Brink & Co. v. Merchants & Mechanics Insurance

Contract. Insurance. Change of Occupation. Evidence. One of the conditions of a policy of insurance was, that “ if the occupation of the premises should be changed from one of the class denominated extra hazardous, or specially hazardous, to that of another of the same class, except as specially agreed to in writing upon the policy, then, so long as the same should be so appropriated, the policy should cease and be of no force.” Upon the back of the policy was a division of risks into three classes denominated hazardous, extra hazardous, and specially hazardous. There was no specific reference in any of -the three classes to any of the manufactures at any time carried on upon the premises insured, but there was a general mention in the third class of “all workshops, mills and manufactoring establishments,” not enumerated in either of the two other classes. The property in question was insured as of the third class, and was described in the policy as •* occupied for the manufacture of toys.” The insurance agents examined the premises fully, and knew that some custom sawing and planing, and turning of mop-handles, had been done there for several years, and in placing the insurance they acted upon their own personal acquaintance with the property, and upon what they observed and learned upon the premises just before writing the policy. After the insurance was effected, the property was used for the manufacture of toy trunks, nursery chairs, berry and market baskets, table mats, chair stretches, and mop-handles, and also for doing a very small amount of custom sawing and planing. Held, that there was no change of occupation within the meaning of said condition; that there was no such change of use of the property as to work harm to defendant or vitiate the policy; and that the knowledge of the agents as to the character of the property and the manner in which it had been used before insurance was effected, was full notice to defendant of all material facts touching the use of the premises in that manner. A policy of insurance should be construed most strongly against the insurer, and liberally in favor of the assured. The tenant of the premises insured, who had charge of all the business done thereon, and knew all of its details and processes, was produced as a witness, and asked if the business he was carrying on at the time of the fire was any more hazardous to the insurance than the manufacture of toys. The answer thereto held admissible. Plaintiffs offered evidence of the admissions of L., whom their evidence tended to prove to have been the agent of defendant, specially authorized to settle their loss. Held, admissible.

Assumpsit upon a policy of insurance. Plea, the general issue, with notice of special matter, and trial by jury, May Term, 1876, Barrett, J., presiding. The policy in question was issued by the defendant company through its agents at Bellows Falls, on August 1, 1874. The property insured thereby was destroyed by fire on April 28,1875. Upon the back of the policy was' a division of risks into three classes, denominated hazardous, extra hazardous, and specially hazardous. There was no specific reference in any of the three classes to any of the manufactures carried on upon the premises after the issuing of the policy ; but there was a general mention in the third class, of “ all workshops, mills, and manufacturing establishments ” not “ enumerated as hazardous or extra hazardous and the premises in question were considered as the highest grade of risk, and the highest rate was paid for the insurance thereon. Among the conditions of the policy, was one providing that if the premises insured should “ be occupied or used so as to increase the risk,” or if “ the risk ’’’should be “ increased * * * by any means whatever within the control of the assured, without the assent of the company indorsed ” upon the policy, then the policy should “ bo voidand also one providing that “ if the occupation of such premises ” should be “ changed from one of the class denominated extra hazardous, or specially hazardous, to that of another of the same class, except as specially agreed to in writing upon the policy, then so long as the same should be so appropriated, the policy should cease and be of no force.” The property insured was described in the policy as “ a new frame manufacturing building and office and ells attached, with fixed and movable machinery therein, situate in Springfield, and occupied for the manufacture of toys.” It appeared that on July 22, 1874, one of said agents visited the premises in question, at the request of the