filed as amended september 24 1952: September 5, 1952.
Before MARIS, McLAUGHLIN and HASTIE, Circuit Judges.
This is an action by the plaintiff against four defendant insurance companies to recover on four fire insurance policies, one issued by each defendant, covering the plaintiff's stock of electric fans and parts stored in a building at 47-49 Albion Avenue, Paterson, New Jersey, which was destroyed by fire on March 19, 1948.The action was originally brought in the Superior Court of New Jersey and was removed by the defendants to the United States District Court where, after a trial, the jury rendered a verdict in favor of the defendants. From the judgment rendered on the verdict the plaintiff has appealed.
The plaintiff, who dealt in electric fans under the trade name Kingaire Manufacturing Company, rented the one-story building at 47-49 Albion Avenue, for the purpose of storing fans and parts. The building had been used as a moving picture theatre and as a pool room and, immediately prior to his occupancy, as a warehouse. He requested fire insurance from Jacob Prince, Jr., agent of the defendants, to cover merchandise valued at $75,000. Prince inspected the building, found it empty except for a pool table in the center of the floor, and on October 21, 1947 issued the four insurance policies for $15,000 each upon which this suit was subsequently brought. Plaintiff then stored a stock of fans and parts in the building
During the subsequent winter there were heavy snow falls and sleet storms in Paterson and on February 14, 1948 a portion of the roof of the building in which plaintiff's fans were stored collapsed. According to the defendants' witnesses the big center skylight fell in, together with the central section of the roof, causing the side walls to bulge and break away from each other at the corners and leave cracks and openings through which a person could enter the building. In addition the panes in the back window were so broken that the building could be entered there also. Later the same day the plaintiff went to the building, having heard that something had happened there. He testified that he went inside and saw some snow on the pool table. He then looked up and saw some of the skylight fallen in but says he saw nothing wrong with the roof or walls of the building. He immediately telephoned Prince, the defendants' agent, told him what he had observed and said that it would not damage the goods. Prince then told him he need do nithing about it and he left immediately for Florida and did not revisit the building until after the fire. Prince drove past the building about once a week thereafter but testified that he observed nothing unusual about the building.
On March 19, 1948 a fire broke out which destroyed the building and very seriously damaged the plaintiff's merchandise, the salvage value remaining being not more than $7,000. It was to recover for the loss thus suffered that the present suit was brought.As an affirmative defense the defendants asserted that they were relieved from liability by virtue of the following provision in each policy:
"Unless otherwise provided in writing added hereto this Company shall not be liable for loss occurring (a) while the hazard is increased by any means within the control or knowledge of the insured; * * *."
Their contention was that the hazard had been increased by the collapse on February 14, 1948 of the building in which the insured merchandise was stored, that this was known to the plaintiff and its correction was within his control and that accordingly they were not liable, by virtue of this "increase of hazard" clause, since the extra hazardous condition had not been corrected by the plaintiff at the time of the fire.
At the close of the testimony the plaintiff moved the eliminate the foregoing affirmative defense from the consideration of the jury. The trial judge denied the motion and submitted that defense to the jury along with the other issues in the case. By its verdict in favor of the defendants the jury resolved in their favor the questions of fact upon which the affirmative defense rested, namely that the building in which the plaintiff's goods were stored was seriously damaged by the collapse of a portion of the roof on February 14, 1948 as testified by the defendants' witnesses, and that this damage increased the hazard of fire to the knowledge of the plaintiff and that its correction was within his control.
Upon this appeal the plaintiff makes a number of contentions.*fn1 The first is that the trial judge erred in refusing to grant plaintiff's motion to eliminate from the consideration of the jury the affirmative defense based on the alleged violation of the "increase of hazard" clause of the policies in suit. This contention is primarily based upon his assertion that the "increase of hazard" clause does not avoid a fire insurance policy where the risk has been increased by accidental means as in this case.
Preliminarily we observe that "In most cases, the hazards of insuring personal property must depend, in a great degree, upon the building in which the insured property is, and upon the uses to which the building is applied. Increasing the hazard of the building increases the risk of insurance upon property within the building."*fn2 The hazard referred to in the "increase of hazard" clause is, of course, the hazard of fire, not of some other casualty. We think that the defendants' evidence in this case was sufficient to justify a finding by the jury that the risk of fire was increased by the collapse of February 14th.Certainly the open and collapsed condition of the building invited the entrance of children and vagrants with a consequent increase in the risk of fires being started therein. Moreover the open condition of the building itself increased the hazard by making it susceptible to increased drafts.
The question remains, however, whether the accidental collapse of the building was within the contemplation of the "increase of hazard" clause. In determining this question it must be borne in mind that the clause is not a forfeiture clause.It does not avoid the policy but merely suspends the insurance while the increased hazard remains unabated by the insured. For this reason and also because its inclusion and exact language are dictated by New Jersey law*fn3 the clause is not to be construed strictly against the insurer but is to be enforced as written.*fn4
The plaintiff argues that the "increase of hazard" clause applies only to conditions created by act or instrumentality of the insured and not to those accidentally occurring as in this case. We do not think that the law of New Jersey so limits the operation of the clause. It is true, as the plaintiff points out, that most of the decided cases have involved increased risks which were the result of acts or neglect of the insured. But we think that an increased hazard not brought about by the insured is also within the scope of the clause to the extent that the insured knows of the increased hazard and is in a position to abate it but fails to do so.In the case of Westchester Fire Ins. Co. v. Fitzpatrick, 3 Cir., 1924, 2 F.2d 651, 654, which came up from the District Court for New Jersey, this court held that the condemnation by the public authorities of an old building followed by notice to the tenants to vacate it constituted an increase of hazard within the meaning of the "increase of hazard" clause.We think that this ruling correctly stated the law of New Jersey and is applicable here.
It is of course true, as we have already indicated, that if the hazard has not been increased by act or neglect of the insured it must appear that he had knowledge of it and that the means of abating it were within his control. But if such knowledge appears and the insured does not promptly take the steps open to him to abate the hazard, the insurance remains suspended until he does so. Here it is obvious that the plaintiff could have either repaired the building or induced his landlord to do so or he could have removed the insured merchandise to a safer place of storage. The trial judge, therefore, ...