YOUNG vs.
MIDLAND TEXTILE INSURANCE COMPANY o Century Dictionary defines the word “store” to be a deposit in a store or
J. Johnson | March 31, 1915
TOPIC: WARRANTIES
FACTS
(1) Young has a candy and fruit store in Escolta, Manila, and occupied a building at
321 Calle Claveria, as a residence and bodega.
(2) On May 29, 1912, MIDLAND, in consideration of the payment of a premium of
60, entered into a contract of insurance with the Young by the terms of which
MIDLAND, upon certain conditions, promised to pay to the Young the sum of
3,000, in case said residence and bodega and contents should be destroyed by
fire.
(3) One of the conditions is “Warranty B”. "Waranty B. — It is hereby declared and
agreed that during the pendency of this policy no hazardous goods stored or kept
for sale, and no hazardous trade or process be carried on, in the building to
which this insurance applies, or in any building connected therewith."
(4) In February 1913, Young placed in said residence and bodega 3 large boxes
filled with fireworks.
(5) In March 1913, said residence and bodega and the contents thereof were
partially destroyed by fire.
(6) Said fireworks had been given to Young by the former owner of the Luneta
Candy Store; that Young intended to use the same in the celebration of the
Chinese new year; that the authorities of the city of Manila had prohibited the use
of fireworks on said occasion, and that Young then placed the same in said
bodega, where they remained from Feb. to Mar. 1913.
(7) Both of the parties agree that said fireworks come within the phrase "hazardous
goods," mentioned in said "Warranty B" of the policy.
(8) That said fireworks were found in a part of the building not destroyed by the fire;
that they in no way contributed to the fire, or to the loss occasioned thereby.
ISSUE: WON the placing of said fireworks in the building insured is a violation of
“Warranty B?”
RATIO
 The SC resolves the meaning of the word “stored” as used in “Warranty B.”
o The meaning of the word “stored” must, in some degree, depend upon the
intention of the parties.
warehouse for preservation or safe keeping – This definition, however, does
not include a deposit in a store in small quantities for “daily use.”
 "Daily use" precludes the idea of a deposit for preservation or safe
keeping, as well as a deposit for future consumption, or safe keeping.
o Here, no claim is made that the fireworks were for daily use. It is admitted
that they were placed in the bodega for future use.
o As such, it seems clear that the fireworks were “stored” in the bodega.
 Supposed that MIDLAND inspected the bodega and saw the fireworks even
before a fire; would it not be justified, then and there, to declare the policy void for
such violation? If yes, then may MIDLAND also repudiate its liability after the fire?
Is this not a breach of contract?
 Contracts of insurance are contracts of indemnity upon the conditions specified in
the policy. The parties have a right to impose such reasonable conditions at the
time of the making of the contract.
 The rate of premium is measured by the nature of the risk assumed. The
insurance company, for a comparatively small consideration, undertakes to
guarantee the insured against loss or damage, upon the terms agreed upon and
upon no other. And when called to pay, the insurer may justly insist in the
fulfillment of these terms.
 The terms of the policy constitute the measure of the insurer's liability, and in
order to recover, the insured must show that he followed the terms; and if it
appears that the contract has been terminated by a violation, on the part of the
insured, of its conditions, then there can be no right of recovery. The compliance
of the insured with the terms of the contract is a condition precedent to the
right of recovery.
 While it is true, as a general rule, that contracts of insurance are construed most
favorably to the insured, yet contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the terms which the parties
themselves have used. If such terms are clear and unambiguous they must be
taken and understood in their plain, ordinary and popular sense.
 The fact that the storing of the fireworks was not the cause of the injury is beside
the question. The violation of the terms of the contract terminated the contractual
relations.
DISPOSITIVE MIDLAND relieved form any responsibility