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CMM DIGEST

Young vs Midland Textile Insurance Co. March 31, 1915 Insurance: warranty
(Insurance)

Plaintiff: Young Defendant: Midland Textile Insurance Company. Ponente: Johnson FACTS: Young: owner of candy and fruit store in Escolta which occupied a building as both a residence and bodega. Entered into contract of insurance with Midland, in which insurer promised to pay P3,000 in case residence and bodega and its contents should be destroyed by fire. o One of the conditions (WARRANTY B): During the pendency of this policy, no hazardous goods be stored/kept for sale, and no hazardous trade/process be carried on, in the building to which this insurance applies, or in any building connected therewith. Young: places 3 boxes filled with fireworks in said residence and bodega. Building was partially destroyed by fire. Both parties agreed that the fireworks come within the term hazardous goods and that the fireworks in no way contributed to the fire. Allegation of insured: Young contends that they were not stored and placing them there does not violate the contract. That he only placed them there because he was notified that he cannot use them for the Chinese New Year and in order that he might later send them to a friend in the province. ISSUES/HELD: (1) Whether or not the fireworks were stored therefore, makes the policy void. YES. (2) Whether insured should be allowed to recover since the storage of the fireworks did not contribute to the damage occasioned by the fire. NO. RATIO: (1) Whether the goods were stored depends upon the intention of the party. Nearly all cases cited by TC were cases where the article was being put to some reasonable/actual use, which would not void the policy. (ex. small quantities for sale like gasoline, gunpowder; or for actual use like oil, paints; or for lighting the purposes). Dictionary definition: to deposit for preservation/safe keeping; put away for future use. (diff from TC definitions in small quantities/for daily use. In this case, the fireworks were placed in the bodega for future use/consumption or for safe keeping, and NOT for present/daily use. They were stored in the bodega as the word is generally defined. (2) The fact that it did not contribute to the fire is beside the point if the storing was in violation of the contract. Placing of the firecracker increased the risk. Insured had not paid the premium based upon the increased risk, neither had the insurer issued a policy upon the theory of a different risk. Insured enjoyed the insurance policy upon one risk, when it was issued for an entirely different one. It was a direct injury to the insurer and changes the basis of the insurance contract.