St. Paul Fire & Marine Ins. Co. v. Bachmann, 2997.

• Decision Date: 13 April 1931
• Docket Number: No. 2997.,2997.
• Citation: 49 F.2d 158
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: ST. PAUL FIRE & MARINE INS. CO. v. BACHMANN.

49 F.2d 158 (1931)

ST. PAUL FIRE & MARINE INS. CO. v. BACHMANN.

No. 2997.

Circuit Court of Appeals, Fourth Circuit.

April 13, 1931.

James M. Guiher, of Clarksburg, W. Va. (Russell L. Furbee, of Fairmont, W. Va., and Steptoe & Johnson, of Clarksburg, W. Va., on the brief), for appellant.

Charles J. Schuck and Carl G. Bachmann, both of Wheeling, W. Va. (Handlan, Garden & Matthews and Schuck, Bachmann & Grimes, all of Wheeling, W. Va., on the brief), for appellee.

Before NORTHCOTT, Circuit Judge, and WATKINS and WEBB, District Judges.

NORTHCOTT, Circuit Judge.

This is an appeal from a judgment for $4,591.84 rendered in favor of the appellee, Sophia C. Bachmann, against the appellant, St. Paul Fire & Marine Insurance Company, a corporation, by the District Court of the United States for the Northern District of West Virginia, at Wheeling, in November, 1929. The judgment was rendered in an action of assumpsit prosecuted upon a policy of fire insurance in the amount of $4,000, covering a three-story brick business building located on Main street in the city of Wheeling.

The insured building was badly damaged by fire in December, 1925, and it was claimed by appellant that three moonshine stills were found in the building after the fire, and that large quantities of gasoline, used in the operation of the stills, were in the building at the time of the fire, and the fire was caused by an explosion, due to the operation of the stills.

The building was managed by the husband of appellee, who as agent for the appellee had for many years attended to all the details of supervising, maintaining, and leasing the building. It is conceded that appellee knew nothing about the building, the tenant, or the insurance. The building was leased to a man by the name of Varisca, in October, 1925, by appellee's husband, for a term of eighteen months, and appellee's husband testified that Varisca had paid him in advance the sum of $1,750 in cash on the rent; the building being leased supposedly for the purpose of conducting a wholesale business therein.

Evidence was offered on behalf of appellant tending to show that Bachmann, the agent, knew, or should have known, that the building was used for operating stills. This was vigorously denied by Bachmann, and in submitting the case to the jury the judge instructed in the language of the policy.

Two main points are raised by appellant: (1) That, in construing the "Increase of Hazard Warranty," the trial court erred in refusing to instruct the jury that an increase of hazard upon the insured premises was "within the control or knowledge of the insured," if the insured or agent had "reasonable cause to believe or know" of the existence of the stills, even in the absence of actual knowledge; (2) that the trial court erred in its charge to the jury with respect to the insurance company's defense based upon the "Prohibited Articles Warranty" in the policy.

With respect to the increased hazard question, the policy provided as follows: "Unless otherwise provided by agreement in writing added hereto, this Company shall not be liable for loss or damage occurring * * * (b) while the hazard is increased by any means within the control or knowledge of the insured."

We know of no authority contrary to the principle that an insurance policy will be construed in a manner most favorable to the insured. This has been held by this court. Missouri State Life Insurance Co. v. Guess, 17 F.(2d) 450, and cases there cited.

In the case of Mutual Life Insurance Co. of New York v. Hurni Packing Co., 263 U. S. 167, 44 S. Ct. 90, 91, 68 L. Ed. 235, 31 A. L. R. 102, Mr. Justice Sutherland said: "The language employed is that of the company and it is consistent with both reason and justice that any...