Ohio Farmers' Ins. Co. v. Williams

• Decision Date: 10 May 1916
• Docket Number: No. 9028.,9028.
• Citation: 63 Ind.App. 435,112 N.E. 556
• Parties: OHIO FARMERS' INS. CO. v. WILLIAMS.
• Court: Indiana Appellate Court

63 Ind.App. 435

112 N.E. 556

OHIO FARMERS' INS. CO.

v.WILLIAMS.

No. 9028.

Appellate Court of Indiana, Division No. 2.

May 10, 1916.

Appeal from Circuit Court, Bartholomew County; Hugh Wickens, Judge.

Action by Samuel Hamer Williams against the Ohio Farmers' Insurance Company. From a judgment for plaintiff, defendant appeals. Judgment reversed, with instructions, and for further proceedings consistent with the opinion.Charles S. Baker and Frank N. Richman, both of Columbus, for appellant. C. J. Kollmeyer and Julian Sharpnack, both of Columbus, for appellee.

MORAN, J.

This is an appeal from a judgment in the sum of $1,135.53 against appellant upon an insurance policy issued by appellant to indemnify appellee against loss by fire or lightning to certain chattel property owned by appellee. A review is sought as to the action of the trial court in holding insufficient as against demurrer appellant's second and eighth paragraphs of answer, addressed to appellee's second paragraph of amended complaint and appellee's amended complaint, respectively. The action of the court complained of was brought about by demurrers addressed to affirmative paragraphs of reply being carried back and sustained to the paragraphs of answer to which the replies were respectively addressed. The record discloses a paragraph of complaint designated amended complaint and a second paragraph of amended complaint. They differ not in theory, and but slightly in phraseology. The sufficiency of neither paragraph being challenged, reference hereafter will be made as a matter of convenience to the complaint, and not to the separate paragraphs.

It is disclosed by the complaint that in consideration of a premium of $39.60 appellant issued to appellee a policy of insurance, insuring against loss by fire or lightning appellee's chattel property consisting: (1) Of furniture, clothing, provisions, and household goods of all kinds and character specifically described; (2) hay, grain, fodder, and seeds; (3) live stock; (4) farming implements. On October 29, 1911, the property insured was totally destroyed by fire. A compliance with the conditions of the policy is pleaded, and a copy of the policy and an itemized bill of particulars of the property destroyed is made a part of the complaint.

The following part of stipulation 8 of the policy is material to the questions presented for consideration:

“This entire policy, unless otherwise provided by agreement indorsed hereon added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on the property covered in whole or in part by this policy.” etc.

The second paragraph of appellant's answer embodies that part of stipulation 8 of the policy heretofore set out, and in substance alleges that the insured on July 21, 1910, violated this stipulation by procuring additional insurance from the German Fire Insurance Company of Indiana, in the absence of an agreement authorizing the same, as provided by the policy. A disposition of the error predicated upon the sustaining of the demurrer to this paragraph of answer will dispose of the error predicated upon a similar ruling as to the eighth paragraph of answer, as the paragraphs are identical, except addressed to different paragraphs of complaint, which paragraphs of complaint seek the same relief, and differ, as we have said, but slightly in phraseology.

It is appellant's position that by appellee procuring additional insurance in the manner and under the circumstances as set forth in the answer under consideration he breached a condition in the policy which relieves it from liability. The reason underlying the insertion of a stipulation such as here under consideration in policies of insurance covering indemnity for loss by fire is to prevent over insurance, and “upon the assumption that the insured will be less careful to protect his property from loss in proportion as to the amount his insurance is increased,” and, further, that the moral hazard should not be increased without the knowledge of the insurer. 19 Cyc. 764; 5 Elliott on Contracts, § 4240; Havens v. Home Ins. Co., 111 Ind. 90, 12 N. E. 137, 60 Am. Rep. 689;American Ins. Co. v. Replogle, 114 Ind. 1, 15 N. E. 810; Elliott on Ins. § 245.

[1] Such stipulations are regarded as valid and reasonable, and, when violated, the insurer may, when a loss occurs, defend on the ground of a breach of the contract in this respect. Thus far there is no ground for controversy.

Appellee's main objection to the answer is that the procuring of additional insurance did not render the contract void, but only voidable at the election of the insurer, and hence that it became appellant's duty as a condition precedent to defend upon this ground to return or offer to return the unearned portion of the premium, and that the absence of such averment in the answer rendered it insufficient to state a defense to the complaint.

[2] Appellee's contention that the stipulation against procuring additional insurance does not render the policy void, but voidable at the election of the insured, is, as well as kindred stipulations, abundantly supported by the authorities. Saville v. Ætna, etc., Co., 8 Mont. 419, 20 Pac. 646, 3 L. R. A. 542;Carpenter v. Providence, etc., Co., 16 Pet. 495, 10 L. Ed. 1044;Glens Falls Ins. Co. v. Michael, 167 Ind. 659, 74 N. E. 964, 79 N. E. 905, 8 L. R. A. (N. S.) 708;Turner v. Meridan Fire Ins. Co. (C. C.) 16 Fed. 454;Commercial Life Ins. Co. v. Schroyer, 176 Ind. 654, 95 N. E. 1004, Ann. Cas. 1914A, 968;Germania, etc., Co. v. Klewer, 129 Ill. 599, 22 N. E. 489.

[3] This as well as the Supreme Court and the courts of other jurisdictions generally have frequently held that both as to fire and life insurance policies, where a defense is based upon a breach of the policy that renders the contract ineffectual from its inception, and where, in fact, no risk attached, under such circumstances there is no consideration for the premium received, and that the insurer upon learning of the breach should seasonably offer to restore the premium received by it, and, failing to do so, it could not insist upon a forfeiture of the policy. Glens Falls Ins. Co. v. Michael, supra; Catholic Order of Foresters v. Collins, 51 Ind. App. 285, 99 N. E. 745.

[4] That liability attached, under the policy in suit, upon its execution and delivery, is not denied by either party, and this is true up to the date of the procuring of the additional insurance. At this date appellant takes the position that liability ceased on its part, while on the part of appellee it is contended that there was no cessation of liability, in the absence of an election on the part of appellant to avoid the contract by a return or offer to return the unearned premium. In view of the fact that this subject has been before the courts of this state heretofore, nothing further need be said than that this jurisdiction is committed to the doctrine that finds support in various jurisdictions that there is a distinction resting upon a legal principle between where a liability attached upon the execution of the policy, and where it did...