Pogo Holding Corp. v. New York Property Ins. Underwriting Ass'n

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before LAZER
• Citation: Pogo Holding Corp. v. New York Property Ins. Underwriting Ass'n, 467 N.Y.S.2d 872, 97 A.D.2d 503 (N.Y. App. Div. 1983)
• Decision Date: 24 October 1983
• Parties: POGO HOLDING CORPORATION, Respondent, v. NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION, Appellant.

Page 872

467 N.Y.S.2d 872

97 A.D.2d 503

POGO HOLDING CORPORATION, Respondent, v. NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION, Appellant.

Supreme Court, Appellate Division Second Department.

Oct. 24, 1983.

Whitman & Ransom, New York City (Walter P. Kelly, New York City, of counsel), for appellant.

Dollinger, Gonski & Grossman, Carle Place (Leslie A. Foodim, Carle Place, of counsel), for respondent.

Before LAZER, J.P., and THOMPSON, O'CONNOR and BROWN, JJ.

MEMORANDUM BY THE COURT.

In an action to recover the proceeds of two fire insurance policies, defendant appeals from an order of the Supreme Court, Queens County, dated December 20, 1982, which set aside the jury verdict in favor of defendant, granted plaintiff's motion to strike defendant's first, third and fifth affirmative defenses, directed a new trial with respect to plaintiff's causes of action and defendant's fourth affirmative defense, and restored the action to the trial calendar.

Order reversed, with costs, jury verdict in favor of defendant reinstated, and matter remitted to the Supreme Court, Queens County, for the entry of a judgment dismissing the complaint.

This action was commenced to recover on two policies of fire insurance issued by defendant to plaintiff covering two buildings owned by plaintiff, located at 320 Beach 43rd Street and 320A Rear Beach 43rd Street, Far Rockaway, New York. These buildings sustained fire damage on September 24, 1974. The policies insured plaintiff against direct loss and damage by fire, not to exceed $40,000 and $15,000, respectively. The policies contained the following standard provision: "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 thereon, or in case of any fraud or false swearing by the insured relating thereto." Defendant served an answer in which it asserted, inter alia, the following affirmative defenses: willful misrepresentations and false swearing with respect to the actual cash value of the property stated in plaintiff's proofs of loss, and willful misrepresentations and false swearing during the examination, under oath, of plaintiff's treasurer, Martin Portnoy.

A jury trial was held in May and June, 1982. Plaintiff's first witness was its treasurer and 50% shareholder, Martin Portnoy who testified that the property in question had been purchased in 1972 for the sum of $12,000, and that numerous improvements had been made to the property. Several bills were introduced into evidence which revealed that plaintiff expended approximately $12,000 in making the improvements. According to Portnoy, just prior to the fire the gross rents that were being collected from the premises amounted to a little over $15,000. Portnoy further testified that although he filed proofs of loss after the fire, he never received payment from defendant. In the proofs of loss, plaintiff claimed the damage to its property was $55,000, the full value of the two insurance policies.

On cross-examination, Portnoy was questioned about a letter mailed to defendant for the purpose of providing information about plaintiff's claim for the damage to the premises in question. In the letter, the gross monthly rental income prior to the loss for 320 Beach 43rd Street was reported to be $508 and the rental income during the 12 months prior to the loss was reported to be $8,340. With respect to 320A Rear Beach 43rd Street, the gross monthly rental income was reported to be $350 while the rental income during the 12 months prior to the loss was reported to be $6,882. Portnoy could provide no figures with regard to plaintiff's monthly operating expenses.

Albert Frankel, a licensed real estate broker testifying for plaintiff, estimated that the value of the damaged structures and the underlying land prior to the fire was $61,700. Frankel arrived at that figure by computing the square-foot price of similar buildings in the area. Frankel later admitted that the property in question was located in a deteriorating neighborhood.

Defendant's witness, James O'Malley, a licensed real estate broker, testified that after considering such factors as the area, sales in the neighborhood, estimated expenses and the rental income supplied by plaintiff, the actual cash value of the premises in question prior to the fire was $10,500.

After both sides rested, plaintiff moved to dismiss defendant's affirmative defenses. The court reserved decision with respect to the defenses alleging that plaintiff swore falsely or willfully misrepresented material facts in its proofs of loss and in the examination under oath.

Upon charging the jury, the court submitted written interrogatories to the jury. Neither party objected to the interrogatories. One of the questions asked was "Did plaintiff falsely swear to or misrepresent a material fact?" The jury answered this question in the affirmative.

After polling the jury, the court addressed itself to plaintiff's motion to dismiss the affirmative defenses alleging misrepresentations and false swearing in plaintiff's proofs of loss and at the examination under oath. The court indicated that both defenses were embraced by the single question which resulted in the jury finding that there was false swearing or misrepresentation of a material fact. The court stated it would now separate the two defenses into two separate questions so that it could evaluate the basis of the finding that there was false swearing or misrepresentation as to a material fact. Defendant's attorney objected to the court's refusal to accept the verdict as is.

Thereafter, the court instructed the jury as follows:

"Members of the jury: You found by your answer to question number 1.b) that the plaintiff falsely...