CLAIM FOR INSURANCE.

New Zealand Herald, Volume LIII, Issue 16200, 10 April 1916, Page 7

CLAIM FOR INSURANCE.

AN IMPORTANT POINT,

BOARDERS IN A " DWELLING."

POLICY NOT INVALIDATED.

Ax important judgment, delivered by His Honor Mr. Justice Cooper, dealing 'with the question of how far a building insured as a private residence can be used to accommodate boarders without invalidating the insurance policy,, was read at the Supreme Court on Saturday by the registrar, Mr. R. Goring Thomas. The case was one in which the plaintiffs— Brown, John Rountreo, and Claude Howard, the latter two as executors of tho will of tho late Christina W. Rountree —sought to recover from the Ocean Accident and Guarantee Corporation, Ltd., the sum of £500, amount of a policy of insurance upon an 11-roomed houso at Ellerslie, of which Mr. Brown was mortgagee, and which was destroyed-by fire on May 9, 1915. Mr. M. McGregor appeared for the plaintiffs, and Mr. M. Myers, of Wellington, for tho defendant corporation.

It was contended by the plaintiffs at the hearing of the'action that no case had been found in which payment of an insurance on a private house was refused because boarders were kept. On the other hand, the defendant corporation claimed that the house had been used as a boardinghouse, for the insurance of which a higher risk was always demanded, and that, as the conditions of occupancy had been altered beyond those fixed in the policy, the insurance company was not liable. Dwelling and Boardinghouse. In tho course, of a lengthy judgment, His Honor stated that it was evident that the house was not a public boardinghouse, for casual applicants were not accepted. It was, however, that class of house, of which there were many in the principal cities of the Dominion, where, as a means of increasing the income of tho occupant, approved paying guests or boarders were taken. In the proposal it was called a dwelling. Tho substantial question for determination was whether the facts which ho had found to be proved in tho case brought tho matter within condition 9 of the policy. The policy was prepared by the defendant, ana the languago of condition 9 was the language of the defendant company. If there was any ambiguity in it, this must be resolved in favour of the insured rather than of the insurer. Condition 9 states : "If the trade or manufacture carried on be altered or if tho nature of the occupation of or other circumstances affecting the building bo changed in such a way as to increase the risk of loss or 'damage by fire." Then unless tho sanction of the corporation was obtained by endorsement on the policy before the loss, the insurance ceased "to attach. It was clear that to bring tho ease within the meaning of the clauso what must be proved was, not merely that thero had been an increase of»risk, but that that increase had arisen through either a change in the "nature of the occupation " of the building or a change in the circumstances of the , i

"Nature of Occupation Unaltered.

In his opinion there had been no alteration in the nature of .the occupation of the building. It was insured as a "dwellinghouse." It continued to be a "dwelliiighouse," notwithstanding that some boarders were taken in, and it was always admittedly within class \V of the defendant's classes of risks, namely, a "dwellinghouse." The necessity of proving that it was not within class W had been recognised in the statement of the defence, for tho allegation was that the nature of the occupation was changed because tho house had become a public boardinghouse. The defendant corporation had failed to prove that this was so, and in his opinion there was therefore " no change in tho nature of the occupation." There was an absence of English authority on the point, but there were two American cases which supported the opinion he had formed. In Kaflerty v. The New Brunswick Insurance Company ft was held that it was not a violation of a policy of insurance "that a house insured as a dwellinghouse is afterward occupied as a boardinghouse, if keeping a boardinghouse is not in the enumeration of things forbidden." In the second caso the taking of lioarders in a dwellinghouse was held not to be an increase of risk within tho conditions of the policy. Ambiguous Wording.

In regard to tho remaining part of the paragraph—" or if other circumstances affecting the building bo changed"—His Honor said that the words were ambiguous, and it was difficult to give a definite meaning to them. In his opinion it would bo giving a forced interpretation to the language used to hold that tlio taking of boarders \yis a " circumstance affecting the building." The fact that there might have been some increase in tho risk by taking in boarders was not sufficient to vacate tho policy it was not onough to show that the risk had been increased unless the increase of risk was caused by a breach of tho condition. ■ His Honor stated, in conclusion, that there was nothing in the questions set forth in the proposal which indicated that it was necessary for a person applying for an insurance upon a "dwellinghouse" to state moro than that it was a dwellinghouse. If it satisfied that description then the question was truthfully answered. Ho did not think that condition 9 was framed in such a way as to bring to tho notice of the ordinary person effecting an insurance, that taking private boarders might be claimed by the insurance company to be a change in the nature of tho occupation of tho house, or a change in tho circumstances of the building. Judgment was given for tho plaintiffs for tho sum of £500 and costs, according to scale.