Loomis v. Rockford Insurance

LyoN, J. If, as the learned circuit judge held, the contract of insurance is entire and indivisible, the conveyance by the plaintiff of the Burke farm, on which stood dwelling-house No. 1, without the consent of the secretary of the defendant company, before certain other of the insured property was burned, renders the whole policy null and void, and the nonsuit was properly ordered; otherwise not. In the cases of Hinman v. Hartford F. Ins. Co. 36 Wis. 159, and Schumitsch v. Am. Ins. Co. 48 Wis. 26, the contracts of insurance there in question were held indivisible. In those cases the property insured consisted of buildings and personal property contained therein, and in the applications for the policies there were misrepresentations by the assured of their title to the realty. In each case the risk was distributed to the different items of property insured. These cases will be adhered to, and the question is whether they rule the present case. There is some apparent conflict of authority as to the rules by which it is to be determined whether the contract in a given case, which insures several items of property, is an entire contract, or whether it is divisible. An examina — 90 — tion of the cases will show, we think, that as to a large majority of them the conflict is apparent rather than real. All the cases seem to agree that, although the insurance is distributed to the different items of insured property, the contract is indivisible if the breach of the contract as to an item of the property affects, or may reasonably be supposed to affect, the other items, by increasing the risk thereon. In Fire Asso. v. Williamson, 26 Pa. St. 196, the insurance was upon three adjoining buddings,— a specified sum on each,— and the breach of the contract alleged was the keeping of gunpowder in one of the buildings, which caused the burning of them all. The contract was held indivisible. In Gottsman v. Pennsylvania Ins. Co. 56 Pa. St. 210, the insurance was distributed upon a barn and certain property in an hotel standing within about sixty feet of the barn. As in the cases in this court above cited, the assured misrepresented his title to the real property, which misrepresentation, by the terms of the policy, invalidated the whole insurance. The property in the hotel was burned. The contract was held indivisible, and the whole insurance forfeited. Several Massachusetts cases are cited in the opinion, among which are Friesmith v. Agawam M. F. Ins. Co. 10 Cush. 590; Brown v. People's M. Ins. Co. 11 Cush. 280; and Kimball v. Howard F. Ins. Co. 8 Gray, 38. These cases, in their essential facts, are in principle like the above cases in this court, except that in the case last cited there was no misrepresentation, but the assured obtained additional insurance upon a portion of the insured property, contrary to the conditions of the policy. Lee v. Howard F. Ins. Co. 3 Gray, 583, is also cited. In that case the contract of insurance was held indivisible because, by the terms of the policy, “ the property was insured as* one risk, and was in fact closely connected together.” In Kelly v. Humboldt F. Ins. Co. 6 Atl. Rep. (Pa.), 740, the insurance was for a specified — 91 — sum on each, of two connected buildings, and a house situated in the rear of them. The contract was held indivisible on the authority of the cases in that state above cited. In Bowman v. Franklin F. Ins. Co. 40 Md. 620, the insurance was distributed upon a distillery and machinery therein, and there was a breach of the condition as to the real estate which worked a forfeiture of the policy, by its terms. Lovejoy v. Augusta M. F. Ins. Co. 45 Me. 472; and Day v. Charter Oak F. & M. Ins. Co. 51 Me. 91, are also similar in principle to the two cases in this court first above cited. The property insured in each was a building and its contents, and there was a misrepresentation by the assured of his title to the realty. None of the above cases seem to have been decided upon the proposition that the contract was entire merely because the premium was not also distributed to the several items of insured property, yet there are expressions in some of the opinions which seem to give weight to that circumstance. But in Plath v. Minnesota F. M. F. Ins. Asso. 23 Minn. 479, and Garver v. Hawkeye Ins. Co. 69 Iowa, 202, the contracts seem to have been held indivisible mainly upon the ground that the premiums were not so distributed. The foregoing cases have been referred to at some length because they are chiefly relied upon by the learned counsel for the defendant company to establish the invalidity of the contract of insurance in the present case, and because they are believed fairly to represent nearly all the cases in which such contracts have been held indivisible. The same counsel also cited and relied upon McGowan v. People's M. F. Ins. Co. 54 Vt. 211. The facts of that case are not -very fully stated, but it may be gathered from the report that the insurance was upon a dwelling-house and personal property in it, and the assured mortgaged the realty contrary to a condition in his policy. It was there claimed that the con — 92 — tract was divisible, and that tbe assured should recover tbe insurance upon tbe personal property wbicb bad been burned, although tbe pobcy bad become void as to tbe dwelling-house. Tbe court negatived this claim, and held tbe contract indivisible. Tbe decision