Donley v. Glens Falls Insurance

Williams, J.: The judgment and order, so far as appealed from, should be affirmed, with costs. The action was upon a standard policy of insurance covering $450 on a barn, and $1,400 on personal property therein. The policy was issued September 8, 1903, and the property was destroyed by fire October 13, 1903, while the policy was in force. The principal defense was that there was a breach of warranty as. to the title-of real property upon which the barn was located which avoided the policy and prevented a recovery. The. facts relating to this issue were not in dispute. Jn his application for the — 70 — insurance the plaintiff stated that he had fee simple title to the real property; that the title or possession thereof was not in litigation or dispute; that there was no mortgage' or other lien on the same; that he was the sole owner of the property and had owned it about one year, and these statements- were expressly provided to be- warranties, and not merely representations as a basis for the insurance requested. As matter of fact the farm was formerly owned by one William P. Bassett. He died in 1895, leaving, a will by -which he devised the farm and other property in equal shares to five brothers and sisters, and the five children of a deceased brother. His indebtedness largely exceeded the Valúe of the personal estate left. In February or March, 1908, the plaintiff obtained a quitclaim deed from one of the’sons of the testator of his one-sixth interest in the farm, subject to all the debts and claims against it. He went into possession of the farm under this deed and remained there until the issue of this policy and the destruction of the barn and personal property therein by fire. November 8,1902, an action was commenced against the devisees' under the Bassett will to charge the farm with a debt against the testator, and a.lis pendens was then filed in the Yates county clerk’s office. Judgment was duly entered in that action November 19,1903, for $454.88 damages and $227 costs, The plaintiff had no other title to the farm, than the deed above referred to. There was, therefore, a breach of the warranty as to the real, property. At the close of . the evidence the trial court held there could be no recovery for loss of the barn, $450, but there could" be a recovery for loss of the personal property therein.He submitted to the jury the question as to, the value thereof, and directed them to render á verdict therefor. The amount of the verdict, including interest, we assume, was $1,428. The defendant insists that the whole policy was avoided by the breach of Warranty and no recovery could be had- thereon for the loss of any of the property insured. ■ This leads us to consider' the law relating to severing the liability under insurance policies, and allowing a recovery for the loss of a portion of the property insured; where there can be no recovery for the other part. ; The following cases decided by the Court of Appeals relate directly to this question. In Wilson v. Herkimer Co. M. I. Co. (6 N. Y. 53) the insurance was úpon a stock of -goods in a building. • — 71 — There was the concealment of a material fact as to the surroundings of the building. The policy provided that such concealment should render the same void and of no effect. It was held that concealment as to the surroundings of the building rendered the' policy void as to the contents of the building insured. The policy seems not to have covered or insured the building. In Chaffee v. Cattaraugus Co. M. I. Co. (18 N. Y. 376) the insurance was npon a building, $600, and the stock of goods therein, $1,400. The policy was the same as in the case last cited, and there was a misrepresentation as to the surroundings of the building in the same respect as in such last-cited case. It was held that there was a warranty and a breach thereof, and that the policy was void. No question seems to have been raised as to the right, nevertheless, to recover for the stock of goods. In Merrill v. Agricultural Ins. Co. (73 N. Y. 452);the insurance was upon farm buildings, $2,300, and various kinds of personal property therein, $3,700. The policy provided that if the property insured should become incumbered by mortgage,- judgment or otherwise, the policy should be void until the written consent of the company was obtained. Two mortgages were given upon the real property after the policy was issued, and no consent of the company was obtained. A part of the buildings and personal property therein was destroyed by fire. The court held the policy void as to the buildings by reason of the subsequent mortgages, but valid as to the personal property. It considered the Wilson and Chaffee cases, above cited, and also an unreported case (Heacock v. Saratoga Mut. F. Ins. Co.), decided in 1856. In that case there-was an insurance upon a factory and machinery therein, valued separately, at $750. There was a condition in the policy which rendered .it void by reason of the conceded fact that the assured had no legal title to the real estate. The Court of Appeals upheld- a recovery for the machinery upon the theory that the contract was severable as to the separate properties covered by the policy. More or less of the reasoning of the court in the Seacock case was referred, to, and then the court at some length considered the question itself and arrived at the same conclusion arrived at in the Seacock case, that the contract was severable,, and, therefore, a- recovery could be had for the machinery, though the policy -was void as to the buildings. ■ — 72 — In Herrman v. Adriatic Fire Ins. Co. (85 N. Y. 162) there was insurance upon several farm buildings and personal property therein, the amount of the insurance upon each of the properties being separately stated. Some of the buildings and the personal property therein were destroyed by fire. The policy provided: “ If the above-mentioned premises shall ■ * * become vacant or unoccu-piedr and so remain for more than thirty days, without notice to and consent of this company in writing, * * * this policy shall be void.” It was held that the contract was severable, and though the policy was void as to some of the buildings it was valid as to the other, buildings and the personal property in all of them, following the Merrill case, above cited. In Schuster v. Dutchess County Ins. Co. (102 N. Y. 260) there was an insurance upon a dwelling house, $800, and personal property therein, $700. The policy provided that -any misrepresentation in the application should render the policy void and of no effect, and that .any misrepresentation or false swearing in the proofs of loss should be a full bar to all remedies