St Paul Fire Marine Ins Co v. Bachmann

• Decision Date: 23 February 1932
• Docket Number: No. 311,311
• Citation: 285 U.S. 112,76 L.Ed. 648,52 S.Ct. 270
• Parties: ST. PAUL FIRE & MARINE INS. CO. v. BACHMANN
• Court: U.S. Supreme Court

285 U.S. 112

52 S.Ct. 270

76 L.Ed. 648

ST. PAUL FIRE & MARINE INS. CO.

v BACHMANN.

No. 311.

Argued Jan. 12, 1932.

Decided Feb. 23, 1932.

Messrs. James M. Guiher, Philip P. Steptoe, and Louis A. Johnson, all of Clarksburg, W. Va., for petitioner.

Messrs. Charles J. Schuck and Carl G. Bachmann, both of Wheeling, W. Va., for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This action to recover on a policy of fire insurance was brought in the federal court for Northern West Virginia by Sophia C. Bachmann, a citizen of that state, against the St. Paul Fire & Marine Insurance Company, a Minnesota corporation. The parties stipulated that the plaintiff was entitled to recover 'unless the policy had been forfeited and nullified by the alleged violations as set forth in defendant's Specifications fo Defense Nos. 1 and 2 filed in this case.' The first specification recited the increase of hazard warranty: 'Unless otherwise provided by agreement in writing added hereto, this company shall not be liable for loss or damage occurring (b) while the hazard is increased by any means within the control or knowledge of the insured'; and alleged that by means 'within the knowledge and control of the plaintiff and her agent or agents' the fire hazard had been increased. The second specification of defense recited the prohibited articles warranty: 'Unless otherwise provided by agreement in writing added hereto, this Company shall not be liable for loss or damage occurring (d) while * * * there is kept, used or allowed on the described premises * * * gasoline * * *'; and alleged that 'at the time of the fire complained of, and prior thereto, large quantities of gasoline were being kept * * * upon and about the insured premises, all of which was well known to the plaintiff and her agent or agents, and was in violation of the foregoing condition and warranty.'

To each defense the plaintiff replied that the warranty recited had been modified by a rider added to the policy; and also that prior to the fire she had no knowledge or control, as alleged, of the circumstances relied upon as showing breach of the warranty. The rider set forth in the reply altered the occupancy clause of the policy, which had originally described the insured building as 'occupied as Produce Store,' so that it read, 'occupied for bottling automobile oils, offices, and other mercantile purposes not more hazardous.' Another clause of the policy permitted the insured 'for present and other occupancies not more hazardous' 'to do such work and to keep and use such materials as are usual in such occupancies;' and a rule of the West Virginia Fire Underwriters' Association (concededly a part of the insurance contract) provides that 'the word 'materials' as used above, includes gasoline and such other materials as are prohibited by the printed conditions of the policy, when kept and used for such purposes as are usual to the occupancies permitted.' Gasoline is used in the business of bottling automobile oils.

The case was tried before a jury. The defendant introduced evidence tending to show that the premises were occupied at the time of the fire by a tenant engaged in the illegal manufacture of intoxicating liquors; and that a large quantity of gasoline was kept on the premises for use in that connection. But it failed in its effort to prove that the plaintiff had knowledge of these facts. The verdict was for the plaintiff; and the judgment entered thereon was affirmed by the Circuit Court of Appeals. 49 F.(2d) 158. The writ of certiorari was granted because of alleged conflict with decisions of this Court and of the Eighth Circuit Court of Appeals, 284 U. S. 605, 52 S. Ct. 31, 76 L. Ed. —.

The only error assigned here by the insurance company relates to the construction of the prohibited articles warranty, and to the Circuit Court of Appeals' approval of the trial court's instructions with reference thereto. It is contended that under that warranty, even as modified by the rider, the presence of gasoline in connection with the use of the premises for the illegal manufacture of intoxicating liquors was an absolute bar to liability, regardless of the plaintiff's knowledge or control of the conditions; and that the trial court, in instructing the jury that the defendant must establish the fact of such knowledge and control, confused the requirements of the prohibited articles warranty with those of the increase of hazard warranty, and in effect read the condition against the use of gasoline out of the policy.

In passing upon this contention, the Circuit Court of Appeals said:

'At the time of the inspection by the agent of the insurance company, and the attachment of the rider to the policy, the building was being used for the handling and bottling of automobile oil, and it was shown that gasoline was stored in the building, and that the agent of the insurance company saw that gasoline was being used and stored in the building. It was contended on the trial below that this rider constituted a permit for the handling of gasoline within the building, and that its effect was to remove gasoline from the prohibited articles warranty, and that the quantity of gasoline, if greater than used at the time of the issuance of the permit, brought this question into the increased hazard class. The trial court took this view of the case, and we think properly so. The agent of the insurance company knew that the rider permitted the use of gasoline, at least to some extent, and, in order to show that the hazard was increased by a greater use of gasoline, as a defense to the recovery by the insured, the...