plaintiffs, and, in company with some of them, made an examination thereof; that the premises had then been leased to one Ellis, who, with others, was to engage in some kind of manufacturing not then precisely determined upon, under the style of the Industrial Works; that the agent was then so informed by one of the plaintiffs, and that Ellis was then engaged in business upon the premises, and employing three or four men.' fit further appeared, that immediately after the agent went home after said examination, the plaintiffs, pursuant to an understanding had with him, sent him a plan and a written description of the property, indicating buildings, rooms, location, the character and extent of the different kinds of property upon which insurance was desired, and other details ; that said agent and his partner, who had examined the property repeatedly in previous years, and had also effected insurance upon it, upon consultation, issued the policy in question as before stated. Both of said agents testified, and their testimony was not contradicted, that in taking the insurance in question, they acted upon their own knowledge of the property, acquired by their own observation ; and that the clause, “ occupied for the manufacture of toys,” was copied from an old policy, and written by their clerk without their knowledge. It appeared also, that there were a saw-mill, two planers, and a forge upon the premises, but that the forge was not used; that the saw-mill and planers were used in preparing lumber for the making of toys, and a little occasionally in doing custom work ; that the premises had been occupied for several years in the making of toy dolls, for doing planing and sawing, and for turning mop-handles, which was known to one of said agents at the time the policy in question was issued, and that soon after the date of said policy, Ellis •began to make toy trunks, nursery chairs, and market baskets, and, in the ensuing winter, table mats, mop-handles, and chair backs and stretchers. It further appeared that substantially the same machinery was used at the time of the fire that was there when the policy was issued, although there had been some slight changes to adapt it to the different kinds of manufacturing ; that the plaintiffs never gave the defendant any notice of the various changes in manufacture, and that said changes did not increase the risk, but on the contrary greatly diminished it. The plaintiffs produced Ellis as a witness, who testified that the risk was no greater by reason of the business he was carrying on at the time of the fire than it was when he was making toys. To the admission of that evidence the defendant objected ; but it was admitted ; to which the defendant excepted. The plaintiffs also introduced as a witness, J. W. Pierce, who testified to some acts, conversations, and correspondence in reference to the settlement of this loss, with one Lester, whom the plaintiffs’ evidence tended to prove was the agent of defendant, specially authorized in writing by defendant to settle this loss. Said Lester was not in court. To all of said Pierce’s testimony the defendant objected, but the court admitted it; to which defendant excepted. All the testimony of Pierce, however, became immaterial, no question being submitted to the jury upon which the same had any bearing. The defendant requested the court to charge, among other things, that if, at the time the insurance was effected, the plaintiffs made any false representations as to the occupancy of the building, either in regard to who was occupying it, or to the purposes for which it was used, or to the exposure thereof, or concealed any fact in any manner affecting the risk, they could not recover; that the neglect of the plaintiffs to mention in their application the occupation of a part of the property insured .by a saw-mill, a planing-mill, and a lathe, was fatal to their claim, even though the agent saw the property and knew how it was occupied, and that their omission to state correctly every fact material to the risk, whether intentional or not, rendered their policy void-; that if there had been any change in the business, either by increase or by change to another kind, without the knowledge or consent of the defendant, then the plaintiffs could not recover, even though the fire might not have been caused by it; and that the policy contained the contract of the parties, and should be strictly construed ;. that all matters of fact stated therein as having been stated by the plaintiffs, were warranties; and that if any of the conditions of the policy had been broken, the policy was vitiated. The court charged that the party making