Sumter Tobacco Warehouse Co. v. Phoenix Ins. Co., Ltd. of London

• Decision Date: 08 February 1907
• Citation: Sumter Tobacco Warehouse Co. v. Phoenix Ins. Co., Ltd. of London, 56 S.E. 654, 76 S.C. 76 (S.C. 1907)
• Parties: SUMTER TOBACCO WAREHOUSE CO. v. PHOENIX INS. CO., LIMITED, OF LONDON.
• Court: South Carolina Supreme Court

56 S.E. 654

76 S.C. 76

SUMTER TOBACCO WAREHOUSE CO. v. PHOENIX INS. CO., LIMITED, OF LONDON.

Supreme Court of South Carolina

February 8, 1907

Appeal from Common Pleas Circuit Court of Sumter County; Purdy Judge.

Action by the Sumter Tobacco Warehouse Company against the Phoenix Insurance Company, Limited, of London. Judgment for plaintiff. Defendant appeals. Affirmed.

Jno. T Seibels and Haynesworth & Haynesworth, for appellant. Lee & Moise, for respondent.

WOODS J.

This appeal is from a judgment recovered by the plaintiff on a policy of insurance issued by the defendant insurance company covering a "two-story frame shingle-roof prizery" the property having been destroyed by fire on July 11, 1903. The defense on the merits was under the following provisions of the policy: "This entire policy, unless provided by agreement indorsed hereon or added hereto, shall be void *** if the hazard be increased by any means within the control or knowledge of the insured. *** This entire policy unless otherwise provided by agreement indorsed hereon or added hereto *** shall be void if any change, other than by the death of an insured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment or by voluntary act of the insured or otherwise." The specific violation of these conditions alleged as avoiding the policy was that the plaintiff had changed the possession and increased the hazard by renting the building to a tenant who used it by permission of the plaintiff, and without the knowledge or consent of the defendant, in making and renovating mattresses, a business more hazardous than conducting a tobacco prizery, which was the business mentioned in the policy.

1. We consider first the exception which charges error in the instruction: "If the jury believe that the possession of the property insured was delivered to a tenant who occupied the property with an increased hazard, and if the jury believe that the occupation was temporary and ceased before the fire, then such occupation would not prevent a recovery, if it was contemplated and agreed between the parties that there should be a temporary use of it." The same point was made in other exceptions to the charge by request to direct a verdict and by motion for a new trial. Stating the evidence as to change of possession and increase of hazard most favorably to the defendant, it is manifest such change and increased hazard was only temporary, had ceased before the fire occurred, and had no connection with it. Ryttenberg, plaintiff's agent, about a month prior to the fire, agreed to rent the property to one Potter, a maker and renovater of mattresses. Potter went into possession and placed a steam engine just outside of the building, which a witness on one occasion saw fired up ready for use in the mattress business; but, finding the building not suited to his purposes, Potter moved out after an occupancy of only two or three days. Ryttenberg seems to have supposed Potter was still in possession at the time of the fire, as he so stated in his proof of loss. In this statement of the facts, all evidence objected to by the defendant has been left out of view, and, if a temporary change of possession increasing the risk while it lasts, but discontinued before the fire, does not totally avoid the policy, but merely suspends it during the prohibited use, the provisions of the policy above quoted cannot avail the defendant.

On this point the authorities are in hopeless conflict. Some courts of high authority hold the policy to be finally avoided by such temporary increase of hazard. Mead v. Ins. Co., 7 N. Y. 530; Wheeler v. Ins. Co., 62 N.H. 326, 13 Am. St. Rep. 582; Ins. Co. v. Kyle, 24 N.E. 727, 124 Ind. 132, 9 L. R. A. 81, 19 Am. St. Rep. 77; Ins. Co. v. Russell, 69 P. 345, 65 Kan. 373, 58 L. R. A. 234. The precise point has not been decided by the Supreme Court of the United States, but the case of Kyte v. Ins. Co., 21 N.E. 361, 149 Mass. 116, 3 L. R. A. 508, is cited with approval in Imperial, etc., Ins. Co. v. Coos County, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 231. The issue in the last-mentioned case, however, was not as to the effect of a temporary change, but of a permanent charge due to material alterations of the building without the consent of the insurer. In Liverpool, etc., Ins. Co. v. Gunther, 116 U.S. 113, 6 S.Ct. 306, 29 L.Ed. 575, the prohibited hazard was in existence at the time of the fire, and the exact point here under consideration was not involved. The reasoning in Kyte v. Ins. Co., the Massachusetts case just referred to, is that, unless the policy be regarded at an end the moment the hazard is increased, the insurance company would be held to furnish insurance for which it had not received the consideration it was entitled to demand and which with knowledge of the facts it would have demanded. But this reasoning seems fallacious, for the insurer is generally held to be not liable at all if the fire occurs during the continuance of the increased risk and in consequence of it. The contract of insurance must, like other contracts, be enforced according to its terms. In construing such contracts, however, courts should endeavor to ascertain from the language used, in the light of the surrounding circumstances and the nature of the business, the safeguards which the parties intended to place around themselves. It may be reasonable to suppose an insurance company would desire to reserve the valuable right of canceling a policy even on a temporary increase of hazard if known to it at the time, because such change might result in loss, but it is not reasonable to impute to it...