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“In Transit” Means Between Destinations, Even If “At Rest”

The First Department, in a full-fledged opinion by Justice Saxe, determined that the “in transit” clause of a bond covered the loss which occurred when the stolen cash was in a vault owned by the armored car company.  Under New York law, the term “in transit” covers a larceny which occurs when the stolen item is between destinations, even if it is not being moved at the time:

An “In Transit” provision was discussed and interpreted in the controlling case of Underwood v Globe Indem. Co. (245 NY 111 [1927]). In Underwood, a bond salesman who was attempting to arrange a bond sale to a potential buyer brought the bonds from Pine Street, in lower Manhattan, to West End Avenue near 88th Street, where the buyer gave him a worthless check that had been forged to appear certified, in exchange for the bonds. When the buyer absconded with the bonds, the seller made a claim under a policy for the theft of the bonds while “in transit.” The Court concluded that the transit of the bonds was never completed, because the completion of transit would have involved a lawful transfer of title, whereas the bonds had been taken “by a trick and false device,” without a valid transfer of title (id. at 115). The Court reasoned that “[t]o hold that transit means actual movement, and not a period of rest, is too narrow a construction to give to this undertaking, and is contrary to its full meaning and scope” (id.).

The Underwood analysis was at the heart of the determination in Franklin v Washington Gen. Ins. Corp. (62 Misc 2d 965 [Sup Ct, NY County 1970], affd 36 AD2d 688 [1st Dept 1971]), a determination affirmed by this Court, holding that the test for whether something is “in transit” is “whether the goods, even though temporarily at rest, were still on their way, with the stoppage being merely incidental to the main purpose of delivery” (at 966-967).  CashZone Check Cashing Corp v Vigilant Ins Co, 2014 NY Slip Op 01565, 1st Dept 3-11-14

 

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