
    HARTFORD FIRE INS. CO. v. DORROH. 
    
    (Court of Civil Appeals of Texas.
    Dec. 15, 1910.
    On Rehearing, Jan. 12, 1911.)
    1. Insubance (§ 333) — Increased Hazard— Anonymous Communications.
    Where, prior to a fire, insured received an anonymous communication that some one was moving goods frequently at night from an adjoining building with a view of subsequently burning the building. being vacated, the hazard, if any, did not arise from the writing and receipt of the letter, but from the actual existence of the occurrence referred to therein; and hence, in order for insurer to maintain a forfeiture of the policy because of insured’s failure to communicate the increased hazard, it was bound to prove, not only the writing and the receipt of the letter by insured, but that the condition referred to actually existed to insured’s knowledge, and that he failed to report the same.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 842-848; Dec. Dig. § 333.]
    2. Insurance (§ 333)— Fire Policy —“Increased Hazard.”
    “Increased hazard” provided against in fire policies refers to changes in conditions in or upon the insured premises, and does not include dangerous conditions on (adjacent premises.
    [Ed. Note.' — For other cases, see Insurance, Cent. Dig. §§ 842-846; Dec. Dig. § 333.]
    3. Insurance (§ 333) — “Increased Hazard” —Determination—Comparison.
    Whether there has been an increase in the hazard with reference to insured premises must be determined by a comparison with the conditions existing at the time the policy was written.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 842-846; Dec. Dig. § 333.]
    4.. Insurance (§ 333) — Fire Policy — Increased Hazard — Notice.
    Where a fire policy provided that it should be void if the hazard was increased by any act within the control or knowledge of the insured, such clause did not include insured’s failure to communicate information relating to an increase of hazard, through means of which he had knowledge, though not within his control, consisting of an attempt on the part of others to bum an adjoining building.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 842-846; Dec. Dig. § 333.]
    5. Insurance (§ 333) — Fire Policy — “Hazard.”
    The term “hazard^” as used in a fire policy, means the incurring of the possibility of loss or harm for the possibility of a benefit; the insurer undertaking to indemnify the insured against the possibility of a loss by fire for an agreed consideration paid in advance; the hazard consisting of the possibility of a loss by fire indicated by the sum of all dangers resulting from the recognized exposure, including losses from incendiary fires communicated from other premises.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 842-846; Dec. Dig. § 333.»
    For other definitions, see Words and Phrases, vol. 4, pp. 3223-3224.]
    6. Insurance (§ 333) — “Moral Hazard.”
    The term “moral hazard,” as used in the law of fire insurance, means the possibility of loss by fires of incendiary origin.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §1 842-846; Dec. Dig. § 333.
    
    For other definitions, see Words and Phrases, vol. 5, p. 4579.]
    7. Insurance (§ 146) — Policy — Construction.
    Where a policy is capable of two interpretations equally reasonable, that construction most favorable to insured must be adopted.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 295; Dec. Dig. § 146.*]
    8. Insurance (§ 333*) — Increased Hazard-Injury to Property.
    Where a fire policy provided for forfeiture if the hazard was increased by any means within the control or knowledge of the insured, the increased hazard referred to included only such as resulted from physical changes in the insured property.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 842-846; Dec. Dig. § 333.]
    9. Appeal and Error (§ 1950) — Admission op Evidence — Prejudice.
    Where insurer in an action on a policy claimed an increased hazard by reason of insured’s receipt of a letter informing him of a contemplated arson on adjoining premises, and a failure to communicate such fact to insurer, but it was held that insured’s failure to disclose the receipt of such letter did not constitute an increase of the hazard for which the ■policy could be forfeited as a matter of law, defendant was not prejudiced by the admission of other evidence of insured relating_ to anonymous letters received by others, indicating the reason why he paid no attention to the one he received concerning such adjoining property, etc.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4153-4160; Dec. Dig. § 1050.]
    10. Evidence (§ 155) — Evidence Made Competent by the Reception of Otiiek Evidence Offered by Opposite Party.
    Where defendant had introduced portions of a statement made by plaintiff on a certain occasion, the court properly permitted plaintiff to introduce other portions thereof, under the rule that, when a portion of a conversation is admitted, so much of the remainder as is essential to a proper explanation of the part which has been offered is also admissible.
    [Ed. Note. — For other cases, see Evidence, Cent. Dig. § 456; Dec. Dig. § 155.]
    11. Insurance (§665) — Fire Policy — Total.
    After a fire, a portion of the lot on which the building consumed had stood was sold to a banking company which had formerly occupied part of it as a tenant. The bank rebuilt on the same lot, and in doing so used part of the foundation of the old building and a part of the old bank vault. The extent and value of the parts used was not shown, nor was there any evidence as to the kind and character of the structure called the “bank vault,” and whether it was part of the building. Held insufficient to show that the loss was only partial.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §'§ 1717-1722; Dec. Dig. § 665.]
    On Rehearing.
    12. Insurance (§336) — Fire Policy — Fraud —Procuring Other Insurance.
    Where insurer claimed that, after insured acquired information that an arson was about to be committed on adjoining property, he took out another policy covering the property destroyed, such fact, if true, did not constitute such fraud as would be a defense to the policy sued on, unless in procuring such additional insurance defendant exceeded the amount of current insurance permitted by the policy in suit.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 856-873; Dec. Dig. § 336.]
    Error from District Court, Upshur County; R. W. Simpson, Judge. - ,
    Action by J. M. Dorroh against the Hartford Fire Insurance Company. Judgment for plaintiff, and defendant brings error.
    Affirmed.
    William Thompson, Geo. S. Wright, and I. D. Fowler, for plaintiff in error. J. P. 1-Iart and Warren & Briggs, for defendant in error.
    
