Western & A. Pipe Lines v. Home Ins.
145 Pa. 346
Pennsylvania Court of Common P...
1891
Check Treatment

Opinion,

Mb. Justice Sterrett:

This action is on a policy of insurance issued by the Home Insurance Company, defendant, insuring the Western & Atlantic Pipe Lines, for one year from June 28,1888, against loss or damage by fire, to the amount of two thousand five hundred dollars, “ on oil while contained in the iron crude-oil tank known as No. 1, on plan situate, detached 273 feet, on the Johnson farm, at Johnson’s station, on the line of the Washington branch of the Pittsburgh, Cincinnati & St. Louis railroad, onleased ground, Washington county, Pa.” By necessary implication, the verdict establishes the fact that, during the life of the policy, over three thousand six hundred barrels of oil were destroyed by fire, while in said “ iron crude-oil tank known as No. 1,” on the plan of oil tanks at Johnson’s station. The jury found in favor of the plaintiff for the value of the oil thus destroyed.

The company defendant, after being fully advised as to the loss, etc., denied its liability on two grounds :

1. Because the tank containing the oil insured had been removed “by an unforeseen disaster, in the shape of a flood,” and carried about four or five hundred feet from the position it occupied when the policy was issued.

2. Because the oil contained in said tank did not belong to the plaintiff company, but to its customers for whom it was held in storage, which fact was not stated on the face of the policy.

Conceding the fact that, at the time of the fire, the tank had been removed by a flood about four or five hundred feet from *358the position in which it stood when the oil was insured, but not off the premises described in the policy, th'e plaintiff contends that the insurance company was not thereby relieved from liability for the loss. In that we think it is right.

The object of the contract was indemnity against the destruction of oil described as “ contained in the iron crude-oil tank known as No. 1,” etc. With the view of attaining that object, the terms of the policy should be construed liberally. If any doubt exists as to their meaning, it should be resolved in favor of the insured, rather than in the interest of the underwriter. When words employed in a policy of insurance are susceptible of two interpretations, that which will sustain the claim of the insured should be adopted: Wood on Ins., 145 ; May on Ins., 182. Tested by these well-recognized principles of interpretation, the position contended for by the defendant company is untenable. In substance, its position is that the above-quoted description of the property insured is, in effect, a warranty that in case of fire, the oil destroyed shall not only be contained in said iron tank, but that the tank itself shall remain where it was when the insurance was effected; otherwise the insurance company will not be liable. Authorities cited in support of that position, where property insured as contained in certain barns, houses, etc., was destroyed after removal to other buildings, have no application to the case before us. In those cases, there was necessarily a failure to show that the' insured property was in the designated buildings when destroyed. In this case, the jury must have found that the oil insured was destroyed “ while contained in the iron crude-oil tank known as No. 1 ” on the plan of tanks at Johnson’s station, and that, we think, fully satisfies the terms of the contract. The parties were not contracting with reference to an insurance upon the tank, but only upon the oil contained in it. With that construction of the company in view, the learned president of the Common Pleas rightly instructed the jury as follows: “ If you conclude that this tank was picked up bodily by the flood, and floated down the stream, and lodged from three to five hundred feet away from the place where it was constructed, against the abutments of the bridge, and remained intact, and in that way held the oil, as an oil tank would hold oil, so that it could have been recovered by the *359company, and while there, in place of on the original foundation, the oil in the tank was burned, then the contract of indemnity would be binding, and the defendant would be liable for such loss as the plaintiff might sustain by reason of the fire on their proportionate share of the loss.” The jury, under this instruction, having found for the plaintiff and assessed its damages, the necessary implication is that they found the facts of which the instruction is predicated to be true; that the oil tank No. 1 contained and held the oil, for the value of which they assessed damages in favor of the plaintiff, until it was destroyed by fire, etc.