is placed upon the ground that by tbe terms of tbe policy tbe insurer bad a lien upon tbe insured buildings for tbe payment of assessments upon tbe premium note, and tbe cause wbicb rendered tbe policy void as to tbe buildings affected such security. Tbe court might well have held, also, that tbe contract was entire because of tbe fact that tbe personal property insured was located in such buildings, and any breach of tbe contract in respect to tbe buildings must necessarily affect tbe risk upon the property therein, to tbe injury of tbe insurer. In that case tbe court laid down general rules for determining whether such a contract is divisible or not. These rules are so reasonable and satisfactory that we feel justified in quoting somewhat at length from tbe opinion. Tbe court says: “ This is a question of great practical importance, as a large proportion of insurance contracts embrace more than one item of property insured. Tbe decisions are apparently conflicting, but, we think, are easily-reconciled by referring to tbe plain principles wbicb should govern them. Tbe general rule, ‘void in part, void m toto,’ should apply to ab cases where tbe contract is affected by some all-pervading vice, such as fraud or some unlawful act con-' demned by public pobcy or tbe common law; cases where tbe contract is entbe and not divisible; and all those cases where tbe matter that renders tbe pobcy void in part, and tbe result of its being so rendered void, affects tbe risk of tbe insurer upon tbe other items in tbe contract. Keeping these rules in mind, tbe leading cases upon this subject can ab be reconciled. A recovery should be bad in ab those cases where tbe contract is divisible, tbe different properties insured for separate sums, and tbe risk upon tbe property, — 93 — which is claimed to be valid, unaffected by the cause that renders the policy void in part. Such are the cases of Howard F. & M. Ins. Co. v. Cornick, 24 Ill. 455; Hartford F. Ins. Co. v. Walsh, 54 Ill. 164; Clark v. New England M. F. Ins. Co. 6 Cush. 342; Date v. Gore D. M. F. Ins. Co. 14 U. C. C. P. 548; Phœnix Ins. Co. v. Lawrence, 4 Met. (Ky.), 9; Loehner v. Home M. Ins. Co. 17 Mo. 247; Koontz v. Hannibal Savings & Ins. Co. 42 Mo. 126; Cucullu v. Orleans Ins. Co. 6 Mart. (N. S.), 11.” It is believed that the rules thus laid down by the Vermont court do not conflict with any of the cases above referred to, except possibly the two cases in Minnesota and Iowa. The proposition determined in those two cases does not commend itself to our judgments as sound. While the fact that the premium is stated in the policy at a gross sum, and is not distributed to the different items of insured property, is a circumstance to be considered in interpreting the contract, we do not think it is controlling. If two houses, located one mile apart, are insured in the same policy for $1,000 each, and there is nothing to show that they do not belong to the same class of risks, we cannot believe that, merely because the premium is stated in the policy to be $20 on both houses, instead of $10 on each, the contract thereby becomes indivisible, when it would undoubtedly have been divisible had the latter formula been adopted. In the present case the aggregate of the insurance is $1,100, and the premium is stated in gross at $16.50, which is 1-J per cent, on the amount of the insurance. There is nothing in the policy or testimony to show that the insured property belonged in different classes, upon which are charged respectively different rates of insurance, or that the percentage of premium is an average between higher and lower rates which the parties understood were charged and paid upon different items of the insured property. The presumption is, therefore, that each item was insured at 1-J- per — 94 — cent, premium, and the contract should be construed as though it was so expressed in the policy. Had it been so expressed therein, there can be no doubt the contract would be divisible, and so the learned counsel for the defendant company franMy admitted during the argument of the cause. The views above indicated are fully sustained by the cases of Clark v. New England, M. F. Ins. Co. 6 Cush. 342; Havens v. Home Ins. Co. 111 Ind. 90; Phenix Ins. Co. v. Pickel, 119 Ind. 155; Merrill v. Agricultural Ins. Co. 73 N. Y. 452; Schuster v. Dutchess Co. Ins. Co. 102 N. Y. 260; Loehner v. Home M. Ins. Co. 17 Mo. 247; Quarrier v. Peabody Ins. Co. 10 W. Va. 507. Indeed, many of the above cases go much further than this court has gone in asserting the divisibility of such contracts. It is not denied that the policy in suit was valid when issued. No misrepresentation or breach of warranty on the part of the assured is claimed. But after the policy was issued the assured violated one of its material conditions by conveying to another one of the insured houses without consent of the insurer, which certainly invalidated the policy as to that house. But it is quite impossible to say from the record before us that the risk upon the insured property destroyed by fire, which property was located five miles distant from the house so conveyed, was increased, or in the slightest degree affected, by such conveyance. We are constrained to hold, therefore, that the contract is divisible, and hence that it was error to nonsuit the plaintiff. By the Gourt.— The judgment of the circuit court is reversed, and the cause will be remanded for a new trial.