1. The plaintiffs' claim arises under several policies of insurance issued in September, October and November 1936 by the defendants, in respect of a fire which occurred on 1st December 1936, and which caused loss and damage to premises and stock contained in a jute godown. In their plaint they claimed also a refund of premia, but this sum was brought into Court by the defendants with their written statement and has since been paid over to the plaintiffs. The defendants' case is that none of the policies were subsisting or effecting at the time when the fire occurred owing to breaches by the plaintiffs of certain terms, conditions and warranties which were of the essence of the contracts. It is not suggested that the fire or the resultant loss or damage was in any way due to or affected by any of such breaches. The plaintiffs deny the breaches, and alter, natively plead waiver. There are arbitration clauses in the policies, but the parties agreed to waive them, and to have the question of liability first decided by the Court, with liberty to direct that the amount of the loss be ascertained hereafter by the Court or by arbitration in the event of the defendants' liability being established. The policies were issued subject to the Calcutta and Howrah Jute Press Tariff Warranties dated 15th June 1937, with certain exceptions which are immaterial. The material parts are as follows:
It is warranted during the currency of this policy (all and each of such warranties being of the essence of the contract and the insured forfeiting all rights and benefits under the policy by any breach or breaches thereof) that:
M. No jute hereby insured or on the insured premises shall at any time be contained in any building other than a 'godown' as hereinafter defined and no such godown shall at any time during the currency of this policy contain jute (irrespective of the ownership thereof) exceeding in the aggregate 35,000 maunds. The term 'godown' in this warranty shall mean the following and shall be incapable of having any other meaning:
(i) Any separate self-contained building (with or without partitions) situate at a distance of 14 feet or more from any other building, or any separate self-contained building situate less than 14 feet from another building provided that every wall thereof facing any such other building whether directly or obliquely shall be built of brick or stone without openings of any kind or if containing openings such openings being protected at all times by approved corrugated iron doors and/or shutters, unless such wall in any such other building is built of brick or stone without openings of any kind, or (ii) any compartment or part of any building which complies with Sub-clause (i) hereof provided that such compartment or part is separated from the whole of the rest of the building of which it forms part by perfect party walls built of brick or stone without openings of any kind or if containing openings such openings being protected at all times by double fire-proof doors and/or shutters, or
(iii) any two or more compartments or parts of any building which complies with Sub-clause (i) hereof, which are as a whole separated from all other parts of the said building by such walls as are described in Sub-clause (ii) hereof, or
(iv) any group of two or more separate self-contained buildings situate at a distance of less than 14 feet from each other provided that if any part of any wall or any building in such group shall be situate within 14 feet of any building not forming part of such group the whole of such wall shall be constructed in the manner described in Sub-clause (i) hereof.
2. The defendant also rely upon Clause 8 and 11 of the general conditions of the policies which so far as they are material read as follows:
8. Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the insured, before the occurrence of any loss or damage, obtains the sanction of the company signified by endorsement upon the policy, by or on behalf of the company.
(a) If the trade or manufacture carried on be altered or if the nature of the occupation of or other circumstances affecting the building insured or containing the insured property be changed in such a way as to increase the risk of loss or damage by fire.
11. The insured shall also at all times at his own expense produce, procure and give to the company all such further particulars, plans, specifications, books, vouchers, invoices, duplicates or copies thereof, documents, proofs and information with respect to the claim and the origina.1 cause of the fire and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the company as may be reasonably required by or on behalf of the company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith.
3. No claim under this policy shall be payable unless the terms of this condition have been complied with. The facts and arguments upon which the defendants rely are set out in their written statement as follows:
Paragraph 7. Prior to the outbreak of the fire mentioned in the plaint there was a breach of the said warranty M.A. hole was made in the party wall separating the part of the building described in the plaint as 'Godown No. 1' from what is described in the plaint as 'Godown No. 2', and the said hole was in existence at the time of the fire and was temporarily filled up by the Fire Brigade. The said hole was unprotected. At the time of the making of the said hole and while the same was in existence there was stored in the said 'Godown No. 1' approximately 32,206 maunds 34 seers of jute and in the said 'Godown No. 2' approximately 32,488 maunds 22 seers of jute.
Upon the making of the said hole there was a breach of the aforesaid warranty M in that the said Godowns Nos. 1 and 2 became one 'Godown' as defined in the said warranty and contained jute exceeding in the aggregate 35,000 maunds.
