Cassity v. New Orleans Insurance

Cooper, C. J., delivered the opinion of the court. This is an action by the appellant against the appellee, upon a policy of insurance by -which his stock of goods was insured against loss by fire to the extent of seven hundred and fifty dollars. The goods have been totally destroyed by fire and their value equalled the sum insured. A clause of the policy is as follows: “ In no case shall the claim be for a greater sum than the actual damage to or cash value of the property at the time of the fire, nor shall the assured be entitled to recover of this association any greater proportion of the loss or damage than the amount hereby insured bears to the whole sum insured on said property, whether such other insurance be by specific or by general or floating policies, and without reference to the solvency or the liability of other insurers.” At the time of taking out the policy here sued on, the plaintiff had another policy on the same stock of goods in the Mississippi Home Insurance Company, in which there was a provision that the policy should be void if other insurance should be taken out without the consent of said company. The plaintiff failed to notify the Home Insurance Company of the insurance in the defendant company, and the Home repudiated all liability on its policy, on the ground that it had not consented to the additional insurance. The sole point in controversy in this suit is whether the defendant is liable for the loss to the extent of the sum named in its policy, or whether by reason of the clause above quoted, its responsibility is limited to that proportion of loss measured by the amount named in its policy added to the amount insured in the Home. The court below held that the sum insured by the policy of the Home is to be considered as reducing the sum for which the defendant is liable, and from that ruling the plaintiff appeals. Counsel for plaintiff does not assert that the clause, construed as the defendant contends it should be, would not be a reasonable and proper one, nor that it would be destructive of the contract, nor that it was covertly inserted as a trap to the unwary. Their contention is, that the policy limits the responsibility of the defendant to its proportion of the loss, measured by the sum of its policy and that [54] of other valid insurance, but that the policy in the Home having become forfeited by the failure of the assured to obtain its consent to other insurance is no longer any insurance, and is to be excluded as a factor in determining the extent of defendant’s liability. In other words, that the phrase “ without regard to the solvency or liability of other insurers,” must be restricted in its application to other valid insurance. We cannot yield our assent to this construction of the contract. We cannot, in applying the rule- which construes the instrument most strongly against the insurer, close our eyes to the manifest purpose of the clause, and so refine upon language as to defeat the object sought to be accomplished. In the absence of a stipulation of this character, the assured might recover from any one of a number of insurers the whole loss sustained by him, leaving the party from whom full recovery had been had recourse on the other insurers for contribution of the loss paid. Under such circumstances it would devolve upon the company seeking contribution to establish the validity of the several contracts of insurance, and it would bear its proportion of loss arising from the insolvency of oiie or more of its co-insurers. To obviate this inconvenience and hazard, the clause under consideration is inserted in the policy. It casts upon the assured not only the loss which may arise from insolvency of any co-insurer, but also the obligation of looking to such other insurers for a proportionate part of the loss, regardless of the liability of such insurer upon its policy. We cannot distinguish between a policy of insurance on which there is “ no liability to the insurer ” and an “ invalid” policy. To do so would be to involve real and important rights in mere scholasticism, and parties to contracts would, we • doubt not, be astounded to learn what right or duty a court so proceeding would evolve from the ordinary contracts of the day. In Ins. Co. v. Verdier, 35 Mich. 395, a stipulation in a policy substantially like the one before us was upheld as reasonable and proper, and though one judge dissented and another concurred upon other grounds, we are satisfied that the decision of the court was a correct exposition of the law. Wo have been referred to no other [55] case in which the exact question has been presented and decided. The cases cited by appellant’s counsel are not analogous to the case at bar. In Hand v. Ins Co., 12 Sickles (Court of Appeals), the limitation of liability was for a proportionate part “ of the whole amount insured.” The principal point of contention there was, whether the assured was under obligation to keep alive all policies that existed at the time of the insurance in the defendant company, and this question was answered in the negative. It was also held that the words “whole amount insured ” embraced only subsisting valid policies at the time of the loss. This case is cited by Wood, Yol. I, p. 316 (to which appellant’s counsel refer), in support only of the proposition that the assured is not bound to keep up all policies existing at the time of securing other insurance. Forbush v. Ins. Co., 4 Gray, is on all fours with this case in New York. In Hygum v. Ins. Co., 11 Iowa, the stipulation was for exemption from greater liability than a proportion of the loss measured by “the whole amount insured.” All these cases may be right, but they cast no light upon the question before us. They decide that the words “ other insurance,” means other “ valid insurance,” other insurance upon which the insurer is liable; but this does not aid us in construing a contract in which the other insurance referred to is that in which there may or may not be “any liability of the insurer.” We might further add, that clauses in policies of insurance declaring that they shall be “ void ” on certain contingencies, are very generally construed to make them voidable only where the contingency stipulated for or against is for the benefit of the insurer alone, and that he may waive the forfeiture and continue the policy at his election. That in this case the forfeiture was insisted on by the Home Company after the loss of plaintiff’s goods, does not show that, its policy was void and not voidable only at the time of the loss, to which time must be referred the defendant’s liability on its contract. The judgment of the court below is affirmed.