Hustace v. Phenix Ins. Co. of Brooklyn

• Decision Date: 09 June 1903
• Citation: 175 N.Y. 292,67 N.E. 592
• Parties: HUSTACE et al. v. PHENIX INS. CO. OF BROOKLYN.
• Court: New York Court of Appeals Court of Appeals

175 N.Y. 292

67 N.E. 592

HUSTACE et al.

v.PHENIX INS. CO. OF BROOKLYN.

Court of Appeals of New York.

June 9, 1903.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Frank Hustace and others against Phenix Insurance Company of Brooklyn. From a judgment of the Appellate Division (75 N. Y. Supp. 568) entered on a submission of controversy, defendant appeals. Reversed.

Bartlett, J., dissenting.

Michael H. Cardozo, for appellant.

William H. Sage, for respondents.

PARKER, C. J.

The Tarrant building on the northwest corner of Warren and Greenwich streets, New York, began to burn at 12:15 p. m., October 19, 1900. It was occupied by dealers in drugs and chemicals. Within 30 minutes after the fire started, a terrific explosion took place in that building, caused by the ignition of such chemicals and drugs, which wrecked it and other buildings, including the buildings between the Tarrant building and that of plaintiffs. The latter, known as 275 Washington street, was separated from the Tarrant building by an alleyway 8 feet wide and two buildings, the total distance between the Tarrant building and that of plaintiffs being 56 feet 11 inches. As the effect of the concussion, the plaintiffs' building fell, and, in the language of the stipulation, ‘became a total loss, and thereafter nothing remained of said building but the ruins thereof.’ Prior to such destruction of plaintiffs' building there was no fire there, and no damage thereto had been caused by the fire. The value at the time of its destruction, as fixed by the agreed statement of facts in this case, was $4,750, and for that sum plaintiffs have secured judgment against defendant under a fire insurance policy. The question is whether the judgment can stand.

It is true that, after the building had fallen, and had become, in the language of the stipulation, ‘a total loss,’ the débris was consumed by the fire which originated in the Tarrant building. But plaintiffs do not claim to recover for such burning. If they did, it would be necessary for this court to consider the effect upon the situation of the provision of the policy that ‘if a building, or any part thereof, fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease.’ The bearing of this clause of the policy is apparent when we recall that, according to stipulation, plaintiffs' building had not been damaged by fire, nor was it on fire prior to its falling. The question would, of course, be presented whether the policy did not cease upon the collapse of the building. And again, within the language of the stipulation, the fire which afterward reached the building caused no damage, for the stipulation is that the explosion ‘caused said building to fall and become a total loss,’ a phrase which has a well-understood meaning in matters relating to fire insurance. This judgment necessarily rests upon the view that under the policy issued by defendant there may be a recovery for destruction by explosion occurring in another property, provided the explosion would not have happened but for the existence of fire in such other property.

Now, having presented the situation, we turn to the policy of insurance by which the rights of the respective parties are to be determined. It is a standard policy, the provisions of which have been formulated pursuant to legislative authority, with the intention of creating a plain and unambiguous contract, which should be just to both insured and insurer. The special provisions applicable to this situation are (1) the insurance clause by which the company undertakes to insure ‘against all direct loss or damage by fire except as hereinafter provided for’; and (2) the following: ‘This company shall not be liable for loss caused directly or indirectly by invasion; insurrection; riot; civil war or commotion; military or usurped power; or by order of any civil authority; or by theft; or by negligence of the insured to use all reasonable means to save and preserve the property at and after a fire, or when the property is endangered by a fire in neighboring premises; or (unless fire ensues, and in that event for damage by fire only) by explosion of any kind; or lightning, but liability for direct damage by lightning may be assumed by specific agreement hereon.’ Now, this building was destroyed by explosion of some kind; and, inasmuch as the policy expressly provides that ‘this company shall not be liable for loss caused, directly or indirectly, * * * by explosion of any kind,’ ‘unless fire ensues, and in that event for the damage by fire only,’ it would seem as if-reading this provision of the contract according to the rule laid down by this court in Schoonmaker v. Hoyt, 148 N. Y. 425, 42 N. E. 1059, Judge Martin writing: ‘Contracts and statutes are to be read and understood according to the natural and obvious import of the language, without resorting to subtle and forced construction for the purpose of either limiting or extending their operation. Courts may not correct suspected errors, omissions, or defects, or by construction vary the contract of the parties'-the conclusion would be reached that an explosion on other premises, which produced such a violent concussion as to destroy a building 57 feet distant, would be plainly within the terms of such provision of the policy. Plaintiffs contend that the language employed indicates that the exemption was not intended to apply to an explosion caused by a preceding fire, whether in distant premises or not, and argues that, if the Legislature had intended to exempt from explosion, whether caused by fire or not, it would have omitted the words ‘unless fire ensues,’ etc., and merely said that the company ‘shall not be liable for loss sustained directly or indirectly by explosion of any kind.’ Thus, according to their view, the clause should be construed as if it read: ‘Or (unless fire ensues, and in that event for the damage by fire only) by explosion of any kind, excepting explosion caused by fire.’ Such a clause should not, of course, be read into a contract that is plain and unambiguous, particularly when it has been framed pursuant to a direction of the Legislature, and when, necessarily, care has been observed to select language which should aptly express the scope of the contract, as well as the limitations upon the liability of the insurer. The occasion for the insertion of this exemption clause in the standard policy was found in the decisions of the courts holding the insurer liable for loss caused indirectly by invasion, insurrection, riot, etc., for loss by order of civil authority directing that a building be blown up to stop the spread of a fire, for loss by theft, by lightning, and in some jurisdictions for loss by explosion. In view of these authorities the insertion of this exemption provision must have been for the purpose of overcoming the decisions. And fire insurance companies had the right to limit their risks to loss or damage by fire direct, if they so chose, rather than against damage by riot, theft, explosion, lightning, and all other causes by which property could be accidentally destroyed.

It should be noted that the insuring clause is ‘against all direct loss or damage by fire, except as hereinafter provided for.’ Plaintiffs argue that this phrase does not convey the same meaning as would a phrase ‘against all loss or damage by fire direct’; and their argument is that the adjective ‘direct’ refers to and qualifies the noun ‘loss,’ and not the noun ‘fire.’ It would seem as if the adjective ‘direct,’ in the connection in which it is employed, qualifies not alone ‘loss,’ but also ‘damage by fire,’ and hence the phrase has precisely the same meaning as if the insurance was ‘against loss or damage by fire direct.’ And, to meet situations where an explosion might occur, it provided against liability unless fire ensued, and, in that event, for the damage occasioned by the fire, and not for damage resulting from the explosion. This provision of the contract is in substantially the same language and has precisely the same meaning as a clause in an insurance contract that was before this court in Briggs v. N. A. & M. Ins. Co., 53 N. Y. 446. That policy contained this provision: ‘This company shall not be liable for loss caused by invasion, insurrection, riot, civil commotion, military or usurped power, nor for loss caused by lightning or explosions of any kind, unless fire ensues, and then for the loss or damage by fire only.’ The building insured was used in rectifying spirits. A person repairing the machinery brought in a lamp. The vapor coming into contact with the burning lamp resulted in an explosion, which did great...