Washburn v. Miami Valley Ins. Co.

• Decision Date: 01 January 1880
• Parties: WASHBURN v. THE MIAMI VALLEY INS. CO. and others. [1]
• Court: U.S. District Court — Southern District of Ohio

2 F. 633

WASHBURN v. THE MIAMI VALLEY INS. CO. and others. ^[1]

United States Circuit Court, S.D. Ohio.

1880

These actions were founded upon policies of insurance against fire issued by the defendants to the plaintiff upon

Washburn Mill A, Minneapolis, Minn. The defence was that the loss was occasioned by an explosion, and, therefore, fell within the exceptions given at length in the following opinion. A jury was waived, and the cases submitted to the court upon the proofs:

The evidence established the fact that a destructive fire had commenced and had been burning some minutes, when it communicated with an explosive material in the mill, known as flour dust, causing an explosion which destroyed and consumed the entire premises.

Sage &amp Hinkle, for plaintiff.

Wm. M Ramsey and Thomas McDougall, for defendants.

SWAYNE A.J.

The policy issued by the Miami Valley Insurance Company contains the following clauses, upon the first of which this controversy is understood to turn, so far as that company is concerned: 'Provided, etc., that this company shall not be liable for loss, etc., by lightning, or explosion of any kind, including steam boilers, unless fire ensures, and then for the loss or damage by fire only.' And the second clause to which I wish to refer is as follows 'Gunpowder, saltpeter, phosphorus, petroleum, naphtha, benzine, benzole, or benzine varnish, are positively prohibited from being deposited, stored, or kept in any building insured or containing property insured by this policy, unless by special consent, in writing, indorsed on this policy, naming each article separately; otherwise the insurance shall be void.'

The policy issued by the Fidelity Fire Insurance Company contains the same clauses. They are as follows: 'Or if the assured shall keep gunpowder, fire-works, nitro-glycerine, phosphorus, saltpeter, nitrate of soda, petroleum, naphtha, gasoline, benzine, benzole, or benzine varnish; to keep or use camphene, spirit gas, or any burning fluid or chemical oils, without written permission in this policy, then, and in every such case, this policy is void.'

Then follows the clause upon which, as respects this company, the controversy turns. The exception is in these words: 'The company shall not be liable, etc., for any loss caused by the explosion of gunpowder, or any explosive substance, nor explosion of any kind, unless fire ensues, and then for the loss or damage by fire only,' etc.

The language of the policy issued by the Union Company, touching these exceptions, is as follows: 'This company will not be liable for the loss or damage occasioned by the explosion of a steam-boiler, gunpowder, or any other explosive substance, except only such loss as shall result from fire that may ensue therefrom; nor shall the company be liable for any loss by such fire, unless privilege shall have been given in the policy to keep such articles, ' etc.

That makes the case very peculiar as to the Union Company. Giving a literal view to the language of the second clause, which I have just read, the policy was void at the outset, and never had any validity, because there was in the mill from the first an explosive substance, to wit, flour dust, and there was no permit given in the policy to keep such substance.

Now, according to the theory contended for by the defence, the company never in legal effect insured the property which is named in the policy, and was known to have connected with it necessarily more or less of this explosive substance, and yet the company took the money of the assured, when it knew, or ought to have known, that according to the terms of its policy it had no validity whatever. Now, I cannot suppose that that was the intention of this company. The policy must be construed, like all other instruments in writing, in the light of surrounding circumstances; and I am willing to construe this particular 'explosive substance' as not within the terms or meaning of the particular language of the policies upon that subject. I shall construe it, as if the language was the same, or substantially the same, as that upon the subject in the other policies. But I do not see, if the microscopic eye of a special demurrer were applied, why the gentleman for the defence might not as well contend that this policy had no validity, as that it had no validity so far as the effect of the explosion is concerned in the results that followed. But, as I do not take that view of the subject, I shall not apply that principle. Now, certain remarks are to be made in the light of the clauses which have thus been read, construing the last one reasonably, in the light of the circumstances surrounding the parties when the contract was entered into, and which are material to be borne in mind.

It will be observed that the companies are protected, with respect to explosives, by making it fatal to the policies to keep them the policies become void if such explosives are kept. Perhaps, right here, I might remark that that word 'kept' must have a particular signification in this connection, and that it does not apply where explosives of a known fixed character, known to be such, were accidentally present in the structure insured; but it does apply where they were kept there knowingly, in violation of the terms which the policy contains with reference to them. That must have been the understanding or intention of the parties in reference to the peculiar substance flour dust, which is highly explosive, but which, as I have remarked, was necessarily present, and from which arose the genesis of the explosion out of which this controversy has arisen. The company had taken care to secure itself against the perils of explosion-- First, by a comprehensive stipulation in the policy; secondly, the exceptions referred to are named only in connection with fires which they have produced. That is in the clause on which the controversy turns. And, by the way, the second clause I have read is the only clause to which counsel have referred. Nothing was said about the...