Source: https://supreme.justia.com/cases/federal/us/216/311/
Timestamp: 2019-04-22 20:56:22+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 216 › Penman v. St. Paul Fire & Marine Ins. Co.
The rule of ejusdem generis is a rule of interpretation, and even if it should be applied more liberally to contracts of insurance than to contracts of other kinds, it cannot be so applied as to exclude "blasting powder" from a prohibition to keep or allow on insured premises certain specified explosives and "other explosives."
waived and expressly provides against modification by custom of trade or manufacture or by agents, and are unambiguous, courts cannot admit parol testimony to alter the written words of the contract. Northern Assurance Co. v. Grand View Building Association, 183 U. S. 308.
The facts, which involve the liability of a fire insurance company on a policy of insurance, are stated in the opinion.
by fire. The action was brought in the Court of Common Pleas of Jefferson County, Pennsylvania, and by the insurance company, the respondent herein, removed to the United States Court for the Western District of Pennsylvania.
"This entire policy, unless otherwise provided by agreement indorsed thereon or added hereto, shall be void . . . if (any usage or custom of trade or manufacture to the contrary notwithstanding) there be kept, used, or allowed on the above-described premises, benzin, benzole, dynamite, ether, fireworks, gasolene, Greek fire, gunpowder, exceeding 25 lbs. in quantity, naphtha, nitroglycerin, or other explosives."
"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as, by the terms of this policy, may be the subject of agreement, indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power, or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached. "
The case was tried to a jury, and resulted in the verdict for the plaintiff, upon which judgment was duly entered. A motion for a new trial was denied. The judgment was reversed by the circuit court of appeals. 151 F. 961. This writ of certiorari was then allowed.
The question in the case is the effect of the covenants which we have quoted. It was raised in the circuit court by objection to certain testimony, which was admitted, and the denial of certain instructions which were requested.
"no powder or high explosive shall be stored in any mine, and no more of either article shall be taken into the mine at any one time than is required in any one shift unless the quantity be less than five pounds."
"increased the rate by reason of the fact that this building was to be occupied by miners, and having knowledge that they kept more or less blasting powder about their dwellings."
having made inquiry as to the rate. He expressed the increase in percentage as "one and a quarter for one year, or two and a half for two years." He also charged an extra premium for finishing.
He increased the premium, he further testified, because he "thought it was going to be occupied by coal miners," and "because there was seven of them." The increase was from one and one quarter percent to two and one-half percent, but he did not know what he would have charged if the building had not been for coal miners. And further that he was not told that the building was to be occupied by coal miners, he knew that from his experience in the business. Mrs. Penman did not tell him, nor did he tell her that he had increased the rate because she might possibly have it occupied by miners, but he told the special agent of the company "that that entered into the calculations." He did not report it on the form, because it was not his custom to do so. To the question whether it was special business he was "performing, rather than acting for the company," he answered, "Yes."
The policy recited that the building insured was "in process of erection, with privilege to finish and to be occupied by tenants as dwellings," and that "in consideration of the extra premium of three and 90-100 dollars ($3.90) thirty days' permission is hereby granted to finish the building." There was evidence showing that blasting powder is a lower degree of explosive than gunpowder or dynamite, and that the latter is a higher degree than gunpowder.
defendant." The court refused other requests which were based on the controlling effect of the policy.
"While, of course, blasting powder is an explosive, and is therefore covered by the generic term 'other explosives,' yet the fact that other explosives of the general character of blasting powder, and those of a much more dangerous character than blasting powder, to-wit, dynamite and gun powder, of which twenty and five pounds were permitted, were specified, it was contended that the expressed mention of these more dangerous powders evidenced an intent not to cover the less dangerous article of blasting powder under the general term 'other explosives.'"
"in that case there was no question as to what the policy provided; in the present, the crucial question was as to what the policy in question covered by the term 'other explosives.'"
