Ekelchik v. American Cas. Co. of Reading, Pa.

• Decision Date: 15 June 1959
• Docket Number: No. A--310,A--310
• Citation: 152 A.2d 156,56 N.J.Super. 171
• Parties: Goldie EKELCHIK, formerly Goldie Goldstein, Plaintiff-Appellant, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, et al., Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 171

56 N.J.Super. 171

152 A.2d 156

Goldie EKELCHIK, formerly Goldie Goldstein, Plaintiff-Appellant, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, et al Defendant-Respondent.

No. A--310.

Superior Court of New Jersey, Appellate Division.

Argued June 1, 1959.

Decided June 15, 1959.

Frank G. Schlosser, Newton, for appellant (Mackerley & Friedman, Newton, attorneys).

Raymond W. Troy, Newark, for respondent (Lum, Fairlie & Foster, Newark, attorneys; Theodore L. Abeles, Newark, on the brief).

Before Judges GAULKIN, SULLIVAN and FOLEY.

The opinion of the court was delivered by

GAULKIN, J.A.D.

Plaintiff sued defendant American Casualty Company (American) and Firemen's Insurance Company (Firemen's) upon fire insurance policies issued by them covering plaintiff's dwelling. The American policy was $5,000, the Firemen's $7,500, and the fire damage to the building was stipulated as $8,750.

The policies were in the 'standard' form required by N.J.S.A. 17:36--5.20. Lines 28 to 35 of that form provide that 'Unless otherwise provided in writing added hereto this Company shall not be liable for loss occurring * * * while a described building * * * is vacant or unoccupied beyond a period of sixty consecutive days * * *.' The American policy bore an endorsement which did extent the vacancy and unoccupancy privilege beyond 60 days; the Firemen's policy did not.

Firemen's defended upon the ground that the property had been vacant and unoccupied more than 60 days, and the jury returned a verdict in its favor. Plaintiff does not challenge that verdict.

American admitted liability, but contended its liability was limited to 5,000/12,500 of $8,750, or $3,500, because the standard policy provides (lines 86--89):

'This Company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, Whether collectible or not.' (Emphasis added.)

The trial court agreed with American, and entered judgment against it for $3,500. It is from this determination that plaintiff appeals.

Plaintiff's argument is that American was liable for the $5,000 face amount of its policy because (quoting from her brief):

'These policies covered substantially different risks in their vacancy privileges. American by its contract assumed the severe burden of insuring during unlimited vacancy, whereas Firemen's refused to assume that risk beyond 60 days, a much lesser burden. The loss occurred while American was on the risk and its co-insurer was off. * * * When policies cover different risks the insurance is not concurrent and the pro-rata clause does not apply.'

From 1892 (L.1892, c. 231, p. 366) until 1944 the New Jersey standard policy provided 'This company shall not be liable under this policy for a greater proportion of any loss * * * by fire than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property.' Fisher v. Phoenix Assurance Co. of London, 103 N.J.L. 184, 134 A. 861 (E. & A. 1926). In 1944 the standard policy was revised (L.1944, c. 171) and the present wording of lines 86 to 89, quoted above, was adopted. When the policy was again revised in 1954 (L.1954, c. 268) this wording was retained.

Plaintiff does not contend that our present 'collectible or not' pro rata clause does not have the same meaning as the 'valid or not' clause in use prior to 1944, quoted in Fisher, supra. What plaintiff says is that under either clause the result would be the same because (to quote from plaintiff's brief):

'Firemen's contract simply omitted coverage after 60 days vacancy and during the omission its policy was not 'invalid'--the risk after 60 days vacancy was not insured at all by Firemen's and American alone was on it.

'In this appeal we do not assault the settled principle that apportionment among underwriters is in order when multiple policies cover the same interest, the same property and the Same risk. The statute and the policies require pro-ration when these 3 elements concur.

'Our point is that here the risks are different and under the plain meaning of the pro-rata clause the insured must receive single indemnity within the limits of American's policy, for that company alone was on the loss producing risk.'

The present pro rata clause does mean the same as did the one in use prior to 1944--i.e., each policy prorates with all others '* * * whether valid or not, or by solvent or insolvent insurers, covering such property.'

There can be no question but that under the language in use prior to 1944 there would have been contribution in a situation such as is presented in the case at bar. Under that language, contribution was based upon the total of all policies issued with the knowledge and consent of the insured, or adopted by him, and which on their faces covered the same property, the same insurable interest, and the same peril, even though a particular policy...