My parents, Bill and Alice Merlin, celebrated their 65th birthdayTh wedding day yesterday. I am very lucky to have both my parents alive at my age. The picture shows my mother getting a special kiss from my father and me at a party after the 2018 Newport to Bermuda race.
When I thought of their wedding day, wedding rings and bands came to mind. I have discussed jewelry insurance as far back as 2009 Insurance agents and policyholders need to schedule jewelry for better coverage. I chose for today’s blog a jewelry “mysteriously disappearing” case from the Miami area1 because it was where my parents met each other for the first time.
It is important to note that the present case deals with an “all risk” policy rather than a theft policy. The court analyzed the “mysterious disappearance” exclusion as follows:
Given the first defense – mysterious disappearance – raised by Jeweler’s as a defense to the action brought against it by Julien and Harriet Balogh, and by Western Assurance as a defense to the action brought against it by David Balogh, it must We begin by stating that this is not a theft policy. Plaintiffs in each suit are not required to show a theft before they are entitled to recover. The policy involved is much broader and is of the type known as an “all risk” policy. It is axiomatic that the plaintiff must show that the damage falls within the insured perils, but it is also axiomatic that the onus is on the defendant to show that the damage was not due to one of the insured perils but rather to an exceptional cause. . It appears that all the claimant needs to show in such a case is a loss, as losses from all causes are covered. The defendant, who claims that a mysterious disappearance is “any disappearance whose circumstances arouse—and at the same time baffle—astonishment or curiosity.” tries to distinguish between the classic cases of lost or misplaced property, and a case that is puzzling and therefore a mysterious disappearance. Provided it has proved its point, at least in the first instance, the defendant contends that the plaintiff was therefore bound to go forward and prove a theft and, having failed to do so, cannot recover. As can be seen, the defendant relies heavily on semantics. According to his theory, any loss whose precise cause could not be proven by at least a preponderance of the evidence would automatically be classified as a mysterious disappearance, and recovery would be defeated unless the plaintiff could prove a theft, misappropriation, or some other specific cause. What then becomes of the “all-risk” feature in the policy? As the court said in Chase Rand Corporation v. Central Ins. Co. in Baltimoreto interpret such a feature of a jeweler’s block policy: “The plaintiff’s sole obligation was to give the defendant such explanation as it received and accepted in good faith as to the time and cause of the injury, and this it has done. If the plaintiff had to go further * * * the inclusive nature of the insurance coverage would be a delusion and a snare” (emphasis mine) quoting and relying on Agricultural Insurance Co. v. A. Rothblum, Inc.which had held that “in an action by the insured against the insurer, it would not be incumbent on the insured to allege and prove, as a precedent, that the injury was not caused by the stated exclusions. Rather, it would be upon the insurer to allege and prove, as a condition later, that the damage arose from one of the excluded causes.’
If the clauses in each of the policies, that of Jeweler’s Mutual and that of Western Assurance, are examined, they will be found to read:
‘This policy insures against all risks of loss of or damage to the property described above arising from any cause except:
“(M) Unexplained loss, mysterious disappearance, or loss or deficiency revealed by inventory.”
It appears that the phrase “revealed on inventory” which is not set off by a comma, was intended to modify disappearance and loss as well as shortage. In fact, the entire exception seems to be about losses, disappearances or defects revealed by inventory. At least it is equally open to such an interpretation and the ambiguity must be resolved against the drafter of the instrument. Moreover, such an interpretation would be more consistent with the “all risk” feature of the policy than defendant’s proposed interpretation. It must be observed that the cases relied upon by the defendant do not involve “all risk” policies, but rather theft policies, where a mysterious disappearance is made prima facie evidence of theft. This type of policy is so unlike that with which we are concerned here that the cases construing such theft policies are of little or no weight in the present situation.
Even assuming for the sake of argument that every mysterious disappearance is an excepted cause, the burden is on the defendant to prove that the loss was due to the excepted cause, so that the fact that it may not be possible to find in this case that the plaintiff has proven theft with preponderance, is irrelevant because he has no such burden. The important point is that the defendant cannot be found to have established its defense that the cause of the injury was a mysterious disappearance, and therefore this defense must fail.
The case was decided in 1958 – the year of my parents’ marriage. It should be noted that “all risk” policies were a new form of contract at the time. The Court’s analysis clearly demonstrated the difference in contract analysis between a named risk policy and the then-newer “all risk” form.
There is nothing nobler or more admirable than when two persons who see eye to eye keep house as husband and wife, confounding their enemies and delighting their friends.
1 Balogh v. Jewelers Mut. ins. Co., 167 F.Supp. 763 (S.D. Fla. 1958).