Hanover Fire Insurance v. Crawford

McCLELLAN, C. J. — The plaintiff in the court below brought suit against the defendant upon a policy of insurance in which he was allowed to recover the value of the storehouse and fixtures therein, two of the subjects covered by the policy, and'not permitted to recover the value of the stock of goods kept’in the house on ác-count of his failure to comply with that provision of the policy known as the iron safe clause. Both plaintiff and defendant prosecute appeals to this court from the judgment. The defendant’s assignments of error are' determinable upon the decision of the question as to whether the policy with respect to the three subjects of insurance, to-wit: the house, the fixtures and the goods, is divisible, so as to allow the plaintiff to recover' the- value of the house and fixtures, notwithstanding his admitted breach of that condition of the policy above referred to and designated as the “iron safe clause.” The policy is one contract containing many conditions, warranties and representations. It récites a gross premium paid for the consideration of indemnifying the plaintiff against loss or damage by fire to an amount not exceeding f1,750 to the following described property: |700 on two story shingle roof building etc. while occupied as a general store etc. $1,000 on his stock of mer-chandisé consisting of dry goods, groceries, hardware, etc., while contained in said building. $50 on store and office furniture and fixtures etc. contained in said building. It does not necessarily follow'that because all the items' insured are covered by one policy, that' a’ breach of a condition subsequent in’the policy will’ avoid it as to all the items or subjects covered. And, indeed, it — 261 — does not necessarily follow that because there- are many items or subjects insured by the policy that it may not be avoided as to all of them.. Whether .either of these results flow from a breach of. a condition in a • policy must depend upon the-nature and character of the condition and the purpose to be accomplished. They ate usually adopted by insurance companies to .protect themselves against fraud and they have been recognized and enforced by the courts as valid stipulations whenever they are reasonable. Whenever nothing, but injustice, will be accomplished by the enforcement of a condition the courts cannot presume that it was the intention of the parties .to have so contracted as to that particular item of property insured. The law will be guided -by a respect to general convenience and equity, and by the good sense and reasonableness of the particular case, for it must be supposed that it was .the intention of the parties- that such, construction should take place. In the case of Georgia Some Ins. Co. v. Allen, 24 So. Rep. 399, s. c. 119 Ala. 436, this 'court held the iron safé clause to be a .condition subsequent. This, covenant and promissory warranty imposed upon the insured the duty. to take . a complete itemized inventory of his stock of goods- within thirty days of the issuance of the policy, unless such inventory had been taken within twelve months prior to the date of its issuance and, at all events, to take this inventory at least every twelve months from the time of- the taking of the last one. It also exacted of him that he keep a set of books which shall clearly and plainly present a complete record of business transacted, including' all purchases, sales and shipments, both for cash and credit, from date'of inventory and during the continuance of the policy. He was required to keep these book's and inventory and also the last preceding inventory if such has been taken, securely locked in a fire-proof safé at night and at all times when the building-mentioned •in the policy is-ndt. actually open for business, or failing ■in this, the a'ssnre'd will keep his books and inventories in soihe place not exposed to a fire which will destroy the storehouse.-. ..it is.-further provided that in the event — 262 — of his failure to produce his books and inventories for the inspection of. the defendant company that the policy shall become null and void, etc. The purpose .of incorporating this condition in the policy is patent .from its language. That it was never within the contemplation of the parties that the books or inventory were to contain any item with reference to the building or fixtures is beyond cavil. The preservation of them .was solely and exclusively for the purpose of ascertaining ..the value of the stock of .goods covered by the policy in case of fire. They were the best evidence of this fact and. if correctly kept, would furnish an. unerring .guide by which the amount of defendant’s liability as to the goods destroyed could have been ascertained. Besides they stood as a barrier to, the perpetration of any .fraud by the assured with respect to the quantum and value of.the goods destroyed. No such considerations could be invoked as to the. application of this .condition to the other subjects of insurance in the policy. . . Nor can it be fairly said that this condition entered into the inducement on the part of the defendant to issue the policy.. .It was not shown that the rate of insurance upon the house and fixtures would have , been greater had the assured not included his stock .of .goods in the policy; or that a different rate was charged upon the separate valuation of each subject. Furthermore, we are unable to see how a failure to comply with the condition could possibly affect the risk upon the building and fixtures. If broken by the assured and a loss occurs by fire, the assured loses the value of his goods and this too whether the fire is occasioned by his willfulness, neglect, acident or the incendiarism of another. There could then be no inducement for him to destroy the building, or the building and its qontents. Unlike the case, in this respect where there is a misrepresentation as to ownership of a building containing machinery more or less attached to