Thе liability of the defendants is dependent upon the riders, parts of their respective insurance policies, each such ridеr being therein described as “Use and Occupancy Form,” and as insurance “on the use and occupancy of . . . buildings, machinery, аnd equipment situated on” certain described real property.
The clause upon which, if at all, the liability must be predicatеd reads as follows:
“The conditions of this contract are that if the buildings described above, and machinery and equipment contаined therein, be destroyed or damaged by fire occurring during the term of this policy so as to necessitate a total or pаrtial suspension of business, this company shall be liable under this policy for the actual loss sustained consisting of net profits on the business which is thereby prevented, and such fixed charges and expenses pertaining thereto as must necessarily continue during a total or partial suspension of business and such expenses as are necessarily incurred for the purpose of reducing the loss under this policy, for nоt exceeding such length of time ... as shall be required with the exercise of due diligence and dispatch to rebuild, repair, or reрlace such part of said buildings, and machinery and equipment as may be destroyed or damaged, subject,” etc.
It is not questioned but that at least two separate and distinct elements are recognized in this provision of the con
From the consideration of the situation of the business of the insured prior to the fire, the jury reached the unchallenged conclusion that had no fire intervened and the business continued during the forty-nine' days therе would have been not only no profits made but a loss sustained of $4,062.64, an excess over the fixed charges and expenses of $3,820.30 during thе same period. The insured having suspended business, it avoided, of course, such loss of over $4,000 with its consequent depletion of assets or .additional liabilities to that extent.
The respondent contended, and the trial court agreed, that the liability under the policy was not dependent upon whether the fixed charges and continuing expenses would have been earned or not and that suсh was therefore an absolute liability as to these items. The appellants contended that inasmuch as it appearеd that had there been no fire and the business continued during the forty-nine days, the insured could not have earned sufficient to have pаid these fixed charges and continuing expenses; that therefore there was no “actual loss” sustained by the insured within the terms of the policy, for as it could not have received from the conduct of the business anything to be devoted to the payment of such fixеd charges and continuing expenses, it could not properly be considered as having lost such sum which it could not have had, fire or no fire.
A consideration of the clause quoted above and other conditions on the rider, particularly th.e phrase therein often recurring “actual loss sustained,” convinces , us that the liability assumed was such that it is incumbent upon the in
To hold as respondent contends would place under such a rider the suspension of a business enterprise, run at a profit and making sufficient with which to meet these fixed chаrges, in exactly the same situation as to the amount of recovery as an enterprise, as in the case here, which would bе run at a substantial loss during the same period. The actual loss in the former instance would be of a substantial thing, of which the fire would have deprived the insured, for at the end of such a period the profitable concern would necessarily, if the business had continued, have had on hand a sum sufficient to meet such fixed charges. In the latter and instant case, had there been no fire and the business hаd continued, the insured would have increased its liabilities to the extent of the $4,062.64 loss it would have incurred in so running the business, and still would have had, just thе same as now, these items of fixed charges and continuing expenses of $3,820.30 to meet. The suspension of business, therefore, madе no change in the real situation so far as the possibility of paying for the fixed charges is concerned, although it did obviate the making of the $4,000 loss and such a consequent increase in its liabilities.
It is clear that the policy is not to indemnify against liabilities necessarily incurred during such suspension period. In order, therefore, that a liability incurred during such
The cases cited and others touching on the subject of such, a “use and occupancy” form of insurance are not in point nor applicable upon such a situation as we have here presented, where the suspension prevented a further loss rather than being the interruptiоn of a gain, and a discussion of such -cases would not be helpful. Among such are Stuyvesant Ins. Co. v. Jacksonville Oil Mill, 10 Fed. (2d) 54; Wilson & Toomer F. Co. v. Automobile Ins. Co.
By the Court. — Judgment reversed, and cause remanded with directions to dismiss the complaint.