Gates v. Madison County Mutual Insurance

The action in this case was brought in the court below upon a policy of insurance against fire. The property insured was a dwelling or tavern-house, a store, and a barn and shed adjoining the store, situated in the village of Durhamville, town of Verona, in the county of Oneida, and on the north side of the Erie canal; the insurance was for five years, from the 12th of March 1838. The property insured was consumed by fire, on the 25th day of August 1840, of which notice was given to the defendants, as required by the terms of the policy. The policy refers to the plaintiffs’ application for insurance “for a more particular description” of the property insured, and as “forming a part of this policy,” and thus, by express words, was made part of the contract. Burritt v. Saratoga County Mutual Insurance Co., 5 Hill 188 ; Jennings v. Chenango County Mutual Insurance Co., 2 Denio 75 .)

The plaintiffs were required, by the form of the application with which they were furnished, to state, first,

This cause has been tried three times at the circuit On the second trial, it was proved, among other things, tliat there were several other buildings within ten rods of the insured buildings, besides those specified in the application, at the time it was made, of a hazardous character, and for that reason, the plaintiffs were non-suited ; not, however, upon the ground that the answer to the second question amounted to a warranty that there were no other buildings than those stated, within ten rods of the building insured; but upon the ground, that it amounted to the withholding of information, material to the risk, which was called for by the question put. A motion for a new trial was made by the plaintiffs, in this court, founded upon a bill of exceptions taken at the trial, when it was held, that the answer to the question contained in the application: “How bounded, and distance from other buildings, if less than ten rods ?” was not a warranty that there were no othei buildings than those specified, within the distance of ten rods from the premises insured; that “ the call was not for all the buildings within ten rods of the appli

decision must be regarded as settling the question, that the answer to the interrogatory in the application, in respect to the distance of the insured premises from other buildings within ten rods, did not amount to a warranty that there were no other buildings within ten rods than those mentioned in it.

In Jennings v. Chenango County Mutual Insurance Co. ( 2 Denio 75 ), where the application .and conditions of insurance were made a part of the policy, and among other particulars, the insured was required, by the conditions of insurance, and by the form of the application, to state the “relative situation (of the grist-mill) as to other buildings, distance from each, if less than ten rods” — and the answer given was, “ the mill is bounded by space on all sides,” there being a large barn standing within six rods of the mill, it was held to be a warranty that there was no building within ten rods of the mill, which the existence of the barn within that distance falsified, on the ground, that the answer “ that the mill was bounded by space on all sides,” was to be understood and taken as an affirmance that there was no building in any direction within ten rods of the mill. Notwithstanding the learned judge, in delivering the judgment of the court in this cause, on the former occasion, was unable to see clearly that it amounted to a warranty, I still think, that it did. For although the insured, in the language of Mr. Justice Bronson, in Burritt v. Saratoga County Mutual Insurance Company ( 5 Hill 188 ), did not, in terms, say, there was no building within ten rods, he must have intended, that his answer should be received and understood by the company, as affirming that fact; and as the answer is to be regarded as parcel of the contract, I could not resist the conclusion, that the insured agreed that there was no building within the ten

In marine insurance, the insured is bound, although no inquiry be made, to disclose every fact material to the-risk, within his knowledge. And although the same general principles * apply to the contract of fire insurance, yet in making the latter, there being no fraud practised, if the applicant for such insurance make a true and full answer to the questions put to him by the insurer, in respect to the subject of insurance, it is enough; he is not answerable for an omission to mention the existence of other facts, about which no inquiry is made of him, though they may turn out to be material for the insurer to know, in taking the risk. He has a right to suppose that the insurer, in making inquiries in respect to particular facts, deems all others to be immaterial to the risk to be taken, or that he takes upon himself the knowledge, or waives information, of them. (Carter v. Boehm, 3 Burr. 1905; Cornfoot v. Fowke, 6 Mees. & Welsb. 358; Williams v. Rawlinson, 3 Bing. 77; Broom’s Maxims 358; Burritt v. Saratoga County Mutual Ins. Co., 5 Hill 188 ; 3 Kent’s Com. 372.)