the building, and both the building and machinery are the subjects of insurance in the same policy. Here, we can well see how the hazard or risk upon the machinery would be increased if there was a.false warranty,as to the ownership of the build — 263 — ■ing. The assured might be induced if allowed to recover for loss of machinery, notwithstanding his false warranty which would deprive of the right to recover for the loss of the house, to destroy the house for the purpose of getting the insurance upon the machinery. We are aware that in many of the States it is held that a policy like the present one is an entire contract, and a false warranty will avoid the entire policy. . In others, the rule is. different and unless,the false warranty is of such a nature as to increase .the hazard or risk assumed by the insurance, company ,as to all,the subjects separately valued, the assured is allowed to recover for the loss or destruction by fire of those not falling under the influence of this construction. This latter rule is declared by the courts, holding it to be the fairer one and more clearly carrying out the intention of the parties to the contract. Whatever may be the rule as to the effect of false warranties, we are clearly of the opinion, that the condition under consideration, as to its application, cannot by any rule of construction consonant with justice and reason and the manifest intention of the parties be made to so apply to the building and fixtures as that a breach of it would defeat his recovery for their loss. ■ In the case of Manchester Fire Assurance Co. v. Feibelman, 23 So. Rep. 759, 118 Ala. 308, the policy of insurance contained separate valuations, made of the fixtures, wines, liquors, etc., and the pool .tables of the assured. The company insisted that, the assured had avoided the policy entirely by giving a mortgage upon three of -the pool tables in violation of one of the conditions contained in the.policy.. This court held that the insurance ■as to each of the subjects was divisible and that the assured might recover for the loss of the other items, notwithstanding. he had avoided the policy as to the pool tables. In support of this view, in .addition to the .authorities therein cited, we find that in Clark v. New England Mut. Fire Ins. Co., 6 Cush. 342, the Supreme Court of Massachusetts held, that the alienation by the assured of his shop, after the issuance of the policy,'did ■nbt ¡avoid the policy upon his tavern covered by the — 264 — same policy, they each being separately valued; also that.in Speagle v. Dwelling House Ins. Co., 31 S. W. Rep., s. c. 97 Ky. 646, the Supreme Court of' Kentucky held that where four dwelling houses insured' were burned, the fact that two of them were unoccupied; thus vitiating the policy as to them, does' not prevent recovery for the other two, which were occupied. ' • • The case of Mitchell v. Mississippi Home Ins. Co., 18 So. Rep. 86, s. c. 72 Miss. 58, decided by the Supreme Court of Mississippi is directly' in point. The court said, “The requirement of the iron-safe clause is that the last inventory and the books of account of sales and purchases shall be kept in such safe or in some secure place other than the premises where -the insured property was kept and that a failure to' produce the- inventory and books after-loss-shall avoid the policy; but all this has reference only to such articles- of merchandise as constitute the stock in trade. The store fixtures and furniture and' the restaurant furniture, including- the cooking stove, were never designed to be embraced in the inventory of the stock on hand or to be entered and carried in the books of account, showing purchases and sales of goods by the insured. ■ As to these, the policy was not avoided by appellant’s failure to observe the iron-safe clause. The contract was divisible and it may be true that appellant ■ could be defeated of a recovery for the sum for which the stock of goods was insured, and yet might have been entitled to recover for the furniture and fixtures of the store and restaurant. The case is not to be confounded with those in which any recovery for any part of the sum-insured has been denied because of misrepresentations or fraud of the insured.” The evidence was without dispute that the plaintiff allowed his books to-remain in the--building- in which he carried on the business of' general merchandise and that they- were destroyed by the fire which destroyed the building, fixtures and stock of general merchandise. That he avoided the policy as to the stock of merchandise by so doing is not questioned by him, and he is not entitled to recover for their l'oss, unless the defendant waived his -breach of the — 265 — condition. It is insisted, however, by plaintiff that the evidence shows a waiver. The evidence relied upon as establishing this contention is in certain letters written by the agent of defendant to the plaintiff and his principal, and letters written by defendant to this agent with reference to the loss under the policy sued upon. In none of them do we find any recognition by the defendant or its' agent of any liability to the plaintiff; but on the contrary there is in many of them a denial of-all liability. In the only two letters received by plaintiff the liability of the defendant is expressly denied for the reason therein stated, that he had failed to comply with this condition of the policy. The evidence upon this point, in onr opinion, was not as forceful as it was- in the case of Georgia, Home Ins. Co. v. Allen, supra, in which this' court held as a matter of law* there was no waiver of the breach of the conditions and covenants of the policy.- ■ What we have said renders it unnecessary to consider the.rulings upon the pleadings in the cause. The evidence being-without dispute upon the two. propositions discussed by us, there was no error committed by the trial court of which the plaintiff or defendant can complaint ■ , . Judgment affirmed on each appeal. ■ , ...