Washington Fire Insurance v. Davison

Miller, J., delivered the opinion of the Court. This suit was brought by the appellees to recover for a loss by fire on their Sulphuric Acid Manufactory, stock, machinery and chemical apparatus connected therewith, situated on Fort avenue near Baltimore. In the policy sued on, after risks on two other buildings, the subject matter destroyed and for which recovery is sought is thus described: “ $ 3,500 on a two story brick and frame building used as a Sulphuric Acid Manufactory, about 500 feet south of the first named building; $3,500 on stock, and $225 on machinery including chemical apparatus contained in and out of the factory building and connected therewith.” — 102 — •" At the ti’ial six exceptions were taken by the defendant, five to rulings upon questions'of evidence, and the last to the action of the Court upon the prayers offered on either side. These several rulings are before us for review on this appeal, and will be considered in the order in which the record presents them. 1st. In the absence of any express provision on the subject in a policy against fire, it is settled law that the making of repairs or additions to, or the erection of adjacent buildings whereby there was a material increase of risk by fire, to the property insured, will not prevent a recovery unless the loss was produced in xvhole or in part by such increase of risk. The defendant’s counsel having admitted he did not propose to show that the loss in this case had been occasioned in whole or in part by the alleged increase of risk, the Court -was clearly right in rejecting the offer in the first exception, to prove that building No. 3 was erected immediately adjacent to the building insured and that at the time of the fire carpenters were at work finishing its roof, and that the erection of that building was a material increase of risk to the insured property, unless the fact that carpenters were at work upon No. 3 at the time of the fire, was admissible for the purpose of showing there had been a carpenters’ risJc on the insured premises which avoided the policy under the seventeenth condition thereto annexed. This latter position was strongly pressed in argument, but in our judgment the policy will not bear the construction contended for. In the body of the policy it is provided that if .the insured premises shall be used for the purpose of carrying on therein any trade or occupation, or for storing or keeping therein any articles, goods or merchandise denominated hazardous, or extra-hazardous or specially hazardous, in the conditions annexed to the policy, it shall be of no force or effect unless the conditions in that respect are complied with. The seventeenth condition provides that certain risks thereafter mentioned being considered hazardous will subject the insured to a higher rate l>f premium, and those, therefore, — 103 — desirous of having the liberty of using their premises for such purposes must have the same inserted in their policies which otherwise will be void. Then follow three sections or classifications of various articles of merchandise, trades, occupations and buildings used for particular purposes, headed: 1st. Merchandise generally — Hazardous. 2d. Trades — Extra Hazardous ; and 3d. Risks — Specially Hazardous: and in the latter is included the term “ carpenters” in the same enumeration with “barns and stables and contents,” “breweries,” “cam-phene and burning fluids.” “hay, straw and provender,” “ lumber,” “ manufactories,” “ mills,” &c. It is very obvious from the proviso in the policy and the terms of this condition that what is here prohibited by the term “ carpenters” is the use of the insured premises for the purpose of carrying on therein the work or business of a carpenter or converting them into a carpenter’s shop, just as the use of the premises for the purpose of storing “ camphene and burning fluid” is provided against by the use of those words in the same connection. It has no reference or application to the erection by carpenters of an adjacent building on adjacent ground when the insured premises are not used by them as a work-shop for that purpose. To avoid the policy under this condition, the insured premises must themselves be used for the purpose of carrying on the prohibited trade or for the storage of the prohibited articles. The testimony offered was, therefore, inadmissible upon any ground and was correctly rejected. 2d. The offer in the second exception to prove by the defendant’s secretary, as an expert in insurance, that the term “carpenters” thus used in this policy was generally understood in the office of the defendant to refer to the -employment and work of carpenters in erecting or adding to buildings insured was properly rejected. The policy in this respect is sufficiently plain and will admit only of the construction we have placed upon it. But if the term “ carpenters,” as here used, could be regarded as in any degree ambiguous so as to admit of parol evidence or usage to explain it, it was not competent — 104 — to do so by showing merely what it was generally understood to mean in the office of the defendant, without any proof or proffer of proof that the plaintiffs knew of such understanding. The scope of the inquiry is altogether too narrow. To allow an underwriter to escape responsibility by proof of a general understanding in his own office of the meaning of the terms of his policy would be to transform such contracts, justly denominated contracts ubérrimos fidei, into mere traps for the unwary and confiding. The law will never permit the rights of the assured to rest upon any such fluctuating and unsafe basis. 