Maxwell v. Springfield Fire & Marine Ins. Co. of Springfield

• Decision Date: 16 January 1920
• Docket Number: No. 10020.,10020.
• Court: Indiana Appellate Court
• Parties: MAXWELL v. SPRINGFIELD FIRE & MARINE INS. CO. OF SPRINGFIELD, MASS.

73 Ind.App. 251

125 N.E. 645

MAXWELL

v.SPRINGFIELD FIRE & MARINE INS. CO. OF SPRINGFIELD, MASS.

No. 10020.

Appellate Court of Indiana, Division No. 2.

Jan. 16, 1920.

Appeal from Circuit Court, Rush County; Will M. Spark, Judge.

Action by Lawrence Maxwell against the Springfield Fire & Marine Insurance Company of Springfield, Mass. From a judgment for defendant, demurrer to the complaint having been sustained, plaintiff appeals. Reversed and remanded, with directions.

This action was instituted by appellant to recover on two policies of insurance. The complaint is in two paragraphs, and was filed in the Fayette circuit court. The appellee demurred to each paragraph of the complaint on the ground that neither paragraph states facts sufficient to constitute a cause of action. The demurrers were overruled. Thereupon appellee filed answers as follows: (1) General denial; (2) special answer addressed to the first paragraph of complaint; and (3) special answer addressed to the second paragraph of complaint. Immediately after filing its answers the appellee took a change of venue, and the cause was transferred to the Rush circuit court. In the latter court appellant filed separate demurrers to the second and third paragraphs of answer, on the ground that neither paragraph stated facts sufficient to constitute a cause of defense. The trial court overruled the demurrer to each paragraph of answer, and then carried the demurrers back and sustained one to each paragraph of the complaint. Appellant declined to plead further. Judgment against appellant.

The following is the substance of the first paragraph of the complaint:

“That the plaintiff, Lawrence Maxwell, is the owner of a factory in the city of Connersville; that the defendant is an incorporated company carrying on the business of insuring owners of property against damages from sprinkler leakage; that plaintiff's factory was equipped with sprinklers for the purpose of protecting the property from damage or destruction by fire; that the plaintiff and defendant entered into a written agreement, by the terms of which the defendant insured the plaintiff against damage from sprinkler leakage for the term of one year, a copy of which contract is filed herewith and made a part hereof as Exhibit A; that on the 25th day of April, 1915, a severe windstorm, cyclone, or tornado swept over said city where said factory was located; that said storm tore a large part of the roof from that portion of the factory which is situated on the east side of Eastern avenue, and broke the pipes and attachments of the sprinkler system in the factory, so that the water and mud from the sprinkler pipes was precipitated and thrown in and upon the floors and upon the finished and unfinished products, stock, materials, and machinery in the building, thereby damaging the plaintiff in the sum of $21,500; that all of said damage was directly caused by said sprinkler leakage, and the precipitation of water from the pipes of the sprinkler system, and not otherwise; that the plaintiff has fully performed all of the obligations resting upon him under the terms of the said contract; that the defendant has wholly failed, neglected, and refused to make payment whatever under said policy of insurance for said loss and damages; that the defendant disclaims liability under said policy; that plaintiff is informed and believes, and therefore avers, that the defendant claims that it is in no way liable for said damage and loss because the same was indirectly caused and occasioned by the storm; and the plaintiff avers that said sprinkler leakage was the direct and proximate cause of all of said damage and loss.”

So much of the policy as is necessary to an understanding of the question presented is as follows:

“The Springfield Fire & Marine Insurance Company of Springfield, Mass., in consideration of the terms and stipulations herein named and of $46.80 premium, does insure Lawrence Maxwell for the term of one year *** against all direct loss or damage by sprinkler leakage, except as hereinafter provided, to an amount not exceeding $6,500, to the following described property while located and contained as described herein and not elsewhere, to wit:

On all property, real and personal, owned by the insured, and on contents, their own or held by them in trust or on commission, which may be sold, but not removed, or for which they may be legally liable, all while situate on both sides of Eastern avenue between First and Second streets, Connersville, Indiana.

Subject to the conditions of this policy, it is agreed, when a tank is or tanks are actually supplying water to the sprinkler system mentioned herein, that this policy shall cover loss or damage resulting from the collapse or precipitation of said tank or tanks, or by the component parts of supports of same, such loss or damage being considered as incidental to and part of the damage caused by water. Attached to and forming a part of Sprinkler Leakage Policy No. 1800.