4. These facts and arguments had been stated previously in a letter from the defendants to the plaintiffs dated 13th February 1937 and the plaintiffs sought to meet them by pleading as follows in their plaint:
Paragraph 14. The words 'without openings of any kind' referred to in the warranties of each of the said policies are understood by all Insurers and Assured in Bengal to mean and are understood as applying to all opening therein except (a) such as are protected by fireproof doors and/or shutters or (b) such as are used for shafts, straps and stream gas or water pipes, such openings not being of more than sufficient size for the purposes and in no case exceeding 4 square feet in area.
Paragraph 15. The plaintiff submits that in the circumstances there was no breach of the torms of Sub-clause III-M of the policies. In the alternative the observance of terms of Sub-clause III-M of the policies was waived by the defendants.
Particulars of Waiver.
(a) The plaintiff for minimizing the risk of fire and for obtaining a substantial reduction of the rates of insurance had decided to install a sprinkler system with a six-inch pipe and had the plans of such sprinkler installation sanctioned by the Fire Assurance Association and entrusted the work to Messrs. Worthington Simpson & Co.
(b) Messrs. Worthington Simpson & Co. decided to install a sprinkler system with six-inch pipe passing through each godown. They had the plans sanctioned by the Fire Assurance Association. For the purpose of installation of the sprinkler, Messrs. Worthington Simpson & Go. used to have made temporary holes sufficient to receive the pipe in the walls of the different godowns when required by them. The defendant company accepted the insurance with full knowledge of the installation which was going on and with full knowledge of the operations necessary therefore.
(c) That during the progress of the work, representatives of the defendant company, namely the Assistant Manager, Mr. Bonaman, the Burra Babu, Mr. Mukherjee, the agent of the defendant company, Mr. Manik Chand and the Inspector of the Fire Assurance Association visited the godowns on several occasions and approved of the works which were being done. At none of such visits was any objection taken to the making of such temporary holes, but on the contrary the said persons approved of the work and asked that the same should be expedited.
5. The defendants dispute these facts and submissions, except that some of their employees were aware that the plaintiffs intended to install a sprinkler system. In particular they deny that they were aware that work in connexion with the installation of the sprinkler was carried on in any premises which at the time contained jute, or of the quantities of jute contained in any godown at any time. I accepted the suggestion of both parties that I should view the premises, and the following facts which were pointed out to me by both parties may be taken to be admitted. The portion with which the suit is concerned consists of a building divided by brick partition walls into four separate godowns in line or range. The building has a ground-floor and an upper floor and, therefore so, has each godown. Each godown has separate doors giving access from the outside. There are no openings in the partition walls. The main six-inch supply pipe of the sprinkler system runs the whole length of the building, just beneath the beams supporting the upper floor, and from it at right angles run smaller pipes to which the sprinklers are attached. It is obvious therefore that in order to pass the main pipe through the partition walls temporary holes must be made. The fire broke out at the end of the godown furthest away from the partition wall in which a hole is alleged by the defendant to have existed at the time. The following issues were settled:
(1) Was any opening within the meaning of Clause M of the warranties made in the separating wall between godown Nos. 1 and 2 prior to the fire, which existed at the time of the fire?
(2) What were the stocks in godowns Nos. 1 and 2 at the time of the fire?
(3) Was the condition No. 8 and/or warranty M broken at the time of the fire by reason of (a) any opening within the meaning of Clause M of the warranty in the separating wall and (b) the stocks?
(4) Was observance of the said condition and/or warranty waived or acquiesced in by the defendants?
(5) Was condition No. 11 broken by the plaintiffs?
6. The learned standing counsel, Mr. S.M. Bose, on behalf of the defendants, accepted the onus of proof regarding Issues 1, 2, 3 and 5 and proceeded to call witnesses. The only witness upon the question of the stocks was Mr. Thorn. His evidence on this point was very unreliable and unsatisfactory. His calculations were largely a matter of guess work. He relied mainly upon a report made by him soon after the fire but was unable to produce his notes, which he said that he had made at the time, but which he had lost. Upon a question so serious to the interests of the plaintiffs the evidence is wholly inadequate, and I cannot accept his calculations as accurate. I have no hesitation in deciding Issues 2 and 3(b) in favour of the plaintiffs. On the issues touching the existence of a hole or opening in the partition wall, this witness said that he noticed something like smoke on the ceiling of godown No. 2 in the neighbourhood of a hole which had been filled up in the partition wall. He admitted that there had been a fire in that godown in the previous October 1936, but he said that it looked as if this godown had since then been repaired and the ceiling whitewashed. When I viewed the premises these facts were pointed out to me, but it appeared to me that the ceiling had not been whitewashed for a very long time. His evidence was given obviously upon the assumption that the hole which penetrated the partition wall had existed at the time of the fire, and was directed to prove that some smoke had come through the opening on 1st December 1936, and had blackened the ceiling.
