
    Westfall v. Hudson River Fire Insurance Co.
    A clause in a policy of insurance against fire, declared that “ camphene, &c., when used in stores or warehouses as a light, subjects the goods therein to an additional charge of ten cents per hundred dollars, and premium for such use must be endorsed on the policy.”
    
      Held, that these words were not a conditionaiprohibition of the use of camphene, but merely exempted the insurers from any liability for a loss resulting from such use, unless the additional charge had been paid. They created an exception, not a warranty.
    
      (Before Duer, Campbell, and Bosworth, J.J.)
    December 13, 1853.
    
    
      JTeld, therefore, that as there was no evidence that the loss resulted from the use' of camphene, and there was no other defence than a breach of the alleged warranty, the plaintiE was entitled to judgment.
    Case upon a verdict for the plaintiff, subject to the opinion of the court at general term.
    The action was on a policy of insurance against fire, on a stock of groceries and liquors, in the store of one Oarston Hennings, the assured, in the city of New York. The plaintiff claimed as the assignee of Hennings.
    The execution and delivery of the policy,- and the happening of a loss, were admitted, but the principal defence set up in the answer, was, that the assured had used camphene as a light in his store ; and that this use was a breach of a warranty contained in the terms of insurance annexed to the policy, aiid was, therefore, a bar to a recovery.
    The clause relied on as a warranty is in these words:— “ Camphene, spirit gas, or burning fluid, when used in stores or warehouses as a light, subjects the goods therein to an additional charge of ten cents per $100, and premium for such use must be endorsed in writing upon the policy.” The cause was tried before Mr. Justice Boswobth and a jury, on the 27th of April, 1854.
    On the trial, evidence was given on the part of the defendants to show that Hennings had used camphene as a light during the whole time that the policy was running. Ho premium for such use wás endorsed upon the policy, or shown to have been paid. Upon this evidence the counsel for the defendants moved that the complaint should be dismissed. The judge denied the motion, and the counsel excepted to the decision.
    The jury, under the direction of the court, found a verdict for the amount of the loss proved, subject to the opinion of the court at general term, upon the question raised by the exception of the counsel for the defendants.
    The case upon the exception was now heard
    
      W. Stevens, for the defendants,
    argued the following points.
    I. The terms and conditions of insurance annexed to the policy, being referred to in the body of the instrument, form part of it, and have the same force and effect as warranties as they would have had if contained in the body of the policy. (Roberts v. The Chenango Mut. Ins. Co., 3 Hill, 501; Burritt v. The Saratoga Mut. Ins. Co., 5 Hill, 188; Gates v. The Madison Mut. Ins. Co., 2 Coms. 43.)
    II. The terms of insurance relative to the use of camphene, spirit gas, and burning fluid, amounted to a warranty of a promissory character upon the part of the assured ;■ but, although a warranty be promissory, the party insured is bound to a strict performance. (Lothian v. Henderson, 3 B. & P. 515; Egan v. The Mut. Ins. Co. of Albany, 5 Denio, 326; Ellis on Insurance, 28; 1 Phillips on Insurance, 3d ed. 416, 469.)
    HI. Hennings, the insured, violated the express condition of the policy, by the use of camphene as a means of light, without the payment of additional premium, or the endorsement of permission for such use on the policy. The policy was, therefore, absolutely void. (Mead v. The North Western Ins. Co. in Court of Appeals, Dec. 1852; 2 Denio, p. 45.)
    
