Rife v. Lebanon Mutual Insurance , 115 Pa. 530 ( 1886 )

Mr. Justice Clark

delivered .the opinion of the court, October, 4th, 1886.

This action of covenant is upon a perpetual policy of fire insurance, issued by the defendant, 3d April, 1871, to the plaintiff, in the sum of $2,400: $1,000 thereof, upon his dwelling house, $1,000 upon the barn, and $400 on the corn house. The barn and the corn house were totally destroyed bv fire, 12th, March, 1883. The premiums and assessments had all been promptly paid, and due notice and proofs of loss were given as required by the policy.

Among the printed conditions of the insurance set forth in the policy, was the following:—

9. “ If, during the insurance, any alterations be made on the premises, buildings be erected, or change made in the use or occupation of the same or neighboring premises, or otherwise, whereby the risk or hazard is increased, so as to increase the rate of insurance, it shall be the duty of the insured to give notice thereof to the secretary, pay the additional premium and obtain the consent of the company thereto in writing, otherwise the insured shall not be entitled to recover for any loss or damage by fire originating in consequence of such change: provided, that in case of any alteration and consequent increase of risk, the company may, at their option, terminate the insurance, after notice given to the insured, or his representative, of their intention to do so.”

In the year 1881, Michael Schall, who was the owner and operator of a furnace propertjq' on the adjoining land, by the order of the Court of Common Pleas of Dauphin County, under Act 5th May, 1832, constructed a lateral raili-oad to connect his furnace with the Pennsylvania railroad-; and locomotive engines and cars were placed thereon and used, in transporting coal, ore, and iron, between the points named, a distance of about five hundred yards. This lateral railroad ran within about twelve feet of the corner of the corn house, and the jnry has found that the fire, which originated in the corn house, was caused by sparks from the locomotive engines.

The question in the cause arises upon the proper construction of the ninth condition of the policy, above quoted. The court submitted to the jury the following questions of fact: first, whether by the construction of the lateral road, the rate or hazard was increased ; and if so, second, was it increased so as to increase the rate of insurance; and third, did the fire originate from, or in consequence of, the change in the occupancy of the neighboring premises. All of these inquiries were settled in the affirmative, and the verdict under the instructions of the court, was, necessarily, for the defendant.

It must be conceded, we think, that the plaintiff was bound only to give notice to the company of any change, of which he had knowledge, and by which he knew the rate of insurance would be increased. He was certainly not obliged to give notice of a change in the use or occupancy of his own, or the neighboring premises, «which in the fair exercise of his own knowledge and judgment, he believed would not increase the hazard or the rate of insurance; this would be absurd. There may be cases, of course, in which the increase of risk is so palpable and plain, that the knowledge of the insured must necessarily be inferred; this inference may be drawn from evidence, direct or circumstantial, as in other cases.

But the proper question for the consideration of the jurors was, not as the learned judge of the court below seemed to suppose, whether or not, according to their judgment under the evidence, the risk was so increased as to increase the rate, but whether, from all the facts in the case, the plaintiff knew that it was so increased. If he did, he was bound, by the express terms of his contract, to give notice of the fact to the company; if he did not, he was not. The exact question in this case was considered.and decided in Lebanon Mut. Ins. Co. v. Losch, 42 Leg. Int., 416, where our brother, Paxson, in his construction of a policy containing the same clause, says: “ Had the conditions of insurance required the insured to give notice to the company of any change in the surroundings, it would have been his duty to give notice of the erection of the carriage factory. Such, however, was not the condition. The notice was only required in case the change was such as to increase the risk or hazard, ‘ so as to increase the rate of insurance.’ Under this clause it is manifest that the insured must be shown to have knowledge that the building would not only increase the risk, but that it would also enhance the rate of insurance. The conditions of the policy must be construed most strongly against the company. We are not to assume, when the plaintiff below seeks to recover on his policies for what at least appears to be an honest loss, that he knew the factory building would increase the risk to such an extent as to increase the rate of insurance. There was nothing upon the face of his policy or in the conditions attached, had he read carefully every 'word of both, which could have given him this information. It was a fact, the solution of which must be found outside this policy. There was not a word of evidence to show that the insured knew that the carriage factory would increase the risk to the extent specified in the policy, nor indeed to any extent.”

The judgment is reversed, and a venire faeias de novo awarded.