Kelly v. Humboldt Fire Insurance

[103] Opinion by Mr. Justice Trunkey: In consideration of $48 the plaintiff was insured by the defendant against loss by fire to the amount of $2,400; $2,000 on his two connected dwelling houses, “$1,000 separately on each building,” and $400 on a dwelling house in the rear of the first described buildings. The consideration is entire and the buildings are insured together for a gross sum, though a separate valuation is put on each. Had only one of the buildings been burned the plaintiff could not recover damages exceeding its yalua.tion. The plaintiff, admitting that the vacancy of the house on the alley avoided the policy as to that house, contends that the policy continued in force as to the other buildings. This depends on the terms of the contract, whether entire or severable. As a general rule, where the consideration is entire and single the contract must be held to be entire, although the subject may consist of many distinct and wholly independent items. The leading case on which the plaintiff relies to take this policy out of the operation of that rule, is Merrill v. Agricultural Ins. Co. 73 N. Y. 452, 29 Am. Rep. 184, where it was held that a contract of insurance, upon several separate and distinct classes of property each of which is separately valued, in consideration of a premium in gross on the sum total of the valuation, is severable; and a breach of the conditions may avoid the policy as to one of the items, but not affect it as to the others. Forger, J., in an able opinion, remarks that upon the question there has been a contrariety of opinion, cites conflicting rulings in other states, and adds: “In such case, we must learn whether there are adjudications in our own state authoritative upon us, or to what conclusion the reason of the case will lead us.” Turning to the decisions of our own state we find that the precise points now discussed have been decided, namely: that such a contract of insurance as the one on which this suit is founded is entire; and that an act done in violation of the condition of the policy, after the making of the contract, in one of the buildings insured avoids the policy as to the whole. Where, in consideration of $30, property was insured for $2,000, of which $500 was on barn and stable, and $1,500 on personalty in a hotel, it was held that the contract of insurance was entire, and not severable. Thompson, Ch. J., in an elaborate opinion, reached the conclusion, upon principle and au [104] thority, that a violation of the condition with reference to the realty, avoided the policy as to both personalty and realty. Gottsman v. Pennsylvania Ins. Co. 56 Pa. 210, 94 Am. Dec. 55. In Fire Asso. v. Williamson, 26 Pa. 196, the policy, for a single premium, covered three distinct but adjoining buildings, to the amount of $666.66% on each. After the insurance, one of the buildings was changed to a grocery store in which, without the knowledge of the assured, the tenant put and kept a keg of gunpowder. The keeping of the gunpowder was in violation of a condition of the policy, which provided that for such violation the policy should be void. It was decided that the contract was entire, and that no recovery could be had for the damage done to the other two houses, though nothing had been done in them to vitiate the policy. Those cases cove? all the points in the present case and are authorities. It would be possible to overrule them, but not to distinguish this so as to take it out of their doctrine. Those cases Avere not decided without reason or consideration. The doctrine is considered in Wood on Fire Ins. p. 384, § 165, where, after referring to the ruling in Clark v. New England Mut. F. Ins. Co. 6 Cush. 342, 53 Am. Dec. 44, it is said: “It is difficult to understand how it can be held that these contracts are several when a gross premium is paid for the entire insurance. The court cannot say as a matter of law, neither can the fact be shown, that the insurer would have been satisfied to take the risk separately at the same premium. By consenting to pay a gross premium for the insurance, the assured has signified his willingness to let the policy stand as an entire contract, subject in all its parts to the condition imposed by the insurer, and there is neither reason nor equity in permitting the assured, after he has violated one of the conditions of the policy as to a part of the risk, to turn around and say that this condition only affected that portion of the risk to which the breach related.” Judgment affirmed.