DeMun Estate Corp. v. Frankfort General Insurance

NORTONI, J.

This is a suit on a policy of insurance. Plaintiff recovered and defendant prosecutes the appeal.

The insurance contract is what is known as a landlord’s contingent policy. It vouchsafes indemnity to the owner of the building, who is neither in the occupation nor control of it, for such expenditures as he may make in liquidation of claims arising on account of personal injuries received because of defects in the building or the neglect of the owner which are chargeable to him at law. The building on which, the policy covers is situate on the west side of North Sixth street in St. Louis, between Olive and Pine, numbered 207, 209, 211, 213, and 215. It consists of three stories, is constructed of brick, and is known as the Mona hotel. It is an old building, having been erected about 1843, and was occupied first by DeMun as a residence. ■ About 1855, it was converted into business property, but during all the time has continued as the property of the DeMun estate — that is, it was owned by the heirs of Isabel DeMun. The policy was originally issued to Julius S. Walsh, agent for himself and the other heirs, on the 20th day of December, 1909, for one year — that is, to December 20, 1910. In the meantime, the interests of all of the heirs in the property were incorporated in the name of DeMun Estate Corporation,. the plaintiff, and on January 28, 1910 the change of the name of the owner was indorsed on the policy as follows:

“It is hereby understood and agreed that the name of the assured in this policy is changed to read DeMun Estate Corporation, and ceasing to cover in the name of Julius S. Walsh, agent for himself and other owners as originally written. ’ ’

At the time the policy was issued, and, indeed, at all times relevant to the questions for consideration here, the building was in possession of tenants. William J. *6 Milford was the lessee under a lease of date June 29, 1908, for a period of four years of all of the second and third floors of the building and also the storerooms numbered 207, 209 North Sixth street — that is, on the ground floor, in which Milford conducted a hotel, the Mona House, and restaurant. Moreover, it appears Milford had possession of a small basement under the building as well. Joseph Fireside & Company were the lessees under a lease of date August 12, 1907, for a period of •five years, of storerooms numbered 211, 213 North Sixth street, on the ground floor, while one Joyce was a tenant and occupied the remaining storeroom — that is, number 215 North Sixth street — as a dramshop. With the property thus occupied, the policy was issued to the heirs of the .DeMun estate, Julius S. Walsh, agent, and continued in force under the change of name after the incorporation of the estate as above indicated.

On a quiet evening in June, 1910, a considerable portion of the cornice on the front of the building fell from position into the street and injured several pedestrians. Plaintiff expended about $3700 in settlement of the claims of persons so injured, preferred against it, and sues upon'the policy for indemnity.

It is argued the subject-matter in suit is not within the terms of the policy, for that plaintiff owner was in possession and control of the roof of the building and the cornice which fell, whereas the policy stipulates indemnity only in those cases where the insured is not in such possession and control. The question thus made is to be determined by a construction of the following provision of the policy:

“This policy is issued with the understanding that the assured is the owner of the property but is not in occupation or control of it, the actual occupation or control being vested in a lessee or lessees, and it is hereby agreed that the company shall not be responsible for any loss, excepting such as may be occasioned by some fault or neglect on the part of the assured, or may be chargeable to him by law, notwithstanding the fact *7 that the property is leased or beyond his control, and this policy is accepted by the assured accordingly.”

We regard the argument as more specious than sound, in that it reckons with the words “occupation or control,” contained in the policy apart from the entire property as tenements, and seeks to confine them to a mere infinitesimal portion of the subject-matter insured —that is, to the roof, or, rather, the cornice which fell to the ground and injured the several pedestrians. Moreover, the argument proceeds in the, view that the word “occupation” is synonymous with the word “possession,” which is in no wise true, and as if possession intends, in part at least, a constructive possession which draws to it the right of control touching the cornice. It appears that every part of the building — that is the habitable portions — was let to and occupied by tenants at the time the policy was issued and throughout the whole period involved here. This being true, no portion of it was in the “occupation or control” of the owner according to the intendment of the policy contract, when interpreted under the principle of law relevant to insurance matters. No one can doubt that the language employed in an insurance policy is to be construed in aid of the insurance rather than to the end of defeating it, for, indeed, the insurance vouchsafed is the very object and purpose of the contract. [See Stix v. Travelers’ Indemnity Co., 175 Mo. App. 171, 177 , 157 S. W. 870 .] Moreover, the policy is to be given effect, if permissible, as if it was intended to cover and include the subject of the insurance'for which the premium was paid, rather than to aid an escape from liability thereon. [See Still v. Connecticut Fire Ins. Co., 185 Mo. App. 550 , 172 S. W. 625 .]