And so, if an insurer enter into a contract of insurance against fire, without making any inquiry of the applicant in respect to the subject of insurance, he has no ground for complaint, if the risk turn out to be greater than he anticipated, unless, indeed, the insured is chargeable with some misrepresentation in reference to the nature or extent of the risk. Hence, it has become the general practice of insurers against fire, to guard, in some form, against the consequence of such matters as they deem material to the risk, or which may affect the amount of premium to be paid; sometimes, by conditions or proposals annexed to and made a part of the policy, and sometimes, by requiring the applicant to disclose certain facts in a written application for insurance,

Holding, therefore, as this court did, on the former occasion, that the answer of the insured to the interrogatory contained in the application, in relation to the distance of the buildings offered for insurance from other buildings, was an apt and full' disclosure of all the facts asked for, stated in a clear and intelligible manner, in the sense in which the parties understood the question, puts at rest the question again raised of concealment, founded upon the fact that there were other buildings within the ten rods, not mentioned.

On the trial, the defendants offered to show, that previously to the making of the insurance, the plaintiffs had made preparations for building a large tavern-barn on the premises; that they had brought upon the premises some materials for that purpose, and soon after the insurance was effected, they erected such barn, in the rear, and nearly adjoining the wood-house attached to the tavern-house, without having made any mention of the same in the survey, or giving any notice thereof to the company, then, or at any time afterwards, and that the defendants had no knowledge of the erection of the new barn, until after the first trial of this cause. The evidence being objected to, it was rejected by the judge, to which an exception was taken. It is insisted, that the omission of the plaintiffs to communicate to the defen d-

It would be a sufficient answer to this point to say, that there being no inquiry made of tbe plaintiffs, by the defendants, calling for that information, nor any evidence to show that tbe omission was intentional, or that even knew or suspected *that tbe communication of such facts was material to tbe risk, and especially, as it was not offered to be shown, that the erection of the barn did, in fact, increase the risk, tbe evidence was properly rejected. There is no provision contained in tbe policy, or proposals annexed, prohibiting tbe insured from erecting any new building upon any part of tbeir premises, contiguous to the buildings insured; and I am not able to discover any legal reason, why they might not do so, without affecting their policy, unless some injury actually resulted to the defendants from such act, and none is pretended in this case.

The defendants have, by the terms of tbe policy and proposals annexed, guard.ed against an increase of the risk by any alteration, either in the buildings insured, or the business carried on therein, and if they had deemed it important, they might have inserted a provision, prohibiting the erection of any other building upon the adjacent premises of the insured, during the continuance of the policy. But they have not thought proper to do so, and in my opinion, the policy is not affected by the erection of the barn, as the defendants proposed to show, especially, as it is not pretended, that any injury resulted from it. (Stebbins v. Globe Insurance Co., 2 Hall 632 ; Stetson v. Massachusetts Fire Ins. Co., 4 Mass. 330 .)

It was offered, by the defendants, to prove substan

*There is no clause in the contract, prohibiting a change of the tenant in the occupation of the premises at the time it was made, during the continuance of the policy ; nor was any inquiry made, whether a change of tenant was contemplated. The question put was — “for what purpose .occupied, and hy whom?” and it was correctly and fully answered, that the premises were occupi ed as a tavern stand, and “ at present,” by Eliphalet Sears. There is nothing indicating that Sears would or should continue the occupant, during the continuance of the insurance; but, on the contrary, if anything may be implied, it may, I think, be implied, that a change of tenants might be made. I see no ground to hold the policy void, on the ground of a change of tenants, although the first was careful and prudent, and the other grossly negligent. It would he unreasonable to imply, that the defendants entered into the contract, with the expectation that the then tenant was to continue in the occupati on, during the period of the running of the policy, in the absence of anything of that sort being indicated by the application, policy or proposals.

