Gottsman v. Pennsylvania Insurance

The opinion of the court was delivered, January 7th 1868, by Thompson, C. J. When this case was in this court before, 12 Wright 151, the only questions definitively settled were, whether certain answers to interrogatories by the applicant, Mrs. Gottsman, for insurance, were under the terms of the policy.to be regarded as warranties, and not merely representations; and, secondly, as to the duty of the insured in regard to giving notice to the company of the levy on the goods and furniture insured. The conclusions the court arrived at on these points, reversed the case ; and although there are some remarks in the opinion of the Chief Justice, which seem to extend to other points, yet nothing else was within the final resolution of the court. The question, therefore, now presented, whether the contract of insurance entered into between Mrs. Gottsman and the company is entire, a unit, or separable, is still open for consideration. The application of Mrs. Gottsman seems to look to an aggregate, or entire contract of insurance, and not several or separate, although the subjects were several. Her application was “ for insurance against loss or damage by fire,” * * * “in the sum [213] of $2000, on the property below specified ; the value being estimated by the applicant.” Then follows a statement of the property and description, both real and personal, with an apportionment of the gross sum of $2000 among them, and then these words at the end: “Total, $2000, at If premium, $30.” Then follow the company’s interrogatories, and the applicant’s answers, with the stipulation at the end, that “ if any untrue answers have been given to the foregoing interrogatories * * * * * then said policy of insurance to he void and of no effect.” There is nothing like a qualification of this last clause discoverable in the policy, and the question is, do the terms of the policy, which must be taken to express the intention or assent of the parties, in the absence of other evidence, qualify or limit it to anything short of the entire policy, in case of untrue answers given ? That the answer in regard to the encumbrances on the real estate was untrue is incontrovertible. The answer to the inquiry whether it was encumbered, and to what amount, was “ $3000 on 10 acres of ground, worth $10,000,” while at the same time the encumbrances exceeded $8000, and after Mrs. Gottsman’s death the property sold for but little over half the estimated value. That this contract of insurance was entire, and not separable, seems to result from a consideration of its frame, even without the aid of anthorities; but, aided by them, and a few familiar elementary principles, no other result can be arrived at. Indeed, any repugnance to such a conclusion, results rather from what we feel ought to have been the form of the contract, than what, without any allegation of fraud, it was. It is not quite agreeable to our ideas of abstract justice, to he obliged to admit that an untrue answer in regard to encumbrances on the real estate, which was not in the least affected or deteriorated by the fire, should have the effect to deprive the insured of compensation for that about which there was no untruth, as the jury have found, and which was entirely destroyed. In the absence of this contract, this would look unreasonable. But we must not forget the contract. The parties were legally competent to make it; and there is not a word to show that they were not fully competent otherwise. We cannot set aside or alter their contract, and they have chosen to agree, that for any “ untrue representations, or neglect to disclose the nature and amount of all encumbrances, in case any exist thereon, whether of bonds, judgments, mortgages or liens of any desci’iption, or to cause the same to he described in the policy, otherwise than they really are, the insurance shall he void and of no effect.” These were terms the insurers thought material to their security, and upon which it must be supposed they insisted, and without which they would probably not have taken the risk. It would be a fraud upon them to hold them bound with this in effect expunged. That the stipulation applies to the [214] entire policy is plain, and if it falls, of course all liability goes with it. That it was so intended we must believe, for it is part of the contract, inserted, as said above, without fraud or deceit, so far as we are informed, or is complained'of. The amount of the risk was applied for in gross, but apportioned to suit the wishes of the insured, and the charge is in gross, estimated, it is true, by the rate per cent. The consideration is entire and indivisible. This is evident, and of this state of facts Parsons on Contracts, vol. 2, p. 31, speaks: “ if the consideration to be paid is single arid entire, the contract must be held to be entire, although the subject of the contract may consist of several distinct and wholly independent items.” That this rule is applicable to contracts of insurance, is shown by many cases. Friesmuth v. Agawam Insurance Co., 10 Cush. 590, was a case where there was an insurance in one policy of $800 on stock, $250 on tools, and $250 on the shop. The assured represented the property as unencumbered; whereas there was a mortgage on the land, and another on the tools. It was claimed on part of the plaintiff, that he was entitled to recover the amount insured on the stock at least, because the subjects embraced in the policy were separately valued, and a distinct sum taken on each, and there was no misrepresentation as to encumbrances on the stock. But the court held, that this was a mistaken view of the contract; that “ the contract of insurance on the part of the defendant, was not distinct and separate on each class or subjects embraced in the policy. It was separate and distinct, only so far as to limit the extent of the risk assumed by defendants upon each kind of property.” So in Brown v. People’s Mutual Insurance Co., 11 Cush. 280; there, $600 was taken on movable machinery, and $500 on the factory. It was represented that the encumbrances were “ about $4000, mortgage to C. T. James,” when in fact there was a mortgage of $3600 to James, and another of $1100 to one Perkins. It was held, that although the machinery was not encumbered, yet the contract was entire, and the plaintiff could not recover. The same principle was applied in Kimball v. Howard, 8 Gray 38, where for a single premium several sums were insured on stock and on fixtures. A subsequent insurance without notice to the first insurer was effected on the stock, in violation of the stipulations of the policy; it was there held that the policy was avoided both as to the stock and fixtures. The court say, “ The contract is, that if the assured fail to give the notice required, the policy shall cease and be of no further effect. The entire contract was therefore terminated.” In Lee v. The Howard Insurance Co., 3 Gray 583, there was a policy upon two separate buildings. Part of one of them was used for a purpose deemed extra hazardous without the consent [215] of the company, in violation of the terms of the policy. It was there decided, that “ the policy cannot be held valid for a portion of the risk, and invalid for the residue. It was an entire contract, entered into for an entire consideration. It is impossible to say, that either portion of the risk would have been taken without the other. Besides, it is expressly agreed, that in case of a breach of the stipulation, as to the use of th'e premises for purposes not specified, these presents shall cease and he of no force or effect. The contract was therefore, by its terms, at an end.” The same in principle is Lovejoy v. The Augusta Insurance Co., 44 Maine 472; Richardson v. The Marine Insurance Co., 46 Id. 394; and our case of The Fire Association v. Williamson, 2 Casey 196. There three distinct, but adjoining tenements, were covered by the same policy, to the extent of f666.66-f on each, so expressed in the policy. The premium was single for the whole. One of them was changed from a millinery to a grocery store, in which there happened to he a keg of gunpowder. That building took fire, and an explosion ensued which injured and communicated fire to the.other buildings. The insured, who was the landlord, had no knowledge of the powder being kept in the grocery. It was held that the contract was single and entire, and that no recovery could he had for the injury by fire to the other two houses, although in no way implicated in violating the terms of the policy. See also on the point of entirety of contracts De Beerski v. Paige, 47 Barb.; 6 Am. Law Reg. N. S. 564. These authorities, we think, sufficiently rule the case with the defendant, and that the judgment of the court below on the reserved question was well entered. Judgment affirmed.