application for insurance was bound to good faith, and to care and reasonable diligence in making representations and exposures of the property— was bound, so far as he did anything that would affect the judgment and action of the agent, to the utmost good faith, and that, as the agent would be governed by the nature of the risk in determining whether to make the insurance, he was also bound to be free from any negligence in regard to the property and its condition, and everything appertaining to it, that would materially affect the risk ; that he was also bound to good faith and care after insurance was effected, so as not by any carelessness to increase the hazard assumed by the company in view of all that was made known to the company and upon which it acted at the time of effecting the insurance ; that the expression, “ and occupied for the manufacture of toys,” did not of itself constitute a warranty on the .part of the plaintiffs that the building should not be used 'for any other purpose; that the parties were at liberty to do their work, using substantially the same machinery, with changes of detail adapting it to the purposes designed, and working upon the same kind of material, unless the doing of such work increased the peril by fire, but that if it did increase the peril, then they could not recover upon their policy ; and that the .policy as a contract was subject to the ordinary rules of law governing contracts, so that the plaintiffs, to have the advantage of it, must have performed its conditions on their part. So far as the charge did not comply with said requests, defendant excepted. Verdict for plaintiffs. 'Contracts of insurance should be construed with the greatest strictness. The utmost good faith is required by both the insurer and the assured. The policy usually contains the stipulations of the contract, and should be specific. Once issued and accepted by the assured, its terms cannot be varied without the consent of both parties. Insurance companies have the right to make their own regulations, and when they have done so, they are bound to comply with them, and the assured when he accepts a policy, engages to abide by and perform all the stipulations imposed upon him by its terms. Dutton v. Vt. Mutual Fire Ins. Co. 17 Vt. 369; Williams v. Vt. Mutual Fire Ins. Co. 20 Vt. 222; Wilson v. JEtna Ins. Co. 27 Vt. 99. The policy upon which the plaintiffs predicate their claim, purports to insure certain property stipulated to be occupied for the manufacture of toys, and for no other purpose. The plaintiffs’ right of recovery depends upon the construction to be given to the language used by them, and the representations made in describing the property. The law of insurance requires the utmost good faith, and all misrepresentations and concealments material to the risk, vitiate the policy, although such representations are by parol, they being regarded as fraudulent. Farmers Mutual Fire Ins. Co., v. Marshall, 29 Vt. 23. Three classes of risks, denominated hazardous, extra hazardous, and specially hazardous, were named on the back and in the printed part of the policy. The plaintiffs’ property was included in the third class. Section five of the printed part of the policy pro- ■ Added that, if the premises should be used for any “ trade, business or vocation, or for storing, using or vending therein any of the articles, goods or merchandize denominated extra hazardous, or specially hazardous, in the class of hazards ” printed on the back of the policy — or if the occupation of the premises should be changed from one of the “ classes denominated extra hazardous or specially hazardous to that of another of the same class,” except as therein specially agreed to in writing, upon the policy, then and from thenceforth, so long as the same should be so “ appropriated, applied or used,” the policy should cease and be of no force or effect. The policy was therefore rendered void by the changes made by plaintiffs. Plaintiffs were strictly bound by the words, “ and occupied for the manufacture of toys,” written in the policy, and the charge that they did not constitute a warranty was erroneous. May Ins. 231, 253 ; Lee v. Howard Fire Ins. Qo. 3 Gray, 583 ; Barrett v. Union Mutual Fire Ins. Co. 7 Cush. 175 ; Whitemarsh v. Charter Oak Fire Ins. Co. 2 Allen, 581; Houghton v. Manufacturers Mutual Fire Ins. Co. 8 Met. 114; Macomber v. Hoioard Fire Ins. Co. 7 Gray, 257; Jennings v. Chenango County Mutual Ins. Go. 2 Denio, 75 ; Merriam v. Middlesex Mw- . tual Fire Ins. Go. 21 Pick. 162 ; Wetherell v. Gity Fire Ins. Go. 16 Gray, 276; Pierce v. Umpire Ins. Qo. 62 Barb. 636 ; Sarsfield v. Metropolitan