Source: https://supreme.justia.com/cases/federal/us/151/452/
Timestamp: 2019-04-24 15:52:24+00:00

Document:
A policy of fire insurance containing a provision that it should become void if, without notice to the company and its permission endorsed thereon, "mechanics are employed in building, altering, or repairing" the insured premises, becomes void by the employment of mechanics in so building, altering, or repairing, and the insurer is not responsible to the assured for damage and injury to the assured premises thereafter by fire, although not happening in consequence of the alteration and repairs.
This was an action of assumpsit upon a five thousand dollar policy of insurance issued by the plaintiff in error November 21, 1882, insuring the courthouse of the defendant in error at Lancaster, in the County of Coos, New Hampshire against loss by fire, for a period of five years from the date of the policy.
The premises insured were a two-story building, having on the first floor the offices of register of deeds and probate, clerk of court, and county commissioners. The courtroom was on the second floor. At the date of the policy, there were two brick vaults, one 8 by 13 feet, for the use of the probate office, and the other 16 by 13 feet, for the use of the offices of the register of deeds and clerk of court, there being a partition in the center, separating the part used by the register from that used by the clerk.
The fire which destroyed the insured premises occurred about two o'clock in the morning of November 4, 1886.
The Policy in suit contains the following: "Payment in case of loss is upon the following terms and conditions."
"This policy shall be void and of no effect if, without notice to this company and permission therefor in writing endorsed hereon, . . . the premises shall be used or occupied so as to increase the risk, . . . or the risk be increased . . . by any means within the knowledge or control of the assured, . . . or if mechanics are employed in building, altering, or repairing premises named herein, except in dwelling houses, where not exceeding five days in one year are allowed for repairs."
In August, 1886, the plaintiff, without the written consent of the defendant, and without its knowledge, employed wood carpenters and brick masons, and reconstructed and enlarged the vaults, making that of the office of the register of probate 12 by 13 feet instead of 8 by 13 feet, as it was at the date of the policy, and making those of the offices of the register of deeds and clerk of court 22 by 13 instead of 16 by 13 feet, as at the date of the policy. The foundations were also reconstructed and enlarged to correspond with the enlargement of the vaults. The reconstruction and enlargement of the vaults necessitated the cutting of the floors and ceilings of the respective offices in which they were, so as to extend the vaults.
The time during which these mechanics were employed in the reconstruction and enlargement of the foundations and vaults was about five or six weeks. Some painting was also done incident to the above changes, but the extent did not distinctly appear.
November 3, 1886. No permission to make this change in the method of heating was either obtained or requested, and the defendant had no knowledge of its being done. In the evening of November 3, a fire was built in the furnace, to test the heating apparatus, and heat the radiators, so they might be bronzed, and the fire was left burning at about midnight, when the mechanics and some of the county officers left the building.
From the time work began upon the vaults -- early in August -- until the fire, the papers and records of the offices of the clerk of court and registers of probate and deeds were in the courtroom or in the respective offices, unprotected by any safes or vaults.
The expense of the labor and raw material of the foregoing alterations was about $3,000.
"The defendants request the court to rule that the building, altering, and repairing of the premises to the extent of tearing down several partitions, cutting away a portion of the floors in several rooms, tearing down the vault and enlarging and rebuilding it, and by changing the method of heating a portion of its building by putting in piping and radiators for hot water or steam, all at the expense of several thousand dollars, for the labor of mechanics, for raw materials, was a building, altering, or repairing of the premises which increased the risk, and the policy thereby became void."
The court declined to rule as requested, and the defendant excepted.
to the jury that the building, altering, and repairing shown by the evidence was not such building, altering, and repairing as avoided the policy."
The motion was denied by the court, and the defendant excepted.
"That if the work done by the mechanics, as disclosed by the evidence, increased the hazard while such work was being done, then the plaintiff is not entitled to recover."
The court refused to give this instruction, and the defendant excepted.
"The identical question before you is whether, at the time the fire took place, what the County of Coos had done in the way of alterations and repairs increased the risk at that time -- that is at the time of the fire; that is, on the night of November 4 -- that the County of Coos had done in the way of repairs, changing the vaults, putting in additional heating apparatus, did those things increase the risk at that particular time? Not whether mechanics, two days previously, or three days previously, or a week previously, had worked in that building. What was the condition of the building on the night of the fire? Had what the County of Coos did in making those repairs increased the risk, or had it not? Were the repairs ordinary or necessary, and accompanied by no increase of risk, or were they of such an extraordinary and material character upon that particular night -- that is, the condition in which the building was upon that particular night -- that the risk was increased, and therefore the assured, the county, violated this condition in the policy, and consequently the defendant company should not be held liable."
To this instruction the defendant excepted. There was a verdict and judgment for the plaintiff below for the sum of $5,505, and the present writ of error is prosecuted to reverse that judgment.
