A provision in a policy of fire insurance that if the interest
of the assured in the property is "any other than the entire,
unconditional, and sole ownership for the use and benefit of the
assured," or is " encumbered by any lien, whether by deed of trust,
mortgage or otherwise," it must be so represented in the policy
does not, if it is stated that the property is encumbered, require
a statement of the nature or amount of the encumbrances.
An application for fire insurance, expressly made a part of the
policy and a warranty by the assured, contained these questions and
answers: "Is there any encumbrance on the property? Yes. If
mortgaged, state the amount. $3000."
Held that an omission
to state that the property was encumbered otherwise than by
mortgage was no breach of the warranty. A warranty, in a contract
of fire insurance that "smoking is not allowed on the premises" is
not, if smoking is then forbidden on the premises, broken by the
assured or others afterwards smoking there.
This was an action by Hosford and Gagnon on a policy of
insurance dated May 14, 1883, by which the Germania Fire Insurance
Company and the Hanover Fire Insurance Company, severally and not
jointly, and as if by separate policies, insured the plaintiffs,
against loss by fire for a year from that date, each one-half of
the sum of $8,000, payable in sixty days after notice and proof of
loss, upon their flour mill, elevator, and machinery in the Town of
Rulo and Nebraska,
"special reference being had to assured application No. 20, 157,
which is hereby made a part of this policy and a warranty on the
part of the assured; . . . loss, if any, payable to Israel May,
mortgagee, as his interest may appear."
The policy contained these provisions:
"The application, survey, plan or description of the property
herein insured shall be considered a part of the contract and a
warranty by the assured, and any false representation
Page 127 U. S. 400
by the assured of the condition, situation or occupancy of the
property, or any omission to make known every fact material to the
risk, or any overvaluation, or any misrepresentation whatever,
either in a written application or otherwise,"
shall render the policy void.
"If the interest of the assured in the property be any other
than the entire, unconditional, and sole ownership of the property
for the use and benefit of the assured, or be encumbered by any
lien, whether by deed of trust, mortgage or otherwise, or if the
building insured stands on leased ground, it must be so represented
to the companies and so expressed in the written part of this
policy; otherwise, this policy shall be void."
The application was of the same date as the policy, and was
signed by the assured and contained a great number of printed
questions and written answers, and so much of it as is material to
be stated was as follows:
"The applicant will answer particularly the following questions,
and sign the same, as descriptive of the premises and forming a
part of the contract of insurance and a warranty on his part:"
"What material is used for lubricating or oiling the bearings
and machinery? Tallow, lard and machine oils."
"Will you agree to use only lard and tallow, or sperm and lard
oils for lubricating? Lard and tallow, or lard and machine
oils."
"Is the machinery regularly oiled, and by whom? Yes, by regular
attendant."
"Will you agree to keep all the bearings and machinery properly
supplied with oil? Yes."
"Is smoking or drinking of spirituous liquors allowed on the
premises? No."
"Is there any encumbrance on the property? Yes."
"If mortgaged, state the amount. $3,000."
"The subscriber hereby covenants and agrees to and with the said
companies that the same is a just, full and true exposition of all
the facts and circumstances in regard to the condition, situation,
value and risks of the property to be insured, and said answers are
considered the basis on which insurance
Page 127 U. S. 401
is to be effected, and the same is understood as incorporated in
and forming a part and parcel of the policy, and further covenants
and agrees that if the situation or circumstances affecting the
risk shall be so altered or changed during the time of any policy
of insurance which may be fixed upon the application, or any
renewal of said policy, as to render the risk more hazardous, [he]
will notify the officers of said companies, or their general agent,
forthwith of such alteration."
The case was tried by a jury, who returned a special verdict
finding the value of the property insured and its loss by fire on
August l, 1883, and so much of the rest of which as is material to
be stated was as follows:
"The plaintiffs forbade smoking to go on in the mill, but
smoking was done on the grinding floor. . . . One of them himself
smoked upon and in the mill."
"At the time of the application, there was due Israel May on his
notes and mortgage on said premises the sum of $3,079.45. . . .
There were taxes of the county and state on said premises for
several years prior to the issue of the policy, which were
delinquent and unpaid, and still remain unpaid, amounting to the
sum of $329.40 on May 14, 1883."
