Allison v. Phoenix Ins. Co.

DILLON, Circuit Judge. There are two questions here. One is whether the subsequent policy on the furniture in the Hawk-eye company, supposing it to be a valid [532] and binding insurance, avoids tbe policy in snit as respects the stock of goods, which was separately valued, there having been no notice to the defendant of the Hawkeye policy. The other is whether the subsequent policy in the Hawkeye company was such “other insurance” as contravenes the provision in the defendant’s policy in that regard, the Hawkeye company having been informed by the plaintiff’s application that there was no other insurance on the furniture, but after the loss, having compromised with the plaintiff in respect to its policy, not having had before the fire any knowledge of the policy issued by the defendant or ratifying its own policy with knowledge of the prior policy. The Hawkeye company insisted that its policy was not binding on it because of the misrepresentation as to prior insurance, but the policy covered other risks and the controversy was closed by the payment to the plaintiff of a sum less than the sum insured. Under these circumstances it is clear that the second policy, as respects the furniture, at all events, could not have been enforced against the Hawkeye company, and, if not, can it be set up by the defendant as constituting other or additional insurance in violation of the condition in that respect, contained in the policy now in suit? The general, but not uniform, opinion of the courts is, that to avoid the first policy the second policy must be valid, that it must constitute an effectual insurance; and we are inclined to so hold, if this can be done consistently with Carpenter v. Providence Wash. Ins. Co., 16 Pet. [41 U. S.] 495. The case last cited has been subjected to much criticism (see Clark v. New England, etc., Ins. Co., 6 Cush. 342, 350; Hubbard v. Hartford Fire Ins. Co., 33 Iowa, 325; May, Ins. § 365, and the authorities there collected;) and, it may be conceded that, though not unsupported, it does-not, at least in its reasoning, accord with the prevailing view. But if the case at bar falls within its principle, it is our duty implicitly to apply that principle to it. That case holds that the company which issued the second policy (the Providence company) was entitled to notice of the prior insurance in the American company, though the policy in that company had been “procured by misrepresentation of material facts” —and the reason given (which has been criticised and its soundness denied) is, that such a policy is not “to be treated, in the sense of the law, as utterly void ab initio, but merely voidable, and as one that may be avoided by the underwriters upon the proof of the facts, but until so avoided, to be treated for ah practical purposes as a subsisting policy.” The decision would make it the duty of the plaintiff to have disclosed the prior insurance in the defendant company to the Hawk-eye company, and if he did not, but stated that there was no such prior insurance, the policy in the Hawkeye company, if not ratified, would be void. And it does not establish that the policy in the Hawkeye company is to be considered as in all respects a valid policy unless avoided by that company before the loss. We are therefore of the opinion that the policy in the Hawkeye company, so far at all events, as respects the furniture, was invalid, that it did not in fact and in law constitute any insurance, and therefore the de-fence based upon the ground that other insurance was procured contrary to the provisions of the policy in suit, fails. This view is, in our opinion, consistent with the real point in judgment in the case of Carpenter, though it may not consist with all the reasoning of the learned justice who delivered the opinion of the court. This makes it unnecessary to decide whether if the Hawkeye policy had been valid as respects the furniture, this would have avoided the defendant’s policy as respects the stock of goods. On this point the cases cannot be reconciled. That it would not thus avoid the policy as to the goods, see Loehner v. Home Mut. Ins. Co., 17 Mo. 247, affirmed 19 Mo. 628; Phoenix Ins. Co. v. Lawrence, 4 Metc. (Ky.) 9; Clark v. New England, etc., Ins. Co., 6 Cush. 342, explained, May, Ins. § 278, note on page 303; Trench v. Chenango, etc., Ins. Co., 7 Hill, 123, (compare Wilson v. Herkimer Co. Mut. Ins. Co., 2 Seld. [6 N. Y.] 53;) Sloat v. Royal Ins. Co., 49 Pa. St. 14; Davis v. Boardman, 12 Mass. 79; Howard Ins. Co. v. Scribner, 5 Hill, 298. But on the other hand, that it would avoid the policy entirely, see Smith v. Empire Ins. Co., 25 Barb. 497, 504; Kimball v. Howard, Ins. Co., 8 Gray, 33, 38, compare with Clark v. New England, etc., Ins. Co. supra; Associated Firemen’s Ins. Co. v. Assum, 5 Md. 165; Barnes v. Union M. F. Ins. Co., 51 Me. 110. In this last case, where there was the usual provision against alienation, or material change of title, and an insurance was effected by the plaintiff on an undivided half of a dwelling house, and afterwards on the petition of his co-tenant, a partition was decreed, this was held to be equivalent to an alienation and purchase, and avoided the policy as to the building, and it was further held that the policy being void as to the building, the plaintiff could not recover for the loss of furniture therein insured in the same policy, and separately valued, the ground of decision being the supposed entirety of the contract, as that if it became void in part it was void in toto. I doubt the soundness of this decision, as to the furniture, but as it is not essential, the court gives no opinion as to the point whether a second valid insurance of furniture, there being no fraud, would avoid the first policy, as to the other and distinct property, separately valued. Judgment for the plaintiff.