Hayward v. Liverpool & London Fire & Life Insurance — 20 N.Y. Super. Ct. 385

Majority

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Nathaniel Hayward, Plaintiff and Appellant v. The Liverpool and London Fire and Life Insurance Co., Defendant and Respondent.

Headnote

1. Where, by the terms of a policy, insuring against loss or damage by fire, “ on the building occupied as an India rubber factory, and on property contained therein * * §2,200 on machinery, tools, steam engine, and shafting, * * * ,” it is provided that the company “ shall not be liable to make good any loss or damage by fire which shall happen or arise, * * * by any explosion;” and where one of the conditions forming part of the policy also declares, that, neither will this company be answerable * * for loss or damage by explosion of any kind ”—and where the insured premises and property are destroyed, during the life of the policy, by a fire which “ originated from, and was caused by an explosion, of one of the boilers of the steam engine, belonging to and used in the said India rubber factory, and covered by said" policy,” the company is not liable for the loss, even though a steam engine was necessary, and ordinarily used in the carrying on of- an India rubber factory.

2. The import of the exception is, as if the company had said, we will make good any damage caused by fire, to the building, goods, machinery, fixtures and steam engine, unless the fire be caused by the explosion of the boiler, or some other explosion, and in that event the company is not to be liable..

(Before Woodbuee, Monoriee and Robertson, J. J.)

Heard October 9,

decided November 10, 1860.

Appeal from a judgment for the defendants, rendered " May 24,1860, upon a trial at special term, had on the 15th of May, 1860, before Mr. Justice Hoffman, a trial by jury having been waived by consent of the parties.

The action is on a policy of insurance issued by the defendants, whereby they insured the plaintiff, against loss or damage by fire, to the amount of $10,000.

It is not necessary to state the pleadings further than to say, that they are sufficient to present the single question upon which the plaintiff’s claim and the defense of the defendants depend, viz., whether the defendants are liable under the policy, for a loss by fire caused by the explosion of the boiler of a steam engine used in the building, and being itself a part of the property insured ? The parts of

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the policy material to the question are as follows, (the words and figures here printed in italics being written, and the residue of the policy and the conditions annexed and referred to therein, being printed :)

“This policy of insurance witnesseth, that Mr. Nathaniel Hayward, Providence, Rhode Island, having paid to the Liverpool and London'Fire and Life Insurance company the sum of two hundred and fifty dollars, for the insurance against loss or damage by fire, (subject to the conditions and stipulations indorsed hereon, which constitute the basis of this insurance,) of the property hereinafter described, to the amount hereinafter mentioned, not exceeding upon any one article the sum specified on such article, viz.:

“ Ten Thousand Dollars at 2|- per cent.—$250.00.

“ On the building occupied as an India rubber factory and on property contained therein, situated on the corner of Clifford and Eddy streets, Providence, Rhode Island, viz.: $800 on building No. 1, in plan on file in the office of the Washington Insurance company; $2,200 on machinery, tools, steam engine and shafting contained in building No. 1; $500 on stock of materials manufactured, Unmanufactured, and in process of manufacture, contained therein; $1,100 on building No. 2 on said plan; $2,200 on machinery, shafting and tools contained therein; $1,000 on stock of materials manufactured, unmanufactured, and in process of manufacture, contained therein; $600 on building No. 3 on said plan; $500 on machinery and tools contained therein; $500 on stock of materials manufactured, unmanufactured, and in process of manufacture, contained-therein—for twelve months.

“ The threé directors of the said company, whose names are hereunto subscribed, do hereby' agree that, from the thirteenth day 'of August; 1857, until the thirteenth day of August, in the year of our Lord one thousand eight hundred and fifty- eight, the funds and property of the said company shall (subject to the conditions and stipulations indorsed hereon, which constitute the basis of this insurance) be subject and liable to pay, reinstate or make good to the

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said assured, his heirs, executors or administrators, such loss or damage as shall be occasioned by fire to the property above mentioned and hereby insured, not exceeding in each case respectively the sum or sums hereinbefore severally specified and stated against each property. Provided always, and it is hereby declared and agreed, that this company shall not be liable to make good any loss or damage by fire which shall happen or arise by any foreign invasion, insurrection, riot or civil commotion, or any military or usurped power, or by any explosion, earthquake or hurricane; and the policy shall remain suspended and be of no effect in respect to any loss or damage which shall happen or arise during the period of any of these contingencies.

“ In witness whereof we, three of the directors of the said company, have hereunto set our hands and seals, this thirteenth day of August, in the year of our Lord one thousand eight hundred and fiftj-seven.”

“ The conditions and stipulations referred to in this policy:”

(Among these conditions and stipulations, which were thirteen in number, is the following:)

“ V. That this company will not be answerable for any loss or damage by fire, occasioned by any invasion, foreign enemy, insurrection, civil commotion, riot, or any military or usurped power whatsoever. Neither will this company be answerable for loss or damage to stock or goods while undergoing any process in which the application of fire heat is necessary, nor for loss or damage by explosion of any kind.”