      
      For other oases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
    
      
       writ of error granted by Supreme Court.
    
    
      
      For other eases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   HODGES, J.

On January 8, 1909, a building belonging to defendant in error and occupied by the company of which he was a member as a general merchandise store was destroyed by fire. The property was at that time covered by a policy of insurance issued by the plaintiff in error for $3,500. Upon demand and refusal of payment this suit was instituted to recover the amount of the policy. Plaintiff in error denied liability upon the following grounds: (1) That the provisions of the policy forbidding the taking of other insurance without the consent of the company had been breached. (2) That, after the policy was issued, the hazard became increased by threatened danger by fire, and notice of this fact was brought home to the assured, who failed to notify the company and obtain its consent for the policy to remain in force as required by its terms. (3)-That the assured was guilty of fraud in reference to the insurance, or the subject thereof, in that before the fire occurred he was advised and put upon notice of the contemplated fire, and that he failed to exercise ordinary care to prevent the fire, and concealed from plaintiff in error information in reference to the contemplated fire. A trial before a jury resulted in a verdict and judgment in favor of the defendant in error for the full amount sued for.

None of the assignments presented in the brief of the plaintiff in error raise any questions involving the defense embodied in the first subdivision above mentioned. Among the numerous clauses providing for its forfeiture under the conditions named in the policy was the following: “This entire policy shall be null and void if the hazard be increased by any means within the control or knowledge of the insured.” The particular fact relied upon as constituting the increased hazard in the present case was the receipt by Dor-roh a few days prior to the fire of the following anonymous letter: “T. J-. and J. Some merchant below you all is moving goods at night. Now keep this a secret and look out. This is from a friend of yours. Jim- ■and the old man.” The plaintiff in error was not informed of the existence of this communication till after the fire. On both his direct and cross-examination, while on the witness stand, Dorroh was interrogated touching the receipt of this letter, and why he had failed to disclose that fact to the company, or its local agent. In giving his-reasons he was permitted over objection of plaintiff in error to testify substantially as follows: “I have heard and known of other anonymous letters being received by people, which letters were of a threatening nature- and received by people in Big Sandy. Dr. Gregory got one of these letters four or five' years ago. I cannot recall the contents of the letter received b.y Dr. Gregory at this time. It was a letter threatening him about prohibition.” And in answer to the question as to whether the threats were ever put into execution, he testified: “I do not know of any harm coming to them in this world, except that he and Campbell wore out a pistol-of mine carrying it for some people. I do not know who they were. Mr. Campbell, who was an editor and justice of the peace of Big Sandy, also received an anonymous letter, and this letter had something in it about the enforcement of the law down there.” The witness was further permitted to testify concerning a letter which he said he had received a year and a half before that time, warning him to leave town or “stop meddling about the whisky business,” and to say that nothing ever came of that letter. This testimony was objected to on the ground that it was irrelevant, immaterial, incompetent, and hearsay, and based upon writings which were not before the court and for whose nonproduction no explanation had been given. The admission of this and similar testimony is complained of in several different assignments, all of which will be considered together.

