Adema v. Lafayette Fire Insurance

36 La. Ann. 660 | La. | 1884

Lead Opinion

The opinion of the Court was delivered by

Todd, J.

This is an action on a policy of insurance issued by the defendant company, of which the plaintiff is the transferee, for $1500, the property insured having been destroyed by fire.

The plaintiff appeals from a judgment against him. The policy was taken out by one Jean Poméz, who owned only one-eighth of the building insured, the remaining seven-eighths belonging to his minor child. The policy issued in favor of Poméz alone.

Among other grounds of defense against the action urged is that the insured concealed and failed to disclose the true ownership of the property, in violation of one of the conditions of the policy.

Section 4 of the policy provides:

“ Sec. 4. If the interest of the assured in the property be any other than the entire, unconditional and sole ownership of the property, for the use and benefit of the assured, it must be so represented to the company and so expressed in the written part of this policy, otherwise the policy shall be void.”

Sec. 14. Whenever the insured does not enjoy the full ownership of the property insured, he is required to disclose to the company the nature of his insurable interest and to cause the same to be inserted in the policy, otherwise the insurance shall be null and void.”

These conditions were part of the contract between the assured and the company.

As expressed by an eminent writer on the subject of insurance: policy, although, not referred to therein. So where the policy is in terms made subject to the terms and conditions of the application for insurance, they are to he construed together as forming the contract; so where the policy is in terms founded on the application.” Wood, p. 273;

“ When the policy is printed on one half, and the conditions on the other half, of the sheet, the conditions are to be treated as a part of the

And again: “ Where the conditions are written or printed on the face of the policy, the assured by accepting it becomes bound thereby, and is estopped from denying that he assented thereto.” Wood,'9; 2 La. 399.

The concealment or failure to disclose his interest in the property cannot be regarded as an immaterial circumstance and of no legal significance in its bearing on the contract, for the reason that the guarantee for the preservation of the property is dependent chiefly upon the extent of the assured’s interest in it. *

On this point, we quote the following language from a decision of the Supreme Court of the United States, rendered by C. J. Marshall:

“ Generally speaking, insurances against fire are made in the confidence that the assured will use all the precautions required to avoid the calamity insured against, which would be suggested by his interest. The extent of this interest must always influence the underwriter in taking or rejecting the risks and estimating the premium. So far as it may influence him in this respect, it ought to be communicated to liim. Underwriters do not rely so much upon the principles as on the interest of the assured, and it would seem to be always material that they should know how far this interest is engaged in guarding the property from loss.” Insurance Company vs. Laurence, 2 Peter, 48; see, also: 10 Cushing (Mass.), 446; 11 Gray (Mass.), 163; 42 Barb. 457; 11 Ohio S. 477; 5 Call (Va.), 517.

As stated, though the minor child of Poméz owned seven-eighths of the property, the application of Poméz for the insurance is entirely silent as to that fact, as well as the policy itself. Under the authorities cited above, this circumstance alone would avoid the policy.

It is argued by the plaintiffs’ counsel, with great ingenuity, that under the system of laws prevailing in this State, no such result would follow; that the insurance effected on the application of Poméz and in his iavor would enure to the benefit of his minor child, it being claimed that Poméz was the natural tutor of the child at the time the application was made and when the policy issued.

It has been shown that by the express terms and conditions of the policy that the disclosure of the child’s title to the property was imperatively required to Mud the company, that it was ail essential part of the contract, and such terms and conditions do not, in our opinion, contravene any article of our Code or any law of the State; and, therefore, full effect must be given them.

This view of the question renders it unnecessary to consider the other issues presented by the pleadings and discussed by the counsel.

It is, therefore, ordered, adjudged and decreed that the judgment of the lower court be affirmed, with costs.

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Rehearing

Oh Rehearing.

Manning, J.

There can be no doubt that Pómez could have insured the property of his minor child, of whom he was the natural tutor. Our law compels him to insure wli#n the property is a house in New Orleans, as was this, and imposes upon him responsibility for failing to insure. Rev. Ci. Code, art. 355. If he had taken the policy, one-eighth for himself and seven-eighths as tutor, no valid objection could have been made.

It has been strenuously urged that the concealment of his child’s interest was not material, and a number of decisions and many texts from the books have been cited to shew, if the true ownership would not have enhanced the premium, then the concealment or misrepresentation is not fatal to the policy. Indeed in the case cited by us from 2 Peters when it went up again, it was said; — whenever the nature of the interest would or might have a real influence upon the underwriter, either not to insure at all or not to undertake the risk except at a higher rate, it must be deemed material and the concealment or misrepresentation of it will avoid the policy. And the decisive test of the materiality of the concealment or misrepresentation was there said to be to ascertain whether if the true ownership had been known, it would have enhanced the premium. If it would, then the concealment or misrepresentation would be fatal to the policy. Columbia Ins. Co. v. Lawrence, 10 Pet. 516.

The converse of this ought to be equally true, viz that when knowledge of the true ownership of the property would not have enhanced the premium or have deterred the underwriter from taking the risk at all, then the concealment or misrepresentation is not fatal to the policy.

But this case is not governed by the law concerning representations of interest. There was an express stipulation in this policy that whenever the insured is not full owner of the property insured he must disclose the nature of his insurable interest and have it inserted in the policy, and if he does not, the insurance shall be null and void. This was a condition of the contract to which he assented, and thereby warranted that he was full owner. Now a representation is not like a warranty. A representation must be shewn to be false in a material point or it will not make void the policy, while a warranty must be strictly complied with. Marshall on Insurance, 335. The rule seems to be inexorable that a failure to set forth truly the title will avoid the policy, whether the failure resulted from design or mistake, whenever the policy requires the real title to be stated. Wood on Ins. §§ 202, 218. Such requirement is a vital part of the contract, and a non-compliance with it forfeits all rights under the contract. Palmer v. Fact. & Trad. Ins. Co. 33 Ann. 1336 and authorities there cited on p. 1340. But unless the true ownership or interest in the property is required by the conditions of the policy to be specifically and particularly and accurately set forth, it will be in general sufficient if the insured has an insurable interest under any status of ownership or possession, in cases where no inquiries are made at the time the application is presented or the policy executed. Ins. Co. v. Haven, 5 Otto, 242; May Ins. § 284; Wood on Ins. 398.

So that in the absence of any condition in the contract requiring the insured to state his interest, it will be sufficient if he have an insurable interest, but otherwise if the policy requires the real title to be stated. Wood on Ins. § 202. And this is not an infringement of the doctrine broadly announced that a person who has the care, custody, or possession of property for another may insure it in his own name although he has no pecuniary interest therein, and the insurance will enure to the benefit of the owner. Ibid. §§ 278-9, 284. For that has application and relevance to cases wherein rules are formulated to define what is an insurable interest. The fact that one has possession, exclusive as to all but the owner, and therefore a right to protect the property from loss, gives him the right to insure, and so Pómez who had this possession and the right consequent thereon, with the duty superadded of insuring, could unquestionably insure, but in making his contract he ignorantly and unwittingly assented to and came under the dominion of a condition which struck his insurance with absolute nullity because he did not state and set forth the real title to the property.

It is a hard case, but courts must enforce contracts, and those who make them should look to the conditions of them before they bind themselves.

Our former decree must remain undisturbed.