16 F. 454 | U.S. Circuit Court for the District of Rhode Island | 1883
On July 9, 1879, the defendant issued a policy of insurance to the plaintiff, running for five years. Afterwards, on Novem-
The main question to be determined upon this motion is whether the defendant company can hold its policy to be invalid by reason of the subsequent policy taken out in the Springfield Company. What constitutes other insurance, within the meaning of this condition in insurance policies, is a question upon which courts have widely differed. The doctrine laid down by the highest tribunals of Massachusetts and some other states is that the subsequent insurance being invalid, at the time of loss, by reason of the breach of condition therein, the prior insurance is good, even though the second company waive the forfeiture and pay its policy in full. Thomas v. Builders’ Ins. Co, 119 Mass. 121; Jackson v. Mass. Fire Ins. Co. 23 Pick. 418; Clark v. New England Fire Ins. Co. 6 Cush. 342; Hardy v. Union Ins. Co. 4 Allen, 217; Lindley v. Union Ins. Co. 65 Me. 368; Philbrook v. New England Fire Ins. Co. 37 Me. 137; Gee v. Cheshire Co. Ins. Co. 55 N. H. 65; Gale v. Ins. Co. 41 N. H. 170; Schenck v. Mercer Co. Ins. Co. 4 Zab. 447; Jersey City Ins. Co. v. Nichol, Am. Law Reg. Sept. 1882, p. 620; Stacey v. Franklin Ins. Co. 2 Watts & S. 506; Sutherland v. Old Dominion Ins. Co. 8 Ins. Law J. 181, (Va. Ct. of Appeals;) Ins. Co. v. Holt, 35 Ohio St. 189; Knight v. Eureka Ins. Co. 26 Ohio St. 664; Rising Sun Ins. Co. v. Slaughter, 20 Ind. 520; Allison v. Phoenix Ins. Co. 3 Dill. 480.
On the contrary it is held, elsewhere, that a subsequent policy,
There is still another view taken by the supreme court of Iowa, in the case of Hubbard v. Hartford Fire Ins. Co. 33 Iowa, 325, to the effect that the question of recovery under the prior policy turns upon whether the subsequent policy has been in fact avoided. If the subsequent policy is recognized by the company issuing it as a valid policy, any breach' of condition being waived, this makes it a valid insurance, and constitutes it a good defense to an action upon the prior policy; but if the subsequent policy has been avoided by the copapany, there is no other insurance, so as to defeat a recovery on the prior policy. Although at first this reasoning may strike the mind as a fair compromise between the other conflicting positions taken upon this question, it is a subject of such grave objections that it cannot be considered tenable.
If the condition in the first policy was violated, it was done at the time the second contract of insurance was entered into, and the subsequent affirmance or disaffirmance of the second contract, should not affect the validity of the first. The validity of the first contract can hardly turn upon what a stranger to it may do" with reference to another contract, even after liability upon the first contract has become absolute by a destruction of the property. Funke v. Minnesota Farmers’ Ins. Ass’n, supra.
