Obermeyer v. Globe Mut. Ins. Co.

• Decision Date: 31 March 1869
• Citation: 43 Mo. 573
• Parties: C. W. OBERMEYER et al., Appellants, v. THE GLOBE MUTUAL INSURANCE COMPANY, Respondent.
• Court: Missouri Supreme Court

43 Mo. 573

C. W. OBERMEYER et al., Appellants,

v.THE GLOBE MUTUAL INSURANCE COMPANY, Respondent.

Supreme Court of Missouri.

March Term, 1869.

Appeal from St. Louis Circuit Court.

Brockmeyer & Jones, and Bryan, for appellants.

I. Where the over-insurance exists at the time of the fire, a recovery upon a policy containing conditions similar to those in the case at bar will not be permitted. But no case can be found to the effect that a recovery cannot be had because of a temporary over-insurance, where the over-insurance had ceased to exist at the time of the fire. (N. E. Fire & Marine Ins. Co. v. Schettler, 38 Ill. 166; Mitchell v. Lycoming Mut. Ins. Co., 51 Penn. St. 409.) Although there has been a non-compliance with a condition, express or implied, yet when that non-compliance has ceased, and no damage has been caused thereby, there ceases to be any ground for enforcing a penalty or forfeiture because of this non-compliance. (Powers v. Ocean Ins. Co., 19 La. 28.)

II. The condition as to over-insurance in the case at bar must be regarded as a condition subsequent, the breach of which works a forfeiture or divests an estate, and as contradistinguished from the condition precedent, the performance of which is necessary to create an estate or right; and the construction by courts of justice never favors the divesting an estate or the destroying a vested right. (1 Phil. Ins. p. 469, § 870; id. p. 460, § 835.)

III. When we consider the design and object of limiting the amount of insurance to be held by the insured--that it can only be to guard against his dishonest destruction of the property, and to secure his vigilant co-operation and interest in preventing its destruction, by leaving a considerable amount at his own risk--it becomes manifest in the case at bar that, though the letter of the condition relative to over-insurance may have been violated, it could not have been in its spirit and essence, or in its substantial import.

Rankin & Hayden, for respondent.

The failure of the insured to notify the insurer of the policy subsequently taken out in excess of the amount allowed by the written stipulation of the policy, and to have the policy so altered as to admit the additional insurance, rendered the policy void. (Gilbert v. The Phœnix Ins. Co., 36 Barb. 372; Benedict v. Ocean Ins. Co., 31 N. Y. 389; Hardy v. Union Ins. Co., 4 Allen, 217; Rising Sun Ins. Co. v. Slaughter, 20 Ind. 520; David v. Hartford Ins. Co., 13 Iowa, 69; Gale v. Belknap, 41 N. H. 170; Kimball v. Howard Ins. Co., 8 Gray, 33; Bigler v. The New York Ins. Co., 22 N. Y. 402; Conway Tool Co. v. Hudson River Ins. Co., 12 Cush. 144; Simpson v. The Pennsylvania Fire Ins. Co., 38 Penn. St. 250; Hale v. Mechanics' Ins. Co., 6 Gray, 169; Murphy v. Atlas Ins. Co., 14 N. Y. 79; Mellen v. The Hamilton Fire Ins. Co., 17 N. Y. 609; Carpenter v. The Providence Mut. Ins. Co., 16 Pet. 495.) It matters little, so far as the present case is concerned, whether the printed clauses in the policy against over-insurance were “warranties” or “covenants.” They were express in their terms, and by them the insured was bound to give notice of any additional insurance over the stipulated amount, and have the same indorsed on the policy or otherwise acknowledged in writing. It is idle to say that the over-insurance did not exist at the time of the fire. The object of the clauses against over-insurance is to provide against the temptation to destroy the property and get the insurance money. If the property was over-insured at any time during the life of the defendant's policy, its risk was of course increased. Besides, the printed clause provides against other insurance, not at the time of the fire, but during the lifetime of the policy. If the provisions were merely against over-insurance at the time of the fire, the wording would be very different.

BLISS, Judge, delivered the opinion of the court.

On the 15th of August, 1865, the defendant issued a fire insurance policy to the plaintiffs upon their mill for $3,000--$1,500 upon the mill, and $1,500 upon the machinery--with the following clause in writing: “Eighteen thousand dollars on same insured elsewhere, and two thousand additional to be insured, to be reported in total when required.” The printed part of the policy contained the usual stipulations for notice and indorsement upon the policy or acknowledgment in writing of all previous and subsequent insurances, in default of which the policy should cease and be of no effect.

The property was burned on the 27th of February, 1866, and this suit is to recover the $3,000 insurance. The defendant answers that the assured made other insurances of the property, which, with the amount already insured, exceeded the sum of $23,000, and that said amount in excess was made without notice to the defendant, and without having it indorsed on the policy or acknowledged in writing, “although the total amount of insurance contracted for in said policy, on said property, was not to exceed $23,000, and although it is agreed on, as a condition of insurance in said policy,” etc., setting forth the conditions of forfeiture. No reply at that time being required, the answer raised the issue whether more than $23,000 had been insured on the property, that amount being permitted by the clause in writing, before quoted.

The evidence showed that at the date of the policy the total amount of insurance was $18,000, besides the policy issued by the defendant, and at the date of the loss only $12,000, including said policy. It also appeared that on the 13th of September, 1865, the plaintiffs were insured in the Morris Company for $2,000, making the stipulated amount $23,000, and, on the 11th day of November following, in the “National” for $2,500, of which they gave defendant no notice, and about the middle of December, more than two months before the fire, some of the old policies were canceled, so as to bring the whole amount of insurance considerably within the amount stipulated. The plaintiffs undertook to prove that before they took the additional $2,500 more than they had a right to take, one of the old policies for the same amount had been canceled, thus making not even a temporary over-insurance; but they only succeeded in proving that in June, 1865, the agent of the company that had issued it came to inspect some additional improvements and told them he should cancel their policy at the end of the year, which was before the new policy was taken; but it appeared he did not actually cancel it until December, making an over insurance of more than a month. The Circuit Court treated this over-insurance, without notice or indorsement upon the policy, as a forfeiture, and rendered judgment for the defendant. The case is brought here by appeal, and that is the only question raised upon the record.

The general doctrine that a previous or subsequent insurance without notice, in a policy requiring such notice, and with a clause of forfeiture like that of the defendant, discharges the obligation of the company that insures, is well settled and universally recognized. That this should be the effect of the concealment, is not only a part of the contract, and obligatory upon that ground, but the forfeiture is reasonable and just. The insurer can never know the full extent of his risk unless he knows everything that bears upon that risk. He has a right to rely upon the interest of the assured to preserve the property, which he can never do if the latter shall be at liberty to so increase his insurance as to destroy that interest. To deprive the insurer of the aid of this powerful motive is a fraud upon him. He has contracted for that protection, and should receive its full benefit; and the plaintiff shall not be permitted to show that there was no fraud in fact, that the property was well guarded, that the insured could not have prevented the loss, etc., or even that the insurer, when the loss is less than the policies, is benefited by...