7. But to the obvious surprise of Mr. Bose both the witnesses called by him to prove these essential facts were unable to do so. Both were officers of the Fire Brigade. Mr. Meyers, the Second Officer, said that while he was in godown No. 2 his attention was called by Station Officer Eraser to a hole in the partition wall under the beam on the ground floor; it was about six to nine inches in size and he gave orders for it to be filled up for safety in case of any sparks flying into the godown. He did not see any sparks or smoke coming through the hole. Mr. Fraser, the Station Officer, said that while he was in godown No. 2 he saw a small hole on the wall about the size of a brick and after informing Second Officer Meyers he went somewhere else. What he saw appeared to be a hole about the size of a brick, but he could not say whether the hole went through the partition wall, and he did not see any smoke or sparks coming ' through the hole. This evidence having been given, Mr. Bose said that he did not wish to call any further witness and closed his case upon this issue. The only other evidence on the point was contained in a letter from the plaintiffs to the defendants-dated 8th February 1937, in which they wrote as follows:
We are in a position to state that the hole in the party wall separating godowns 1 and 2 made temporarily for the installation of the sprinkler service was filled up by one or more of our employees after the outbreak of the fire, but we are not able to-give you the name or names of such employees. In reply to our enquiry from Messrs. Worthington Simpson Limited, for the information required by para, 4 of your letter of the 23rd instant they have written to us as follows:
We have been in communication with our chargehand erector who was responsible for the sprinkler erection on 1st December 1936, the date of the recent fire at your place. As our chargehand is at present in Cawnpore, we quote to you his reply to the various questions we asked. 'We asked for a hole to be cut by the press staff on the morning of the day of the fire, so that we could put our six. inch main pipe through the dividing wall of godowns Nos. 1 and 2.
Accordingly this work was being carried out and our erection staff and myself went to lunch at about 11 A.M. After about half an hour One of the mistris came to my house and informed of the fire. I immediately cycled to the press and went to the hole and found it bricked in pucca. It is impossible for me to tell the name of the person who made the hole or who it was who made it pucca. After about a fortnight the hole had to be re-made and the main was put through the wall and the wall again made pucca.
With regard to your expression of surprise regarding our letter to Sinclair Murray of 9th January, the facts as above stated were not then known to the writer of that letter; this fact is, we think, evident from the terms of that letter.
8. This being the whole of the evidence, I pointed out to Mr. Bose that there' appeared to be no case for the plaintiffs to answer. There was nothing in the evidence to show that the work ordered by the chargehand erector had been completed or that the hole had penetrated the wall at the time when the fire broke out, which must have been between 11 o'clock when the chargehand erector went to lunch and 11-25 when the fire call was made. Mr. Banerjee on behalf of the plaintiff submitted that he had no case to answer, and invited me to decide that point before calling upon him to tender evidence. Mr. Bose objected that no such procedure was admissible under the Code of Civil Procedure. Thereupon Mr. Banerjee said that he would call no evidence upon that issue. In order to make doubly sure, I ordered Mr. Meyers to be recalled, and in reply to my question he said that he could not see whether the hole went right through the wall or not. Mr. Bose then asked for leave to recall Mr. Thorn and to call a new witness Mr. Jackson on this point. I refused to grant leave on the ground that Mr. Thom had been present in Court and had heard the discussion, that Mr. Bose had closed his case, and that Mr. Banerjee had already made a submission that he had no case to answer on this issue. Both counsel then addressed the Court. I came to the conclusion that the defendants had failed upon this issue, and so decided. This was sufficient to dispose of the whole case in favour of the plaintiffs, but in view of the possibility of further proceedings, I decided to hear evidence and arguments upon the remaining issues, namely whether there was waiver or acquiescence on the part of the defendants, and whether, assuming that the hole described had in fact penetrated the wall, this was an 'opening' within the meaning of the term contained in the warranty.