The majority of the circuit court of appeals took another view. It found nothing obscure in the language of the policy, and nothing therefore to excuse the circuit court from exercising the duty of construing it. Answering the contention that the words "or other explosives" should not be held to include explosives of lower power than gunpowder or dynamite, it was said: "Such an application of the maxim noscitur a sociis is too narrow."
"to hold, under the present proofs, that the general words 'or other explosives' do not include blasting powder, merely because it is a less dangerous explosive than dynamite or gunpowder, when it may be more dangerous than Greek fire, benzin, benzole, ether, gasolene, or naphtha, is virtually to decide arbitrarily that no meaning or effect shall be given to the general words. We are satisfied that this cannot be done, and that, as the proofs stand, the general words include blasting powder."
The court, thus deciding that the words of the policy included blasting powder, further decided that the circuit court erred in admitting parol testimony to vary its terms, and also erred in not directing a verdict for the company.
"The policy sued on in this case was issued to a manufacturing company, and covered the buildings, machinery, fixtures, and appliances in daily use in the business of the company. The rules of construction applicable to such a contract of insurance are well settled. The object of the contract is indemnity against the loss by fire of the business plant, or any portion of it, while used and occupied by the owners in the manner and for the purposes for which it was designed. If its provisions are susceptible of two or more interpretations, that one should be adopted that will make the contract effective for the protection of the insured. In other words, the contract should be liberally construed in aid of the indemnity which was in contemplation of the parties who made it. W. & A. Pipe Lines v. Insurance Co., 145 Pa. 346."
"Again, an insurance company issuing a policy upon a business plant, or any portion of it, is chargeable with knowledge of the customary methods of conducting the business in which the property insured is used. Ibid. This rule is not limited to insurance upon property in use for manufacturing or other business purposes. It was applied in the construction of a policy issued upon a dwelling house in Doud v. Citizens' Insurance Co. 141 Pa. 47, 23 Am.St.Rep. 263, 21 A. 505, and in Roe v. Dwelling House Ins. Co., 149 Pa.
94. It was applied to a policy of insurance upon a horse in Haws v. Fire Association of Phila., 114 Pa. 431. Still another rule of construction is that the circumstances surrounding the making of the contract, and affecting the subject to which it relates, form a sort of context that may properly be resorted to for aid in determining the meaning of the words and provisions of the contract. Bole, Assignee v. New Hampshire Fire Ins. Co., 159 Pa. 53; Graybill v. Penn Township Mutual Fire Ins. Co., 170 Pa. 75."
We have stated the rulings of the courts below because they accurately exhibit the contentions of the parties and the questions for decision, and with such fullness of argument that there is not much more for this Court to do than to select and concur. The court of appeals decided, as we have seen, that, under the terms of the policy, blasting powder could not be "kept, used, or allowed" on the insured property, and that such prohibition was not waived by the knowledge and acts of the company's agent. We concur in this, and we think the reasoning by which it was supported is conclusive. The rule of ejusdem generis is rule of interpretation, and granting, arguendo, it should be applied more liberally to contracts of insurance than to contracts of other kinds, yet we think it would be giving it too much force to yield to the contention of petitioner. Blasting powder is an explosive, and one of power; it is therefore capable of producing the result that the provision of the policy was intended to guard against. We are given no tests, as the court of appeals said, and we certainly may not assume them, of a comparison of it with the explosives which are enumerated, except dynamite and gunpowder. The law of Pennsylvania, as we have seen, has given it character and has guarded against its destructive force.
"shall be written upon or attached" to the policy. The company could have used no words which would have been more explicit. There is no ambiguity about them. Parol testimony was not needed nor admissible to interpret them. They constituted the contract between the company and the insured. No agent had power to change or modify that contract except in the manner provided. This was decided in Northern Assurance Company v. Building Association, supra. Any other ruling would take from contracts the certain evidence of their written words, and turn them over for meaning to the disputes of parol testimony.
The Pennsylvania cases cited by the petitioner do not militate with the rule there announced. If they did, it might be open to controversy how far they were binding on this Court. Kuhn v. Fairmount Coal Company, 215 U. S. 349.

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