Dolliver v. Granite State Fire Ins. Co.

• Decision Date: 10 December 1913
• Citation: 111 Me. 275,89 A. 8
• Parties: DOLLIVER v. GRANITE STATE FIRE INS. CO.
• Court: Maine Supreme Court

89 A. 8

111 Me. 275

DOLLIVER

v. GRANITE STATE FIRE INS. CO.

Supreme Judicial Court of Maine.

Dec. 10, 1913.

Report from Supreme Judicial Court, Hancock County, at Law.

Action by Clifton E. Dolliver against the Granite State Fire Insurance Company. On report from Supreme Judicial Court. Judgment for defendant.

Argued before SAVAGE, C. J., and SPEAR, CORNISH, KING, BIRD, and PHILBROOK, JJ.

Edward S. Clark, of Bar Harbor, for plaintiff.

John E. Nelson, of Augusta, for defendant.

CORNISH, J. Several questions are raised in defense to this action on two fire insurance policies, but it is necessary for this court to consider only one, namely, the legal effect of the breach of contract as to occupancy.

The policies were dated, respectively, December 8, 1909, and December 13, 1911, were issued for a term of three years, and covered farm buildings in the town of Trenton. When the first policy was issued, the plaintiff was living with his family upon the premises and making his home there. In June, 1910, he moved with his family to Bar Harbor and has since resided in that town, but he claims to have kept workmen as tenants in the insured premises until about January 1, 1912, and we think the evidence fairly supports this contention. The buildings therefore were occupied when the policies were issued.

On January 1, 1912, the premises being then unoccupied, the plaintiff secured 30-day vacancy permits from the defendant's agent, which expired January 31, 1912. But the premises remained unoccupied until June 18, 1912, when other workmen for the plaintiff entered into possession and continued to occupy the buildings until July 28, 1912, when the fire occurred.

The policies were of the Maine standard form adopted by the Legislature in 1895, and each contained the usual provision, "This policy shall be void * * * if the premises hereby insured shall become vacant by the removal of the owner or occupant, and so remain vacant for more than thirty days without such assent;" such assent having been previously defined as "in writing or in print of the company." It being conceded that the written assent to vacancy issued on January 1, 1912, expired on January 31, 1912, and that no other permit was given, it follows that by their own terms the policies were rendered void because of the subsequent vacancy extending to June 18, 1912, unless, as claimed by the learned counsel for the plaintiff, the reoccupation begun on June 18, and continued till the time of the fire, of itself revivified the contract and restored the plaintiff to his former rights. Did it have that legal effect?

This is a question raised sharply for the first time in this state and because of its consequences is deserving of the most careful consideration.

Especially is this true because the decisions in other jurisdictions are not in harmony.

The policy contains 11 distinct conditions, the violation of any one of which renders it void. One of these, false representation in the application, relates to matters antedating the policy; nine others, viz., other insurance, removal, increase of risk, sale, vacancy for more than 30 days, manufacturing establishments running later than 9 o'clock p.m., or ceasing operations more than 30 days, keeping of gunpowder or other like articles contrary to law, keeping of camphene, benzine, naphtha, or other chemical oils, all relate to matters while the policy is in force, while the eleventh fraud, relates to acts either before or after the loss.

An examination of the authorities reveals the fact that in some states the courts have held that the breach of these conditions does not render the policy void but merely suspends its operation, and, when the breach ceases, the policy again attaches. They make it a case of suspended animation rather than of death. But it would seem that in order to do this they ignore the plain words of the contract and seek to reach a conclusion which under the circumstances might seem fairer to the assured, working out what they conceive to be "substantial justice."

The reasons given for these decisions do not commend themselves to our judgment.

In some cases the later decisions are based upon earlier ones arising under a different form of policy where the temporary suspension was expressly provided for, but the distinction is not noted, or, if noted, the earlier is followed, notwithstanding the changed contract.

For instance, three early cases are often cited as authority for the doctrine of revivification, viz., Lounsbury v. Insurance Co., 8 Conn. 458 (1831), 21 Am. Dec. 686, Phoenix Ins. Co. v. Lawrence, 4 Mete. (Ky.) 9, 91 Am. Dec. 521 (1862), and U. S. F. & M. Ins. Co. v. Kimberley, 34 Md. 224, 6 Am. Rep. 325 (1870); but in each of them the policy provided, not that it should be void in case the property were used contrary to the conditions specified, but that, "so long as the same shall be so appropriated, applied or used, these presents shall cease and be of no effect." It is obvious that under that plain language the policy was suspended by its own terms, but when that language was abandoned, and it was provided that the policy should be "void," it is difficult to see how these early decisions form any precedent in favor of the doctrine of suspension. In fact they are authorities against it.

