Concord General Mut. Ins. Co. v. Patrons-Oxford Mut. Ins. Co., PATRONS-OXFORD

• Decision Date: 25 February 1980
• Docket Number: PATRONS-OXFORD
• Citation: 411 A.2d 1017
• Parties: CONCORD GENERAL MUTUAL INSURANCE COMPANY v.MUTUAL INSURANCE COMPANY.
• Court: Maine Supreme Court

Page 1017

411 A.2d 1017

CONCORD GENERAL MUTUAL INSURANCE COMPANY v. PATRONS-OXFORD MUTUAL INSURANCE COMPANY.

Supreme Judicial Court of Maine.

Feb. 25, 1980.

Berman, Berman & Simmons, P.A., Gary Goldberg (orally), Lewiston, for plaintiff.

Kurtz & Myers by Douglas M. Myers (orally), South Paris, for defendant.

Before McKUSICK, C. J., and WERNICK, GODFREY, NICHOLS and GLASSMAN, JJ.

NICHOLS, Justice.

On this appeal we are called upon to interpret the meaning of the "other insurance" clause in the standard fire insurance policy, 24-A M.R.S.A. § 3002. ¹

The Plaintiff, Concord General Mutual Insurance Company instituted this suit in Superior Court, Androscoggin County, seeking contribution from the Defendant, Patrons-Oxford Mutual Insurance Company, on a $22,500 fire loss claim which, after a November, 1977, fire destroyed a residence in Lincoln, Maine, Concord General had paid in full. When both parties moved for summary judgment, pursuant to Rule 56, M.R.Civ.P., the Superior Court found that the Patrons-Oxford policy contained no endorsement under § 3002 prohibiting or limiting other insurance, and entered judgment for Concord General in the amount of $11,250, or one-half the amount of the claim paid. From that judgment Patrons-Oxford seasonably appealed.

We affirm the judgment of the Superior Court.

The central question before us is whether a provision in the Defendant's fire insurance policy prohibiting other insurance constitutes an "endorsement attached" under 24-A M.R.S.A. § 3002. A second question we must consider is whether the Superior Court, in granting summary judgment for the Plaintiff, properly apportioned the loss between the two insurance companies.

In September, 1976, Patrons-Oxford issued a homeowner's policy to Nelson Pelkey, which included fire insurance coverage on Pelkey's buildings in Lincoln, Maine. The policy provided for renewable 6-month terms subject to written notice of cancellation for non-payment of premiums. The policy also contained the following "other insurance" clause OTHER INSURANCE: Other insurance covering the described dwelling building (except insurance against perils not covered by this policy) is not permitted.

Pelkey paid the premiums for a period ending September 15, 1977.

On September 19, 1977, Pelkey purchased a homeowner's policy from Concord General. The fire insurance coverage on the Lincoln, Maine, premises was very similar to that provided by Patrons-Oxford's policy, but Concord General's premiums were slightly less. The clause prohibiting "other insurance" in the Concord General policy was identical to that in the Patrons-Oxford policy.

On November 6, 1977, the insured premises were damaged by fire. Concord General paid Pelkey for the entire $22,500 loss, and obtained from him an assignment of his rights for further claims on the loss.

As Pelkey's assignee, Concord General brought this action against Patrons- Oxford, seeking full recovery or contribution on the Patrons-Oxford policy. ² Patrons-Oxford moved for summary judgment, claiming that when Pelkey purchased the Concord General policy in violation of the "other insurance" provision of its policy, its obligations under the contract were voided.

The Superior Court denied the Defendant's motion and granted Concord General's subsequent motion for summary judgment, ruling that whereas the "other insurance" clause was a part of the "body" of the Patrons-Oxford policy, it could not constitute an "endorsement attached" under § 3002. Since the "other insurance" clause was thus "ineffectual" to prohibit the insured from purchasing additional insurance on his home, ³ the presiding justice looked to the apportionment provisions of the two insurance contracts and, in accordance therewith, equally apportioned the loss between the two insurance companies.

Patrons-Oxford assigns as error the presiding justice's ruling that "the (§ 3002) requirement of an endorsement is not satisfied by reference in the body of the policy to other insurance." The Defendant posits a general definition of an "endorsement" as any incidental or subsidiary provision which changes the terms of a standard policy. The contention is that a § 3002 "other insurance" endorsement need not be physically separated from the rest of the policy.

I.

Every fire insurance policy issued by an insurer in this State must minimally contain all the provisions of the standard fire policy found at 24-A M.R.S.A. § 3002. That statute provides that a fire insurance policy shall consist of the statutory provisions "together with such other provisions, stipulations and agreements as may be added hereto, as provided in this (standard) policy." (emphasis added). Any addition to the standard fire policy language must be made according to the specific requirements of the standard policy "in writing added (t)hereto." The standard policy states specifically the method or methods which may be used to add a provision. For instance, it provides that any additional peril to be insured against "shall be by endorsement in writing hereon or added hereto." (emphasis added). In contrast, the "other insurance" section of the standard policy provides,

Other insurance may be prohibited or the amount of insurance may be limited by endorsement attached hereto. (emphasis added).

Comparing these two provisions, we see that the Legislature envisioned that an "endorsement" could be added by writing directly on the policy rather than on a separate paper. The requirement of an endorsement for other perils could be satisfied, therefore, by reference in the body of the policy.

On the other hand, the standard policy specifically calls for an endorsement in the nature of an attachment when an insurer desires to prohibit or limit other insurance. The language is clear and unambiguous. In construing a statute our duty is to give effect to the intent of the Legislature as evidenced by the language of the statute. If the meaning of the language is plain, we must interpret the statute to mean exactly what it says. Appeal of Davis, Me., 369 A.2d 628, 629 (1977); Ballard v. Edgar, Me., 268 A.2d 884, 885 (1970); Sweeney v. Dahl, 140 Me. 133, 140, 34 A.2d 673, 676, 151 A.L.R. 356, 361 (1943). We agree with the Superior Court that the requirement of an endorsement regarding other insurance is not satisfied by written reference thereto in the body of the policy, but must be by separate "attachment" to the policy.

Where the words of a statute are clear and unambiguous, they should be strictly construed, and we need not look beyond them to the purpose of the legislation. Ballard v. Edgar, supra at 885. Nevertheless, the beneficial effect of this legislation requiring a completely separate endorsement is quite apparent. ⁴ The misleading design of the Defendant's insurance policy here illustrates how noncompliance with the separate endorsement requirement could lead an unwary insured into a trap in which he finds himself with no property insurance.

Page 2 of the main body of the Defendant's fire insurance policy contains the statutorily mandated standard fire insurance policy language of 24 M.R.S.A. § 3002. On that page is the...