King v. Tioga County Patrons Fire Relief Ass'n

Putnam, J.: The defendant, by its policy of insurance No. 1,436, insured certain real and personal property of the plaintiff for the term of five years from the 5th day of April, 1896. In the application for insurance the following questions were proposed to the insured and answers given: “ Value of farm on which buildings are situated, [59] 4000. In whom is the title vested ? D. 0. King. Is it encumbered? No." In the contract for insurance the application was referred to as “ forming a part of this policy.” In fact, at the time the policy was issued, there was a mortgage on the buildings insured for the sum of $600. We think it well settled in this State that where, by the terms of a contract of insurance, the application is made a part of the policy, answers made to specific questions in the application are deemed warranties, and, if untrue, prevent a recovery on the policy. (Egan v. The Mutual Ins. Co. of Albany, 5 Den. 326; Shoemaker v. Glens Falls Ins. Co., 60 Barb. 84; Pierce v. Empire Ins. Co., 62 id. 636; Ripley v. Ætna Ins. Co., 30 N. Y. 136; First N. Bank of Ballston Spa v. Ins. Co. of N. A., 50 id. 45; Clemans v. S. A. R. S. of G. F., 131 id. 485; Dwight v. Germania Life Ins. Co., 103 id. 341; Armour v. Transatlantic Fire Ins. Co., 90 id. 450.) In such a case the statements contained in the application are made material by the contract. (Shoemaker v. Glens Falls Ins. Co.; Pierce v. Empire Ins. Co., supra.) In the opinion in Graham v. Fireman's Ins. Co. (87 N. Y. 69,77) it is said: “ And in a case like this, when a specific inquiry is made, the question of the materiality of the statement in respect to the risk is settled by the parties as a matter of contract. A broad distinction exists whether the statement is made in answer to inquiries or otherwise. In the one case the answers are made material by the act of the assured, whether they are in fact or not, while in the other case, even though the statements are made a part of the policy, they are not efficacious as warranties, although material in fact. (Wood on Fire Ins. 422, § 214.) This is especially the case when the inquiry calls upon- the party to communicate the nature of his interest in the property, and he is bound to answer accurately and at his peril.” The answers made by.the plaintiff in the application as to incumbrances on the property insured, being a warranty and material to the risk by the contract of the parties, a recovery in favor of the plaintiff cannot he sustained, notwithstanding the provisions of section 20 of the by-laws of the defendant that, “ in case there shall be any misrepresentation or omission of circumstances required by the association increasing the hazard of the property therein described, it shall render void any policy issued on such application.” This [60] provision of the defendant’s by-laws must be deemed to refer to a misrepresentation of the insured not constituting a warranty. In Shoemaker v. Glens Falls Ins. Co. (supra), where the facts considered as to the warranty, form of policy and application were similar to those in this case, the conditions required that applications for insurance should be in writing, and that any misrepresentations, concealment, suppression or omission of facts or circumstances known to the insured, increasing the haza/rd of the property, whether inquiry should be made in respect to it in the application or not, should avoid the policy. It was held, an untrue answer having been given to a specific question in the application, that a recovery on the policy could not be sustained. (See, also, Pierce v. Empire Ins. Co.; First Nat. Bank of Ballston Spa v. Ins. Co. of N. A., supra.) We think the authorities cited in the memorandum of the learned trial judge are not parallel. In insurance contracts there are two kinds of warranties. (11 Am. & Eng. Ency. of Law [1st ed.], 293.) “Warranties are affirmative or promissory. An affirmative warranty is one which affirms the existence of certain facts at the time of the insurance. A promissory warranty is one which requires the performance or omission of certain things, or the existence of certain facts after the taking out of the insurance.” A breach of an affirmative warranty avoids the policy. But in case of a promissory warranty, sometimes a question of fact may arise as to whether there has been a breach thereof. Such was the case of Armstrong v. Germania Fire Ins. Co., referred to by the trial judge, the warranty in that case being that any increase of hazard by change of use or occupancy, vacancy or non-occupancy, unless especially agreed to in writing upon this policy, would avoid the contract. In Cornish v. Farm Buildings Fire Ins. Co. (74 N. Y. 295) the warranty was similar. In both of those cases it was promissory, and related to a future increase of hazard, and a question of fact arose as to whether there had in fact been such an increase. We have examined the cases cited by the learned counsel for the respondent, and are of opinion that they do not conflict with the doctrine established in the authorities to which we have referred. With some hesitation we reach the conclusion that a recovery as to the personal property described in the policy on which the plaintiff sought to recover, can be had. (Kiernan v. Agricultural Ins. [61] Co., 81 Hun, 373; Merrill v. Agricultural Ins. Co., 10 id. 428; 73 N. Y. 452; Knowles v. American Ins. Co. of Boston, 66 Hun, 220; 142 N. Y. 641.) The learned counsel for the appellant urges that, by the provisions of the statute under which the defendant was incorporated (Chap. 362, Laws of 1880) and its by-laws, the company was only authorized to insure such personal property in connection with the building in which the same was contained; hence, that the contract could not be deemed severable, it appearing that the defendant would not have assumed the risk of the personal property separate from the building in which it was situated. But in Pratt v. D. H. M. F. Ins. Co. (130 N. Y. 206), where the defendant was also organized under the provisions of chapter 362, Laws of 1880, it appeared that there was a mortgage upon the building insured. In his opinion Vann, J., said : “ Moreover, the condition in regard to encumbrances affected nothing except the real estate, which was but part of the subject of insurance, and a breach thereof did not affect the remainder of the contract, as it related only to the personal property which was not mortgaged. “ Whatever the rule may be elsewhere, it is settled in this State that where insurance is made on different kinds of property, each separately valued, the contract is severable, even if but one premium is paid, and the amount insured is the sum total of the valuations.” The judgment should, therefore, be reversed and a new trial granted, unless the plaintiff stipulates to reduce the recovery to the sum of $634, and if he so stipulates the judgment as so modified should be affirmed, without costs of this appeal to either party. All concurred, except Merwin and Landon, JJ"., dissenting.