      H. S. Dodge, contra.
    
    I. The only question in the case is -that presented by the second objection to the recovery, namely, the use of camphene, and the motion on this ground was properly overruled, because the question did not arise. 1. The proof did not show that the article burnt in the lamp was “ camphene, spirit gas, or burning fluid,” so as to authorize the court to take that question from the jury. 2. Nor did it appear that the material was used as a light at the time of the fire.
    II. There is no provision in the policy which furnishes a foundation for the defence set up in the answer. That is based upon the mistaken supposition that the stipulations in the policy provides for the case. 1. The provisions do not apply to insurances of goods, but only of buildings, the words, “ the above-mentioned premises or any part thereof,” mean the “ insured premises,” which is the legal and natural meaning. The case of goods insured is provided for in the conditions. All the reported cases on these provisions arose on policies upon the building. (Vide Langdon v. Equitable Ins. Co., 1 Hall, 226; S. C. 6 Wend. 623; O’Neil v. Buffalo Ins. Co., 3 Coms. 122; Gates v. Madison Ins. Co., 1 Selden, 469.) 2. If they do apply, the storing or keeping of camphene, &c., is not prohibited. Camphene, spirit gas, or “ burning fluid,” are neither of them in the list of hazardous or extra-hazardous goods, nor in the memorandum of special rates. Spirituous liquors are, but this policy permits them. 3. The provision as to “ camphene, &c.,” merely adds additional premium when these articles are used as a light in stores and warehouses. But no part of the policy requires previous permission, to use “ camphene, &c.” Nor was it ever agreed that an unauthorized use should avoid the policy, or suspend its operation during the use of the light. 4. There is no penalty attached to the failure to procure the assent of the company to such use. The only consequence would be that the assured would be liable for the additional premium, if unpaid, unless it were proven that such use changed or increased the risk under the first condition. 5. No such proof was offered in this case, nor was it shown that the additional premium had not been included in that paid, nor that the light was used at the time of the fire. Judgment should be ordered for the plaintiff upon the verdict.
    
      
       Although this case was heard in December, it was not in fact decided until the following April term; but it is deemed proper to publish it in connexion with the preceding case, as it contains the final decision of the court, upon a conference of all the judges, upon the question, whether the clause relative to the use of camphene imports a warranty.
    
   By the Court. Duer, J.

In our opinion, there is in this case only a single question which is necessary to be considered. The plaintiff is clearly entitled to retain the verdict, unless the clause in the conditions annexed to the policy relative to the use of camphene, must be construed as a warranty. If such must be its construction, there was sufficient evidence of its breach to render it necessary that the question should have been submitted to the jury ; and as it was not thus submitted, there must be a new trial. If there was no such warranty, the plaintiff must have judgment upon the verdict.

The question whether a particular provision in a policy shall, or shall not, be construed as a warranty, and the effect of the construction when adopted, are exactly the same, whether the insurance be against fire upon land, or against marine risks— and we deem it needless to cite authorities to prove that such is the settled law. In neither case, is the policy usually signed by the assured ; yet, in both, a provision that a particular state of facts shall or shall not exist, or a particular act shall or shall not be performed,- is construed as a positive stipulation by the assured that the provision shall be complied with. It therefore constitutes a warranty, the breach of which, although wholly unconnected with the loss that is claimed, by avoiding the contract, discharges the insurer.

Nor in the case of an insurance against fire, is it of any consequence whether the provision relied on as a warranty, be found in the policy itself, or in the terms and conditions which are annexed ; since, by an express clause in the policy, the rights and obligations of the parties as much- depend upon these terms and conditions as upon the special provisions in the body of the instrument. They are, therefore, an integral and essential part of the contract.

The provision we are now required to construe, and which is found in the terms annexed to the policy, is in these words;

“ Camphene, spirit gas, or burning fluid, when used in stores or warehouses, as a light, subjects the goods therein to an additional charge of 10c. per $100, and premium for such use must be endorsed, in writing, upon the policy.”

In considering this case, our first impression undoubtedly was, that this clause amounted to a conditional prohibition of the use of camphene as a light, and must, therefore, be construed as a warranty by the assured against such use, unless the prescribed conditions should be complied with; but upon further reflection, we became satisfied that such is not the necessary construction of the words of the clause, and that they may be very fairly and reasonably understood in a very different sense. The words, we are now satisfied, are ambiguous; they may mean that if camphene shall be used, the company shall not be liable for a loss resulting from its use, unless the additional premium shall be paid, and its payment be endorsed; or, that unless these conditions are complied with, camphene shall not be used at all. Upon the first construction, the only effect of the clause is to except a particular risk, the use of camphene as a light, from the general risks of the policy. Upon the second, the effect is to create a warranty. If we adopt the first, as there was no evidence that the loss resulted from the use of camphene, the verdict must stand. If the second, as there was evidence that by the use of camphene the warranty was broken, there must be a new trial.

