CHAPTER XII.

STANDARD FIRE POLICY-CONTINUED.

§ 138. Other Insurance.-If the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy without agreement indorsed or added thereon.

Other or double insurance exists where there are two or more policies on the same interest and subject, and against the same risk. Insurers need to know the amount of other insurance to enable them to calculate their share of the loss under the pro rata clause, and they also generally desire a disclosure on this same point in advance to enable them to determine whether they will accept the risk or not; because a substantial over-insurance of the property might offer a temptation to the insured either to bring about the fire or to be careless in preventing it.

The requirement of the contract is quite reasonable and must be complied with.1

It must be noticed that insurances of different interests, as for example the policy of a mortgagor and another policy by a mortgagee, are not within the operation of this clause, because they do not constitute double insurance. So also the interests of different mortgagees are distinct, and the different interests of joint-owners; but where warehousemen, common carriers, or bailees generally, and agents, trustees, or co-partners, take out insurance for the benefit of the owners or others interested, and the owners or other parties in interest take out insurance for themselves upon the same subject and against the same

1 Sanders v. Cooper, 115 N. Y. 279. Landers v. Watertown Fire Ins. Co., 86 N. Y. 414; s. c., 40 Am. Rep. 554. Liverpool, L. & G. Ins. Co. v. Verdier, 35 Mich. 395.

Fox v. Phenix Fire Ins. Co., 52 Me. 333.

3

Woodbury Sav. Bank v. Charter Oak F. & M. Ins. Co., 31 Conn. 518.

risk, this constitutes double insurance.1 Such other insurance for another person would not avoid the owner's policy, unless it appeared that it was taken out by his authority or consent: otherwise it really would not constitute a contract, because the element of mutual assent would be wanting, and the courts are very reluctant to vitiate a policy unless the intent on the part of the insured to procure double insurance is established; for if the insured is not aware of the existence of other insurance, one of the reasons for inserting this clause of the policy is wanting. No temptation to commit arson could be inferred from a fact of which the insured is ignorant.2

In one case it was held that where the consignor effected an insurance with the warranty "no other insurance," and unknown to him the consignees also insured the same goods, the first policy was not avoided. But the warranty in the policy being absolute, principle would seem to require, that, if the double insurance really exists by legal authority of the insured, the policy in suit must be held avoided, whether the existence of the double insurance was known to the insured or not.1

Policies in which the clause against other insurance does not contain the additional words "valid or invalid" have given rise to much difficulty in cases where two or more policies constituting double insurance contain the same provision. Shall both policies be avoided, or only one, and if only one, which one? There is in each a condition by which the policy containing it ought to be avoided, and yet the moment that either policy is held void, the reason for vitiating the other has ceased to exist.

And substantially the same difficulty arises where the other insurance is in fact voidable at the option of the insurers upon some other ground of forfeiture which renders the policy invalid.

The opinions of the courts upon these questions are varied

Williams v. Crescent Mut. Ins. Co.,

1 Home Ins. Co. v. Balt. Warehouse Co., 93 U. S. 527. Sturm v. Atlantic 15 La. Ann. 652. Mut. Ins. Co., 63 N. Y. 77. Mussey v. Atlas Mut. Ins. Co., 4 Kern. 79. 2 London & L. Fire Ins. Co. v. Turnbull, 86 Ky. 230. Doran v. Franklin Fire Ins. Co., 86 N. Y. 635.

Phoenix Ins. Co. v. Copeland, 86 Ala. 551. Van Alstyne v. Etna Ins. Co., 14 Hun, 360. London & L. Fire Ins. Co. v. Turnbull, 86 Ky. 230.

and irreconcilable. A full presentation of the subject may be found in the last edition of May on Insurance, chapter 18.1

Much of this difficulty would seem to be removed by the insertion, as in the standard form, of the words "valid or invalid," to which force must be given; and when the policy in suit contains them, it should be held vitiated by other insurance, whether void or voidable.2

If, however, a case should arise where the other policy is upon its face absolutely null and void, so as to be no policy at all, but a piece of waste paper, or where the policy, though still existing as a document, has been canceled, or where it has been irrevocably avoided at the election of the insurer issuing it, then, in either case, the conclusion seems to follow that there is within the meaning of this clause no other or double insurance.3

The case of Stevens v. Citizens Ins. Co., 69 Iowa, 658, is thus referred to at page 807 of May on Insurance: "It has been held that the clause against other insurance, valid or not, is not violated by a prior policy which had become absolutely void by its terms. It is difficult to see why the words 'valid or not' do not in all common sense cover a void policy."