9. Upon the issue of waiver, the onus only lay upon the plaintiffs and they called one witness, a partner in the plaintiff firm. He said that orders were given in July 1936 for the installation of the sprinkler system. The defendants' agent, Manik Chand, and their chhota saheb, Mukherjee, came to the plaintiffs' premises about the second week in September 1936, and inspected them prior to effecting any insurance. The witness told them that he had given orders for a sprinkler system to be installed and they said that he had done the right thing and asked for his insurance business. They said that he should install the system as early as possible, because in such cases they allowed a 22 1/2 per cent, rebate. Thereupon insurance was effected for two lacs. About the fourth week in September, Manik Chand, Mukherji and Bonaman of the defendant company came again to the premises. They pressed the witness to get the sprinkler system installed as soon as possible. On 5th October 1936, a fire broke out in godown No. 2. Messrs. Bonaman, Mukherji, Maclure and Mitra, representing the defendant company, came to inspect, and the defendants' claim was settled. Then Mr. Bonaman asked for further insurance business and the plaintiffs took out further policies.
10. The installation of the sprinkler system started and the materials were assembled on the premises in the beginning of November 1936, and Messrs. Bonaman, Mukherji and Manik Chand came and saw them there. They pressed the witness to expedite the installation. They saw that jute was stored in godowns 1, 2 and 3. The work progressed and by 21st November all the pipes had been fitted in godown 3, and more than half the work had been completed in godown 2. On that date, Messrs. Bonaman, Mukherji and Mr. Fritz, the burra saheb of the defendant company, came to the premises and inspected the installation work. They asked the witness to hurry it up saying that if he had installed the system earlier the previous fire would not have caused any loss. They went into the godown and saw the jute which was stored in all of them. On the same day, further insurance was effected with the defendants who asked witness to give them all his business. Mr. Bose called no witness to contradict this evidence, though Messrs. Fritz, Bonaman and Mukherji were present in Court. Having heard and seen the witness, I have no reason to suppose that he was speaking other than the truth. His evidence was uncontradicted and I accept it. As was said by Viscount Cave in P. Samuel & Co. v. Dumas (1924) A.C. 431 at page 442:
A right may be waived either by express words or by conduct inconsistent with the continuance of the right; and even where there is no actual waiver, the person having the right may so conduct himself that it becomes inequitable for him to enforce it.
11. Assuming that the hole penetrating the wall existed at the time of the fire, and assuming that such a hole is an 'opening' within the meaning of the terms of the warranty, I find without hesitation that the defendants not only by implication waived the term and acquiesced in the work being carried out, but requested that it should be carried out as quickly as possible. In any case they so acted that it became inequitable for them to rely upon their right. In my opinion however such a hole, assuming its existence at the material time, was not an 'opening' within the meaning of the terms of the warranty. These terms are meant to refer only to 'openings' permanent in character and of substantial size. They contemplate 'openings' which can be protected with corrugated iron doors or fireproof doors or shutters : see Thompson v. Equity Fire Insurance Co. (1910) A.C. 592 at p. 596, per Lord Macnaghten. The fact that a six to pine inch hole is made temporarily through the partition wall of a godown in order to pass through it a six inch pipe, does not make the godown any the less a compartment or part of a building and therefore a 'godown' within the term of warranty M. Nor does it entitle the defendants to count godowns 1 and 2 as one godown, and thus enable them to add together the weights of the contents of the two godowns. If the defendants intended to stipulate that any opening however small and however temporary in character would constitute a breach of the warranty they could have so expressed it : see Dobson v. Sotheby (1827) Moo & M. 90 at page 1092, per Lord Tenterden C.J.
12. No argument was advanced by either party with regard to condition 8 or 11. As to condition 8, Sub-clause (a) was the only one relied upon, and in my opinion it refers only to changes which are permanent : see Shaw v. Robberds (1937) 6 Ad. & E. 5 at p. 32, per Lord Denman C.J. Moreover the words 'or other circumstances affecting the building' must be read according to the rule ejusdem generis, and refer to changes in the nature of the occupation which affect the building, and therefore have no application to the facts of this case. As to condition 11, the part which I have already quoted was the only part relied upon, and no evidence was given to prove that there was any breach of it on the part of the plaintiffs. As was said by Lee C.J. in Pelly v. Royal Exchange Assurance Co. (1757) 1 Burr 341 at p. 347:
It is certain that in construction of policies, the strictum jus or apex juris is not to he laid hold on, but they are to be construed largely, for the benefit of trade and for the insured.
13. I have applied those principles in the present case with the result that there must be judgment for the plaintiff with costs.