Royal Ins. Co. of Liverpool v. Lubelsky

• Decision Date: 09 April 1889
• Citation: 86 Ala. 530,5 So. 768
• Parties: ROYAL INS. CO. OF LIVERPOOL v. LUBELSKY.
• Court: Alabama Supreme Court

5 So. 768

86 Ala. 530

ROYAL INS. CO. OF LIVERPOOL v. LUBELSKY.

Supreme Court of Alabama

April 9, 1889

Appeal from city court of Birmingham; H. A. SHARPE, Judge.

Action by D. Lubelsky against the Royal Insurance Company of Liverpool Defendant appeals.

Webb & Tillman, for appellant.

D F. Myers and Hewitt, Walker & Porter, for appellee.

SOMERVILLE J.

The action is one on a fire insurance policy for the value of a dwelling-house destroyed by fire on April 14, 1888, the policy having been issued July 1, 1887. The building is described as a "two-story frame, shingle roof dwelling-house, when completed to be occupied as a private dwelling-house," situated on certain named streets in the city of Birmingham. The policy contains, as usual with such agreements, a number of conditions on the happening of which it is stipulated that the insurer shall not be liable for any loss or damage occasioned by fire. One of these is if the building " becomes vacant or unoccupied, *** without the written permission of the company indorsed on the policy." It is provided that "in every [such] case, without such written permission, this policy shall be void, and all insurance hereunder shall immediately cease and determine."

At the time the negotiation for the policy was progressing the building was in process of completion. According to the defendant's version of the testimony, it was not completed when the insurance agents visited the premises for inspection, nor did they know of its completion when the policy was issued, on July 1, 1887. According to the statement of the plaintiff, it was completed when one of the defendant's agents last visited the premises, and when the policy was issued. One of the plaintiff's witnesses says that at the time of the agent's visit the fence around the house was unfinished, and the blinds were down to be painted. This fence was completed on June 29th, and the tools of the workmen were not removed from the house, where they were kept, until July 3, 1887. It was contemplated that the house would be rented to some tenant after completion, and this was so represented by the plaintiff to the insurance agents. The house was vacant and unoccupied when insured, and known to be so to the defendant's agents. It remain so until September 5, 1887, or over two months, when it was rented to a tenant. This tenant quit the premises on April 1, 1888, on account of an attachment being levied on his furniture at the instance of the plaintiff for unpaid rent. The premises were destroyed by fire on April 14, 1888, after 14 days of vacancy or nonoccupation.

The question is whether, under this state of facts, the policy became forfeited so as to determine the insurance, it being admitted that the insured had no permission for the premises to remain vacant or unoccupied from April 1st to the 14th, and the evidence showing that the company had no knowledge of the fact of such vacancy during this time.

In construing this contract all its conditions and terms will be construed liberally in favor of the assured, and strictly against the insurer. Clear and unequivocal language must be required in order to create a warranty, and all statements of a doubtful meaning must be construed to be representations rather than warranties. The rules governing this subject are discussed at length in Insurance Co. v. Johnston, 80 Ala. 467, 2 South. Rep. 125, and need no further discussion. But, while these rules of construction are followed, it is our duty "to interpret the contract of the parties as they have made it, and to enforce it according to obvious intention, legally expressed, so long, at least, as it offends no law, or violates no principle of public policy." Insurance Co. v. Thomas, 74 Ala. 578, 583.

It is contended that as the house was vacant and unoccupied within the knowledge of the agents of the company at the time the policy was issued, this fact operated as a waiver of the condition that "the company will not be liable for loss or damage if the building becomes vacant or unoccupied." In support of this construction it is necessarily contended that the house was insured as vacant, without contemplating its occupancy during the year for which it was insured; the phrase in the policy, "when completed to be occupied as a private dwelling-house," being asserted to be merely descriptive. If the house in question had been insured within the knowledge of the defendant's agents as vacant property, unoccupied at the time of issuing the policy, and if the facts justified the inference that there was no implied agreement that it was to be occupied as a dwelling during any period of the insurance, and during this time it had been destroyed by fire while vacant, this would, under the authorities, operate as a waiver of the condition in question, and the company would be liable for the loss. This would be on the principle that a condition precedent of this nature could be waived by parol agreement, the company being estopped to afterwards assert any benefit under it, on the ground that it would be in fraud of their contract, and violative, as such, of all fair and honest dealings. Insurance Co. v. McCrea, 8 Lea, 513; Short v. Insurance Co., 90 N.Y. 16.

The circumstances surrounding the contracting parties must be taken into consideration in construing this, as all other contracts. When the negotiation for insurance was commenced as we have said, the house was in process of erection. An agent was authorized to rent it when complete, and the defendant's agents were informed of such purpose. The fence around the premises was completed only two days at most before the date of the policy. In the light of these facts, we must construe the phrase, "when completed to be occupied as a private dwelling-house." The adjudged cases are quite in conflict as to the force to be given phrases analogous to this when inserted in insurance policies. In Joyce v. Insurance Co., 45 Me. 168, it was held that where a house was represented in a policy as "occupied by" the insured, this was a...