Wherever the words ‘sprinkler leakage’ occur, it shall be held to mean leakage, discharge, or precipitation of water from the automatic sprinkling system or tanks supplying it (including accident caused by freezing), in or on the buildings now erected and described herein, whether the accident occurs in the portion occupied by the insured or not.

This company shall not be liable (1) for loss by fire, however caused; (2) nor for loss resulting from the leakage of water, if such leakage is caused directly or indirectly by fire; (3) nor for loss due to stoppage or interruption of any work or plant, unless liability for such loss is specifically assumed herein; (4) nor for loss caused by lightning (whether fire ensues or not), cyclone, tornado, windstorm, earthquake, explosion, or blasting; (5) nor for loss caused directly or indirectly by invasion or insurrection, riot, civil war, or commotion, or military or usurped power, or by order of any civil authority; (6) nor for loss by theft; (7) nor for loss caused directly or indirectly by the neglect of the insured to use all reasonable means at the time of an accident to save and preserve the property; (8) nor for loss caused directly or indirectly by the fall or collapse of any building or part thereof, unless such fall or collapse is caused by the accidental leakage of water from the automatic sprinkler system or the tanks supplying it”

The affirmative paragraph of answer, addressed to the first paragraph of complaint, recites some of the terms and conditions of the policy, states the company's construction of the contract, and concludes:

“Defendant further says that the said loss and damage sued for in the said first paragraph of complaint herein was caused by windstorm, and by sprinkler leakage caused directly, proximately, and immediately by a windstorm then and theretofore occurring, and not otherwise, and that the said damage sued for in the complaint and all thereof was caused wholly by a means and cause and by the aforesaid means and cause excepted by said policy, by the terms thereof excluded therefrom, and by a cause not insured by said policy.”

The second paragraph of complaint is the same as the first, except that it is founded on a different policy. The affirmative paragraph of answer addressed to the second paragraph of complaint is the same as the affirmative paragraph of answer addressed to the first paragraph of complaint.

D. W. McKee, of Connersville, Lawrence Maxwell, of Cincinnati, Ohio, and Allen Wiles and Richard N. Elliott, both of Connersville, for appellant.

Thomas Bates and Alfred R. Bates, both of Chicago, Ill., and Burke G. Slaymaker, of Indianapolis, for appellee.

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

[1] For the purpose of construction, an insurance policy is not regarded as an ordinary contract; and where the language of the policy is ambiguous, that construction will be adopted which is most favorable to the insured. Glens Falls Ins. Co. v. Michael, 167 Ind. 659, 74 N. E. 964, 79 N. E. 905, 8 L. R. A. (N. S.) 708; Ætna Ins. Co. v. Strout, 16 Ind. App. 160, 44 N. E. 934;German Baptist, etc., v. Conner, 64 Ind. App. 293, 115 N. E. 804. The reason for the rule has been stated cogently by Judge Taft, as follows:

“Policies are drawn by the legal advisers of the company, who study with care the decisions of the courts, and, with those in mind, attempt to limit as narrowly as possible the scope of the insurance. It is only a fair rule, therefore, which courts have adopted, to resolve any doubt or ambiguity in favor of the insured and against the insurer.” Manufacturers' Accident Indemnity Co. v. Dorgan, 58 Fed. 956, 7 C. C. A. 592, 22 L. R. A. 620.

[2] It is averred in the complaint that the loss for which appellant seeks recovery was caused directly by the leakage from the sprinkler system. The general obligation of the insurer is to pay indemnity for “all direct loss or damage by sprinkler leakage, except as hereinafter provided.” Under that general obligation the insurer is liable for the loss averred in the complaint, unless it has absolved itself by the exceptions stated in the contract. We will examine, therefore, the entire policy, to determine from the language thereof, if we can, the real intention of the parties as expressed by the contract.

The insured installed in his factory an automatic sprinkler system to lessen the fire hazard. That was commendable from every point of view, for thereby he promoted his own interest, as well as the interest of the insurance companies underwriting the fire risk. However, by installing the automatic sprinkler system, he introduced into his factory a new hazard. In several ways and by various means the sprinkler system might be opened, thereby releasing the impounded water. In that event, damage by water probably would result to the building, machinery, goods manufactured and in process of manufacture, materials, and supplies. It was indemnity against...