On July 2, 1885, the circuit court gave judgment for the
defendants. The plaintiffs brought the case to this Court by writ
of error, with a certificate of division of opinion between the
circuit judge and the district judge upon the following
questions:
"1st. Whether the plaintiffs or the defendants, insurance
companies, are entitled in law to recover judgment on said verdict
and special findings of the jury returned in said cause."
"2d. Whether the fact that delinquent taxes on the mill, to the
amount of $329.40, were due and unpaid at the time the application
for insurance on the property destroyed was made, and that fact was
not disclosed by the applicants to the insurers, will defeat the
plaintiffs' right to recover."
"3d. Whether the fact that smoking was done in the mill, the
proprietor of the mill being one that smoked, notwithstanding the
plaintiffs had stated in their application for insurance that
smoking was forbid therein, will defeat their
Page 127 U. S. 402
right to recover, the fire that destroyed the property not
having originated from that cause."
MR. JUSTICE GRAY, after stating the facts as above, delivered
the opinion of the Court.
If this policy is valid, each of the defendants was severally
liable for no more than the sum of $4,000, and interest thereon to
the date of the judgment in the circuit court. The whole amount
recoverable against either defendant in that court being less than
$5,000, this Court has no jurisdiction of the case, except by
reason of the certificate of division of opinion.
Ex Parte
Phoenix Ins. Co., 117 U. S. 367;
Dow v. Johnson, 100 U. S. 158;
Williamsport Bank v. Knapp, 119 U.
S. 357. The first question certified is too general to
be answered, because it undertakes to refer the whole case to the
decision of this Court.
Jewell v. Knight, 123 U.
S. 426. Nothing is open for consideration, therefore,
but the second and third questions, upon which the opinions of the
judges of the circuit court were opposed.
The whole scope of that clause of the policy which requires the
interest of the assured, if "other than the entire, unconditional,
and sole ownership of the property for the use and benefit of the
assured," or if "encumbered by any lien, whether by deed of trust,
mortgage, or otherwise," to be so represented by the assured and so
expressed in the policy is to ascertain whether his interest comes
within either of these two descriptions, and not to call for
information as to the nature or amount of any encumbrances. It is
therefore fully satisfied by the statements in the application that
there is an encumbrance on the property, and what the amount of
mortgage is, and by the expression in the policymaking the
insurance payable
Page 127 U. S. 403
to a mortgagee.
Williams v. Roger Williams Ins. Co.,
107 Mass. 377.
By the terms of this policy and of the application made part
thereof, the answers to the questions in the application are
doubtless warranties, to be strictly complied with. But this Court
is unanimously of opinion that so far as regards either of the
matters presented for its decision in the present case, these
answers are direct, full, and true.
The only questions put as to encumbrances are first, the general
one, "Is there any encumbrance on the property?" which is truly
answered, "Yes," and second, the particular one "If mortgaged,
state the amount," in answer to which the assured states the
principal sum due on the mortgage. The effect of omitting to
include the additional sum due for less than half a year's interest
in not presented by the certificate of division. The insurers
having put no question as to the nature or the amount of
encumbrances otherwise than by mortgage, cannot object that no
information was given upon that subject.
Phoenix Ins. Co. v.
Raddin, 120 U. S. 183.
There was therefore no breach of warranty in not disclosing the
lien for unpaid taxes, independently of the question whether such a
lien was an encumbrance within the meaning of this contract, and
this case does not require a decision of that question.
As to smoking, the only question put in the application and
answered in the negative is whether smoking is "allowed on the
premises," which looks only to the rule established upon the
subject at the time of the application, and not to the question
whether that rule may be kept or broken in the future. This appears
by the language of the question, as well as by the circumstance
that it is not, as other interrogatories as to existing precautions
against fire are followed up by compelling the assured to agree
that they will continue to observe the same precautions. The jury
having found that the assured forbade smoking in the mill, the mere
fact that other persons, or even one of the assured, did afterwards
smoke there was not sufficient to avoid the policy. The two cases
cited by the defendants from the Illinois
Page 127 U. S. 404
Reports contain no adjudication to the contrary. The point
decided in each was that smoking by workmen in the mill did not
avoid the policy, and the remark of the judge delivering the
opinion, that in such a case the assured undertakes that he will
not himself do the act, was
obiter dictum. Ins. Co. of
North America v. McDowell, 50 Ill. 120, 131;
Aurora Ins.
Co. v. Eddy, 55 Ill. 213, 219.
Judgment reversed and case remanded to the circuit court
with directions to render judgment for the plaintiffs upon the
special verdict.