The opinion of the court was delivered by: LASKER
This suit arises from a dispute regarding the scope of coverage and burden of proof under an insurance policy issued by American Motorists Insurance Company (American Motorists) to Atlantic Lines, Ltd. (Atlantic).
Beginning in April, 1971, Atlantic Lines leased approximately 700 pieces of equipment including chassis and containers to use on board two vessels which Atlantic operated as a liner service between New York and various ports. When Atlantic terminated the service in the fall of 1972, it discovered that certain of the leased chassis and containers were missing from its inventory. Although some of the lost equipment has been recovered, one chassis which was found was damaged and repaired at Atlantic's expense. Two containers and six chassis have not been found. Atlantic admits its complete ignorance as to the cause of the equipment's disappearance or its present whereabouts. American Motorists disclaims liability for the six items and the repair cost of the chassis, asserting that there is no coverage under the policy for lost equipment and that, in any event, Atlantic Lines has not met its burden of establishing that the equipment is no longer in existence or within its inventory. In lieu of presenting oral testimony, the parties submitted a stipulation of agreed facts and the deposition of R. Ross Camardella, General Manager in Charge, Container Division, Atlantic Lines. The parties specifically declined to present testimony as to the interpretation given the contract by the custom of the trade.
Both parties agree that the policy in issue was in effect at the time the alleged losses occurred. (Order and Stipulation of Agreed Facts, para. 2) It provides in part:
To pay for physical loss or damage to the property insured. . . from any external cause except as excluded below. (Clause 7.A of addendum to policy dated September 22, 1971)
There is no contention that any of the specific exemptions apply in the present case. American Motorists' position is simply that the clause quoted above does not include coverage for theft, mysterious disappearance of the equipment, or inventory loss. The insurance company interprets the phrase "physical loss or damage to the property" to mean that coverage is provided only for damage to the equipment, not loss of the property.
This exceedingly narrow reading is not entirely persuasive as a matter of grammatical analysis. In any event, it is at odds with the wording of other provisions in the same contract. For example, immediately following the basic coverage section, the policy contains two sections under the heading "Exclusions" which read in part:
This insurance also covers damage, theft . . . or destruction of the property insured [and] destruction of or damage to the property directly caused by persons acting maliciously. (Ex. A to Order and Stipulation of Agreed Facts, para. 9)
[In] case of any loss or misfortune . . . no acts of the Assurers or of the Assured in recovering, saving or preserving the property insured shall be considered as a waiver or acceptance of abandonment. (para. 11)
These sections, as well as others, specifically contemplate coverage in the event of theft or "any loss," and do not limit recovery to instances in which the property is only damaged. Although other provisions in the contract specifically state that their terms are enforceable "notwithstanding anything herein to the contrary," -- or enforceable despite their inconsistency with other contract provisions, including the coverage clause -- the coverage for theft and "any loss" does not include such language.
It is reasonable to assume, therefore, that those particular provisions are not contrary to the general coverage provision and that the coverage for "physical loss or damage" does contemplate coverage for loss as well as damage.
The parties have pointed to no cases which deal with this particular issue and we have found none. However, the contract clause in dispute is termed an ...