Stevenson v. Phœnix Insurance

JUDGE LEWIS delivered the opinion of the court. This is an action by appellant to recover of appellee1 $3,000, amount of a policy of insurance issued October 25, 1877, for one year, on a dwelling-bouse destroyed by fire. In the policy is contained the following condition : “If the assured shall have, or shall hereafter make — 9 — any other insurance on the property hereby insured, or any part thereof, without. the consent of the company written hereon, * '* * then in every such case this policy shall be void.” In defense of the action it was alleged that on the-same day, but after the policy was issued, the plaintiff, in violation of that condition, without the consent of the defendant written on the policy, procured from two other companies policies of insurance on the same property, aggregating $6,000, to continue in force during the same period. In reply, it was admitted that the plaintiff did procure other insurance on the property without the defendant’s consent as alleged in the answer,, but it. was stated that the defendant had notice thereof,, and waived its right and was estopped to claim a, forfeiture of the policy. Upon the issue as to waiver made by the pleadings a verdict in favor of the plaintiff in the action for the amount sued for was rendered, and judgment-entered accordingly; but upon appeal to this court the judgment of the lower court was reversed and cause rémanded for a new trial, it being held in the-opinion rendered that there was no evidence offered which was proper to go to the jury on the question as to waiver of the forfeiture, and that the motion, for nonsuit should have been sustained. (Phœnix Ins. Co. v. Stevenson, 78 Ky., 150.) Upon the return of the case the plaintiff' in the-action was permitted by the court-to file two amended replies, in which it was, in substance, alleged that in each of the two policies procured by him after thes — 10 — ■one issued by the defendant was contained a like condition as to previous and subsequent insurance of the .-same- property by other companies; that those policies were issued to him without any notice to, or knowledge on the part of, either of the two companies issuing them of the prior insurance by the defendant until after the house insured was destroyed by fire; ■ and that the two policies being thus rendered invalid by the plaintiff’s breach of condition contained in them, there was in fact no violation by him of the ■condition contained in-the policy sued on. The case is now before this court upon appeal from the judgment sustaining a general demurrer to the amended replies and dismissing the petition. The question presented by the amended replies has heretofore been passed upon by this court in the case of Suggs v. Liverpool, London and Globe Ins. Co., MS. Opinion, March 27, 1880. In that case the court, in rendering the opinion, used this language: “Appellant contends that the .last insurance was absolutely void, and left the first in full force. He is wrong in any aspect of the case. First, the second insurance was not void, but voidable only at the option of the insurer; and .second, if it were void, db initio, that fact would not relieve appellant from the forfeiture resulting from a violation of the stipulations in the first policy against additional insurance.” It is thus obvious that if the opinion in that case is to be- adhered to, the judgment in this case sustaining the demurrer to the amended replies must be affirmed. — 11 — Counsel for appellant refers us to several- authorities holding a doctrine opposite to that announced in the opinion referred to by this court, and perhaps the weight of authority in this country may sustain him. But, on the other hand, the decision of this court is supported not only by the Supreme Court of the United States and several State courts, but by principle and reason. In the case of Baer v. The Phœnix Ins. Co., 4 Bush, 242, where the question arose as to the.proper construction to be given to a similar condition contained in a policy of fire insurance, this court said: '“The object of that condition was to assure the underwriter against over - insurance, or insurance equivalent to the entire risk, whereby the insured, xelieved of all risk, might be tempted to procure the loss or to take no care to prevent it. To make it the interest of the insured as well as the insurer to avert loss, no prudent underwriter ever insures for the full value of the property, but leaves the owner ;so far interested in preventing the loss as to assure his fidelity and vigilance in proper care to avert it.” This precaution on the part of insurance companies is not only justifiable, but indispensable to their success, if not existence. For without such provision against cumulative insurance, fraud and bad faith on the part of the insured would be encouraged, and the legitimate and useful purposes of fire and marine insurance to a great extent defeated. A contract of insurance, like any other which the law sanctions, should be enforced by the courts according to its terms and conditions. In this case a — 12 — plain and vital stipulation, which the insurer had the-right to insert in the policy, and which the assured, understanding, or having the opportunity to understand, agreed to, has been deliberately violated by the-latter. And he now asks to avoid the forfeiture whichi resnlts from such violation and is now claimed by the-insurer, upon the ground that the two subsequent policies being rendered invalid by like breach of contract and of faith on his part, the first one is now valid and enforceable by either party to it. But it has been held by this court in the two cases of Baer v. The Phœnix Ins. Co. and Sugg v. Liverpool, London and Globe Ins. Co., that a violation by the assured of such a condition in a policy of insurance does not render the policy absolutely void, but simply voidable, to be treated as void by the insurer.at his own exclusive option. The correctness of this ruling is, in our opinion,, so manifest that it is needless' to enter into an extended discussion to support it; for to hold a contract of insurance that has been violated by only one of the parties to it void, or, in the language of the pleadings, invalid, as to both, is to put it in the-power of either party, after making the contract, to-render it a nullity by simply violating some one of its; conditions. The two policies referred to in the replies, which, were obtained subsequent to that issued by appellee,, should not, therefore, be held as void or invalid, but. only voidable at the option of the companies issuing; them. How they have been treated by the parties'the record of this case does not show, nor is it mate — 13 — ■riab, for they were procured by appellant, either with the intention to defraud appellee, or in ignorance of the fact that, in obtaining them, he was violating his first contract and incurring a forfeiture of his first policy. And in either case we are forced to conclude he intended to avail himself of cumulative insurance upon his property, and, therefore, was exposed to the temptation to bring about the loss of his property, or at least was rendered less -careful to prevent its destruction. The object of the condition mentioned was thus defeated by the conduct of appellant, and the risk of .appellee increased without its knowledge or consent! When a contract is plain, unambiguous and fair, not vitiated by fraud nor mistake in its execution, ■the courts are not authorized to make for the parties to it a different one, or to construe it contrary to its -express terms, especially when the consequence may be to enable one of the parties to profit by his wrongful violation of it. The judgment is affirmed.