The provision above copied proceeds, “This policy is issued with the understanding that the insured is the owner of the property, but is not in occupation or control of it, the actual occupation or control being vested in a lessee or lessees.” (The italics are our own.) In so far as these words are concerned, they relate to the property and not merely to the roof or the cornice. It Is certain that this property, considered as the subject-matter insured, was not in the occupation or control of *8 the owner, for it was under lease and occupied by tbe several tenants, and, indeed, the leases stipulate that it was given over to the- lessees in its present condition without any obligation on the landlord to make repairs for their benefit. Obviously, plaintiff owner did not occupy the roof of the building nor the cornice, and it cannot be said in the sense of the policy that it even controlled them. Whether Milford, who occupied two of the storerooms on the ground floor as a restaurant, and the second and third stories of the building as a hotel, is to be regarded as in the occupation and control of the roof and cornice as appurtenances to his tenement, is immaterial under this policy, for it is clear plaintiff was neither in the occupation nor the control of the property, that is, the habitable portions of it, which as a whole is the subject of the insurance. The concluding words of the provision of the policy above copied — that is, the words “notwithstanding the fact that the property is leased or beyond his (the owner’s) control” — imply too, that the stipulation relates to .the property as property for the uses intended, rather than to a mere isolated portion, such as the roof or the cornice, which in no sense is either occupied or controlled at all for the uses of either the tenant or the landlord. ' In this view, the subject-matter in suit — i. e., the payments made to the injured persons — is clearly within the terms of. the policy, and it is unnecessary to consider the argument directed against the instruction touching the question as to the occupation or control, for the court should have directed as a matter of law that plaintiff was not in the occupation or control of the cornice which fell, in that all the habitable portions of the.property were in the occupation and control of the tenants.

But it is argued that though such be true, it does not sufficiently appear that the damages liquidated by plaintiff were occasioned by some fault or neglect on the part of the assured or - that they are chargeable to it by law according to the purport of the provision of the policy above set forth. There is no question about the fact that the cornice, because of its own defects, fell into the public street on a quiet evening, when it is *9 said the current of air did not exceed three miles per hour. It is conceded, too, that all of the parties to whom the payments were made received injuries from the fall of the cornice, without fault on their part, while passing the way. Ordinarily, the presumption of negligence which attends such a state of facts would alone suffice, in that the rule res ipsa loquitur applies (see McNulty v. Ludwig, 125 App. Div. (N. Y.) 291, 292); for, as said by the court in Mullen v. St. John, 57 N. Y. 567, 571 , it is similar to the case of a ship thought to be seaworthy which goes to the bottom in a tranquil sea and without a collision. The mind, in such circumstances, necessarily seeks for a cause of the occurrence. Apparently it is the defective condition .of the structure. This, of course, leads to the inference of neglect of duty, which suffices as a prima-faeie showing and casts the burden to rebut it on defendant.