Ins. Go. 61 Barb. 479 ; Wall v. Fast River Ins. Go. 3 Duer, 264; s. c. 3 Selden, 370; Williams v. Nevo England Mut. Ins. Go. 31 Me. 219; 2 Parsons Cont. (5th ed.), 424, 425 ; Holby v. Dana, 17 Barb. Ill; Lyman, v. Slate Mutual Fire Ins. Go. 14 Allen, 329; Richards v. Protection Ins. Go. 30 Me. 273 ; Williams v. New England Mutual Fire Ins. Go. 31 Me. 219 ; Shepard v. Union Mutual Fire Ins. Go. 38 N. H. 232; Wood v. Hartford Fire Ins. Qo. 13 Conn. 533; Mead v. Northwestern Ins. Co. 7 N. Y. 530 ; Pindar v. Oontinental Ins. Go. 38 N. Y. 364; Pindar v. Resolute Fire Ins. Go. 47 N. Y. 114; Jones v. Fireman’s Fund Ins. Go. 51 N. Y. 318 ; Ripley v. JEtna Ins. Go. 30 N. Y. 136. The ruling of the court allowing the witness Ellis to testify as to whether the changes that had been made in the property insured increased the risk, was incorrect, as he was not an expert. Underwriters, even, are not permitted to testify to their opinions as to the nature of a risk — whether more or less hazardous. Hartford Protection Ins. Go. v. Farmer, 2 Ohio St. 452 ; Merchants f Man„ Mut. Ins. Co. v. Washington Ins. Go. 1 Handy (Ohio), 408. Besides, whether or not the change in the use or occupation of property increased the risk, was to be determined by the jury from the facts in the case, and was not a subject for expert testimony. May Ins. 719; Fraser v. Tupper, 29 Yt. 409; Crane v. Northfield, 38 Yt. 124; Lee v. Howard Ins. Co. 3 Gray, 583; Mulry v. Mohawk Valley Ins. Co. 5 Gray, 541; Lincoln v. Barre, 5 Cush. 590 ; Lyman v. State Mutual Fire Ins. Co. 14 Allen, 329 ; Luce v. Dorchester Mutual Fire Ins. Co. 105 Mass. 297 ; Joyce v. Maine Ins. Co. 45 Me. 168; Jefferson Ins. Co. v. Cotheal, 7 Wend. 73 ; Schmidt v. Peoria Fire f Marine Ins. Co. 41 111. 295; Connell v. Phoenix Ins. Co. 59 Me. 582 ; Northrop v. Mississippi Valley Ins. Co. 47 Mo. 435, 443. Fx-parte depositions and affidavits are never admissible as evidence on the trial of a case. The original proof of loss, to which was attached the three affidavits, was improperly admitted as evidence in chief, as they were drawn by the plaintiffs, and were in the nature of declarations made by a party in his own favor. Lafayette B. f Miss. B. B. v. Winslow, 66 111. 219. The testimony of Pierce as to conversations and correspondence with one Lester was improperly admitted, as there was no proof, except Pierce’s statement, that Lester was an agent of defendant; and the character of his agency was not'shown, whether general or special. Pierce’s testimony as to what Lester said and did, had an important bearing on the determination of the suit. Ins. Co. v. Mahone, 21 Wall. 152; Illinois Mutual Fire Ins. Co. v. O'Neal, 13 111. 89. The defendant was entitled to a charge in compliance with its requests. The instructions to the jury were erroneous on all questions referred to in the defendant’s exceptions. The court charged as matter of law that plaintiffs might change the use of the building, if they used substantially the same machinery, thus virtually telling the jury that they might disregard the statements in the policy. The court correctly charged that, “ having reference to this policy as a contract, it is subject in its operation and in its construction to the ordinary rules of law governing contracts.” May Ins. s. 172. And the defendants were not prejudiced by any omission in that respect, because under familiar rules of law, the contract will be construed liberally in favor of the insured, so as not to defeat without a plain necessity his claim to the indemnity. May Ins. ss. 174, 175 ; 2 Parsons Cont. 426, 427. Defendant was not entitled to a charge that all matters of fact stated in the policy as having been stated by plaintiffs were warranties. The agents who wrote the policy were the agents of defendant, and not of plaintiffs. Gen. Sts. c. 87, s. 4. Defendant cannot avail himself of any neglect or omission of its agents to report to the home office. Facts material to the risk made known to the agents before the policy is issued, are constructively known to the company, and caunot he set up to defeat a recovery on the policy. May Ins. ss. 122, 132, 152; Plumb v,. Cattaraugus Mut. Ins. Co. 18 N. Y.. 392; 'Ames v. N. Y. Union Ins. Co. 14 N. Y. 253 ; Beebe v. Hartford Mut. Pire Ins. Co. 25 Conn. 51; Hough v. City Pire Ins. Co. 29 Conn. 10. The company will not be permitted to set up in defeat of a recovery on this policy, that the business was not confined strictly to the manufacture of toys, or that the article manufactured was changed from time to time. The clause, “ occupied for the manufacture of toys,” even if properly in the policy as expressing the contract of the parties (and this we deny), only referred to, and was a representation of the then present use'of the buildings, and was not a warranty of their continued use during the term of the policy. May Ins. s. 247 ; 2 Parsons Oont. *425 ; Catlin v. Springfield Ins. Co. 1 Sumner, 434; O’Ueil v. Buffalo Ins. Co. 3 Comst. 