Archer v. Merchants' & Manufacturers' Insurance

Wagner, Judge, delivered the opinion of the court. This was an action brought by the plaintiff as assignee of a policy of insurance issued by .the defendant to John Cook, and dated February 9, 1866, whereby defendant insured Cook for six years against lohs by fire, in the sum of twenty-five hundred dollars, upon a wagon-maker’s shop and materials used in manufacturing wagons. The policy was a mutual policy, and Cook, at the time of obtaining insurance, gave his premium note for nine hundred dollars, “payable in such portions and at such time or times as the directors of said company may, agreeably to their regulations, require.” The upper story of the building insured was ' used as a paint-shop, where were kept paints, oils, and other materials for painting wagons, and among the materials was about half a barrel of benzine, used in mixing paints, and which was proved to be of a very inflammable nature. The fire broke out in the paint-shop, and in that part of it where the benzine was kept. Defendant denied that it had any notice that a paint-shop was kept in the building, or that benzine was kept there, and contended that the keeping of the paint-shop and benzine in the building vitiated the. policy. The eighth article of the conditions of the policy declared that the company would not be “liable for damages to property by lighting, aside from fire, nor for damage occasioned by the explosion of a steam boiler, nor for damage by fire resulting from such explosion, nor explosions caused by gunpowder, gas, or other explosive substances, nor for damages occasioned by the use of camphene, spirit gas, or burning fluid, unless otherwise expressly provided.” When the case was called for trial defendant asked leave to file an amended answer, which, in addition to the defense theretofore relied on, set up an offset or counter claim, arising out of an assessment of about $360, made by the defendant on the premium note of Cook, the assignor. The court refused to permit the amended answer to be filed, and the defendant excepted. It was shown in evidence that a paint-shop was a common part of [440] a wagon-maker’s shop ; that the paints were used as materials for manufacturing wagons, and were customarily kept in the building used for that purpose, and that benzine had been used for several years as a material for mixing paints. This evidence was objected to, but admitted. The court gave judgment for plaintiff for the amount of the policy, and the defendant appealed to this court. The paints and benzine, disconnected and by themselves, would belong to the class designated extra hazardous, and therefore excluded from the terms of the policy. But as it was proved that they were materials usual and customary in the manufacture of wagons, and generally kept,in the same shop where wagons were made, the question is, were they not included and covered by its terms ? In Harper v. The Albany Mutual Insurance Company, 17 N. Y. 194, the action was upon a policy of insurance against damage by fire, issued by the defendant upon the plaintiff’s printing and book materials, stock, paper, and stereotype plates, and printed books, contained in certain buildings in the city of New York, therein described, “ and privileged for a printing-office, bindery, and book-store.” Under the head of special rates was this provision: “Camphene, spirit gas, or burning fluid, cannot be used in the building where insurance is effected, unless permission for such use be indorsed in writing upon the policy, and is then to be charged an extra premium.” The plaintiff proved a loss by fire exceeding the amount of insurance, and it appeared by the evidence on his part that the fire was occasioned by the act of a plumber engaged in making some repairs, who accidentally threw a lighted match or paper into a pan containing a small quantity of camphene, used for the purpose of cleaning rollers employed in inking the forms of type, wood-cuts, etc. It was insisted on the part of the defense that such use of camphene was prohibited by the clause in the policy respecting the use of “ camphene, spirit gas, or burning fluid.” But the court were unanimous in the opinion that the prohibition of camphene in that case related only to its use as a lighting material, and' that upon its being shown that the use of camphene was necessary in conducting the business, an assent was implied by the insurer to its being [441] kept upon the premises for suck use. The same rule was held in the case of the same plaintiff v. The New York Insurance Co., 22 N. Y. 441. In the case of Pindar v. The Kings County Insurance Co., 86 N. Y. 648, Pindar procured from the defendant a policy of insurance against loss by fire upon a building for one year; .also for fifteen hundred dollars on his stock, such as is usually kept in country stores, for one year. The policy contained a clause providing that if the premises, at any time during the period for which the policy would otherwise continue in force, should be used for storing or keeping therein any articles, goods, or merchandise denominated hazardous, or extra hazardous, or specially hazardous, in the second class of hazards annexed to the policy, except as therein specially provided for, the policy should be void while the premises were so used. Among the articles so specified as extra hazardous was spirits of turpentine, and among those specially hazardous, gunpowder. The premises and stock of goods were consumed by fire during the life of the policy. At the time of the fire about twenty gallons of spirits of turpentine and fifteen pounds of' powder were kept upon the premises. Upon the trial the plaintiff proved that spirits of turpentine and gunpowder were articles usually kept in country stores. It was held that the ■ policy insuring such goods as were usually kept in country stores covered all articles of merchandise coming within such description, even though articles were included generally prohibited except at special rates. The testimony introduced in this case was plainly admissible. Among the articles insured were materials used in manufacturing wagons. To determine what articles were covered by the policy, it was necessary to ascertain the kind of articles usually used in that kind of business. This rendered the proof clearly competent. The evidence showed that a paint-shop and the materials used for mixing paint were usual and customary in establishments for the manufacturing of wagons. The shop and the materials were thus brought within the description of the policy and covered by it. With the aid of the proof given, the shop and the materials must be construed to be within the policy as much as if they had been specifically mentioned. The insurer must be presumed to [442] know what is generally included in a wagon-manufacturing establishment ; and when the insurance was made, all the customary articles were included, and the printed conditions prohibiting them to be kept were plainly repugnant to the written clause insuring ' them. There is no other question of principle involved in the case; but there is a question of practice which remains to he noticed. The court refused the defendant permission to file the amended answer setting up an offset. The defendant showed great negligence in not filing it sooner, as the defense existed a long time anterior to the time it was proposed to be made availing, and no good reason is perceived for the delay. It may be said, as a general rule, that allowing an amended pleading to be filed under the circumstances exhibited in this ease is a matter resting in the sound discretion of the court; but yet, where the ends of justice will be subserved by granting the perihission, it is better to allow it; and if the other party is taken by surprise, or a continuance is thereby occasioned, the court should put the defaulting party on terms. This practice conduces to substantial justice and prevents multiplicity of suits. The assignee took the assignment with full notice of the assign- or’s liability. His title was wholly derivative, and he could have no greater or superior rights than the assured. (Bidwell v. St. Louis Floating Dock Insurance Co., 40 Mo. 42, and cases cited; Ang. on Fire and Life Insurance, § 222.) The assignment was made after the loss occurred, and it stood on the same footing as the assignment of a debt, or right to recover a sum of money actually due, which, like the assignment of any other chose in action, would give the assignee an equitable interest and a right to recover, subject, of course, to a set-off and all other equities. There is no good reason why the defendant should be compelled to pay the whole amount of the policy, and then have to resort to a separate and distinct suit against Cook, the assured and assignor, who in the meantime may have become insolvent. I think the company should have been allowed to avail itself of the defense set up in the answer, and for this reason the judgment will be reversed and the cause remanded for further proceedings in accordance with this opinion. The other judges concur.