3d. We cannot perceive upon what ground error can be predicated of the refusal by the Court to allow the question set out in the third exception to be asked: Whether it was, or not, an uniform usage of this company, to endorse written permission on all its policies, in case of an alteration of, or addition to insured premises, whereby the risk of fire was materially increased, was a matter wholly immaterial to the case. There was no requirement of the policy to that effect, and the usage, if it existed, was wholly gratuitous, and could not in any manner have affected the insured, even if they knew it. 4th. Davison, one of the plaintiffs, when examined as a witness, swore that he was present when McGinnis and Mil-nor, the secretaries of the two companies, examined the premises previous to taking the risks and pointed out to them the plan of the buildings about to be erected. McGinnis and Milnor, in their examination for the defendant, swore that Davison was not present on that occasion. Their testimony, therefore, went to a substantial impeachment of the credibility of Davison. The plaintiffs then proved that at the time of the examination, McGinnis did a certain act and made a certain remark in regard to the building, which he had not communicated to Davison. The latter was then recalled and swore to the occurrence and remark. The plaintiffs then proved by Symington, that on the same evening or the next — 105 — morning, after the visit of McGinnis and Milnor, being the next time he saw Davison, after the visit the latter mentioned to witness the occurrence in question and the remark made by McGinnis. To this testimony the defendant excepted, but the Court allowed it to go to the jury, and to this ruling the defendant took its fourth exception. We are clearly of opinion the testimony was admissible to corroborate Davison, whose credibility had thus been impeached by the defendant’s witnesses. The ruling falls directly within the decision in Cook vs. Curtis, 6 H. & J., 93, and the rule of evidence of which that case is an illustration. 5th. By the plain reading of the fifth exception, a question >vas asked one of the plaintiffs’ witnesses, in his examination in chief, which he was allowed to answer, and after it had been answered, the defendant objected to it as a leading question. This objection the Court refused to sustain. The objection came too late. When the objection is to the question and not to the answer, it must be made before the question is answered. The opposing party cannot allow the answer to come in and then if it does not suit him, object to the question. When the objection is to testimony it must be taken when the offer is made, if the ground of objection is known or apparent, and not after it has gone to the jury, and the same rule applies to a case like this. The alleged objection to the question that it was leading, was just as apparent when it was asked, as after it had been answered. It is therefore unnecessary to inquire, whether the objection would have been well founded, or not, if it had been made In due time. 6th. The sixth exception presents for review the prayers, which were offered on either side. The plaintiffs’ first prayer, that the defendant’s liability under the policy, (which contains no clause making it void for that reason,) was not affected by any additions to the factory, machinery or apparatus insured, made after the execution of the policy, unless the loss was occasioned in whole — 106 — or in part by suck additions, merely announces the proposition, which we have already decided in passing upon the first exception and was correctly granted. One of the main points of controversy relates to the erection of the shed by which the steam boiler and other apparatus connected with the manufacture of sulphuric acid, in the insured building, were covered and protected. There was proof that at the time the secretaries of the two companies visited and examined the premises with a view of taking the risks the insured building was completed, or nearly so, but the business of the manufactory had not then commenced; that at a distance of about twenty-two feet'from this building and parallel therewith, the brick foundation for another factory for the same purpose .(called in the evidence building No. 2) was laid; that the steam boiler and smoke stack were erected but not covered; and that neither the evaporating pan nor the nitric acid still had been put up, but the brick and stone foundations for both had been laid and completed, and the still itself was lying on the premises. All these fixtures were situated between the insured building and the •foundation of No. 2, and nearer to the latter. It is conceded the assured had the right to cover and protect them in some manner, without affecting the validity of the policy. Instead of erecting separate sheds over each, the plaintiffs proceeded to erect and complete No. 2, and then built a shed covering the entire space between the two buildings, and extending their entire length, resting upon timbers placed across from one to the other. The fire originated on