122 ; Cumberland Ins. Co. v. Douglass, 58 Penn. St. 419; Blood v. Howard Pire Ins. Co. 12 Cush. 472 ; Boardman v. N. H. Mut. Pire Ins. Co. 20 N. H. '551; Joyce v. Maine Ins. Co. 45 Me. 168 ; Billings v. Tolland Co. Mut. Ins. Co. 20 Conn. 139 ; Smith v.Mechanics Traders Pire Ins. Co. 32 N. Y. 399. Although the policy must bo held to express the. contract of the parties and cannot be varied by parol evidence,, the facts as to the prospective occupancy of the buildings for some kind of manufacturing therein, not then certainly known by Ellis and others, having been communicated to defendant’s agents, before the policy was written, the defendant is estopped from sotting up in defence any errors in the terms of the policy. This principle is decisive of the case. May Ins. ss. 144, 145, 497 ; Campbell v. Merchants Farmers Mut. Ins. Co. 37 N. H. 35 ; Plumb v. Cattaraugus Co. M. Ins. Co. 18 N. Y. 392; Rowley v. Empire Ins. Co. 36 N. Y. 550. And this is true, even though the policy provide that when the application is made through an agent of the company the applicant shall be responsible for such agent’s representations. Miller v. Mut. Benefit Life Ins. Oo. 31 Iowa, 216; Rathbone v. City Fire Ins. Co. 31 Conn. 193 ; Hough v. City Fire Ins. Co. 29 Conn. 10 ; May Ins. s. 143, u.T ; Hartford Protection Ins. Co. v. Harmer, 2 Ohio St. 459 ; McBride v.' Republic Fire Ins. Co. 30 Wis. 562; Aurora Fire Ins. Co. v. Eddy, 55'III. 213 ; Mich. State Ins. Co. v. Lewis, 30 Mich. 41; American Central Ins. Co. v. McLanathan, 11 Kan. 533 ; Combs v. Hannibal Ins. 'Co. 43 Mo. 148 ; McFarland v. AEtna F. ‡ M. Ins. Co. 6 W. Va. 437; Southern Ins. Co. v. Trust Co. 42 Ga. 587; Janies River Ins. Oo. v. Merritt, 47 Ala. 387; Witherell v. Maine.Ins. Co. 49 Me. 200; People’s Ins. Co. v. Spencer, 53 Penn. St 353; Union Mut. Ins. Co. v. Wilkinson, 13 Wall. 222. It is true that the courts of Massachusetts and Rhode Island are more strict, and have refused to yield to the strong equity of the assured under like circumstances, but it is tó be noticed that there is no statute in Massachusetts making the agent who takes the application the agent of the company, instead of the assured, as in this state. This court has not directly adjudicated this question, although from the reasoning of Bennett, J., in Allen, Spafford CoAv. The Vt. Mut. Fire Ins. Co. 12 Vt. 366, 372, it seems to be implied that if the agent had knowledge of the fact of the existence of the sizing apparatus that was there material to the risk, it would have operated as a waiver or estoppel. But giving the clause, “ occupied for the manufacture of toys,” the force claimed by the defendant, still, reading it in connection with the fifth condition of the- policy, we insist that plaintiffs are entitled to recover. Manufacture of toys is neither hazardous, extra-hazardous, nor specially hazardous, according to the classes of hazards on the back of the policy. The kind of toys to be manufactured is not indicated. Hence the toy trunk is within the terms. This clause applies only to a permanent change in the use of the buildings, and the policy is not made void by the mere temporary exercise therein of a hazardous trade or vocation. Grates v. Madison Go. Ins. Go. 5 N. Y. 469 ; May Ins. s. 241; ¡Shaw v. Robber ds, 6 A. & E. 75 ; Williams v. New 'England Mut. Fire Ins. Go. 31 Mo. 219 ; Rice v. Tower, 1 Gray, 426 ; Robson v. Sotheby, 1 Moody & M. 90 ; Billings v. Tolland Go. Mutual Fire Ins. Go. 20 Conn. 138. And under the clause, “ manufacture of toys,” the plaintiffs had the right to employ, and the policy covered, all processes, practices, subordinate trades, and manufactures necessarily or usually included in and incidental to the general subject-matter of the insurance, notwithstanding the policy provided that, if during the insurance the premises should be used for any trade, business or vocation, denominated extra hazardous or specially hazardous, or if the occupation should be changed from one of the class denominated extra hazardous or specially hazardous to that of another of the same class, without permission, then so long as the premises should be so appropriated, the policy should cease and be of no force. This proposition has been established and illustrated by numerous cases. May Ins. s. 239, and cases cited. The court properly instructed the jury in