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.
Page 151 U. S. 453
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."
Among the terms and conditions are the following:
"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.
In addition to the foregoing, the plaintiff below also changed
the method of heating the offices of the register of probate and
clerk of court, placing a hot-water coil in the furnace in the
basement, from which ran pipes through the floors, and were
attached to radiators in those offices. This work was commenced
November 2, and completed about midnight
Page 151 U. S. 454
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 defendant contended that the foregoing alterations,
rebuilding, and repairs were extraordinary, and not ordinary,
repairs, such as were necessary in the use of the premises insured,
and such as might have been contemplated by the parties when the
contract was made, and the following request for a ruling was made
to the presiding judge,
viz.:
"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.
Upon the conclusion of the testimony, which proved the foregoing
facts, the defendant made the following motion that a verdict be
directed,
viz.:
"The defendants move that a verdict be directed for them on the
ground that there is no evidence competent to be submitted
Page 151 U. S. 455
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.
The defendant requested the court to instruct the jury:
"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 court, in the course of its charge to the jury, instructed
them as follows:
"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.
Harry Bingham, for plaintiff.
Page 151 U. S. 461
MR. JUSTICE JACKSON delivered the opinion of the Court.
In the view we take of the case, it will be necessary to notice
only the exceptions based upon the refusal of the court to instruct
the jury, as requested by the defendant,
"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.
It is contended on behalf of the plaintiff in error that these
exceptions present the following legal propositions:
(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.
On behalf of the defendant in error, it is claimed that under a
proper construction of the policy, the question on which the case
turns is did the repairs and alterations made by the defendant in
error upon its courthouse, and completed when the fire occurred,
result in an increase of risk at that time, or were they in any way
the cause of the fire? The proposition is that unless such repairs
and alterations had the effect of either causing the fire or of
increasing the risk at the time it occurred,
Page 151 U. S. 462
then there was no breach of the condition contained in the
contract that
"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.
It is settled, as laid down by this Court in
Thompson v.
Phenix Ins. Co., 136 U. S. 287,
that when an insurance contract is so drawn as to be ambiguous, or
to require interpretation, or to be fairly susceptible of two
different constructions, so that reasonably intelligent men, on
reading the contract, would honestly differ as to the meaning
thereof, that construction
Page 151 U. S. 463
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.
It is entirely competent for the parties to stipulate, as they
did in this case,
"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."
These provisions are not unreasonable. The insurer may have been
willing to carry the risk at the rate charged and paid so long as
the premises continued in the condition in which they were at the
date of the contract; but the company may have been unwilling to
continue the contract under other and different conditions, and so
it had a right to make the above stipulations and conditions on
which the policy or the contract should terminate. These terms and
conditions of the policy present no ambiguity whatever. The several
conditions are separate and distinct, and wholly independent of
each other. The first three of the above conditions depend upon an
actual increase of risk by some act or conduct on the part of the
insured, but the last condition is disconnected entirely from the
former, whether the risk be increased or not. This last condition
may properly be construed as if it stood alone, and a material
alteration and repair of the building beyond what was incidental to
the ordinary repairing necessary for its preservation, without the
consent of the insurer, would be a violation of the condition of
the policy,
Page 151 U. S. 464
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.
This being the proper construction, as we think, of the terms
and conditions of the policy, and it being shown that the insured,
in August, 1886, without the knowledge or written consent of the
insurer, employed carpenters and brick masons, and reconstructed
and enlarged the vaults and offices of the courthouse,
reconstructing the foundations corresponding to the enlargement of
the vaults, which necessitated the cutting of the floors and
ceilings of the different offices, and that this work occupied five
or six weeks, and in connection therewith necessitated painting,
and a new method of
Page 151 U. S. 465
heating the offices of the register of probate and the clerk of
the court, this change in the method of heating being completed
about midnight of November 3, 1886, and the fire which destroyed
the building occurring some two hours thereafter, clearly entitled
the plaintiff in error to the instruction requested, 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."
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.
The court below proceeded upon the theory that, the fire having
occurred after the employment of the mechanics had ceased, such
employment, and the making of the alterations
Page 151 U. S. 466
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.
But, aside from the error of the court in refusing to give the
specific charges requested and in the general charge as given, it
appears by the bill of exceptions that upon the conclusion of the
testimony establishing the foregoing facts, and about which there
is no controversy, the defendant made the following motion:
"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."
This motion was denied by the court, and the defendant excepted.
Under the construction we have placed upon the last condition above
quoted, we are of opinion that the defendant was entitled, on the
conceded facts, to have a verdict directed in its favor on the
ground that the employment of mechanics to make such material
alterations and repairs as were made, without the knowledge or
consent of the plaintiff in error, was, in and of itself, such a
violation of the terms of the policy as rendered it void, without
reference to the question whether such alternations and repairs had
increased the risk or not. The principles of law applicable to this
question are stated and illustrated in the following
authorities:
In
Ferree v. Oxford Fire & Life Ins. Co., 67
Penn.St. 373, the policy of insurance contained the provision that
it should not
"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.
In
Fabyan v. Union Mutual Fire Ins. Co., 33 N.H.
203,
Page 151 U. S. 467
the policy provided that procuring other insurance without the
consent of the company would avoid the policy. Other insurance was
procured, and the court held
"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."
In
Moore v. Phoenix Ins. Co., 62 N.H. 240, the policy
contained, among other provisions, the following conditions:
"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."
At the time the premises were destroyed, they were occupied, but
for a period of at least three months prior to that time, they were
unoccupied, although without the knowledge of either the assured or
the insurer. The court held that the conditions of the policy had
been broken by the unoccupancy of the premises, and that,
"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.
Page 151 U. S. 468
In
Frost's Detroit Lumber Works v. Millers' Mut. Ins.
Co., 37 Minn. 300, 302, the court was called upon to construe
a contract of insurance which contained the following
provision:
"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.
In
Mack v. Rochester Ins. Co., 106 N.Y. 560, the policy
contained a condition similar to the one in the policy in this
case, providing that the working of mechanics in building,
altering, or repairing any building covered by the policy, without
the written consent of the company endorsed thereon, would cause a
forfeiture of all claim under the policy. Mechanics were at work
making changes in the building at the time of the fire, without the
consent of the insurer, and the court held that this effected an
avoidance of the policy. The court said that
"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."
The principle announced in the last-cited case was also
Page 151 U. S. 469
enunciated in
Lyman v. State Mut. Ins. Co., 14 Allen
329.
In
Kyte v. Commercial Union Assurance Co., 149 Mass.
116, a policy was sued upon containing the provision that it should
become void if the circumstances affecting the risk should be
altered so as to increase the risk, or if articles subject to legal
restriction should be kept in quantities or manner different from
those allowed or prescribed by law. When the premises were insured,
they were used as a common victualing place, and subsequently
intoxicating liquors were sold illegally. The judge before whom the
case was tried instructed the jury in substance that if that
illegal use was temporary, not contemplated at the time when the
policy was taken by the plaintiff, and ceased before the fire, then
the fact that he had made an illegal use of the premises during the
time covered by the policy would not deprive the plaintiff of the
right to maintain the action, and that his right, under the policy,
if suspended while the illegal use of the building continued, would
revive when he ceased to use it illegally The Supreme Judicial
Court of Massachusetts, in considering this instruction, said:
"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."
And again:
"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.
"
Page 151 U. S. 470
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.~"
MR. JUSTICE BREWER dissents.