And indorsed on the policy is the following notice : “Please to read your policy and the conditions.”

By stipulation, the following facts were admitted:

The making of the policy; the plaintiff's ownership of the property insured; the destruction, by fire, of property insured, to the value of $84,573.39 ; that if the plaintiff is entitled to recover, such recovery should be for the full

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amount of the policy, and interest from November 28,1857 ; that due proof of' loss was furnished to the defendants.

Also, “ 4th. The said plaintiff admits that the said fire, by which said insured property and premises were destroyed, occurred on the morning of the 29th day of October, A. D., 1857, soon after, and originated from, and was caused by an explosion of one of the boilers of the steam engine, belonging to and used in said India rubber factory, and covered by said policy; a steam engine being necessary, and ordinarily used in the carrying on of an India rubber factory.”

It was also proved that, “ at Hayward’s factory, India rubber boots and shoes are manufactured. After the shoes are formed, they are put into a heater and subjected to heat of from 250 to 280 degrees Fahrenheit, for the purpose of vulcanization. They are universally made so.”

And the plaintiff read in evidence a circular, issued by the defendants, to show what they decided to be extra-hazardous risks, of which an extract is as follows:

“ Extra-hazardous risks—as livery stables, large hotels, book binders, printing offices, carpenters and cabinet makers, wholesale druggists, mills, machine shops, manufactories, etc., etc., and in general all establishments where fire is used for other purposes than warming the premises, or where large-numbers of workmen are collected together, you will in general decline.”

The judge found the facts in conformity with the foregoing statement and proofs, and thereupon stated, and decided as a conclusion of law: “ That- the fire which

caused the loss, having originated from an explosion of a steam boiler, the case was within the exception in the policy, and the defendants were not liable for such loss.”

“ Judgment must thereupon be entered, dismissing the complaint.”

The plaintiff filed exceptions to the findings of fact and to the conclusions of law, and from the judgment entered, dismissing the complaint and awarding to the defendants their costs, the plaintiff appealed.

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Luther R. Marsh, for the Plaintiff, (Appellant.)

Alex. Hamilton, Jr., for the Defendants, (Respondents.)

—-In St. John v. The American Mutual Fire and Marine Insurance company, (1 Dner 311,) the defendants had insured the plaintiff’s property against loss or damage by fire, and, by one of the conditions annexed to the policy, had provided that they would not be liable “ for any loss occasioned by the explosion of a steam boiler, or explosions arising from any other cause.” A steam boiler, in the basement of the building, in the upper stories of which the insured property was contained, exploded; the walls of the building were mostly thrown down, and the fires in the boiler furnace, and in stoves in various parts of the building, were communicated to the frame and wood work of the building, and the insured property was burned. It was held, in this court, that the insurers were not liable for the loss, and that decision was affirmed in the court of last resort. (1 Kern. 11 N. Y. R. 516.) Unless some discrimination, operating in favor of the plaintiff, can be made, which shall distinguish the present case from the one referred to, this case was correctly decided and the judgment must be affirmed.

To our minds, whatever differences exist between the two cases, are strongly and decidedly favorable to the defendants’ claim to exoneration.

It is not and cannot be denied, that the contract of insurance, like every other contract fairly and voluntarily made, is to be construed according to the plain and natural import of its language; nor that it is entirely competent for the parties to agree to any terms and conditions defining, limiting or apportioning the risk, which they may think proper, or for their interest respectively.

When, therefore, the insurers consented to give to the plaintiff an indemnity against loss by fire, it was entirely competent for them, as a part of the contract, to define affirmatively the causes of fire, the consequences of which

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they would be responsible for, and to exclude fires arising from other causes, declaring that for the consequences of such fires they would not be responsible. In one form or another, this discrimination probably enters into every contract of insurance customarily made, and the varying premiums upon fire risks are adapted to the varying hazards assumed, while there are some causes of loss by fire which are rarely assumed at all by insurers.

In the present case, the defendants, in the very body of their policy, have declared—and the other party to the contract must be taken to have conseúted, by accepting the policy—that the defendants “ shall not be liable to make good any loss or damage by fire which shall happen or arise by any explosion.” These terms are too plain to admit of doubt respecting their meaning; they create an exception to the general language of the previous clause, by which •they promise to make good such loss or damage as shall be occasioned by fire to the property insured. It is as if the company had said, we will make good to you any loss which you may sustain to your building, goods, machinery, fixtures and steam engine, by fire, unless the fire is caused by the explosion of the boiler, or some other explosion.

Had this company, in another department of their business, insured the life of the plaintiff, and provided that they would not be responsible if he was drowned by being wrecked when on a voyage at sea, there would be no doubt, we apprehend, of the validity and full effect of the exception.

