Egan v. Mutual Insurance

By the Court, Beardsley, Ch. J. Immediately after a brief description of the property insured we find the following clause in this policy: “ Reference being had to the application of the said Kiran Egan for a more particidar description and forming a part of this policy.” It was argued by the counsel for the defendant in error, that this reference to the application was not made with a view to engraft all its stipulations into the contract of insurance, but for the single purpose of a more “ particular description” of the property insured. I cannot assent to this as a correct interpretation of the clause. It was conceded on the argument that if the clause of reference had contained but a single additional word, so that it would have read “for a more particular description and as forming a part of this policy/’ the entire application would have been made a part of the contract; and such, upon adjudged cases, would, certainly, have been the result. (Burritt v. The Sar. County Mu. Ins. Co., 5 Hill, 188; Trench v. The Chenango County Mu. Ins. Co., 7 id. 122; Jennings v. The Same, 2 Denio, 75.) I am unable, however, to see any solid ground for a distinction, in principle and effect, between these different [328] forms of reference. The word as is, perhaps, usually inserted in these clauses, and it may be conceded that it gives point to the reference, so that no doubt can in such case remain, that the entire application was intended to be made a part of, the contract between the parties. The degree of certainty in such a reference exceeds that in the present case. Still, I cannot say that the latter, although less direct, should receive a more restricted interpretation. It seems to me that it affirms with all requisite certainty, that the application forms a part of the policy, and in this sense I think it should be understood and enforced. It is expressly declared in the application, that if an insurance is effected pursuant thereto, and the insured “ shall suffer any judgment or decree, operating as a lien on said property or any part thereof, to pass against him, the policy shall be void, unless he shall make a representation thereof in writing to the directors of said company, stating”—“ in whose favor such judgment or decree was rendered, and in case such representation is made, said directors shall have power to give their assent to the same, or to cancel said policy, as they shall judge proper, on examination.” This clause forming part of the contract of insurance, constituted an express warranty that if any such judgment or decree should pass against the applicant, so as to become a lien on the property insured, the policy should be void, unless a proper representation thereof was made in writing to the directors. (1 Phil, on Ins. 346.) The insurance was on this condition, and although the warranty was promissory the party insured was bound to a strict performance. (Ellis on Ins. 23 ; Hughes on Ins. 308; 1 Phil, on Ins. 346.) On the trial the defendants offered to prove that several judgments were rendered against the insured, after the making of the policy and before the fire, and which became liens on the house which was burned and for which the plaintiff sought to recover. This evidence was rejected by the court, and the counsel for the defendants excepted. I think the court below erred in excluding this evidence. Had the fact been proved as offered, it would have [329] shown a palpable breach of the contract of warranty, and the policy must have been held void unless a proper representation in regard to the judgments had been made by the insured. I also think the court erred in holding that the plaintiff was entitled to recover the full value of the house destroyed. The application, which was in every respect a part of the contract of insurance, has this clause: “ The real property above specified is herein estimated by me at two-thirds of its cash value. Such estimate, however, is not to be conclusive on the company ; and should I be insured pursuant to this application, I agree that in case of loss by fire, the said company shall only be obliged to pay as if they had insured two-tliirds of the actual cash value of said property, any thing contained in this application or the policy of insurance to the contrary notwithstanding.” Parties must be allowed to make such contracts as they please, unless illegal in their terms or spirit. (Beadle v. The Chenango County Mu. Ins. Co., 3 Hill, 161.) These parties agreed that the company should only be bound “to pay as if they had insured two-thirds of the actual cash value of said property.” Clearly, on such an insurance the company could never be liable for the full value of the property insured.. Yet the court held, in this case, that the plaintiff was entitled to a verdict for the full value of the house destroyed. This was erroneous. , Judgment reversed.