But assuming, merely for argument’s sake, that the description of the tank’s location may be regarded as in the nature of a warranty, it can only be construed as a warranty of location at the time the insurance was effected, and not that the tank would thereafter remain in the same location: Lycoming Ins. Co. v. Mitchell, 48 Pa. 367. As a statement of then existing facts, it is not even pretended that the description of the location of the tank, etc., was not strictly true.. If it was intended to make the continued location of the tank, at the precise point where it then was, a condition of the underwriter’s liability, it would have been an easy matter to have said so. It is not the province of courts to indulge in conjectures favorable to such insurance companies as are disposed, upon mere technicalities, to avoid the payment of honest claims. Cases are not unfrequent in which statements in regard to the use and character of buildings, etc., are construed as merely descriptive of the risk at the time the application is made, and not as a warranty that there shall be no change during the life of the policy: Wood on Ins., §§ 444, 446 and cases there cited. In Everett v. Insurance Co., 21 Minn. 76, a threshing machine was insured as “ stored in a certain barn on section 36,” etc., and it was held that this was a mere matter of description, operating to identify the property; and not a promissory stipulation on the part of the insured, nor a condition on the part of the insurer. But, giving the defendant the benefit of the' broadest construction, the language used in describing the location of the oil insured cannot amount to anything more than an implied warranty of the plaintiff company that it will not voluntarily change its location. This construction appears to have been recognized in. *360Sillem v. Thornton, 3 El. & Bl. 868, and was perhaps warranted by the facts of that case. Even in that view, we have, on the oné hand, only an implied warranty that the insured will not voluntarily change the location of the tank containing the oil, and, on the other, defendant’s admission, in its affidavit of defence, that the location of the tank was changed “ by a visitation of Providence.”

Another ground of defence is that the oil in question did not belong to plaintiff, but to its customers, for whom it was held in storage. For some reason, best known, perhaps, to the party who, on behalf of the defendant, wrote the sympathetic letter of October 11,1888, and made the affidavit of defence April 16, 1889, this ground of defence was not even hinted at in either of those papers, and for aught that appears was a mere afterthought. In the letter he says: “ We regret exceedingly the loss sustained by your company, and would be pleased to reimburse you if we could see wherein you had any claim upon us, either in law or equity. We insured oil in an iron tank located in a safe position, upon a good foundation, and charged you a premium which we considered adequate, in view of its position; but an unforeseen disaster, in the shape of a flood, carried the' tank from its position to a more dangerous one, whereby it was destroyed.” In the affidavit substantially the same defence, viz., removal of the tank “ by a visitation of Providence,” etc., is solely relied on. It is not even pretended that there was any fraudulent ■ concealment of ownership of the property, or that any untruthful representation was made, upon the faith of which the policy was issued; nor is it claimed that the defendant company was not fully aware of the exact situation and ownership of the oil when it accepted the risk. It had notice, by the proof of loss furnished by plaintiff, as to the manner in which the oil was held, but no objection on that ground was interposed or even intimated. Defendant’s liability was denied solely on the ground that the tank containing the oil had been removed “by a visitation of Providence.”

The supplemental defence, afterwards sprung upon the plaintiff, that it was not the owner of the oil, might well be disposed of by saying it came too late : Brink v. Insurance Co., 80 N. Y. 108 ; Castner v. Insurance Co., 50 Mich. 273; Vos v. Robinson, 9 Johns. 192; Stayton v. Graham, 139 Pa. 1. In Brink v. *361Insurance Co., supra, the company denied liability on the ground of fraud, and so declared to the assured. After suit brought, it raised the question as to time of the filing proofs of loss, etc. In denying its right to do so, Chief Justice Chuuch said: “I think it was estopped from so doing. The plaintiffs’ claim was challenged for fraud, and fraud only. They acted upon it, and brought an action incurring large expenses in its prosecution; non constat, if the failure to file the proofs in time had been insisted on, but that the plaintiffs would have acquiesced and refrained from prosecuting, and thus they might be injured by the change of ground on the part of the defendant. Every consideration of public policy demands that insurance companies should be required to deal with their customers with entire frankness. They may refuse to pay without specifying any ground, and insist upon any available ground; but, if they plant themselves upon a specified defence, and so notify the assured, they should not be permitted to retract after the latter has acted upon their position as announced, and incurred expenses in consequence of it.”