But another question arises upon the evidence offered, namely, whether a loss occurring from the gross care

The rule is well established, not only in the English, but in the general American insurance law ; that in the absence of all fraud, the proximate cause of loss, only, is to be looked to; and the same rule now prevails in marine insurance. (Waters v. Merchants’ Louisville Ins. Co., 11 Peters 213 ; Columbia Ins. Co. of Alexandria v. Lawrence, 10 Id. 507; Delano v. Redford Ins. Co., 10 Mass. 355 ; Patapsco Ins. Co. v. Coulter, 3 Peters 222 ; Williams

v. Suffolk Ins. Co., 3 Sumn. 276 ; * Copeland v. N. E. Marine Ins. Co., 2 Metc. 432 ; Shore v. Bentall, 7 B. & C. 798, note b; Busk v. Royal Exchange Assurance Co., 2 B. & Ald. 73; Shaw v. Robberds, 6 Ad. & E. 75; 3 Kent’s Com., 5th ed., p. 300, note c; p. 307, note e; p. 374, note b.)

Another ground of defence is, that the insured premises, by the acts mentioned of the tenant in possession, were thereby appropriated, applied or used, to or for the purpose of carrying on, or exercising therein, a trade, business or vocation, which, according to the conditions, class of hazards, or rates to the policy annexed, or referred to, would increase the hazard, without the consent of the defendants, as specified in the policy, and that, therefore, the policy ceased, and was of no force or effect, at the time of the fire.

It is true, that this policy is subject to such a provision, but I do not think, that the evidence proposed ■would tend to show such an appropriation of the premises. There is nothing in the conditions, class of hazards, or rates annexed to the policy, or referred to,

Upon the whole, I am of opinion, that there is no error in the judgment of the court below, and that it should be affirmed.

(Dissenting.) — This action presents an important question; the facts on which it arises

are these: — The appellants insured the respondents against loss by fire, on their tavern-house, barn and shed, and store, for five years, from March 12th, 1838; the fire occurred in August 1840. In the application, which is made, by agreement of the parties, a part of the policy, and in answer to a printed inquiry made by the appellants, how the buildings to be insured were bounded, and their distance from other buildings, if within ten rods, the respondents stated the nearest buildings on each side of the insured property, and on the north side, in the following words: “ On the north, and about five rods distance is a shop, used, in the season of navigation of the canal, for manufacturing setting-poles.” Soon after the policy was executed, the respondents erected a large wooden barn, on the north side of the insured

The first inquiry is, whether the respondents, in their application, by their answer to the interrogatory respecting the situation of the insured property, clearly and distinctly declared, that the space between the insured property and the shop on the north was open, and unoccupied by any building. It appears manifestly to me, that they did, and as fully and distinctly as if they had declared it in so many words. Their declaration was, therefore, a warranty; for it is well settled, that in fire, as well as in marine policies, every clear and explicit declaration contained in the policy concerning the condition and description of the property insured, is a warranty by the insured, that such is its condition and description. (Fowler v. Ætna Fire Ins. Co., 6 Cow. 676 , 677; s. c. 6 Wend. *274; Jennings v. Chenango County Mutual Ins. Co., 2 Denio 75 ; Wood v. Hartford Fire Ins. Co., 13 Conn. 544 .)

The next and important inquiry is, whether this warranty was a continuing one, and extended through the term of the policy. Were this a marine policy, there would be no doubt that the warranty was a continuing one; that principle was recognised as settled law, by Radcliee, J., and Benson, J., in the case of Vandenheuvel v. United States Ins. Co. ( 2 Johns. Cas. 129 , 451), and has never been disputed, so far as I am informed. Mr. Duer also, in his valuable and learned treatise, states it as a clear proposition. (2 Duer on Ins. 700.) Then, does it apply to fire policies ? I see no reason, why it does not; on the contrary, every consideration which will sustain the principle in its application to marine'policies and risks, will uphold and enforce it, when applied to fire policies and risks. Ch. J. Savage has taken this view of the subject, in delivering the judgment of the supreme court in the case of Fowler v. Ætna Fire Ins. Co. ( 6 Cow. 676 -77), and all which seems to be necessary is, to ex

In regard to the alleged estoppel in pais, because the appellants assessed, and the respondents paid their’contributions to losses which occurred after the fire, in the present case, it is sufficient to say, that there is no proof that the appellants knew, when the assessments were made and received, that the barn in question had been erected. This is an affirmative fact, which the respondents should have proved to establish their estoppel; they not only did not prove it, but the appellants offered to prove the contrary. I think, the judgment should be reversed, and a new trial ordered.

Judgment affirmed.