But the presumption is to be put aside here, for that, to cast liability at law upon the owner of the property, there must be some showing that the building was defective at the time possession was given over to the tenants under the leases, and it appears the leases were made about three years before. It appears that the cornice which fell was placed on this old building about twenty-five years before the occurrence. It was constructed by means of placing two-by-four pine timbers in the brickwork of the walls above the roof, and these were covered with a metal sheet. The whole was made fast by means of certain iron braces. In the course of all these years, the elements had caused this metal sheeting, which constituted the outside and covering' of the cornice to disintegrate, and thus permitted the rain and snow to reach the wooden supports and iron braces within. The two-by-four pine pieces had decayed and the iron bolts rusted, until they broke. The mortar between the brickwork, to which the whole was affixed, had, through thus being exposed to the elements, lost its bond, until it had disintegrated into a mere sandy substance without resisting power. Expert evidence, given by experienced builders and men engaged in the business of wrecking buildings, tended to prove that this *10 condition was of long standing, and it sufficiently appears that it was discoverable by ordinary care for a period of several years before — at least antedating the leases in question. This evidence is abundant, as tending to prove that this old, dilapidated and weatherworn cornice, thus overhanging a sidewalk on a public street, was a nuisance, for injuries from which the owner of the property was liable, even at the time the property was let to the tenants. The finding to the effect that the injuries received by the pedestrians in the street were caused by some fault or neglect on the part of the insured and that they were properly chargeable to it by law is amply supported-by the evidence. The question concerning this matter was sufficiently submitted to the jury by plaintiff’s instruction No. 3 and defendant’s instruction No. 7.

But it is argued plaintiff DeMun Estate Corporation, the insured under the policy as it now stands, is in no view liable at law to the persons injured in the street hv the falling of the cornice, for that the property was under lease at the time it acquired it. The leases were made by the DeMun heirs through Julius S. Walsh, agent, one in 1907 and the other in 1908, and plaintiff DeMun Estate Corporation came into being subsequent thereto — that is, late in the year 1909. This argument proceeds in the view that, though the evidence sufficiently shows fault and neglect on the part of the DeMun heirs, even prior to the date of the leases, such fault and neglect may not be attributed to plaintiff DeMun Estate Corporation, which, it is said, succeeded to the property subject to the leases. We put aside entirely the argument, that he who knowingly continues a nuisance is responsible, as well as his predecessor, for permitting it in the first instance, as of doubtful import here, because, in no view, may liability he cast secondarily against defendant insurance company, unless the cornice was defective at the time the leases were executed and the property passed into the hands of the tenants, for that the owner of the property is not to he held for a dereliction of duty thereafter.' Be this as it may, however, it is abundantly clear that plaintiff DeMun Estate Corpora *11 tion is, both in spirit and substance, a mere continuation of the prior owner — that is, the several heirs of the DeMun estate. The property was owned by the heirs of Isabel DeMun and the leases were made by them througn their agent, Julius S. Walsh', for himself and the other owners. In the latter part of the year 1909 the estate was incorporated and the property turned over to it ás capital, while shares of stock were issued to each heir. representing his proportionate part of the property. One of the heirs was president, another secretary and treasurer, etc., of the corporation, and it amounts to no more than encasing the estate in a corporate charter, for, as said before, in both spirit and substance the assured and lessor remained the same. In other words, the name of the assured and owner was merely changed and, indeed, such is recognized as the fact by defendant in the indorsement on the policy to that effect. By the express words of this indorsement it is recited of date January 28, 1910 that “the name of the assured in this policy is changed to read DeMun Estate Corporation.” Obviously, though a corporate charter was obtained, and as incident thereto a franchise for the property interests of the several heirs to continue and subsist as a corporate entity rather than as individual private rights, the interests of the heirs remained the same throughout, in that the DeMun Estate Corporation represented the same rights of property as did the lessors, the heirs of the DeMun estate at the time the leases were executed. It is a benign precept that the common law heeds the substance rather than the mere shadow of things. In such circumstances, the plainest principles of natural justice require that the corporation be regarded as a mere change of name of the owner. In other words, as is well said in the brief, it is similar to the case of an .owner going into court after the lease is executed and before the loss and having his name changed by decree, or a femme sole owner and lessor taking a different name as the name of her husband through marriage. In either event the owner, lessor and assured remain the same person. The principle declared in Winkleman v. Des *12 Moines & Mississippi Levee Dist., 171 Mo. App. 49 , 153 S. W. 539 , and more recently vindicated in Wilson v. Drainage District, 257 Mo. 266 , 165 S. W. 734 , s. c. 176 Mo. App. 470 , 158 S. W. 931 , is reflected and finds appropriate application here.

We see nothing further in the case that merits discussion in the opinion. All of the arguments advanced for a reversal of the judgment have been duly considered but we regard them as insubstantial.

The judgment should be affirmed. It is so ordered.

Reynolds, P. J., and Allen, J., concur.