Capital Fire Ins. Co. v. Carroll

• Decision Date: 10 May 1910
• Citation: 109 P. 535,26 Okla. 286,1910 OK 122
• Parties: CAPITAL FIRE INS. CO. v. CARROLL et al.
• Court: Oklahoma Supreme Court

109 P. 535

26 Okla. 286, 1910 OK 122

CAPITAL FIRE INS. CO. v. CARROLL et al.

Supreme Court of Oklahoma

May 10, 1910

Syllabus by the Court.

If language in an insurance policy is ambiguous and susceptible of two constructions, one of which will give the policy effect, the other render it void at the time of its execution, that construction should be adopted which will make the policy effective.

The burden of proving that statements of the insured in his application for a policy of fire insurance, which by the terms of the policy are made his warranty, are untrue, and that a condition of the policy essential to its validity has been violated by the insured, is upon the insurer when it seeks to avoid the policy upon such grounds.

The term "roller mill," in its general sense, includes any form of mill for the coarse grinding of grain for feed and may include a mill and machinery used for the purpose of manufacturing meal, bran, and other feed products.

A policy of insurance which described the property insured as a frame building "while occupied as a flour and roller mill" and the fixed and movable machinery, pipes belting, pulleys, shafting, roller mills and appurtenances smut mill and appurtenances, purifiers, blowers, dusters tools," etc., "and such other machinery not more hazardous as is usual to roller mills," will be held to include machinery used in the manufacture of meal, bran, and other feed products, where not to do so will render the policy void from its execution.

A policy of insurance covering a mill plant for the manufacture of flour, meal, bran, and other feed products contained a stipulation that the entire policy shall be void if the manufacturing establishment ceases to be operated for more than 10 consecutive days. The mill was not operated for the purpose of manufacturing flour at the time of the issuance of the policy and for a longer period than 10 days thereafter, but was at the time of the issuance of the policy, and continued to be thereafter until the property was destroyed, operated in the manufacture of meal, bran, and other feed products. Held, that the establishment had not "ceased operation" within the meaning of the policy.

This court will not consider alleged errors of the trial court, unless such alleged errors appear in the record of the case and exceptions were taken thereto in the trial court.

Error from District Court, Pittsburg County; Proslie B. Cole, Judge.

Action by John F. Carroll and others against the Capital Fire Insurance Company. Judgment for plaintiffs, and defendant brings error. Affirmed.

C. S. Collins and Boles & Holes, for plaintiff in error.

James S. Arnote, for defendants in error.

HAYES J.

This is an action on two fire insurance policies, each for the sum of $1,500, brought by defendants in error, hereinafter called plaintiffs, against plaintiff in error, hereinafter called defendant, in the United States court for the central District of the Indian Territory, at McAlester, prior to the admission of the state. After the admission of the state, the cause was transferred to the district court of Pittsburg county, where a trial to the court without a jury on an agreed statement of facts was had, and resulted in a judgment in favor of the plaintiffs for the amount of the policies and interest thereon. It is to reverse that judgment that this proceeding in error is prosecuted.

Defendant admits the execution and delivery of the two policies and the destruction of the property insured, but defends against any liability under the policies upon the ground that certain representations made by the plaintiffs in their application for the policies were untrue; and that certain conditions of the policies essential to their validity had been continuously violated by plaintiffs prior to the destruction of the property. Plaintiffs, in their reply to defendant's answer in which the foregoing matters are set up, make denial of the affirmative allegations in the answer, and plead an estoppel against defendant's pleading the forfeiture of said policies upon the grounds alleged in its answer. The policies of insurance were issued upon the written application of plaintiffs therefor. Their applications were made upon a printed form of application for insurance on cotton gins which the parties attempted to adapt to their purpose by erasing some of the printed provisions and interlining others. The schedule of items to be insured appears as follows: "Atlas Engine, val. $800, insurance $500; building $1,500; insurance $500; flour mill $3,500; insurance $2,000." Following and immediately to the right of the foregoing schedule appears the following more detailed description of the property (the italicized words represent the words written into the application; the others are in print. We insert also the words struck out): "(1) On 50 H power 2 story built of wood with rubber roof. (2) On fixed and movable machinery of all kinds (excepting engine and boiler appurtenances), while set up for use, including gin stands, feeders, condensers, dust and lint flues, cotton press and appurtenances, suction elevators, fans, vacuum boxes, distributers, piping, pulleys, seed blowers, seed feeders, conveyors, shafting, belting, hangers, journals, tools, piping and hose, all only while contained in the above-described mill. (3) On boiler house, built of iron with iron roof 30 feet from mill. (4) On engine and boiler, including all connections, foundations, pumps and heater, and smokestack, while contained in above described Boiler House. (5) On gristmill, all while contained in. ***"

Paragraphs 6, 7, 8, and 9 thereafter following pertain to cotton gins only, as does also provisions 11 and 12 which were struck out. Clauses 10 and 13 read as follows: "(10) On cotton grain held in trust or on commission for which assured may be liable while in said mill. (13) On tools contained in above mill."

On the back of the application are certain questions and answers made thereto by plaintiffs, which, by the terms of the application, are made a part thereof, and the application by the terms of the policies is made a part of the policies, and plaintiff's statements therein are made their warranties, and a condition upon which the insurance was issued. Question No. 7 of the application reads: "Will the building or machinery be used, during the term of the policy, for any other purpose than milling? If so, for what purpose? State fully. (Answer.) For mill purposes only." Question No. 67 reads: "Will the property to be insured be in continuous operation during the season? (Answer.) Yes."

Then occurs the following statement: "The property has been and is profitable, and applicant has every reason to believe it will continue to be so." Each of the policies contain the following provision: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void, *** if the subject of insurance be a manufacturing establishment, if it be operated in whole or in part at night later than 10 o'clock, or if it ceased to be operated for more than ten days. ***" Defendant contends that it is not liable in this action, for the reason that the representations of plaintiffs in their application that the property described therein had been and was profitable at the time of said application, and that they had every reason to believe it would continue to be so, was untrue, and for the further reason that the property insured was not at the time of the application for the policies and was not thereafter until the destruction of the property by fire, which occurred about eight months after the issuance of the policies, operated as a flour mill. In the agreed statement of facts it is admitted that no part of the property was at the time of the application for the insurance, and for some time theretofore, and was not thereafter up to the time of the fire operated in the manufacture of flour, but that it was at all of said times idle and unused for that purpose. It is admitted, however, that in the same building there was certain machinery, the exclusive use of which was for the manufacture of corn meal, bran, chops, and feed; that said last-mentioned machinery and a large portion of the machinery for making flour was used at the time of the application for their insurance, and was continually used thereafter, until the destruction of the property, for the purpose of manufacturing corn meal, bran, chops, and feed. A portion of the machinery in the building, admitted by defendant to be covered by the policies, was adapted for the use of the manufacture both of flour and of corn meal, bran chops, and feed. Another portion of the machinery was suitable to be used only for the purpose of manufacturing flour. Another portion of the machinery which defendant contends was not covered by the policies was used exclusively in the manufacture of corn meal, bran, chops, and feed.

Under the view we take of this case, the correctness of the judgment of the trial court turns upon the question whether the policies covered only those portions of the machinery adapted for use in the manufacture of flour, or whether it covered all the machinery including that used exclusively for the manufacture of meal and feed products. If the application contained no description of the property to be insured other than that given in the general terms of the three items first set out above, there could be little or no ambiguity in its language, but that applicants intended that the printed paragraphs following and above set out should be considered as a part of the description of the property to be insured is evidenced by the fact that the blanks in these various paragraphs are filled out and some of the paragraphs that...