bank v. Insurance Co., 95 U. S. 673,

678; Voorhis v. Olmstead, 66 N. Y. 113, 117, 118; Conrow

v, Little, 115 N. Y. 387; Skinner v. Norman, 165 N. Y.

565, 571; Reynolds v. Commerce Fire Ins. Co., 47 N. Y.

597, 604; Nellis v. Western Life Indemnity Co., 207 N. Y.

320, 324; Wolfe v. Security Fire Ins. Co., 39 N. Y. 49, 51;

Pratt v. N. ¥. Central Ins. Co., 55 N. Y. 505, 512; Rice Oil

Co. v. Atlas Assur. Co., C. C. A. 9, 102 Fed. (2d) 561,

576; and that defendant’s duty was enlarged by knowl-

edge that endorsement of the insurances to plaintiff for

its reliance was the specifically intended ‘prospective

use’? (Glanzer v. Shepard, 233 N. Y. 236, 240) thereof,

and the ‘fend and aim of the transaction’’ (Jd. 233 N. Y.

238-239; Ultramares Corp. v. Touche, 255 N. Y. 170, 181,

182).

In so far as the decision is based on findings as to

what defendant did not know or was not informed, and

as to the limited nature of inspections defendant says it

actually made, and ignores its initial demand for ‘‘com-

plete’’ inspection, and its later assuming to make such

inspection as it deemed necessary, it conflicts with Su-

preme Lodge K. P. v. Kalinski, 163 U. S. 289, 298; Fidel-

ity & Deposit Co. v. Queens Co. Trust Co., 226 N. Y. 225,

233; Columbian Nat. Life Ins. Co. v. Rodgers, C. C. A. 10,

116 Fed. (2d) 705, 707, cert. den. 313 U. S. 561; and with

Rochester & C. T. R. Co. v. Paviour, 164 N. Y. 281, 284-

285 and Soma v. Handrulis, 277 N. Y. 223, 233-234.

Assuming that as held below (fol. 445) contrary to

ample evidence defendant ‘‘did not know of the issuance”’

or ‘‘negotiation to plaintiff’? of the warehouse receipts,

the decision conflicts with Guaranty Co. v. Pressed Brick

Co., 191 U. S. 461; Western N. Y. Life Ins. Co. v. Clinton,

14

66 N. Y. 326; Keyes v. Anderson, C. C. A. 8, 262 F. 748;

and O’Brien v. North River Ins. Co., C. C. A. 4, 212 F.

102, 105, in holding that this, or the lack of specific

enumeration of them in the insurances, is ground for

giving the coverage a more narrow rather than a broader

meaning. In determining such issue by accepting Smith’s

limited assertions, without a trial to enable ‘‘full examina-

tion’? of him, Brust and Thurnall, ‘‘who could have given

further testimony on the subject,” it conflicts with

Stewart v. Southern Ry. Co., No. 161, Feb. 16, 1942, 86

L. ed. 548, 550.

Its ignoring defendant’s suppression of facts and wit-

nesses conflicts with Equitable Life Ins. Co. V. Halsey

Stuart & Co., 312 U. S. 410, 426; Runkle v. Burnham, 133

U. S. 216, 225; Interstate Circuit v. U. S., 306 U. 8S.

208, 226.

In so far as the decision holds that the certificates in

covering ‘‘non-delivery’’ were endorsements to an open

policy covering goods, and this made it reasonable for

defendant to believe they were conditioned accordingly,

it conflicts with the express provisions of the certificates

which do not certify endorsements of ‘*non-delivery”’

insurance to the policy, but themselves specially agree

‘‘also to insure’ from their own date against ‘‘non-

delivery’’; and conflicts with Phoenix Ins. Co. v. De

Monchy (H. L.) 45 T. L. R. 948 (C. of A.) 44 T. L. R.

364, 366, 368, 369; Aetna Ins. Co. v. Willys Overland, Inc.,

N. D. Ohio, 288 Fed. 912, and Imperial Shale Brick Co. v.

Jewett, 169 N. Y. 148, establishing the independence of

the certificate insurances; with Eddy v. Farmers Mutual

Ins. Co., 20 N. Y. App. Div. 109, establishing that special

insurances are not affected by other clauses ; with Aldrich

v. N. ¥. Life Ins. Co., 235 N. Y. 214, 224, and Nellis v.

