Cassity v. New Orleans Ins. Ass'n

• Decision Date: 21 November 1887
• Citation: 3 So. 138,65 Miss. 49
• Court: Mississippi Supreme Court
• Parties: G. D. CASSITY, v. NEW ORLEANS INSURANCE ASSOCIATION

3 So. 138

65 Miss. 49

G. D. CASSITY, v. NEW ORLEANS INSURANCE ASSOCIATION

Supreme Court of Mississippi

November 21, 1887

APPEAL from the Circuit Court of Hinds County, HON. T. J. WHARTON Judge.

The case is stated in the opinion of the court.

Judgment affirmed.

Calhoon & Green, for the appellant.

These printed contracts in which one party has no voice, forced to accept the form tendered by the company, should be construed most strongly against the company.

If the clause in question means, by legal interpretation, that a concurrent void policy, of which the company had notice constitutes insurance upon the property, then the demurrer should have been sustained.

This clause so far from indicating a void policy, conveys the idea that the contract is valid, but that questions may arise thereon which may defeat recovery. If it had meant void policies why couple it with "solvency, without reference to the solvency or liability of other insurers?" Both these words indicate a valid contract.

The use of the expression whether such other insurance is "valid or invalid" is constantly used, and it is used in line 13 of this very policy, when speaking of what insurance without notice will invalidate the policy.

If a policy is issued stipulating that the measure of liability is the proportion of that policy to other insurance, and at date of issuance there exists a former policy, which contains stipulation that if other insurance is taken without consent such policy is void, and no consent is granted, it is held that the first policy is void by reason of non-consent, and the second policy is liable for the whole loss. Hand v Williamsburgh Ins. Co., 57 N.Y. 41; Forbush v. West. Mass. Ins. Co., 4 Gray 337; see also, 11 Iowa 21; 1 Wood Fire Ins., p. 316.

The only case cited by the court for its opinion below (and it is the only case that smacks to the contrary that can be found), is the case in 35 Mich. , and in that case by the terms of the policy it was provided that such should be whether the policy was valid or invalid, and hence not in point.

W. P. & J. B. Harris, for the appellee.

The object of the stipulation respecting other insurance is to guard against further excessive insurance or overinsurance, and a policy valid on its face and apparently good was, or might be, as to the insured as influential as a valid policy. But aside from this it is perfectly within the scope of fair dealing to insert in the face of the policy a stipulation that the failure to give notice or to obtain consent shall avoid the policy, whether such other insurance was valid or not. There is nothing in it obnoxious to public policy or positive law, and the parties are free to make their own contracts; and so it has been held that such stipulation is valid and binding. Ins. Co. v. Hullman, 92 Ill. 156; Ins. Co. v. Lamar, 106 Ind. 513; Liverpool Ins. Co. v. Verdier, 35 Mich. 395.

It will be observed that the policy here contains the stipulation that want of notice of, or consent to, further or other insurance avoids the policy, whether such other insurance is valid or not; but that point does not arise here.

And again, it will be noticed that this policy provides for definiteness and certainty in respect to the limit of liability. The insurer is not left to seek contribution from other insurers, and the question whether other insurance is valid or invalid, or the other insurers solvent or insolvent, makes no difference.

It contains a stipulation that "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 liability of other insurers."

The matter which the contract proposed to settle, and does settle, is simply this: whether, in case the insured has taken out a policy in an insolvent company or one which afterwards became insolvent, the consequences shall fall on the insurer or the insured; and where the insured has by omission or commission caused a forfeiture of the other insurance, that forfeiture shall affect the insurer who is solvent and bound by a valid and operative policy. The contract provides that neither of these contingencies shall affect the limit of recovery against the insurer under this policy, which is fixed.

No one can doubt the meaning of the above stipulation as to solvency. No one can show as it seems to us, that it is not legitimate, reasonable, and competent for the parties to provide for the contingency.

It is equally clear that the other contingency, to wit, the occurrence of forfeiture or other ground of avoiding the "other insurance" is provided for. The legal propriety of the stipulation is beyond doubt. Its fairness cannot be and is not impeached. There are no fetters, as in the case of common carriers, on the perfect freedom of the contracting parties, and no principle of morality, law, or public policy is violated.

It appears here that the insured gave notice to the company sued of a prior policy on the same property; but as the declaration avers, the insured failed to give notice to the first insurer of his intention to take out other insurance, whereby the first policy was forfeited, and therefore could not be estimated as part of the insurance in fixing the amount of the recovery here.

It is to be borne in mind that it is the insured setting up his own default under a valid policy to enhance the liability of the second insurer.

W. R. Harper, on the same side.

The plain fair meaning to be given to the condition of this policy is, that if there be a policy in existence which on its face covers the loss, but which can only be avoided by the production of extrinsic evidence, that such policy must be counted in the pro rating. This is the meaning of the words "without regard to the liability of other insurers." Of course, it can be said that there is, in logic, no such thing as an insurance without liability because the moment it ceases to bind it ceases to be insurance. But it is...