respect to the use to which the building might be put, in charging that they “ might do their work using substantially the same machinery, with change of detail, adapting it to the purposes designed, and working upon the same kind of material, unless the doing of such work increased the peril by -fire.” The question whether the change did in fact increase the peril by fire was submitted to the jury, who found that it did not, but greatly decreased it. One of the provisions of the policy was, that if the premises should be used or occupied so as to increase the risk, the policy should be void. The defence-in that respect is purely technical, and not sound law. Gramwell v. Merchants Farmers Mut-. Fire Ins.- Go. 12 Cush. 167; Smith v. Mechanics Traders Fire Ins. Co. 32 N. Y. 399; Boardman v. Merrimach Mut. Fire Ins. Co. 8 Cush. 583 ; Wood v. Hartford Fire Ins. Co. 13 Conn. 533. . Under the fifth condition of the policy, the use of the premises for any trade, business or vocation, denominated extra hazardous or specially hazardous, or the change of occupation from one of the class denominated hazardous or specially hazardous to that of another of the same class, makes the policy void, but void only so long as the same should be so appropriated, applied or used. The exceptions do not show that at the time of the fire any trade, business or vocation denominated extra hazardous or specially hazardous, was carried on. That should affirmatively and clearly appear in order to render the policy void, the jury having negatived any increase of the risk. New England Fire f Marine Ins. Co. v. Wetmore, 32 111. 221; Phoenix Ins. Co. v. Lawrence, 4 Met. (Ky.) 9. The request for the court to charge that any alteration of the business for purposes other than that specified in the policy, was too general. According to that, even the slightest alteration of the business or a change from the manufacture of toys to the safest kind of occupation, materially diminishing the risk, or the slighest increase in the amount of manufacturing toys, would have invalidated the policy. That request did not direct the attention ■of the court to the first nor the fifth condition of the policy, and the court was-justified in disregarding it. Rat-hbone v. City Fire Ins. Co. 31 Conn. 193. The request to charge that the omission to state every fact material to the risk whether intentional or inadvertent renders the policy void, was complied'with except as to the term' inadvertent. There was nothing' in the facts that made it the duty of the -court to instruct the jury as to inadvertence specifically, but the charge was sufficiently broad and comprehensive in that respect to cover every reasonable construction or hypothesis based upon the proofs. “The insured need not,” says Lord Mansfield, “mention what the underwriter ought to know ; what he takes' on himself-the knowledge of; or what he waives being informed of.” ■ Carter v. Boehm, 3 Burr. 1905...... ...... ..... The testimony .of Ellis that the'business he was carrying on ¡at the time of the fire, was noc more hazardous than the manufacture of toys, was properly received; because the first condition of the policy provided that if the premises should be occupied or used so as to increase the risk, the policy should be void, and it would be competent for plaintiffs to show that the risk had not been increased ; because the buildings having been insured for some kind of a manufacturing- establishment, it was competent for plaintiffs to show that the risk had not been increased by any more hazardous occupation than that carried on at the time of the issuing of the policy ; and because the testimony had a tendency to support the issue. Green v. Donaldson, 16 Yt. 162. It was a matter of fact and not of opinion. Fulsome v. Concord, 46 Vt. 135, 140; James v. Hodsden, 47 Yt. 127, 136; 28 Vt. 149. And even if improperly admitted, defendant was not injured thereby. Leonard v. Belknap, 47 Yt. 602. The defendant’s objections to the introduction of the original proofs of loss, and the three affidavits, are frivolous. Those proofs and affidavits were required by the conditions of the policy to be made, and should have been proved on trial; but if improperly admitted, the defendant did not suffer in consequence, as they were not read to the jury; and the defendant did not except to any use made of them on the trial. There was no error in the admission of the testimony of Pierce in reference to the settlement of the loss with Lester, who, as plaintiffs’ evidence tended to show, was the agent of defendant, and specially authorized in writing to settle this loss ; whereby the testimony became immaterial.