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AMERICAN POLICYHOLDERS' INS. CO. v. MAGENHEIM

September 16, 1944

AMERICAN POLICYHOLDERS' INS. CO.
v.
MAGENHEIM



The opinion of the court was delivered by: MEANEY

This is a proceeding instituted under the Federal Declaratory Judgment Act, 28 U.S.C.A. § 400. The plaintiff seeks a determination as to whether, under a policy of insurance issued by it to the defendant, it is liable, in connection with certain suits now pending in the Essex County Circuit Court, for the defense of such suits or for payment of such judgments as may result therefrom.

Findings of Fact.

 The defendant, Morris Magenheim, is and was during the period of time herein material, the owner of a building located at No. 142 Ferry Street in the City of Newark, New Jersey. In January of 1942, the building, then a three-story structure, was severely damaged by fire, and the defendant determined, as a result, to remove the upper two stories and thus convert the edifice into a one-story building. To that end he engaged the services of one, Max Drill, a building contractor, in a written contract dated July 16, 1942. The actual, physical reconstruction began on or about August 10, 1942. Meanwhile, on August 1, 1942, after the aforementioned contract had been signed but before work thereunder had actually begun, the defendant obtained from the plaintiff a policy of insurance covering the premises, the application for which contained, among other warranties, the following:

 "Neither the premises nor the elevators are in the process of construction or undergoing repairs."

 The application was attached to, and made a part of, the policy of insurance. That policy contained the following exclusionary clause: Condition A. Paragraph 5:

 "This policy does not insure as respects claims for injuries or death growing out of or due to the marking of structural alterations in, or extraordinary repairs of the said premises unless a written permit is granted by the Company specifically describing the work and an additional premium is paid therefor."

 It is admitted by the defendant that no such application was ever made, and that no such additional premiums were ever paid.

 On September 16, 1942, a cornice fell from the front of the building, injuring certain pedestrians who have commenced suit in the Essex County Circuit Court, as aforesaid, against the defendant Magenheim and the building contractor, Drill.

 A hearing was had before this Court on February 10, 1944, at which various witnesses gave testimony. A careful examination and weighing of this testimony has convinced the Court that the cornice in question fell as a result of the extraordinary repairs which the building was then undergoing.

 On the other hand, the modus operandi of the contractor in demolishing the upper two stories of the structure is enlightening. In his own words he "started to take down the structure in the rear and work toward the front." At the time of the accident the third story had been removed in the rear of the building, but was still in place at the front. The roof had been removed from the rear to a point approximately 12 feet from the front. It was from the front of the building that the cornice fell, injuring the pedestrians below.

 Obviously, it would be advantageous to the contractor, Drill, if he could establish that the accident did not result from his work on the building. Yet, when he was asked on direct examination by counsel for defendant whether he would say that the cornice fell as a result of the work that he was doing, he could only say "I don't know."

 The only logical conclusion from all the evidence is that the cornice had been weakened as a result of the structural changes being wrought by the building contractor, and that the ...


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