Western Life Indemnity Co., 207 N. Y. 320, establishing

that an apparent meaning of a clause will be binding

oe

S

aK

\

though at variance with an obscurely expressed real

meaning intended by the insurer; with the following

decisions establishing that the character or meaning of a

particular insurance is to be determined by the nature

of the contract it expresses according to the facts in evi-

dence and regardless of the nomenclature of a policy or

the character or avowed purposes of the company that

issued it (Knott v. Security Mutual Life Ins. Co., 161 Mo.

App. 579, 144 S. W. 178; Oceanic Steam Navigation Co.,

Lid. v. Evans, 40 Comm. Cas. 108, revg. 90 L. T. R. 296;

Aetna Casualty & Surety Co. v. National Bank of Tacoma,

c. C. A. 9, 59 F. (2d) 493; O’Brien v. North River Ins.

Co., C. C. A. 4, 212 Fed. 102, 105, 106; Bidwell v. North-

western Ins. Co., 24 N. Y. 302); and with Bekins v.

Lindsay-Strathmore Irr, Dist., Cc. C. A. 9, 114 Fed. (2d)

680, 684, cert. den. 312 U. S. 693, rehearing denied 312

U. S. 716, establishing that not the ‘‘label’’ but ‘‘all of

the acts, statements and writings’? shown by ‘‘the entire

record’? determine contractual intent.

Assuming that defendant was an innocent insurer,

deceived by the Garcia Company and its controlled ware-

house, the decision conflicts with General Interest Ins. Co.

v. Ruggles, 12 Wheat. (25 U. S.) 408, 410-414; Ryan v.

U. S., 19 Wall. (86 U. S.) 514; Comptoir Nationale

d’Escompte de Paris v. The Law Car € General, reported

in Macgillivray on Insurance Law, 2nd Ed. 504; Aetna

Casualty & Surety Co. v. National Bank of Tacoma, C. C.

A. 9, 59 Fed. (2d) 493; Western N. Y. Life Ins. Co. Vv.

Clinton, 66 N. Y. 326; McWilliams v. Mason, 31 N. Y.

294; and Rothschild v. Frank, 14 N. Y. App. Div. 399, in

not applying the principle that of two innocent parties

it was defendant’s duty to protect itself without relying

on plaintiff, and plaintiff’s right to rely on the insur-

ances unqualified by fraudulent acts of the Garcia Com-

pany or its warehouse company.

—

16

In its determination of the meaning of ‘‘non-delivery”’

in the insurances the decision conflicts with the following

decisions defining equivalent terms in bills of lading,

Georgia, Fla. & Ala, Ry. Co. v. Blish Milling Co., 241

U. S. 190, 195; Davis v. Roper Lumber Co., 269 U. §8,

158, 161; M. & T. Trust Co. v. Export S. S. Corp., 262

N. Y. 92, 98; cert. den. 290 U. S. 650; with The Falcon,

3 Blachf. 64 and Roberts v. Chittenden, 88 N. Y. 33; and

with the following decisions establishing that plaintiff

sustained loss by ‘‘non-delivery’’, for which in New York

the warehouseman is liable in an action for damage by

‘*non-delivery’’ (Armour v. Michigan Central R. R. Co.,

65 N. Y. 111; Hanover National Bk. v. American Dock &

Trust Co., 148 N. Y. 612; Rosenberg v. P. Viane, Inc., 109

Mise. 215 on ‘‘non-delivery’’ interpleader, and double

judgment rendered therein, sub nom. Joseph v. P. Viane,

Inc., 118 Mise. 344, affd. 206 App. Div. 698); for which a

bonded warehouseman and his bondsman alike are liable

for ‘‘non-delivery’’ damage (Maryland Casualty Co. v.

Washington Loan and Banking Co., 167 Ga. 354); for

which a surety on a ‘‘delivery’’ bond is liable (Ryan v.