But, aside from what has been said in answer to the, last-mentioned ground of defence, we think it is also successfully met by the facts connected with the contract of insurance, etc. The plaintiff is a corporation chartered under the law of April 29, 1874, and supplements, and invested with the right to transport, store, insure, and ship petroleum, and under our constitution is prohibited from engaging in any other business than that specified in its charter. It should be presumed that the insurance company was cognizant of these facts, and contracted with reference to them; but, whether it was or not, it is certainly chargeable with knowledge of the usual and customary methods of conducting the business pertaining to property which it insured: Citizens’ Ins. Co. v. McLaughlin, 53 Pa. 487. While, in one sense, the plaintiff was not the owner of the oil, yet, in so far as risk from loss by fire was concerned, it may, to all intents and purposes, be considered as the owner. According to the contract made with its customers, it was bound to protect, by insurance, the oil in its tanks at its own expense. In case of destruction by fire without insurance, it would have been bound to its customers to make good the loss. To the extent of the value of the oil, therefore, it certainly had *362an insurable interest, and, in a certain sense, was at least quasi owner of the oil. The policy in suit issued without any application or written request describing the interest of the insured in the oil, and it does not appear that any actual representation of any kind was made by the insured. In view of these circumstances, the language of our Brother Williams in Philadelphia Tool Co. v. Assurance Co., 132 Pa. 236, is especially applicable. He there said: “We ought to assume that a policy written under such circumstances was written upon the knowledge of the representative of .the insurer, and intended to cover in good faith the interest which the insured had in the buildings. Fraud is never to be presumed, and in this case no fraudulent representation is shown or alleged, unless it can be deduced from the statements of the insurer, made, as we must presume, on the knowledge of its representative, and for which the insured is in no manner responsible. We must also remember that this policy is to be interpreted most strongly against the company whose contract it is. Applying these principles to the question now raised, we conclude that the policy written on the knowledge of the insurer was made in view of the facts of the case, and was intended to cover such interest as the insured had.” So, in the case before us, the defendant having insured the oil contained in tank No. 1, without any representation as to the quantum of plaintiff’s interest therein, must be considered as having insured it against any loss which the plaintiff would suffer by fire.' As already observed, the plaintiff had a right, and was bound by its contract with its customers, to protect the oil by insurance, so that its value could be accounted for to them in case of loss by fire. As was said in Waring v. Insurance Co., 45 N. Y. 606 : “ Agents, commission merchants, or others, having the custody of and being responsible for property, may insure in their own names, and they may, in-their own names, recover from the insurer, not only a sum equal to their own interest in the property by reason of any lien for advances or charges, but the full amount named in the policy, up to the value of the property.” To the same effect is Story on Agency, 126.

The testimony referred to in the first, second, and third specifications was rightly admitted. It tended to prove plaintiff’s interest in the oil, and consequent right to insure.

*363The only other specification that requires further notice is the ninth, in relation to interest. A sufficient answer to that is, the company denied in toto its liability, and was therefore not entitled to the benefit of the provision in the policy giving sixty days for adjustment and payment of loss : Nevins v. Insurance Co., 5 Fost. (N. H.) 22; Ætna Ins. Co. v. Maguire, 51 Ill. 342; Phillips v. Insurance Co., 14 Mo. 220; Indiana Ins. Co. v. Routledge, 7 Ind. 25 ; Myer’s Fed. Dec., p. 535. In Ætna Ins. Co. v. Maguire, supra, it was held that such a clause applies only where the insurance company agrees to pay, or is undecided in regard to paying, but not when it peremptorily refuses to pay the loss. Further notice of the specifications is unnecessary. There is no merit in either of them.

Judgment affirmed.

Mr. Justice Green and Mr. Justice Mitchell noted their dissent.