There are two grounds upon which the materiality of this testimony may be challenged. One is, if the letter made known to Dorroh an increased hazard within the meaning of the policy providing for a forfeiture in such cases, any explanation which he might give after the loss for his failure to disclose his information to the company would not affect the legal consequences of the fact that the hazard had been increased, and that he knew it. The other is the letter shows upon its face that it does not relate to a hazard the increase of which “by any means within the control or knowledge of the insured” should by the terms of the policy cause a forfeiture. The paragraph containing this provision of the policy is as follows: “This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void 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; or if the subject of insurance be a manufacturing establishment, and it be operated in whole or in part at night later than 10 o’clock, or if it cease to be operated for more than ten consecutive days; or if the hazard he increased hy any means within the control or Icnoioledge of the insured [italics ours]; or if mechanics be employed in building, altering or repairing the within described premises for more than fifteen days at any one time.” Then follow a number of other provisions, in which it is stipulated that there shall be a forfeiture of the policy if certain named conditions occur. If this anonymous communication, and its receipt by Dorroh, is to be regarded as materially affecting the continued validity of the policy of insurance, it must be because it conveyed to Dorroh information of preparations for incendiarism on other premises. The writer does not say specifically that some one was preparing, or intending, to set fire to this or another building, but uses language which might be construed as an intimation that he thought a burning was probable. The real hazard, if any, did not arise from the writing and receipt of the letter, but upon the independent existence of the conditions referred to — that some one was guilty of moving goods secretly at night with a view of subsequently burning the building being vacated. Unless this occurrence took place, there was no new menace to the property brought to the knowledge of the insured, and no grounds upon which to claim a forfeiture. It seems that no effort was made upon the trial in the court below to prove that any such state of facts as that stated in this communication had ever existed. The duty of making that proof rested upon the plaintiff in error. 19 Oye. 936, 937, and cases cited. Certainly the mere writing and mailing of this anonymous communication will not be considered sufficient evidence. Until it is shown that a more hazardous situation had been created, it cannot be said that Dorroh had been informed of any, and there could be no cause for a forfeiture under that clause of the policy.

It is also apparent from the face of this letter that the probable incendiarism hinted at would likely originate on premises other than those covered by this policy. It has been held that the “increased' hazard” provided against in policies of insurance refers to changes in conditions in or upon the insured premises, and not on those adjacent. State Ins. Co. v. Taylor, 14 Colo. 499, 24 Pac. 333, 20 Am. St. Rep. 281; Sun Ins. Co. v. T. F. & M. Works, 3 Willson Civ. Cas. Ct. App. § 320 ; 2 Cooley’s Briefs on Ins. 1499, 1500. In the case first above cited the court said: “It is provided in the policy that, if the hazard is increased without the consent of the company in writing, the policy shall be void. This should be construed as only applying to the insured premises, or to property under the control of the insured. There is nothing in the language used which would extend it to property not under his control, and the acts of others, and hold him responsible for the acts of his neighbors, or contiguous owners, and require him to keep informed as to the manner in which other persons in the neighborhood use their property, or to communicate the facts to the insurer. The contract of insurance being mutual, good faith should require that he give-information of any fact, or act of his own, or with his consent, on the property insured, or adjoining, and under his control, whereby the risk was increased. Further than that he could not be expected to go.” In support of that doctrine the court quotes from May on Ins. §§ 244, 247, and Wood on Ins. § 237. The latter authorities, not being accessible to us, have not been examined. It is also the established rule that whether there has been an increase in the hazard or not must be determined by a comparison with the conditions existing at the time the policy was written. 2 Cooley’s Briefs on Ins. 1637. Until it is shown that a new danger has arisen that did not exist at the time the policy was written and delivered which augmented the general risk, there is no basis for the claim of forfeiture by reason of an increased hazard.

