Planters' Mut. Ins. Co. v. Rowland
| Decision Date | 16 December 1886 |
| Citation | 7 A. 257,66 Md. 236 |
| Parties | PLANTERS' MUT. INS. CO. OF WASHINGTON CO. v. ROWLAND. |
| Court | Maryland Court of Appeals |
Appeal from circuit court, Washington county.
Action to recover loss under a policy of fire insurance.
H. Kid Douglas and Edward Stake, for appellant.
H H. Keedy and L. E. McComas, for appellee.
The property insured in this case was a flour and fertilizer mill belonging to the appellee. After the policy was issued, the appellee leased the mill to the Messrs. Aiken & Sons for five years, with the privilege, on their part, to make "alterations, and to refit the mill with other or new machinery," upon the condition, however, that they should, upon the expiration of the tenancy, replace the old machinery. The Messrs. Aiken entered into possession under the lease; and, finding it desirable to change the machinery they took out so much of the old machinery as was used for the manufacture of flour by the burr process, and substituted therefor the roller process. This was done at their own expense; and, the new machinery being their property under the terms of the lease, it was insured by them. About two years afterwards, the mill was destroyed by fire, and this suit is brought by the appellee to recover the loss sustained by him. To this action several defenses are set up by the appellant. In the first place, it is contended that the alteration in the machinery, without the consent of or notice to the company, whether increasing the risk or not, per se avoided the policy. If this be so, it must be by reason of some stipulation between the parties; for, unless restricted in some way by the policy, we take it to be well settled that the insured may make alterations in the property without notice to insurer, provided such alterations do not thereby increase the risk. So the question resolves itself into this: Is there any stipulation in the policy or by-laws which forfeits the policy upon the failure on the part of the appellee to give notice to the company of the alterations in the machinery, although such alterations did not increase the risk? The policy does provide that it "shall cease and be of no effect" if the property shall be so altered or appropriated or used for the purpose of carrying on therein any trade or business which, according to the class of hazard thereto annexed, would increase the risk, unless it be by the consent of the company, in writing, indorsed upon the policy. This provision is one usually to be found in fire policies, and there ought not, it seems to us, to be any difficulty in its construction. The property here insured was a flour-mill, and the rate of insurance was fixed and paid according to the risk incident to that business. The insurer assumed this and no other risk; and if the appellee proposed so to alter the mill, or to use it for the purpose of carrying on any trade or business which, according to the class of hazards annexed to the policy, would increase the risk, he was bound to get the consent of the company, in writing, indorsed upon the policy. Without such consent, the alteration or use ipso facto avoided the policy. The question as to the increase of risk was no longer an open question, because the parties had by their agreement made such alteration or use material. Kimberly's Case, 34 Md. 224; Lounsbury's Case, 8 Conn. 459; Diehl's Case, 58 Pa. St. 443; Lee's Case, 3 Gray, 583.
The question, then, is whether the alterations made by the appellee in the machinery were such as would, according to the class of hazards annexed to the policy, increase the risk. The class of hazards annexed to the policy is not to be found in the record, and we cannot assume, as matter of fact, that the mere change in the machinery of the mill, from the burr process to the roller process, was such an alteration as would, according to the class of hazards annexed to the policy, increase the risk. On the contrary, the proof shows that the appellant had permitted other mill-owners to make this change without objection, and without increasing the rate of insurance. This provision, therefore, in the policy, has not, in our opinion, any bearing upon the question.
But the appellant also relies upon an indorsement on the back of the policy, to the effect that, whenever any alteration is to be made in the property, the insured shall make application to the secretary or agent, who shall examine the property, and certify whether the hazard be thereby increased or not, etc. Now, an indorsement on the back of a policy may be regarded as part of the contract, provided it is referred to in the policy as constituting part of it. If, however, there be no reference whatever to it in the policy,--nothing to show that the parties meant it to be a part of the contract,--it will be regarded merely as the act of the insurer, and not, therefore, binding on the insured. Stone's Case, 34 N. J. Law, 371; Kingsley's Case, 8 Cush. 393; Ferrer's Case, 47 Cal. 416; Snyder's Case, 16 Wend. 481; Bize v. Fletcher, 1 Doug. 13, note. In this case there is no reference, either in the policy or in the by-laws, to the direction or indorsement on the back of the policy, and it cannot, therefore, be regarded as part of the contract. It is what it professes to be,--merely directory, and not obligatory. And, besides, it does not provide for a forfeiture of the policy upon the failure, on the part of the insured, to make such application, and forfeitures are not favored by implication. We are of opinion, therefore, that there is no stipulation in this policy which per se avoids it upon the failure of the appellee to give notice to the company of the alteration in the machinery of the mill, provided such alteration did not increase the risk. Whether or not the risk was thereby increased was a question which the court properly submitted to the finding of the jury.
And this brings us to the next and the more important question Assuming that the change in the machinery from the burr to the roller process did increase the risk, was notice given to the company as required by the tenth section of the...
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