"that if the work done by the mechanics, as disclosed by the evidence, increased the hazard while such work was being done, then the plaintiff is not entitled to recovery,"
and the exception to the instruction given, to the effect that the question was whether the work and repairs done upon the building increased the risk at the time of the fire.
(1) The court should have instructed the jury that if the work done by the mechanics increased the hazard while the work was in progress, then the assured would not be entitled to recover, because, when the hazard was increased and the risk changed by the acts of the assured, and without the knowledge or consent of the insurer, in that event the contract came to an end by virtue of its own expressed, unambiguous terms.
(2) The assured, the County of Coos, having made extensive repairs upon the insured premises and having neither notified the plaintiff in error, the insurer thereof nor obtained its consent in writing therefor, the conditions of the policy were violated, and by its terms the contract terminated.
(3) It was error to instruct the jury that it was immaterial what had occurred to increase the hazard during the repairs, unless such increased hazard existed at the time of the fire.
"this policy shall be void and of no effect if, without notice to the company, and permission therefor endorsed hereon, . . . mechanics are employed in building, altering, or repairing the premises named herein."
Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy or policies embodying the agreement of the parties. For a comparatively small consideration, the insurer undertakes to guaranty the insured against loss or damage upon the terms and conditions agreed upon, and upon no other, and, when called upon to pay in case of loss, the insurer therefore may justly insist upon the fulfillment of these terms. If the insured cannot bring himself within the conditions of the policy, he is not entitled to recover for the loss. The terms of the policy constitute the measure of the insurer's liability, and in order to recover, the assured must show himself within those terms; and if it appears that the contract has been terminated by the violation on the part of the assured of its conditions, then there can be no right of recovery. The compliance of the assured with the terms of the contract is a condition precedent to the right of recovery. If the assured has violated or failed to perform the conditions of the contract, and such violation or want of performance has not been waived by the insurer, then the assured cannot recover. It is immaterial to consider the reasons for the conditions or provisions on which the contract is made to terminate, or any other provision of the policy which has been accepted and agreed upon. It is enough that the parties have made certain terms conditions on which their contract shall continue or terminate. The courts may not make a contract for the parties. Their function and duty consist simply in enforcing and carrying out the one actually made.
will be adopted which is most favorable to the insured.
But the rule is equally well settled that contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous, their terms are to be taken and understood in their plain, ordinary, and popular sense.
"that this policy should be void and of no effect if, without notice to the company and permission therefor endorsed hereon, . . . the premises shall be used or occupied so as to increase the risk, or cease to be used or occupied for the purposes stated herein, . . . or the risk be increased by any means within the knowledge or control of the assured, . . . or if mechanics are employed in building, altering, or repairing premises named herein, except in dwelling houses, where not exceeding five days in one year are allowed for repairs."
even though the risk might not have been in fact increased thereby. The condition that the policy should be void and of no effect if "mechanics are employed in building, altering, or repairing the premises named herein" without notice to or permission of the insurance company, being a separate and valid stipulation of the parties, its violation by the assured terminated the contract of the insurer, and it could not be thereafter made liable on the contract, without having waived that condition, merely because, in the opinion of the court and the jury, the alterations and repairs of the building did not in fact increase the risk. The specific thing described in the last condition as avoiding the policy, if done without consent, was one which the insurer had a right, in its own judgment, to make a material element of the contract, and, being assented to by the assured, it did not rest in the opinion of other parties, court or jury, to say that it was immaterial unless it actually increased the risk.
If the last stipulation had been so framed as to require the element of an increased risk to be incorporated into the condition that if "mechanics are employed in building, altering, or repairing the premises named herein," without notice to the company, and its permission in writing endorsed on the policy, then there would have been presented a question of fact for the jury whether such alterations and repairs constituted an increase of the risk. But this condition being wholly independent of any increase of risk, its violation without the consent of the insurer or waiver of the breach annulled the policy.
"if the work done by the mechanics, as disclosed by the evidence, increased the hazard while such work was being done, then the plaintiff is not entitled to recover."
This instruction, which the court declined to give, presented the question of fact whether there had been any violation of the condition that the premises should not be so used or occupied as to increase the risk, or that the risk should not be increased by any means within the knowledge or control of the assured.
The court not only refused this instruction, but in its charge to the jury so construed the condition that if "mechanics are employed in building, altering, or repairing the premises named herein," without the consent of the insurer, as to make it mean that such alterations and repairs must be shown to have increased the risk in point of fact, and that such increase of risk must have existed at the time of the fire.