U.S., 19 Wall. [86 U. S.] 514); and for which an indem-

nity insurer is liable under a contract indemnifying

against damages for ‘‘lack of delivery’? (Aetna Casualty

& Surety Co. v. National Bank of Tacoma, C. C. A. 9, 59

F. [2d] 493); and conflicts with The G. R. Booth, 171

U. S. 450, 459-460, in failing to apply such meanings.

In giving to the term used a more narrow rather than

a broader special meaning in the insurances than it has

under the warehousing or carrier relationships, the de-

cision conflicts with Aschenbrenner v. U. S. F. & G. Co.,

292 U.S. 80.

The following are the few prior decisions found in-

volving insurance contracts—all non-negotiable—covering

‘‘delivery’’, ‘‘lack of delivery’? or similar risks. Ryan

—

17

v. U. S. (1873) 19 Wall. [86 U. S.] 514; Comptoir Na-

tionale d’E'scompte de Paris v. The Law Car & General

(1908) K. B. (1909) C. A., reported only as we find in

Macgillivray on Insurance Law, 2nd Kd., 504, et seq.;

Maine Lumber Co. v. Maryland Casualty Co. (1926) 216

App. Div. 35, affd. 244 N. Y. 537; National Bank of

Tacoma v. Aetna Casualty & Surety Co. (1931) 161

Wash. 239; Aetna Casualty & Surety Co. v. National

Bank of Tacoma (1932) C. C. A. 9, 59 F. (2d) 493;

Inikart v. Mass. Bonding & Ins. Co. (1935) 129 Neb.

771, 263 N. W. 124. All hold the insurer liable where a

risk existed under and there was violation of a delivery

obligation fixed by law or contract; and the decision be-

low conflicts therewith and with The G. R. Booth, supra,

in failing to apply such meaning.

The date sequence of such decisions illustrate the re-

cent development of ‘‘lack of delivery”’ or ‘*non-delivery”’

indemnity insurances; and in Winter on Marine Insur-

ance, by defendant’s president, the first edition (1919)

did not discuss ‘‘non-delivery’’ insurance, whereas the

second edition (1929) discusses it as a form developed

since the World War.

Petitioner further contends that such negotiable in-

surances specially agreeing ‘‘also to insure’? from date

against ‘‘non-delivery’’ for protection of an endorsee and

under circumstances such as shown by plaintiff’s papers,

are not insurances of bailed physical property, like the

earlier fire insurances, requiring and subject to condition

or warranty of existence of, and an insurable interest of

the endorsee in bailed physical property, as such; but

are insurances of what defendant’s president Wiyter

himself has called the endorsee’s ‘insurable risk”? and

“insurable hazard’? of a ‘‘liability-loss”’ by non-delivery

in which such ‘‘specially enumerated’? risk constitutes one

of the ‘‘true liabilities of the carriers [or warehouse-

18

man] for which they are liable under their bill of lading”’

{or warehouse receipts]; and cover any ‘‘non-delivery”’

liability of such a bailee-contractor imposed by law or

fixed by contract (Winter on Marine Insurance, 2d Ed.,

170-171, 113, 129; bracketed words ours). They afford

protection to the endorsee, additional to that of the bailee-

contractor’s own engagement, which the endorsee’s risk

itself fully entitles him to obtain and enforce (Great

Lakes Transit Corp. v. Interstate Steamship Co., 301 U.S.

646, 652, 653). The decision conflicts therewith; and the

questions on which this Court has not yet passed, as to

the rights of an ‘‘order’’ merchant, banker, consignee or

pledgee, under these negotiable ‘‘non-delivery’’—or, as

Winter puts it, ‘‘liability loss’’—insurances, we submit,

closely parallel in nature and importance those reviewed,

and the rulings thereon in this case below closely parallel

those reversed, in Great Lakes Transit Corp. v. Interstate

Steamship Co., supra, wherein this Court granted cer-

tiorari ‘‘In view of the importance of the issue’’ (301

U. S. 648).

Its ruling that plaintiff had no insurable risk and in-

terest also conflicts with the following decisions establish-

ing that ‘‘No legal obstacle prevents parties, if they so

desire’’ from insuring against loss even though, unknown

to the parties, the risk and the loss covered may already

have occurred (U.S. v. Patryas, 303 U. S. 341, 345; Gen-

eral Interest Ins. Co. v. Ruggles, 12 Wheat. [25 U. S.] 408,

418), that ‘‘whatever act, event or property, bears such

velation to the person seeking insurance, as that it can be

said, with a reasonable degree of probability, to have a

bearing upon his prospective pecuniary condition’? may

be insured (Rohrback v. Germania Fire Ins. Co., 62 N. Y.

