Koshland v. Home Mut. Ins. Co.
| Decision Date | 25 October 1897 |
| Citation | 31 Or. 321,50 P. 567 |
| Parties | KOSHLAND v. HOME MUT. INS. CO. |
| Court | Oregon Supreme Court |
On rehearing. Denied.
For prior report, see 49 P. 864.
During the progress of the trial, defendant offered to prove that the amount of the incumbrances on the property at the time the insurance was effected had been reduced by payments, and did not exceed $16,000 at the time plaintiff's mortgages were given, and therefore the statement in the opinion heretofore filed that they were given for the purpose of raising money with which to pay prior incumbrances was not strictly accurate. But, in our opinion, the evidence offered was immaterial. The question was not so much whether the amount secured by plaintiff's mortgages exceeded that actually due on the prior liens at the time of their execution as it was whether the risk had been thereby increased. The rule that an incumbrance on insured property, in violation of the terms of the policy, works a forfeiture, proceeds upon the theory that it increases the hazard, by reducing the interest of the assured in the property covered by the policy, and consequently his interest in its preservation. But the reason of this rule ceases where the policy is issued with knowledge of existing incumbrances. The insurer in that case in effect contracts to accept the risk according to the assured's present interest in the property, and a subsequent change in the form or amount of the incumbrances ought not to work a forfeiture of the policy so long as the amount of such incumbrances is not increased. The interest of the assured remains unchanged, and the moral hazard the same. It is true, there is some conflict in the authorities upon this question; but we take this to be the better rule, and supported by the weight of authority. See cases cited in the original opinion. Petition denied.
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