There occurs to us still another reason why this communication should be disregarded as a defense in this case, and the error, if any, in admitting this testimony held to be harmless. The forfeiture of this policy is not insisted on because the hazard had been increased by some “means within the control’’ of Dorroh, but by some “means” of which he had knowledge, and because he had failed to communicate this information to the company. If there is any clause in this policy requiring the insured to impart sucn information to the insurer in order to avoid a forfeiture, we have overlooked it. It may be said that in the event an increase of the hazard arises through some means within the knowledge, or control, of the insured, and the new situation is made known to the insurer, its failure to promptly cancel the policy and return the unearned portion of the premium should be considered as a waiver of the forfeiture and treated as a recognition of its continued liability. But, before such questions can arise, it must be shown that there has been an actual increase of the hazard assumed by the insurer for which he may, under the terms of the contract, claim a forfeiture. Let us admit for the sake of argument that the evidence in this case proved the truth of the facts stated in the anonymous communication to Dorroh, that some one was secretly in the nighttime removing goods from some building “below” that covered by this policy; and, further, let it be assumed that such facts indicated that an incendiary fire was likely to follow which would endanger, 'if' not destroy, Dor-roh’s property. Can it be said that this would establish the right to claim the forfeiture insisted on in this case? We aré disposed to think it cannot, for the reason that this would not establish the existence of an “increased hazard” within the meaning of this policy. Webster defines the word “hazard” to mean “the incurring of the possibility of loss, or harm, for the possibility of a benefit.” Here the insurer undertakes to indemnify the insured against the possibility of a loss by fire for an agreed consideration paid in advance. The hazard here referred to evidently means the possibility of a loss by fire created by the sum of all dangers resulting from the recognized exposures. It is a matter of common knowledge that accepted insurance risks are graded, and premium rates adjusted, according to the physical conditions and surroundings of the property insured. It is also well known that many fires are of incendiary origin, and that in the transaction of their business insurance companies must take into consideration the dangers arising from that source in estimating the extent of the hazard they assume in all ordinary risks. This is what they call the “moral hazard.” We think it will hardly be denied that in the same community and among the same class of people, at least, this element may be regarded as a constant factor, entering alike into all insurance contracts and risks taken. Hence it follows that a loss resulting from incendiarism for which the insured cannot be held responsible is one of the dangers against which he secures protection by the general terms of the policy. It is one of the dangers which the company assumes when it makes the contract of insurance, and not one which it may claim arises subsequently and adds to the original hazard. The increased probability of a loss by incendiarism could no more be considered an “increased hazard” which would avoid the policy than could the increased probability of a fire from any of the physical exposures existing at the time the policy was written. To hold otherwise would be to place upon the policy a construction that would render the contract unreasonable. If the construction contended for by plaintiff in error be the proper one, this policy of insurance would be nullified at any time by a threat to commit arson upon the insured premises, or upon adjacent premises sufficiently close to endanger the former. Yet such a contingency formed one of the elements of danger insured against. It may be a proper precaution for insurance companies to protect themselves against an increased hazard caused by such an alteration in the physical conditions and surroundings of the property as to create new sources of danger, thus augmenting the burden assumed beyond that contemplated in their contract. Under such conditions, they might well say they would have refused the risk, or would have demanded a greater premium as the price of carrying it. “If the terms of a policy are capable of two interpretations equally reasonable, it is the general rule that that construction which is most favorable to the insured must be adopted.” 16 Am. & Eng. Ency. of Law, 863, and cases cited. We are therefore of the opinion that the clause of the policy providing for a forfeiture if the hazard be increased by any means within the control or knowledge of the insured refers to hazards resulting from physical changes.

Applying the principles discussed to the facts of this case, we reach the conclusion that there is an absence of any grounds for the claim that this policy was forfeited on account of an “increased hazard.” The danger, if any, created, or disclosed, by showing that goods were being secretly removed, was only such as might result from an act of incendiarism for which the insured could not be held responsible. It follows from what has been said that all testimony relating to the anonymous letter received by Dorroh was immaterial and irrelevant to any issue upon which the plaintiff in error might rely for a defense. We are further of the opinion that the admission of the objectionable evidence was entirely harmless, and furnishes no cause for a reversal of the judgment. The plaintiff in error introduced the letter in evidence, and must bear the responsibility .for the injection of that issue into the trial of the case.

.What has been said also disposes of the sixth assignment of error.