The terms “ any explosion ” are comprehensive enough to embrace every kind of explosion; and in a policy which covers property in a building containing a steam boiler, and even covers the steam engine itself, would seem to be used with necessary and primary reference to the liability of the boiler to explosion, though not with such exclusive reference to that as to leave them liable for fires caused by other explosions.

It was argued that the very circumstance here mentioned, viz., that the steam engine was insured, created an

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inconsistency in the policy itself, and therefore the subject of insurance, viz., the steam engine being named in writing, the exception, which was a printed portion of the policy, must* be disregarded. That, by insuring a steam engine against fire, the defendants necessarily assume the risk of a fire arising from the explosion thereof, and that an exception of fire arising from explosion is so repugnant to the defendants’ undertaking, that it must be rejected.

No such repugnancy exists. Fires arising in many ways might occur, and by the destruction of the building and property therein, so far injure the steam engine as to render it worthless except for the materials therein which were not consumed. As above suggested, the exception is simply saying, if the cause of the fire be the explosion of your steam boiler, we shall not be bound to make good the loss; and the plaintiff is to be deemed to say, as to the hazard of fire arising from that cause, I will bear that risk. So an insurer of life may insure the specific life generally, for a term of years, but provide that he shall not be liable if the insured die by violence, or by a particular -specified disease or epidemic. This would create no repugnancy. The cases relied upon, Harper v. Albany Ins. Co, (17 N. Y. R. 194,) and Bryant v. The Poughkeepsie Mutual Ins. Co., (Id. 200,) do not appear to us in any degree to conflict with these views. They hold that an insurance of a particular trade or business ex vi termini, imports a license to use those articles which are necessary or customary in that trade or business, for the usual and customary purposes thereof, and therefore, that when such an insurance is made, the prohibition of the use of those articles must be referred to the use of them for other purposes than such as are embraced within that license, and to the like effect is Harper v. The City Ins. Co, in this court, ( 1 Bosw. 520 .) In the present case, it is expressly conceded to the plaintiffs that they may use a steam engine, but agreed that if the boiler explode and fire be caused thereby, the loss shall not be within the insurance. All parts of the policy are in harmony.

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To recur then to the case of St. John v. The American Mutual Ins. Co., above cited : In that case, the words of the condition under which the defendants were protected, were that the company would not be liable “for a loss occasioned ~by the explosion,” &o., and the subject of contention was, whether this exempted the company from liability for a loss by a fire which was caused by the explosion. It was argued that the insurer was liable for all damage sustained by fire, however the fire was caused. That the fire, and not the explosion, was the immediate cause of the loss, and that the exemption was only from a liability for a loss sustained by the mere force of the explosion. And this appears to have been the whole ground of contest, and this was the view taken by Mr. Justice Gardiner in his dissenting opinion. He insisted that the fire was the proximate, and the explosion the remote cause of loss, and for the immediate cause of loss, the defendants were liable. But the other judges of the Court of Appeals held, as this court had held, that the clause ought to be construed as if the words had excepted a liability for “ a loss by a fire occasioned by the explosion,” while at the same time its greater generality would make it include any injury from explosion.

Now, in the case before us, as if the parties had before their minds the very doubt which led to the litigation in that case, they have employed, to describe the exception, the very terms which, by construction, that policy was finally determined to include, viz., “ any loss or damage by fire which shall arise or happen by any explosion,” and this in the very body of the policy itself.

They did even more than this; they further declared, in the body of the policy, that the agreement to indemnify was subject to the conditions and stipulations indorsed thereon which constitute the basis of the insurance ; and, in one of those conditions, they declare that the company will not be answerable “ for loss or damage by explosion of any kind.” They have in the condition the very words which were held to exonerate the defendants in the case referred to; and they have, in the body itself, adopted a

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form of exception which removes the only'doubt which existed in that case. And, to prevent any pretence of a design to entrap the insured by obscure conditions, they have indorsed on the policy a notice cautioning him to read both the policy and its conditions.

It is suggested, that in the case last mentioned, the steam engine .was in the basement of the building, and was not covered by the policy. That may be true, but we are not able to see that that affects the question more favorably to the plaintiff. On the contrary, we have already said that to our minds, the fact that the engine in the case before us was insured, subject to the exception, would rather indicate that the company did not intend to protect the engine itself, nor any other property, against the consequences of the explosion of its boiler; and that the insured bore that risk himself, whether it caused fire or did other mischief.

We are unable to form any other conclusion, than that this case is fully within the case of St. John v. The Am. Mut. Ins. Co., and were we to dispose of the case uninfluenced by that decision, we must still say that the defendants are protected by the exception in the body of the policy, and the condition annexed thereto, from any liability.

The judgment should be affirmed.

Judgment affirmed, with costs.

Cases cited

Harper v. City Insurance 1 Bosw. 520 N.Y. Super. Ct. 1857-07-11 p. 391