this shed, caused, most probably, by the smoke stack of the steam boiler passing through it, or from sparks therefrom. In view of these facts, and of all the evidence in the case, the plaintiffs presented their second prayer, that even if the jury should find the loss might not have occurred but for the erection of this shed between these buildings, yet if they find the apparatus covered by the shed was appropriate and usual as part of, or connected with a Sulphuric Acid Manufactory — 107 — like that mentioned in the policy, and was properly located for the uses and purposes thereof, and that said shed was a proper and usual protection to such apparatus, and that the defendant’s secretary examined the premises with a view to their insurance, and found said apparatus, or the buildings, or foundations therefor, constructed in whole or in part, and as yet exposed and unprotected, then the subsequent erection of said shed over said apparatus is no bar to their right to" recover. In our judgment there was evidence in the case from which the jury, if they believed it, might have found that the particular shed in question was a proper, usual and necessary protection for the machinery and apparatus so situated, as well as all other matters of fact submitted to their finding by this prayer. This being so, the legal proposition involved in the prayer cannot be seriously controverted. On the other hand there was evidence from which the jury might have found the contrary, that is, that the erection of this shed, in the manner in which it was constructed, was not a usual, proper or necessary protection of the machinery and apparatus, and if they so found, and that the risk of fire was materially increased thereby, and that the loss complained of was caused by such increase of risk, then the plaintiffs were not entitled to recover, unless they further found the defendant knew, at.the time the insurance was effected, that the plaintiffs intended to erect the shed in the manner in which it was subsequently erected. If a prayer on the part of the defendant had been offered plainly and distinctly, presenting this counter-proposition, it would have been error to refuse it. But no such instruction was asked. The defendant’s first prayer, which .approaches the position most nearly, is defective mainly for assuming and embodying as an element of increased risk, the erection under the shed of a furnace for the manufacture of nitrie add, as if this was an independent manufacture, disconnected from the purposes and necessities of a manufactory of sulphuric acid, whereas it was proven, without contradiction, that the use of nitric acid in — 108 — the manner described by the witnesses was the most usual and best method of manufacturing sulphuric acid; and, moreover, the foundation for the nitric acid still, for the purpose of such manufactory, was laid at the time the defendant’s secretary inspected the premises. This prayer .was therefore correctly rejected, because of its misleading tendency in this particular, no matter how correct it might have been in other respects. The third, fourth and fifth prayers of the plaintiffs, as well as the second, rest upon the propositions that an insurer taking a risk like the present upon a sulphuric acid manufactory and machinery and chemical apparatus connected therewith, is presumed to know and to have contemplated all the casualties and incidents to which the subject insured might be liable as such manufactory, and to have known all the requisites and adjuncts belonging thereto; and if he inspects the premises by himself or his agents, he has notice of all an expert ought to know from such inspection, and is bound by knowledge to that extent, and cannot set up in defence the ignorance or incapacity of the inspectors he employs. These propositions are founded in justice and sound reason, and are abundantly supported by the authorities cited in that behalf by the appel-lees’ counsel in argument. The second prayer of the defendant combines two distinct reasons for avoiding the policy sued on. 1st. The non-endorsement thereon in writing of another insurance in the Maryland Fire Insurance Company, within the proviso in the body of the policy itself. And 2d, the non-endorsement of a change, in this latter policy by the addition of the words “ and out of ” and “ and connected therewith,” within the fourth condition annexed to the policy in suit. The second ground of objection is without foundation in fact. It is admitted the policy in the Maryland office contains the same provisions as that in suit, and the eighth condition provides it shall not be considered as binding until actual payment of the premium. It is also established by undisputed evidence, that this alteration in the Maryland policy was made by the secretary of that — 109 — company (whose act in so doing is admitted to be effective to bind the company) before the premium was paid. Thus at the time this policy became a binding and effective contract between the parties, and when the risk was first incurred thereunder, it was in the. form in which it now stands, and consequently there was no change, to be endorsed on the policy in suit within the terms of its fourth condition. The correctness of the first branch of this prayer depends first upon the question whether the policy in the Maryland office procured at the time and under the circumstances