German American Ins. Co. v. Hyman

• Decision Date: 03 February 1908
• Parties: GERMAN AMERICAN INS. CO. v. HYMAN. GERMAN ALLIANCE INS. CO. v. SAME.
• Court: Colorado Supreme Court

94 P. 27

42 Colo. 156

GERMAN AMERICAN INS. CO. v. HYMAN.

GERMAN ALLIANCE INS. CO. v. SAME.

Supreme Court of Colorado

February 3, 1908

Appeal from District Court, Lake County; Frank W. Owers, Judge.

Action by M. Hyman against the German American Insurance Company and the German Alliance Insurance Company. Judgment for plaintiff, and defendants appeal. Reversed.

These causes were consolidated for trial in the court below. They were argued together in this court, and are determined by one opinion. Appellee, Hyman, who was plaintiff below, was the owner of a certain brick store building on Harrison avenue in the city of Leadville. On August 1, 1901, and on April 28 1902, Wright & Stotesbury, agents of the appellant insurance companies, who were defendants below, issued to him two policies of fire insurance for $2,000 each in said companies respectively. These policies were the same in form, and were what is known as 'New York standard policies.' Each contained the following, among other conditions:

'This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if * * * illuminating gas or vapor be generated in the described premises (or adjacent thereto for use therein).'

'This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if * * * there be kept, used or allowed on the said above described premises benzine, gasoline * * * or petroleum, or any of its products of greater inflammability than kerosene oil.'

'This company shall not be liable for loss caused directly or indirectly by invasion * * * or (unless fire ensues, and in that event for the damage by fire only) by explosion of any kind.'

'This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be enforsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of the agreement endorsed hereon or added hereto, and as to such provisions and conditions, no officer, agent or representative shall have such power or be deemed or held to have power to waive such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.'

The ground floor of the building was occupied as a clothing store by Sanda Bros., tenants of the plaintiff. About the 26th of May, 1902, Wright & Stotesbury also issued to them a policy in the German American Insurance Company on their stock of goods. This policy was similar in form to those issued to Hyman. Subsequently, and about June 21, 1902, at the request of Sands Bros., Wright & Stotesbury attached to their policy a written permit for the installation of a certain specified apparatus and device for the generation and use of the vapor of gasoline for lighting purposes on the premises. This apparatus or plant either had already been or was at once installed in the back part of the storeroom. Neither Sands Bros. nor Wright & Stotesbury communicated to Hyman any knowledge of the granting of said permit to Sands Bros. Nor did Hyman have any knowledge until after the fire either of the granting of such permit or of the installation of the gasoline lighting plant upon the premises. Hyman's policies remained apparently in full force, and without any intimation from Wright & Stotesbury or otherwise, until after the explosion and fire, that defendants intended to disclaim liability thereunder. About 9:30 p. m. on the evening of July 3d the building was seriously damaged by fire and explosion. As to whether the explosion took place first and the fire afterwards, or whether the fire preceded and the explosion was an incident thereto, is a matter upon which the parties differ in their conclusions drawn from the evidence. Appellants contend that the explosion occurred first, and that the fire resulted therefrom. Appellee contends that the fire was first and the explosion afterwards, as an incident thereto. Substantially all of the evidence in relation to this specific subject is included within the testimony of three witnesses, Carlson, Snyder, and Coble. This testimony is sufficiently stated in the opinion. As to the extent of the damages, there is some conflict of evidence. But the court below who tried the case, a jury being expressly waived, found the total amount thereof to be in excess of the $4,000 covered by the two policies. There was also evidence upon the subject of the relative proportions of the loss due to the explosion and to the fire, respectively. A witness for plaintiff, having fixed the total loss at $4,082.05, on rebuttal attributed one-third of that sum to the explosion. One of defendants' witnesses places the extent of the damage from the explosion at $1,600, and from the fire at $1,450. Another of defendants' witnesses estimates the total damages at $3,800 and the loss by fire at $1,769.80. But the trial court evidently adopted the view that the fire preceded the explosion, and that the explosion was an incident thereto, and rendered judgment for the full amount of the policies, holding that the entire injury proximately resulted from the fire.

Sylvester G. Williams, for appellant.

Fillius & Davis, for appellee.

HELM, J. (after stating the facts as above).

1. The first ground relied on for a reversal of the judgment below is that both of the policies in suit were rendered wholly void by the installation and use of the gasoline lighting plant in the building insured; each of said policies prohibiting the generation and use of gasoline vapor on the premises without the consent of the insurer in writing. Wright & Stotesbury represented both defendants in the city of Leadville. They were furnished with blank policies of insurance duly signed by the president and secretary, with authority to fill out and issue the same. They had power to solicit insurance, to receive applications and premiums, to issue, countersign, renew, and cancel policies in that district. They were therefore general agents of the companies, and possessed all the authority devolved by law upon such agents. Acting in that capacity, they issued both policies to plaintiff, and also issued the policy to Sands Bros., who were tenants of plaintiff. The action of Wright & Stotesbury in suspending the operation of the gasoline provision in Sands Bros.' policy is not challenged. Defendants themselves make no objection in this regard. They admit that the agency was sufficiently broad for such purpose; and it is not questioned but that Wright & Stotesbury could also have suspended the similar provision in both of plaintiff's policies had they been requested by him so to do. But plaintiff did not make this request for the very obvious reason that he had no notice or knowledge of the suspension of the gasoline provision in the policy taken out by his tenants, or that a gasoline plant had been installed and was in use on the premises. Yet it is insisted on behalf of defendants that the installation of the gasoline plant rendered both of plaintiff's policies void; he having failed to apply to Wright & Stotesbury and procure a suspension of the gasoline clause therein, and that for this reason he is not entitled to recover anything in the present action. That such a view would, under the circumstances, result in gross injustice as well as hardship to plaintiff, must be admitted; and, unless coerced by cogent and powerful authority so to do, we are not disposed to adopt the same. The innocence and good faith of plaintiff are not impugned. No bad faith is in any manner inputed to him. He is not even charged with negligence; and, relying on the honor and integrity of defendants and their agents, he honestly supposed his policies invulnerable until they were challenged after the fire. At the time of granting the suspension of the gasoline provision in Sands Bros.' policy, as well as when issuing the same, Wright & Stotesbury may fairly be presumed to have had in mind the policies previously issued to plaintiff. It is true Stotesbury testifies that, when granting the gasoline permit to the tenants, it did not 'occur' to him that plaintiff had policies of insurance on the building; also, that this fact did not 'occur' to him until after the fire. But Wright & Stotesbury solicited plaintiff's insurance, and issued his policies themselves. From the date of issue of the second policy to plaintiff till the issue of Sands Bros.' policy upon the goods in plaintiff's building less than four weeks intervened, and less than seven weeks passed between the former date and the suspension of the gasoline provision in the latter policy. Wright & Stotesbury were constantly dealing with this class of policies, and were familiar with the gasoline clause uniformly included therein. They must be regarded as aware of the fact that in suspending or waiving this provision they were sanctioning the violation of plaintiff's contracts by his tenants.

It is suggested by counsel in argument that Wright & Stotesbury had no actual knowledge of the fact that their permission was utilized by installation of the gasoline plant. But this, if true, would not be significant; for in granting the permission they must be held to have anticipated the installation. Besides, Stotesbury says, when speaking of the party who applied for the suspension of the gasoline clause 'I knew he would not come in and ask for that permit, unless the plant was in there.' Had Wright & Stotesbury notified plai...