Insurance No. 63 K. S. YOUNG, plaintiff-appellee, vs. THE MIDLAND TEXTILE INSURANCE COMPANY, defendant-appellant. G.R. No.

L-9370 FACTS: 1. K.S. Young (Young) owned a candy and fruit store in Manila and occupied a building as a residence and bodega. Young entered into a fire insurance policy for the amount of P3,000 with The Midland Textile Insurance Company (Midland) stipulated as one of the conditions of the contract warranty B wherein no hazardous goods be stored or kept for sale in the building. 2. Young placed three boxes of fireworks in the building on Feb 4 or 5, 1913. Said fireworks were intended to be used for Chinese New Year but since such were prohibited by the City of Manila, Young stored these in the bodega. 3. On March 18, 1913, the said residence and bodega were partially destroyed by fire. The area where the fireworks were, was not destroyed by the fire; that these did not contribute to the fire in any way. Both parties agreed that the fireworks are considered as hazardous goods. ISSUE: Whether or not the placing of said fireworks in the building insured, under the conditions stated above, these being hazardous goods is a violation of the terms of the contract of the terms of the insurance, specially warranty B. HELD: Midland is relieved from any responsibility under the said policy. 1. Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. 2. The deposit of the hazardous goods in the building insured was a violation of the terms of the contract, particularly warranty B. Although the hazardous goods did not contribute to the loss, the insurer, at his election, was relieved from liability. Said deposit created a new risk, not included in the terms of the contract. The insurer had neither been paid, nor had he entered into a contract, to cover the insured risk. March 31, 1915