upon the policy. The assured represented themselves in the policy and proofs of loss as owners- of the' real property. This was untrue, their interest therein having been sold on foreclosure. No recovery was allowed, for the dwelling house, but there was a recovery had for the personal property therein. ' The,court held the contract severable, following the Hea-. cock and Merrill cases. Also that the recovery for the personal was properly allowed inasmuch as the jury found that the representations, as to .the ownership of the real estate were made in good faith-without intent to defraud under a.mistake as to the fact. In Smith v. Agricultural Ins. Co. (118 N. Y. 518) the insurance was upon a barn, $600, and its contents $500. The policy provided • that “ If the property, either real or personal, or any part thereof, shall be incumbered by mortgage, judgment or otherwise, it must be'so represented to tlie company in the application, otherwise this entire policyand every part thereof \ shall be void. * * * All statements contained therein are warranties on the part of the assured.” . , . . The application represented the property as-incumbered in the' sum of, $1,000. As matter of fact the incumbrance was more .than . $5,000. The court held- that the policy in this case was quite differ — 73 — ent from those in the Merrill, Herrma/n and Sehuster cases, where the contracts were held severable, and that the breach of contract in this case was such as to defeat plaintiffs right to recover for any of the property. This case was decided in the Second Division and only four of the seven judges of the court concurred therein. One judge dissented and two others did not sit. In Pratt v. D. H. M. F. Ins. Co. (130 N. Y. 206) the insurance was upon a wine house, $500, and personal property therein, $1,500. A verdict was directed for defendant, which was affirmed at General Term. There was a reversal in the Court of Appeals. The question most discussed related to the making of the contract of insurance. The form of the policy and the alleged breach thereof do not clearly appear in the report. The court did, however, state that “ the condition in regard to’ incumbrances 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.” (Citing the • Merrill and Sehuster cases, but not referring to the Smith case.) This was also a decision in the Second Division made nearly two years after the Smith case, and all the judges concurred therein. In Knowles v. Am. Ins. Co. of Boston (66 Hun, 220; affd. on opinion at General Term, 142 N. Y. 641) the insurance was by two policies, one in December, 1890, upon a hop house, $700, and the other in March, 1891, upon hops in the hop house, crop of 1889, $1,200, and crop of 1890, $800. The whole property was destroyed by tire soon after the second policy was issued. There' was a chattel mortgage upon the crop of hops of 1889, but none on the hop house or crop of 1890. A recovery was had for the hop house and crop of 1890 which was upheld in the General Term and Court of Appeals. The policy provided: “This entire policy * * shall be void * * * if the subject of the insurance be personal property, and be or become incumbered by a chattel mortgage.” No defense was made as to the hop house. The only question really litigated was the right to recover for the crop of 1890 insured in — 74 — the same policy as the crop of. 1889. Concededly the policy was void as to the-crop of 1889. The court held the contract was sever-able, Under the Merrill, Schuster and Pratt cases-; that the policy should be construed to' mean that the entire policy should be void, tis to the.personal property which was mortgaged, but not as-to such . property as was free from mortgage. , . • The Smith case was distinguished in that the policy , was á peculiar one, providing that the entire policy should be void if the property insured or cmy part of it became incumbered. . . - . These are the only cases in the Court of Appeals which have been called to our attention' or have been discovered by. us relating to the question under consideration. The law seems to be well settled in this State that when a policy of insurance covers separate and distinct classes or species _of property, each of which is separately valued, the contract is severable, and the avoidance of the policy as to one of the subjects of insurance will not affect the validity of the contract as to the others. There is nothing peculiar in the policy in this case, as there seems to have been in the Smith Case (supra), taking it out of this general rule. It is stated that “ this entire policy shall be void if,” etc., but that was the language used in the'policy in the Knowles Case (supra), which was held to be within the rule as to severability of the contract. We have not regarded it as important to consider the cas.es decided by the courts of other States or the' Supreme Court of this State, as the ■ law seems to he well settled by the Court of Appeals. Indeed, counsel for the appellant, in his brief, does not dispute the law generally as to severability as applied to insurance contracts, but claims that the rule does not apply to cases of warranty like this. He claims that, 'in such cases the warranty of a fact as to. one subject of the insurance applies equally to all other subjects and that it does not matter whether it is material to such other subjects or not. We do not find that any such distinction is made in the cases we have examined.. The Smith case was clearly one of warranty, .but the decision was not placed upon the ground that- the severability of insurance contracts was not applicable to cases of warranty.. It is not so clear whether the other cases cited were cases of warranty or representations merely. . In some of -them the policies: were rendered invalid by reason of misstatement of facts" existing at the — 75 — time of the issue of -the policies, and in others by reason of things occurring after the issue of the policies and before the fires. This distinction is not referred to in any of the cases so far as we are able to discover. While there is reason in the claims made by counsel, we think, in this case, it is better to adhere to what seems to be the well-settled law of this State, and allow this new distinction to be made by the Court of Appeals if it is to be made at all. We do not think reversible error was committed by the trial court in excluding evidence as to fires upon the farm of the wife of the plaintiff and his declaration with reference thereto. The views herein expressed lead us to affirm the judgment and order appealed from, with costs. All concurred, except McLennan, P. J., who dissented in an opinion in which Stover, J., co'hcurred.