47, 53-54), and that any bona fide risk supports insurance

thereof Lucena v. Crawford, 2 Bos. & Pul. 75, 7 Term. 13;

Hooper. v. Robinson, 98 U. S. 528, 538; General Interest

ia:

ect

rea

19

Ins. Co. v. Ruggles, supra; Hancox vy. Fishing Insurance

Co., 3 Sumn. 132; Insurance Co. v. Thompson, 95 U.S. 547,

549-500; Harrison v. Fortlage, 161 U. S. 57, 65; Filley v.

Pope, 115 U.S. 213, 220; Empire Development Co. v. Title

G. & Tr. Co., 225 N. Y. 53, 58-59; National Filtering Oil

Co. v. Citizens Ins. Co., 106 N. Y. 535; Cone v. Niagara

Fire Ins. Co., 60 N. Y. 619, 621; Waters v. Merchants

Louisville Ins. Co., 11 Pet. (36 U. S.) 213, 221; Inglis v.

Stock (1885) 10 A. C. 263, and Stock v. Inglis (1884) 12

Q. B. 564; Thompson v. Taylor, 6 Term. 478; Stirling v.

Vaughan, 11 East. 529; and conflicts with A. C. Frost &

Co. v. Coeur D’Alene Mines Corp., 312 U. S. 38, 44,

establishing that ‘‘the protean basis’’ of any such rule

never prevents enforcement of a contract where no

publicly injurious results can follow its enforcement.

In confusing ‘‘non-delivery’’ indemnity insurances of

this character with guaranty or suretyship, treating plain-

tiff’s contention as involving guaranty, and treating the

issue as involving choice between guaranty or suretyship

and property insurance of beans, the decision conflicts

with Great Lakes Transit Corp. v. Interstate Steamship

Co., supra, 301 U. S. 646, 652; and with Aetna Casualty

€& Surety Co. v. National Bank of Tacoma, supra; Na-

tional Bank of Tacoma v. Actna Casualty & Surety Co.,

161 Wash. 239, 244; First National Bank v. National

Surety Co., 228 N. Y. 469; Assets Realization Co. v. Roth,

226 N. Y. 370; Maine Lumber Co. v. Maryland Casualty

Co., 216 N. Y. App. Div. 35, affd. 244 N. Y. 537; and

Moore v. Capital Nat. Bank of Lansing, 274 Mich. 56.

In ignoring or going back of ‘‘non-delivery’’ to the

*freason’’ (f. 261) alleged but unproved by defendant

and purportedly found (without evidence) by the Court

(f. 446), the decision conflicts with Ins. Co. v. Transporta-

tion Co., 12 Wall. [79 U. S.] 194, 199; and Bird v. St.

Paul F. & M. Ins. Co., 224 N. Y. 47, 53, 55, establishing

20

that especially in insurance the causa proxima alone,

and not the antecedent cause of that cause or causa

causans, is to be considered; with Baldwin v. Childs, 249

N. Y. 212, 215, establishing that even were defendant’s

allegation proved, plaintiff had enforceable delivery

rights, obligating both the Garcia Company and the ware-

houseman ‘‘to feed’’ such rights; with the ‘‘lost policy’’

release evidence showing defendant apprehended precisely

such obligation as the particular risk existing; and with

Ryan v. U. S8., supra, 19 Wall. (86 U.S.) 514, and Aetna

Casualty & Surety Co. v. National Bank of Tacoma, supra,

C. C. A. 9, 59 F. (2d) 493, showing that non-delivery de-

fault is itself the risk, condition and event occasioning

liability without differentiation even on proof of a third

party’s fraud.