This criticism of the Iowa case by the learned editor of May would be just, if the case had been decided on the ground mentioned by the reporter in the head note. But the reported facts in evidence disclose the important consideration, that, before the policy in suit had been taken out, the property had been removed from the locality in which it was situated when insured by the other policy; and the court was of opinion that this removal without the requisite consent of the insurer took the property altogether out of the operation of the first policy, so that when the second policy was issued there was no double insurance existing upon the property in question.

It is clear that, in the absence of the words "valid or in1 Hubbard v. Hartford Fire Ins. Co., Phoenix Ins. Co. v. Copeland, 90 33 Iowa, 325; s. c., 11 Am. R. 125. Ala. 386. Phenix Ins. Co. v. Lamar, Thomas v. Builders Mut. F. Ins. 106 Ind. 513. Allen v. Merchants Co., 119 Mass. 121; s. c., 20 Am. R. Mut. Co., 30 La. Ann. 1386; s. c. 31 317. Fireman's Ins. Co. v. Holt, 35 Am. Rep. 243. Ohio St., 189; s. c., 35 Am. R. 601. Lackey v. Ga. Home Ins. Co., 42 Ga.

456.

Phenix Ins. Co. v. Lamar, 106 Ind. 513. Am. Ins. Co. v. Replogle, 114 Ind. 6.

valid," the prohibition of this clause would extend only to valid other insurance.

The corresponding provision of the Massachusetts policy is as follows:

"This policy shall be void if the insured now has or shall hereafter make any other insurance on the said property without the assent in writing," etc.

§ 139. Factories.—Or if the subject of insurance be a manufacturing establishment, and it be operated in whole or in part at night later than ten o'clock, or if it cease to be operated for more than ten consecutive days.

Exactly what constitutes an operating of a factory may not be very easy to define; but, in general, the evident meaning of the clause is that the active working of the business of the factory must be suspended, to constitute a cessation. Such continuation of the furnace fires, or even of the running of machinery, as could not from the nature of the business be temporarily suspended, is not to be considered prohibited. The mere running of the main shaft at night without any further operation has been held permissible.1

Running the factory at night after the limit named in the policy avoids it.2

Stopping work without permission even for repairs falls within the prohibition of this clause.

The Massachusetts policy contains a similar clause, naming nine o'clock P. M. instead of ten o'clock, and thirty days as the limit for cessation of operations.

§ 140. Watchman.-It is sometimes provided that a watchman shall be kept. What is a reasonable compliance with such a provision must often be a question for the jury. Where the clause of the policy required that a watchman must be kept day and night, it was held in a very recent case that the policy was voided because only one watchman was kept in the building. The court concluded that the intent of the

1 Whitehead v. Price, 2 Cr. M. & R.

447; s. c., 5 Tyrwh. 825.

2 Reardon v. Faneuil Hall Ins. Co., 135 Mass. 121.

'Day v. Mill Owners Mut. F. Ins. Co., 70 Iowa, 710.

instrument was that a watchman must be awake, and if there was only one watchman, there would be some portion of the time, presumably, when he would be asleep.1

The warranty to keep a watchman must be observed.

§ 141. Increase of Risk.—Or if the hazard be increased by any means within the control or knowledge of the insured.

So far as the conduct of the insured himself is concerned, an obligation is said to rest upon him by general principles of insurance law not to enhance the risk.3

This important clause of the policy must receive a reasonable construction. The hazard is of necessity a variable quantity. It constantly changes from day to day, though perhaps imperceptibly, from the operation of the laws of nature and various circumstances beyond the control of the insured. Such influences, and also the acts of persons other than the insured upon or in respect to property other than the insured property, are in general, unless unusual or extraordinary, to be considered as a necessary part of the risk which the insurer has undertaken to sustain. It is not to be supposed that the insured has guaranteed that no improvements or changes shall be made anywhere in the vicinity of the insured property, but it is reasonable to exact an obligation from the insured that he shall not allow himself, or permit others in control of the insured property with his consent, to change its nature or its use in such a way as to make the risk of the insurers materially different from that which they agreed to undertake. Trivial variations in the risk necessarily incident to the use of the insured property are presupposed by the contracting parties to be likely to occur; other changes are not.

This clause binds the assured to make no alteration or change in the structure or use of the property which will substantially increase the risk, and it prohibits him from introducing any practice, custom, or mode of conducting his business which would have the same effect, and also from discontinuing any precaution already used or represented in his application

1 Rankin v. Amazon Ins. Co., 89 Cal. 210 (1891).

Bank of Ballston Spa v. Ins. Co.,

50 N. Y. 45.

Hoffecker v. Newcastle Co. Mut. Ins. Co., 5 Houst. (Del.), 101.