Yet these decisions, among others, are cited as authorities in Athens Mutual Ins. Co. v. Toney, 1 Ga. App. 492, 57 S. E. 1013 (1907), one of the more recent cases that adopts the theory of suspension and revivification.

Along the same line are the decisions in Illinois. The earliest case on this subject in that state, and the one often cited by that court as the leading case, is New England P. & M. Ins. Co. v. Wetmore, 32 Ill. 221 (1865).

But the policy in that case provided, as in the other early cases before referred to, that, if the premises should be appropriated to any prohibited use, then, "so long as the same shall be so appropriated, applied, or used, these presents shall cease and be of no force or effect"; and the court say: "The import of this language it seems to us, is most clear, not that this policy should be absolutely void to all intents and purposes, if the premises are misappropriated, but only while they are so improperly used, the insurance shall have no effect." With this construction we can have no quarrel, because plain words are given their plain meaning.

But following this the Illinois court have extended the doctrine even to cases where the policy contains the word . "void," as in Germania Fire Ins. Co. v. Klewer, 129 Ill. 599, 22 N. E. 489 (1889), and Traders' Ins. Co. v. Catlin, 163 Ill. 256, 45 N. E. 255, 35 L. R. A. 595 (1896).

In Germania Fire Ins. Co. v. Klewer, supra, the court went so far as to hold that, while the policy provided that it should be void in case of other insurance existing at the time the policy was taken out, the legal effect was, not to avoid the second policy, the one in suit, but to suspend it until the expiration of the prior policy, and then it would come into full force.

Our court has squarely rejected such a doctrine in a case arising under the same clause and presenting the same point. Bigelow v. Insurance Co., 94 Me. 39, 46 Atl. 808. The opinion concludes: "By the express terms of the policy in suit the defendant company is absolved from all liability thereunder." To the same effect are Jersey City Ins. Co. v. Nichol, 35 N.J.Eq. 291, 40 Am. Rep. 625; Insurance Co. v. Rosenfield, 95 Fed. 358, 37 C. C. A. 96; and Carleton v. Insurance Co., 109 Me. 79, 82 Atl. 649, 39 L. R. A. (N. S.) 951.

In Traders' Ins. Co. v. Catlin, supra, the question arose over changes in the property that increased the hazard, and the court held that if the changed conditions had ceased to exist before the fire, leaving the risk no more hazardous than before, the policy again became in force. The court say: "If a loss occurs during the increased hazard, it would defeat a recovery. If a former increase of hazard has ceased to exist, and that increase of hazard at that former time in no way has affected the risk when the loss occurs, no reason exists why a forfeiture should result from a cause which occasions no damage."

This clearly shows the reasoning of the Illinois court. It is based upon increase of risk at the time of the fire, and, whether or not the specific conditions have in the meantime been broken, they hold to be of no consequence, providing the situation has been restored. They applied the same rule by way of dictum in case of vacancy in Insurance Co. v. Garland, 108 Ill. 220, and it is the rule of the early case of Insurance Co. v. Wetmore, supra, applied to an entirely different policy.

This same idea of construing the policy, not according to its own plain terms but according to an arbitrary and unauthorized, standard increase of risk at the time of the loss, forms the basis of many of the decisions which hold to the doctrine of intermittent liability.

In Athens Mutual Ins. Co. v. Toney, supra, after citing the early decisions before referred to and others, including decisions from Illinois, the court say: "We place our decision squarely on the proposition that the violation of the condition as to vacancy in this case in no wise contributed to the loss. The increased hazard existed while the house was vacant, but when the house was reoccupied the danger from vacancy terminated, and the policy again attached and became of binding effect, and the company was liable for the loss." The same reason is given in Born v. Insurance Co., 110 Iowa, 379, 81 K. W. 676, 80 Am. St. Rep. 300 (1900), when construing the clause against incumbrance, and in Insurance Co. v. Pitts, 88 Miss. 587, 41 South. 5, 7 L. R. A. (N. S.) 627, 9 Ann. Cas. 54 (1906), when construing the clause as to vacancy.

Here again our own court has taken the directly opposite view and has rejected the doctrine that the effect of vacancy, under the present form of policy,...