Liverpool London Globe Insurance Company v. Gunther/Opinion of the Court

The first question to be examined is whether the circuit court erred in withdrawing from the jury the right to consider the facts proven as to the drawing of the oil in the oil-room, after dark, in the vicinity of a lighted lamp, which was the admitted cause of the fire, as constituting a defense to the action under the pleadings.

The tenth paragraph in the answer, setting up a separate and distinct defense, recited two conditions in the policy: the first, that the assured should not keep any burning fluid without written permission in the policy; the second, that kerosene, carbon oils of any description, whether crude or refined, or any other inflammable liquid, 'are not for sale or otherwise, unless the above premises, temporarily or permanently, for sale or other wise, unless with written permission indorsed on this policy, excepting the use of refined coal, kerosene, or other carbon oil for lights, if the same is drawn and the lamps filled by daylight; otherwise this policy shall be null and void.' It then alleged a breach of these conditions in substance as follows: That without the written permission of the defendants, indorsed on said policies or otherwise, there were stored, used, kept, and allowed on the insured premises benzine or benzole, or other inflammable burning fluids or liquids, prohibited by said policies, and that the fire referred to in the complaint originated therefrom and was caused thereby. It is true that the answer does not specifically set out as part of the defense that kerosene was kept on the premises to be used for lights, but that, in breach of the condition which permitted such use, it was drawn after dark and with a lighted lamp near; but the right to keep it and use it in the manner specified in the condition is an exception from the general prohibition, which forbids the mere keeping of it without written permission; so that, strictly speaking, an averment that the article was kept and used on the premises, in violation of the condition, includes the use of it otherwise than for lights, and the drawing of it otherwise than by daylight. Under the allegations of the answer, although not so definite and certain as might have been required upon motion made in due time, it seems to us it was competent for the defendant to prove and rely upon any keeping and use of burning fiuid prohibited by the conditions set out.

Whatever obscurity there was in pleading the defense, considered apart from the facts subsequently disclosed in evidence, nevertheless, all the testimony necessary to its establishment was offered and admitted without objection. It was offered and admitted as tending to prove that there had been a breach of the conditions of the policy; and the whole matter of the defense was covered by the testimony, on examination and cross-examination of the witnesses, both on the part of the defendant in chief and on that of the plaintiff in rebuttal. On the conclusion of the testimony on both sides the matter now insisted on was specially called to the attention of the court by a request, on the part of the defendant's counsel, to direct a verdict for the defendant on that ground alone, when, if it was a matter of surprise to the opposite party, opportunity for meeting it might still have been given; or, if the pleadings were considered not to be sufficiently explicit, an amendment might have been required and made. The request was refused, and it does not appear from the record to have been on the ground that the defense was not within the issues; but the refusal was absolute and unqualified. We refer to it, not for the purpose of intimating that the court was bound to grant the request, but because we think the matter ought to have then been either submitted to the jury or put in shape for such submission, if the rights of the adverse party required any change in the pleadings, or opportunity for the production of other evidence. By the course actually taken the defendant was deprived of the benefit of a defense legitimately arising upon the evidence actually in the case, admitted without objection: and and this, we think, was contrary to the practice as established under the laws of New York, as appears from the cases cited of ''New York Cent. Ins. Co. v. National Protection Ins. Co., 14 N. Y. 85; Williams v. Mechanics' & Traders' Fire Ins. Co., 54 N. Y. 577; and williams v. People's Fire Ins. Co.'', 57 N. Y. 274.

The New York Civil Code of Procedure, which furnishes the rule of practice in such cases, is explicit on the point. In section 539 it is provided that 'a variance between an allegation in a pleading and the proof is not material, unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits. If a party insists that he has been misled, the fact, and the particulars in which he has been misled, must be proved to the satisfaction of the court. Thereupon the court may, in its discretion, order the pleading to be amended upon such terms as it deems just.' And section 540 declares that 'when the variance is not material, as prescribed in the last section, the court may direct the fact to be found according to the evidence, or may order an immediate amendment without costs.'

There are other errors, however, in the charge to the jury equally fatal to the judgment, which, as the case must be remanded for a new trial, it becomes important to point out. The circuit court charged the jury, in substance, that it was not a breach of the conditions of the policy if they should find a half barrel of benzine was stored, by direction of Walker, in the oil-room, unless they should also find that he acted by the express or implied authority of the assured; that is, unless in doing so he was acting in the management of the property as the agent of his wife, and within the limits of the authority conferred upon him for the purpose of managing the property according to the terms and purposes of her tenancy; and accordingly the jury was told that if he had brought the prohibited article on the premises, not for the legitimate use of the hotel, but for an outside purpose, it constituted no defense. The outside purpose referred to was suggested by some testimony that the benzine was brought for the purpose of being used in lighting an adjacent grove for a picnic. Whether this use was for the entertainment of the guests of the hotel, or to attract custom, does not appear from the evidence; but, in any view, we think the construction of the policy on which the charge to the jury was based, was erroneous.