The seventh assignment complains of the action of the court in admitting in evidence a portion of the answers given by Dorroh in his examination under oath immediately after the fire. The question and answer were as follows: “Q. When did you first learn that this policy of the Hartford Fire Insurance Company for $2,000 had been taken out by him for you? A. That was the Pro-thro policy. Well, I recollect the occasion, but I cannot tell. I recollect seeing the policy and him calling my attention to it, but 1 do not recollect the time. I happened to be there, and he called my attention to the fact that the policy had expired, and he was going to renew it.” The plaintiff in error had offered other portions of the question and answers asked, and given upon that occasion relating to a policy issued by an agent by the name of T. L. Prothro. Just what the Prothro policy, as it is termed, had to do with the validity of this we are not advised —presumably it was referred to as one of the policies whose issuance caused the excess of the insurance relied upon as avoiding this one. An examination of the evidence, however, shows that there was no effort to defeat this suit by showing the issuance of the Prothro policy. If we may judge from the volume of testimony offered, the defense of excessive concurrent insurance rested mainly upon a polity issued by Cooke & Raines, insurance agents residing at Long-view, Tex. The question sought to elicit from the witness an answer as to the time when he learned of the issuance of this Prothro policy for $2,000. The reply was so vague and indefinite as to amount to no answer at all. The witness merely says that he recollected the occasion, but could not tell when it was. We are unable to see how these statements could have affected the plaintiff in error prejudicially. However, if the testimony should be considered material from any standpoint, we think it was probably admissible under the rule that, when a portion of a letter or conversation is admitted in evidence so much of the remainder as is essential to a proper explanation of that which has been offered is also admissible. The answer objected to was offered by the defendant in error after the plaintiff in error had introduced other portions of what Dorroh had stated upon the occasion referred to.

It is also claimed that there was evidence tending to show only a partial loss, and that the court erred in instructing the jury that, if they found for the plaintiff in the suit, to find the full amount of the policy. The testimony shows that, after the fire, a portion of the lot upon which the building stood was sold to the banking company which had formerly occupied, a part of it as a tenant. The bank rebuilt on the same lot. Perdue, a witness for the plaintiff in error, testified’th-pt in doing so they used some part of the foundation of the old building and a part of the old bank vault. The extent and value of the parts so used are not shown. Neither is there any evidence of the kind and character of the structure called the “bank vault,” and whether or not it was a part of the building. Defendant in error contends that it was not. Be that as it may, we think the evidence shows a total loss, and there was no error in giving the charge complained of. Amer. Cent. Ins. Co. v. Murphy, 61 S. W. 956; Murphy v. American Cent. Ins. Co., 25 Tex. Civ. App. 241, 54 S. W. 407.

The judgment of the district court is affirmed.

On Rehearing.

Since this case was first decided by ns the opinion of the Supreme Court in the case of Williamsburg City Fire Ins. Co. v. Weeks Drug Co., 132 S. W. 121, has been published. We think what is there said sustains the views expressed by this court with reference to the plaintiff in error’s contention that the hazard had been increased by the receipt of the anonymous letter written to Dorroh, and it is therefore unnecessary for us to add anything further upon that issue. It is now claimed that the concealment by Dor-roh of the fact that such letter had been written was material upon the issue of the fraud charged in plaintiff in error’s answer. The averments referred to are in substance that Dorroh, in addition to concealing from plaintiff in error the information imparted in the anonymous communication, thereafter took out another policy in the same company covering the property insured by this policy. If there was any fraud in procuring this additional contract of insurance, that defense may be urged when an effort is made to< collect a loss under that contract. Such a fraud would have no effect on this policy, unless in procuring the additional insurance defendant in error exceeded the amount of concurrent insurance permitted under this contract, but that he did contract in excess of the amount allowed is not now insisted on.

It is also urged that we erred in holding that the evidence showed a total loss, and the statement is made that Perdue, one of plaintiff in error’s witnesses, testified that the bank vault was a part of the building destroyed. Upon a second examination of the statement of facts, we find no such testimony. On the contrary, the evidence shows that in another policy of insurance taken out through the same agent, Perdue, insurance to' the amount of $500 was expressly procured upon the store, furniture, and fixtures and bank vault. By the terms of this policy the store and office furniture and fixtures, including an iron safe, were expressly excluded.

The motion for rehearing is overruled.  