If the mechanics were employed in altering and repairing the building in a manner beyond what was required for its ordinary repair and preservation, and in such a material way as constituted a breach of the condition of the contract, it is difficult to understand upon what principle the charge of the court can be sustained. The condition which was violated did not in any way depend upon the fact that it increased the risk, but by the express terms of the contract was made to avoid the policy if the condition was not observed. The instruction of the court gave no validity or effect to the condition and its breach, but made it depend upon the question whether the acts done in violation of it in fact increased the risk and whether such increased risk was operative at the date of the fire.
and repairs described, did not constitute a breach at the time of the fire; that the increased risk, which was necessary to render the policy void, must be found to have existed at the time of the fire, and not at any preceding date.
"That a verdict be directed for it on the ground that there is no evidence competent to be submitted to the jury that the building, altering, and repairing shown by the evidence was not such altering and repairing as avoided the policy."
"be assignable without the consent of the company expressed thereon. In case of assignment without such consent, whether of the whole policy or of any interest in it, the liability of the company in virtue of said policy shall thenceforth cease."
The assured assigned the policy, and the court held that the condition was a perfect legal one and that the company was not liable, although the plaintiff had redeemed the policy previously assigned and was the holder thereof at the time of the suit.
"that by the terms of the policy, this discharged the defendant from liability, its promise contained in the policy to pay the plaintiff in case of loss being upon the condition that, in case of double insurance, its assent thereto should be endorsed on the policy."
"If the above-mentioned premises shall become vacant and unoccupied for a period of more than ten days . . . without the assent of the company endorsed hereon, . . . then, and in every such case, this policy shall be void."
"the contract, being once terminated, could not be revived without the consent of both of the contracting parties. It is immaterial, then, whether the loss of the buildings is due to unoccupancy or to some other cause."
In other New Hampshire decisions, it is held that a departure from the conditions without the written consent of the insurer avoided the policy and terminated the contract. Shepherd v. Union Mutual Ins. Co., 38 N.H. 232; Gee v. Chesire M. F. Ins. Co., 55 N.H. 65; Sleeper v. N. H. Ins. Co., 56 N.H. 401; Hill v. Ins. Co., 58 N.H. 82; Baldwin v. Phenix Ins. Co., 60 N.H. 164; Crafts v. Union Mutual Ins. Co., 36 N.H. 44; Dube v. Mascoma Mutual Ins. Co., 64 N.H. 527.
It is competent for the parties to agree that this or that alteration or change shall work a forfeiture, in which case the only inquiry will be whether the one in question comes within the category of changes which by agreement shall work a forfeiture. May on Insurance, 1st ed., sec. 233, citing Lee v. Howard Fire Ins. Co., 3 Gray 583; Glen v. Lewis, 8 Exch. 607.
"Such ordinary repairs as may be necessary to keep the premises in good condition are permitted by this policy, but if the buildings hereby insured be altered, added to, or enlarged, due notice must be given, and consent endorsed hereon."
The building insured was subsequently materially enlarged, and the court held, inasmuch as notice was not given to the company, that under the construction given to the clause, the policy was avoided, although the risk was not increased by the alterations which had been made to the building.
"certain conditions are very generally regarded by underwriters as largely increasing the hazards of insurance, and they, unless corresponding premiums are paid for extra risks, are usually intended to be excluded from the obligation of the policy. Such are the conditions in reference to unoccupied houses, changes in the occupation from one kind of business to another more hazardous, the use of inflammable substances in buildings, and their occupation by carpenters, roofers, etc., for the purpose of making changes and alterations. These conditions, when plainly expressed in a policy, are binding upon the parties, and should be enforced by the courts if the evidence brings the case clearly within their meaning and intent. It tends to bring the law itself into disrepute when, by astute and subtile distinctions, a plain case is attempted to be taken without the operation of a clear, reasonable, and material obligation of the contract."
enunciated in Lyman v. State Mut. Ins. Co., 14 Allen 329.
"The question is thus presented whether the provision of the policy that it shall be void in case of an increase of risk means that it shall be void only during the time while the increase of risk may last, and may revive again upon the termination of the increase of risk. . . . The contract of insurance depends essentially upon an adjustment of the premium to the risk assumed. If the assured, by his voluntary act, increases the risk, and the fact is not known, the result is that he gets an insurance for which he has not paid."
"An increase of risk which is substantial, and which is continued for a considerable period of time, changes the basis upon which the contract of insurance rests, and since there is a provision that in case of an increase of risk which is consented to, or known by the assured and not disclosed, and the assent of the insurer obtained, the policy shall be void, we do not feel at liberty to qualify the meaning of these words by holding that the policy is only suspended during the continuance of such increase. "
The decision of the supreme court reversed the lower court, which had proceeded exactly upon the same theory adopted by the circuit court in the case under consideration. The principle laid down in this and the other cases cited clearly establishes that the general instruction to the jury complained of in the present case was erroneous.
"Judgment reversed, and case remanded, with instructions to set aside the verdict and to order a new trial.~"

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