The inquiry, therefore, now is, which is the construction, which as probably most consonant with the intention of the parties, judging of the intent by the settled rules of interpretation, it is the duty of the court to adopt.

Ho rule, in the interpretation of a policy, is more fully established, or more imperative and controlling, than that which declares that, in all cases, it must be liberally construed in favor of the assured, so as not to defeat without a plain necessity, his claim to the indemnity, which, in making the insurance, it was his object to secure. When the words are without violence susceptible of two interpretations, that which will sustain his claim and cover the loss, must in preference be adopted. (Pelly v. Royal Ex. Assur. Co., 1 Burr, 341, 348; Blackett v. Royal Ex. Assur. Co., 2 Cromp. & Jar. 244; Yeaton v. Fry, 5 Cranch, 355; Palmer v. Warden, 1 Story, 360.) Hor is this an arbitrary rule of construction. On the contrary, it follows from the very nature of an insurance, as a contract of indemnity, and has been adopted and confirmed from the conviction that the construction to which it leads is probably that which the real intention of the parties requires shall he followed. (Dorr v. Whithen, 1 Hall Sup. Ct. R. 174; Opinion of Jones, Ch. J.)

It is evident, it seems to us, that this general rule applies with a peculiar force, when the court is required to say, that the words of a disputed clause must be construed as a warranty.

The construction that bur own, as well as the English courts, have unfortunately given to a warranty, is exceedingly strict, but it is too well established to be now changed by any exercise of judicial discretion. It is not enough, that a provision construed as a warranty in its spirit and substance is fulfilled; its terms must be literally complied with. Its breach is not excused by showing that it was the result, not of choice but of accident or necessity; that it worked no prejudice to the insurer, and not only had no influence on the loss that is claimed, but had no tendency to increase, or even vary, the risks that were meant to be assumed. If a breach, however slight, and confessedly immaterial,' is proved, the entire contract is at an end, the assured loses his indemnity, and the insurer retains his premium, and rejoices in his discharge. When the provision that is claimed to be a warranty is, at all, ambiguous, it seems to us, it is a reasonable presumption that the assured never meant to bind himself by a stipulation thus rigidly construed, and we cannot but think, that this presumption, unless the words used are such as plainly, if not necessarily to exclude it, ought to prevail. Certainly, it cannot be said that this presumption is plainly excluded by the words of the clause that is now under consideration. On the contrary, the words, “camvphene, <&e.” when used, &c.,” imply the possibility of its future use, and those which follow, may well be construed as a mere declaration of the consequences of such use, not as a conditional prohibition; as meaning only that unless the premium shall be paid, the particular risk will not be assumed. They may well be construed, therefore, as an exception of a loss resulting from the risk, instead of a warranty that the fact creating the risk Shall not exist.

The terms of the clause which immediately precedes that we are considering, strengthen our belief that the construction we have stated is reasonable in itself, and, probably, expresses the true intention of the parties.

The terms of this clause are, that “ saltpetre, gunpowder, and cotton are expressly prohibited from being deposited, stored, &c., in any building, &c., containing any goods or merchandise insured by this policy, unless by special consent in writing.” And it is difficult to account for the immediate and marked change of phraseology in the next clause, upon any other supposition than that of a change of intention. If the use of camphene was meant to be prohibited in the same sense as the storage of gunpowder, we can discover no reason why the prohibition was not express, in the one case, as well as in the other. Had the intent been the same, it seems to us that such would have been the language; whereas if the intent in the second clause was to create an exception and not a warranty, the alteration in the mode of expression was proper and necessary.

In the recent case in the Court of Appeals, to which we were referred on the argument, in which the clause relative to the use of camphene was held to he a warranty, we have asceiv tained that the words, in the last member of the clause, were materially different. They were, that 4 permission ” for such use (ir e. of camphene) must be endorsed upon the policy—and necessarily implied that without a permission so evidenced, the use was forbidden. The words 4 premium for such use, &c.,” carry with them no such implication; but as we have already shown, taken in connexion with those that precede them, are satisfied by holding them to mean, that unless the required premium should be paid and endorsed, the risk would not he assumed. We therefore think that we are bound to say that they created an exception, and not a warranty, and that the plaintiff is entitled to our judgment,

Judgment for plaintiff, with costs,  