stated in the evidence comes within the terms of the proviso referred to. It is proved the plaintiffs did not apply to the Maryland Company for insurance, but sought their whole insurance from the defendant, and the latter for its own convenience and not at the request or authority of the plaintiffs, applied to the Maryland Company to share the risk; that the premises were examined by the secretaries of the two companies together, with a view of taking the ris'k conjointly: that both policies as originally drawn were precisely similar, of the same date, for the same amount, and both were altered in the same particulars before the premiums were paid; and that the premiums were paid to both companies on the same day. It thus appears the Maryland policy was effected with full knowledge on the part of the defendant, indeed at its request and for its convenience, that both policies were precisely similar and became effective and binding contracts at the same time. The proviso is that “if any other insurance has been or shall hereafter be made on the said property,” without the consent of the company in writing endorsed thereon, the policy shall be void. The design of such provisions respecting notice of prior and subsequent policies, is to enable underwriters to judge whether they ought to insure at all and at what premium, and to ascertain whether there still remains any such substantial interest of the assured in the premises insured, as will guarantee on his part, vigilance, care and strenuous exertions, to preserve the property. Underwriters do not — 110 — rely so much upon the principles, as upon the interest of the assured. Whether there be any other insurance or not on the property, is a fact material to them-, and perfectly known to the assured and not- easily or ordinarily within the means of knowledge of the insurers; hence, the importance and necessity of such clauses. Carpenter vs. The Providence Washington Ins. Co., 16 Peters, 510. Whilst it may be said the public have an interest in' maintaining the validity of these clauses, and giving them full effect and operation, inasmuch as they have a tendency to keep premiums down to the lowest rates, and to uphold institutions of this sort, so essential to the protection of property; yet, like every other stipulation in the policy, they must receive only a fair and reasonable interpretation according to their terms and obvious import; We are satisfied no rule of construction is violated, and no just end of public policy subverted or endangered by holding that this policy in the Marylánd office, obtained with the knowledge and under the circumstances stated, was neither prior nor subsequent to the policy sued on, but took effect contemporaneously and "uno flatu with it, and' is not within either the spirit or the letter of the clause in question. Placing this construction upon the clause, it would be improper to express any opinion upon the other interesting and important question, so ably argued at bar, on this branch of the case. The defendant’s third prayer assumes that the alteration in the policy was made after it was issued and delivered to the plaintiff's, but the proof is clear it was made and required to be made before the premium was paid, and by consequence before by its own terms it became a valid and binding instrument. It was never issued in the legal sense of the term, and no risk was taken until after the alteration was made. Again this prayer assei’ts, that if the clerk who made the alteration had no authority to do so, and thereby bind the company, and that the same' was not known to the president or secretary of the defendant until after the fire, then the — 111 — words introduced by the alteration form no part of the policy. This assumes that nothing but actual notice of the alteration would bind the company, and ignores altogether the fact that the same alteration was made at the time, by the same clerk, in the record of the policy in the record book, in which all policies issued by the company were recorded. In our opinion constructive notice is imputed to the company from this record in their own books, kept' by them for the sole purpose of recording their policies, and that they were bound by this as effectually as by actual notice. (Decided 21st January, 1869.) By the true construction of the policy as it stands, assuming the alterations to have been properly made, and to form part of it, it covers all stock, machinery and apparatus on the grounds or premises, used for the purpose of the manufac-tory, whether in or outside of the insured building, provided they were connected with the manufacturing of sulphuric acid therein, and whether under one shed or another, or one building or another. Actual physical or mechanical connection was not essential either as to the machinery, apparatus or stock, but only a connection in purpose, application and use. There was consequently no error in the rejection of the defendant’s fourth and fifth prayers. The sixth prayer is erroneous for the reason already stated, in asserting that the erection of buildings Nos. 2, 3, &c., if found to increase the risk, will avoid the policy, even though the loss may not have resulted from such increased risk. Having thus considered, in detail, the several rulings excepted to, and finding no error in any of them, the judgment must be affirmed. Judgment affirmed,