At the trial of the cause, it seemed as if the weight of authority was in favor of holding the prior policy good upon the ground that the subsequent policy was invalid, and this position had been held by Judge Dillon in Allison v. Phoenix Ins. Co. 3 Dill. 480, not to be in conflict with the real point in judgment in Carpenter v. Providence Washington Ins. Co. 16 Pet. 495; but upon further consideration of
This construction is open to the objection that the insured may collect both policies. It is also subject to the criticism that, in deciding upon the validity of one contract, the court, in the same action, must go outside of it, and determine, first, the validity of one or more independent contracts, involving, perhaps, an inquiry into complicated questions of fact respecting those contracts. Royal Ins. Co. v. McCrea, 8 Lea, 588. But further than this the principle upon which this construction is founded does not appear to be satisfactory. The reasoning in these cases is based largely on the assumption that the second policy is void by reason of the breach of condition therein, and that the issuing of such a void policy is no violation of the condition as to other insurance in the first policy. ■ But is not this assumption too broad ? Is it legally true that the second policy is a void contract? Conditions of this character in insurance policies are inserted for the benefit of the insurer, and their violation does not render the policy void, but only voidable at the election of the insurer. It is still a binding contract upon the insured. Ho can take no advantage of this breach of condition, and the insurer could still enforce the contract against him if anything was to be gained by so doing. “Although the policy by its terms provides that it shall be void on a breach of any of its conditions, its legal effect is simply to render it voidable at the election of the insurer, and that the insurer can waive the forfeiture and continue the policy in force; or, to state the proposition more broadly, in all contracts where the stipulations, avoiding the same are inserted for the sole benefit of one of the parties, the word ‘void’ is to be construed as though the contract read ‘voidable.’ This view seems to be sound in principle, just in practice, and is certainly well sustained by authority.” Masonic Mut. Benefit Society v. Beck, (Sup. Ct. of Indiana;) 11 Ins. Law J. Oct. 1882, p. 755; Armstrong v. Turquand, 9 Irish C. L. 32; S. C. 3 Life & Acc. R. 350.
The party in default cannot defeat the contract. Viele v. Germania Ins. Co. 26 Iowa, 1. The policy is merely voidable, and may be avoided by the underwriters upon due proof of facts, but until so avoided it must be treated for all practical purposes as a subsisting policy. Carpenter v. Providence Washington Ins. Co. 16 Pet. 495. See, also, Baer v. Phoenix Ins. Co. 4 Bush, 242, and authorities before cited.
As the second policy is not a void contract, but only voidable at the election of the company, as it is a contract entered into by the insured, and which he cannot dispute, and as the reason, if any, why he cannot legally enforce it arises from his own neglect or misrepresentation, may it not be fairly claimed that this is other insurance within the meaning and intent of the condition in the first policy? We think the rule, supported as it is by authorities of great weight, which holds the taking out of a voidable policy a violation of the provisions respecting other insurance in the first policy, the best one, and subject to less serious objections than any other.
What was the position of this plaintiff at the time of the loss ? He had one policy of insurance in the defendant company, and he had another policy of later date in the Springfield Company. This second policy was issued in good faith by the Springfield Company and the premium paid. It was a policy, the validity of which the plaintiff could not deny, and upon which he obtained $200 by way of compromise. It seems to us that upon any fair rule of interpretation this must be considered a breach of the condition as to other insurance in the defendant’s policy.
We cannot bring our minds to assent to the proposition that a subsequent contract of insurance, binding upon the assured, and which the company may pay in full or in part, is no violation of the terms of the first policy.
We believe the general rule, that conditions in insurance policies inserted for the benefit of the company should be strictly construed against it, to be a sound one, and we do not think our conclusion in this case inconsistent with this doctrine; at the same time we should bear in mind that this condition is a reasonable one, in that it is of great consequence to the insurer as a protection against fraud to know whether other insurance exists; and it is said, therefore, that this provision is not regarded with the jealousy due to other provisions which
New trial granted. _
The question involved in the particular case is of considerable importance. It has been before the courts in a great number of cases, and appears to bo as unsettled a question now, as when it was raised for the first time. The opinion announced in the particular case cites the cases on both sides, and it is evident that the question raised is about as uncertain upon the authorities as any question in the law of insurance.
Yauidity of the Prior Policy. Of course no question can seriously be raised as to the invalidity of the prior policy, containing a condition against subsequent insurance such as is found in the policy in the particular case, when it is evident that the subsequent policy is a legal one. A subsequent valid policy unquestionably avoids a prior one conditioned against other insurance.
EFFECT OF PAYMENT UNDER THE SUBSEQUENT POLICY. It has been held .that the fact that the subsequent insurers may have regarded their policies as valid, and may have paid a part of the whole of the amount insured, does not constitute matter of defense to an action on a prior policy conditioned to be void in ease of other insurance; the reason being that the rights of the parties, under the first policy, must be considered as fixed at the time the loss occurred, and cannot be affected by what may be subsequently done between the insured and third parties. The material question in such eases is whether the second policy was a valid one. If it was not in fact a valid one at the time the loss occurred, then, in accordance with the decisions which hold the first policy not avoided by the taking out of a subsequent invalid policy, the first policy was good at the time of the loss, and should not be invalidated by ■any subsequent transaction to which the first insurer was not a party.