One of the conditions of the policy is that if the assured shall keep or use any of the prohibited articles without written permission, it shall be void another is that the articles named 'are not to be stored, used, kept, or allowed on the above premises, temporarily or permanently, for sale or otherwise, unless with written permission indorsed on the policy,' etc. A violation of these prohibitions by any one permitted by the assured to occupy the premises is a violation by the assured himself. The company stipulates that it will not assume the risk arising from the presence of the articles prohibited; and if they are brought upon the premises in violation of the policy by one in whose possession and control the latter have been placed by the insured, he assumes the risk which the company has refused to accept. In our opinion the defendant in error was chargeable with the acts or Walker if he brought upon the insured premises and stored in the oil-room any of the prohibited articles, although they were not intended to be used on the premises, but for lighting a neighboring grove for a picnic. Walker was in no sense a stranger or a trespasser. With his wife, he was in the lawful occupation of the premises, and, with the implied assent of the insured at least, was intrusted with the control and management of them. And under the terms of the conditions in this policy, it must be held that the insured shall suffer the consequences of Walker's acts in doing that which, if done, the company had stipulated that they would not be liable. The insured engaged that the prohibited thing should not be done; and when he committed the control of the insured premises to another, the latter became his representative, for whom he must answer as for himself.

This construction of such a condition is well supported by authority. Kelly v. ''Worcester Mut. Fire Ins. Co.'', 97 Mass. 284. In this case it was held that 'a policy of insurance obtained upon a building by the owner, and containing a proviso that it shall be void if the building shall be occupied or used for unlawful purposes, is avoided by a tenant's use of the building for an unlawful purpose, even if without the owner's knowledge.' In distinguishing the case from those cited by counsel adversely, the court said: 'In some of the cases cited for the plaintiff the prohibited use was not so constant or habitual, or of such a nature, as to fall within the terms of the provision, and in the others the knowledge or assent of the assured was expressly required in order to avoid the policy.' In New York it has been the settled law since the case of Duncan v. ''Sun Fire Ins. Co.'', 6 Wend. 488. In Mead v. ''Northwestern Ins. Co. 7 N. Y. 530, it was said, in such a case: 'It is equally unimportant that the respondent was ignorant that such business was carried on; the question whether a warranty has been broken can never depend upon the knowledge or ignorance or intent of the party making it, touching the acts or the fact constituting the breach.' Matson v. Farm Buildings Ins. Co.'', 73 N. Y. 310. In Fire Ass'n v. Williamson, 26 Pa. St. 196, the supreme court of Pennsylvania said: 'Neither is it material that the landlord did not know that his tenant kept gunpowder. His contract with the insurance company was that it should not be kept without permission, and it was his business to see that his tenants did not violate the contract in this respect.' Diehl v. ''Adams Co. Mut. Ins. Co., 58 Pa. St. 443; Howell's Ex'rs v. Baltimore Equitable Soc.'', 16 Md. 377.

The circuit court also erred in the charge to the jury that, under the circumstances cisclosed by the evidence, it was no breach of the conditions of the policy to have in the oil-room a quantity of gasoline, although not intended for use in the gas apparatus, the use of which had in fact been discontinued, if the oil-room was a place where such fluid might have been properly stored, when intended for use in the apparatus. The only direct evidence in the case as to the usual and suitable place for the keeping of gasoline when used in such an apparatus was that it should be deposited at once in the apparatus itself, one part of which is a generator where atmospheric air is carbonized by being forced through the gasoline. But, waiving any question on that point, it is clear that the privilege indorsed on the policy, in the following terms: 'To use gasoline gas; gasometer, blower, and generator being under-ground, about 60 feet from main building, in vault. No heat employed in process,'-did not sanction the keeping, using, or storing of gasoline, or its equivalent,-burning fluid or oil,-except for actual use in that gas apparatus. There is no express permission to keep gasoline given in the words of the privilege. Such permission is implied only when and because the use of gasoline is necessary to the enjoyment of the privilege. Otherwise, and for all other purposes and uses, it is expressly prohibited. The implication cannot be extended beyond the necessity for a fair and reasonable exercise of the privilege granted.

But the evidence on the trial was uncontradicted, that at the time of the fire, and for nearly a year previously, the ase of the gas apparatus had been discontinued. The plaintiff below himself testified that it was not used during the season of 1879, and that its use had been purposely discontinued. And the privilege indorsed on one of the policies, 'to use kerosene oil for lights, lamps to be filled and trimmed by daylight only,' and 'to keep not exceeding five barrels of kerosene oil on said premises,' was dated September 17, 1878, at the time when, according to the testimony of the plaintiff, the use of the apparatus for lighting the premises by means of gas from gasoline ceased at the end of the season of 1878. It is, of course, not to be denied that this did not supersede the privilege to use the gasoline apparatus, and that this privilege had not been otherwise exhausted or withdrawn. The insured had the right at any time to resume its exercise, and, in doing so, would have been justified in obtaining, keeping, storing, and using, in the accustomed manner, the necessary quantity of gasoline for supplying it. This is implied in the grant of the privilege. But if the privilege itself is not actually exercised, no such implication arises; and the prohibition against gasoline, according to the terms of the condition, must have full effect. It was error, therefore, in the court to instruct the jury that the naked privilege to use a gas apparatus, not actually exercised, nor intended to be exercised, but in fact abandoned, justified the insured in keeping and storing gasoline, in any quantity, in any place, or for any time. The judgment of the circuit court is, therefore, for these reasons, reversed, and the cause is remanded, with directions to grant a new trial.