Both lower courts state that ‘‘the queston is close’’

(ff. 449-450). This Court at the present term, in revers-

ing a judgment directed for a defendant, in Jacob v. City

of New York, No. 589, decided March 30, 1942, held that

even where ‘‘Without doubt the case is close and a jury

might find either way,’’ such ‘‘is no reason for a Court

to usurp the function of the jury’’ (Cf. Baylis v. Travel-

lers Ins. Co., supra, 113 U. S. 316, 320-321). The decision

below conflicts therewith. Here the question was made

assertedly ‘‘close’’ by the Court considering only the

picture painted in defendant’s affidavits; misconstruing

the omnibus reclamation proceedings order; making find-

ings favorable to defendant on conflicting evidence or

without evidence to support them; ignoring plaintiff’s

evidence; ignoring plaintiff’s undisputed ‘‘non-delivery”’

risk and loss, and the established meaning of ‘‘non-deliv-

ery’’ under warehouse receipts, bills of lading, other in-

demnity insurances and other commercial contracts; and

refusing ‘‘In addition’’ (f. 450), in direct conflict with

Bushey & Sons v. American Ins. Co., 237 N. Y. 24, 29, to

21

apply the principle that the language used should be con-

strued most strongly against the insurer.

Reasons for Granting the Writ.

As hereinabove ‘indicated, the Circuit Court has ren-

dered a decision in conflict with decisions of other Cir-

cuit Courts of Appeals on similar matters; it has de-

cided important questions of local New York law and

rights thereunder probably in conflict with applicable

local decisions; it has decided important questions of

Federal law and practice which have not been, but should

be, settled by this Court, and has decided them in a way

probably in conflict with applicable decisions of this

Court, and in conflict with Rules 56, 38 and 39 of the

Federal Rules of Civil Procedure and the Seventh Amend-

ment to the Constitution; it has decided important ques-

tions of commercial and insurance law, of novelty and

public importance, and of probable world wide impor-

tance, in a way probably in conflict with State and Na-

tional policy, and with applicable decisions of this Court

and of other Federal, State and English Courts; and

has so far departed from the accepted and usual course

of judicial proceedings, and so far sanctioned such a

departure by the District Court, as to call for an exercise

of this Court’s power of supervision.

The importance of the questions lies, not only in the

importance of establishing the proper construction and

meaning of novel and special negotiable ‘‘non-delivery”’

insurances now widely in use by indemnity insurers such

as defendant, the proper means and method of proving

and determining the construction and meaning thereof,

and the proper applicability thereto of the meaning,

understood by and favorable to a hona fide endorsee

22

thereof, which the word ‘‘non-delivery’’ has by trade

usage and under warehouse receipts and other forms of

commercial contracts, under other forms of similar indem-

nity insurances, and under Federal and local New York

court decisions, and whether such meaning is fixed or

relative and determinable in each case from the peculiar

surrounding facts and circumstances ; and not only in the

importance of establishin » the proper construction and

effect when collaterally pleaded of omnibus reclamation

proceedings orders in bankruptey; but also, and especi-

ally, in the circumstance that the lower courts have as-

sumed power under Rule 56 to determine disputed factual

issues herein both as to the surrounding facts and cir-

cumstances and as to the intent, purpose and meaning

of particular words used in written contracts of insur-

ance, and to ignore issues and evidence in connection

therewith, contrary to Rules 56, 38 and 39, the Seventh

Amendment and previous decisions of this Court and

other Courts.

The decision, if allowed to stand, must have far reach-

ing importance as a precedent, and will create great

confusion in the commercial and insurance worlds, in

matters of bankruptcy and res adjudicata, and in Federal

trial and summary judgment procedure and the adminis-

tration of justice. It will enable any Federal Court,

despite the fact that a jury trial has been demanded, to

take the issues away from the jury and decide the case

itself, whenever a motion for summary judgment is made

and opposed under Rule 56, without regard to how op-

posite the factual picture appears in the opposing afh-

davits or how completely these refute the moving party’s

claims, show its suppression of facts, records and best

informed witnesses and establish the opposing party’s

ease. And it will reverse the rules heretofore obtaining

for construing insurance contracts of insurers for profit

most strongly in favor of a bona fide insured and against

the insurer.

Respectfully submitted,

Niescuitac & Co., Inc.,

By Paut W. Kocuer, Treas.,

Petitioner.

Dated, New York, June 3, 1942.

We hereby certify that we are counsel for petitioner

in the above matter in this Court; that we each have

examined the foregoing petition and in our opinion it is

well founded and entitled to the favorable consideration

of this Court, and that it is not filed for purpose of delay.

Haroip T. Epwarps,

Cuaries A. Exuis.