Hildebrand v. Holyoke Mut. Fire Ins. Co.

• Decision Date: 24 May 1978
• Citation: 386 A.2d 329
• Parties: Ursula HILDEBRAND v. HOLYOKE MUTUAL FIRE INSURANCE COMPANY.
• Court: Maine Supreme Court

Page 329

386 A.2d 329

Ursula HILDEBRAND v. HOLYOKE MUTUAL FIRE INSURANCE COMPANY.

Supreme Judicial Court of Maine.

May 24, 1978.

Thompson, Willard & McNaboe by Thomas R. McNaboe (orally), Steven Devine, Asst. Dist. Atty., Portland, for plaintiff.

Theodore H. Kurtz, South Paris (orally), for defendant.

Before DUFRESNE, C. J., and POMEROY, WERNICK, ARCHIBALD and DELAHANTY, JJ.

ARCHIBALD, Justice.

The plaintiff ¹ commenced this action seeking to recover damages ² resulting from a fire which destroyed her dwelling house and its contents, both of which had been insured against fire loss by the defendant. The defendant counterclaimed alleging it was entitled to recover $15,872.72 from the plaintiff. ³

The sole issue raised by plaintiff's appeal is whether the presiding Justice, when ordering judgment for the defendant, erred in ruling that it would be "against public policy and violative of the provisions of the insurance contract" to allow recovery by the plaintiff even "where the evidence demonstrates that she was completely innocent of any wrongdoing."

We sustain the appeal.

The jury was entitled to find the following facts. In the fall of 1965 the plaintiff and her husband purchased a home in Portland, taking title as joint tenants. They made a down payment on the house and gave the Maine Savings Bank a real estate mortgage as security for the balance of the purchase price.

In 1968 the defendant issued a fire insurance policy on the house and its contents, which named both the plaintiff and her husband as "Named Insured." On January 15, 1970, Mr. Hildebrand conveyed his interest in the realty and its contents to the plaintiff. Three months later the defendant endorsed the policy deleting the husband's name as a "Named Insured."

In June, 1971, the insured's residence was destroyed by fire which had been intentionally ignited by Mr. Hildebrand. The Justice presiding characterized the plaintiff's conduct as being "completely innocent of any wrongdoing."

I

The policy provided in pertinent part as follows:

"This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto." (emphasis added)

Under the "General Conditions" of the policy in paragraph 2, the term "Insured" is defined as follows:

"The unqualified word 'insured' includes (1) the Named Insured and (2) if residents of his household, his spouse, the relative of either, and any other person under the age of twenty-one in the care of an Insured."

It is clear that Mr. Hildebrand, as the spouse living in the household of the named insured at the time of the fire, is an "insured" within the terms of the policy. Kipp v. Hurdle, 307 So.2d 125 (La.App. 1st Cir. 1974).

The defendant therefore contends that since plaintiff's husband is an insured under the policy, the trial Court correctly held that his fraud in the form of arson voids the policy with respect to the named insured, the plaintiff.

We do not agree.

We construe the term "insured" in the first above quoted clause of the policy to mean a specific insured, namely, the insured who (1) is responsible for causing the loss and (2) is seeking to recover under the policy. Pawtucket Mutual Insurance Company v. Lebrecht, 104 N.H. 465, 190 A.2d 420 (1963). We therefore conclude that the instant policy allows recovery by the "Named Insured" for the loss despite the fact that it resulted from the intentional act of another "insured." See Arenson v. National Automobile and Casualty Insurance Co., 45 Cal.2d 81, 286 P.2d 816 (1955); Walker v. Lumbermens Mutual Casualty Co., 491 S.W.2d 696 (Tex.Civ.App.1973).

We reach this result irrespective of whether the interests of the plaintiff and her husband in the destroyed property are deemed to be joint or several. ⁴ Howell v. Ohio Casualty Ins. Co., 130 N.J.Super. 350, 327 A.2d 240 (Super.Ct.App.Div.1974). As the Court held in Howell, 327 A.2d at 242:

"The significant factor is that the responsibility or liability for the fraud here, the arson is several and separate rather than joint, and the husband's fraud cannot be attributed or imputed to the wife who is not implicated therein."

Accordingly, we hold that the trial Court incorrectly determined that the husband's arson was a bar to recovery under the policy by the innocent wife.

II

Our interpretation of the policy is not in conflict with the general rule that it is contrary to public policy to allow one to benefit from his own wrongdoing. As pointed out in Pawtucket Mutual, 190 A.2d at 423:

"There is no such policy against insurance to indemnify an insured against the consequences of a violation of law by others without his direction or participation . . . ."

The defendant, citing Erlin-Lawler Enterprises, Inc. v. Fire Insurance Exchange, ...