Wiiat Amounts to Double Insurance. Double insurance occurs only when the second insurance is upon precisely the same property as that covered by the first insurance. Consequently it has been held that a policy on a store was not avoided by a subsequent policy on the goods in the store.
Two policies on the same property by different persons, each for the benefit of different persons, does not constitute double insurance.
In Burton v. Gore District Mutual Fire Ins. Co.
If the mortgagees insure their own special interest as mortgagees, but the mortgagors agreed to pay the expense of obtaining the insurance, it has been held to be an insurance effected by the mortgagors within the meaning of the clause against double insurance,
Without pursuing this branch of the subject further, it is enough to say that the clause against double insurance does not mean that the same property shall, not be insured twice, but that it shall not be insured twice by the same-person or in the same interest.
Effect of Double INSURANCE ON Part of the Property. Where the words of the condition are that in case of double insurance on the premises or property insured, without notice, etc., the policy granted thereon shall be void, the question has been raised whether, to enable this condition to operate, the double insurance must be not merely on a part of the property insured, but on the property insured; that is, on the whole property. It has been held, however, that the whole policy is avoided by a double insurance on a part of the property. Thus, there was insurance on a building, on the
Waiver of the CONDITION as to Double InsubaNoe. The condition in a policy of insurance that it shall be void in case the insured “ shall have or shall hereafter make any other insurance on the property ” without the consent of the company, contemplates that the consent to future insurance shall be given in advance. And it has been held that the consent, in absence of evidence dispensing with such signature, should be signed by the person whose signature is declared necessary to the validity of the policy and its extensions ; that an unsigned consent to additional insurance could only be upheld on proof of authority to bind the insurers in that way, or by action amounting to ratification or estoppel,
It seems clear that the tendency of the modern eases is to the effect that the consent to double insurance need not be indorsed on the policy as literally required by the. stipulation
In Canada, where it has been provided by statute that the policy shall bo void in caso of double insurance, it is held that the clause against double insurance cannot be waived “ by consent of the parties, notice, consent, or verbal or tacit acquiescenceand that the waiver cannot be relied on any more in a court of equity than of law. The principle is that what an act of parliament expressly requires cannot be waived.
HeNry Wade PÚ ogees.
Burt v. People’s Mutual Firo Ins. Co. 2 Gray, 397; Illinois Fire Ins. Co. v. Fix, 53 Ill. 151; Shurtleff v. Phoenix Ins. Co. 57 Me. 137.
Jersey City Ins. Co. v. Nichol, 35 N. J. Kq. 291.
Lackey v. Georgia Home Ins. Co. 42 Ga. 456.
Fireman’s Ins. Co. v. Holt, 35 Ohio St. 180; Thomas v. Builders’ Mutual Fire Ins. Co. 119 Mass. 121; Hardy v. Union Mutual Fire Ins. Co. 4 Allen, (Mass.) 217; Philbrook v. New England Ins. Co. 37 Me. 137. And see Bardwell v. Conway Ins. Co. 118 Mass. 465.
Jones v. Maine Mutual Fire Ins. Co. 18 Me. 155.
Howard Ins. Co. v. Scribner, 5 Hill, 298.
Associated Fireman’s Ins. Co. v. Assum, 5 Md. 165.
Madison Ins. Co. v. Fellowes, 1 Disney, (Ohio,) 217.
Roots v. Cincinnati Ins. Co. 1 Disney, (Ohio,) 138,
Sloat v. Royal Ins. Co, 49 Pa. St. 14.
Wells v. Philadelphia Ins. Co. 9 Serg. & R. (Pa.) 103.
