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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA43086415_1133%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for A Writ of Certiorari
- **Published:** January 1, 1942
- **Citation:** 317 U.S. 640

## Text

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.

EE
Lopm: AprzaL Press, Ino., 65-67 Duane St., N. Y. 0. Tel. WOrth-2-0689

EEO ee Oe LONE EE EE OE EE, Ope >

Te ee oe ee a a SS

oS Ree

Tee Rev TAS

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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA43086415_1133%3A1. Public record. Not legal advice.