See Franklin Savings Institution v. Central Mutual File Ins. Co. 119 Mass. 240; Fogg v. Middlesex Mutual Ins. Co. 10 Cush. 337; Hale v. Mechanics’ Mutual Ins. Co. 6 Gray, 109; Loring v. Manufacturers' Ins. Co. 8 Gray, 28; Sias v. Roger William Ins Co. 8 Fed. Rep. 187; Flanders, Fire Ins. 441.
12Grant, OR. (U. C.) 156.
Holbrook v. American Ins. Co. 1 Curtis, C. C. 200.
g) See Gilchrist v. Gore District Mut. Ins. Co. 34 U. C. (Q. B.) 15; Park v. Phoenix Ins. Co. 19 U. C. (Q. B.) 110, 121; Franklin, etc., Ins. Co. v. Drake, 2 B. Mon. 47; Burbank v. Rock Ins. Co. 4 Foster, (N. H.) 550; Woodbury Savings Bank v. Charter Oak Ins. Co. 31 Conn. 518; Ætna Ins. Co. v. Tyler, 16 Wend. 385; Rowley v. Empire Fire Ins. Co. 36 N. Y. 550; Fox v. Phoenix Ins. Co. 52 Me. 333; Marigny v. Home Mut. Ins. Co. 13 La. Ann. 338; Norwich Fire Ins. Co. v. Boomer, 52 Ill. 442; Tuck v. Insurance Co. 56 N. H. 326; Pitney v. Gen. Falls Ins. Co. 61 Barb. 335; Wells v. Phil. Ins. Co. 9 S. & R. (Pa.) 103.
Ramsay Woolen Cloth, etc., Co. v. Mutual Fire Ins. Co. 11 Q B. (U. C.) 516.
?) 9 Mete 205.
O?) 30 La. Ann. 1386
(*) 5 Md. 165.
Security Ins. Co. v. Fay, 22 Mich. 467, 471,
Westchester Fire Ins. Co. v. Earle, 33 Mich. 144.
8 Lea, 513,
s) 89 Ill. 314.
2L. Can. Jur.181.
Potter v. Ontario, etc., Mut. Ins. Co. 5 Hill, 147.
See Northrup v. Miss. Valley Ins. Co. 47 Mo. 435; Franklin v. Atlantic Fire Ins. Co. 42 Mo. 456; Horwitz v. Equitable Mut. Ins. Co. 40 Mo. 557; Peck v. New London, etc., Mut. Ins. Co. 22 Conn. 575; Walsh v. Ætna Life Ins. Co. 30 Iowa, 133; Viele v. German Ins. Co. 26 Iowa, 55; National Fire Ins. Co. v. Crane, 16 Md. 260 Hutton v. Beacon Ins. Co. 16 U. C. (Q. B.) 316.
See Geib v. International Ins. Co. 1 Dill. 443; Whitwell v.Putnam Fire Ins. Co. 6 Lans. 136; McEwen v. Montgomery County Mutual Ins. Co. 5 Hill, 101; Sexton v. Montgomery Mutual Ins. Co. 9 Barb. 191; Kenton Ins. Co. v. Shen, 6 Bush, 174; Van Vories v. Life Ins. Co. 8 Bush, 133; Planters’ Mut. Ins. Co. v. Lyons, 38 Texas, 253; Carrugi v. Atlantic Fire Ins. Co. 40 Ga. 135; Hadley v. N. H. Ins. Co. 55 N. H. 110; National Ins. Co. v. Crane, 16 Md. 260; Schenck v. Mercer Co. Mut. Ins. Co. 24 N. J.447; Cobb v. Ins. Co. 11 Kan. 83.
Redstrake v. Cumberland Mut. Fire Ins. Co. 44 N. J Law, 294.
See Wood, Ins. 838; Potter v. Ontario Ins. Co. 5 Hill. (N. Y ) 147; Planters' Mut Ins. Co. v. Lyon, 38 Tex. 203; Hadley v. N. H. Ins. Co. 55 N. H. 110; Horwitz v. Equitable Ins. Co. 40 Mo. 557.
Merritt v. Niagara Mutual Ins. Co. 18 U. C. 529.