Turner v. Meridan Fire Ins. Co.

• Decision Date: 09 March 1883
• Citation: 16 F. 454
• Parties: TURNER v. Meridian FIRE INS. CO.
• Court: U.S. District Court — District of Rhode Island

16 F. 454

TURNER v. Meridian FIRE INS. CO.

United States Circuit Court, D. Rhode Island.

March 9, 1883

Stephen Essex, for plaintiff.

Oscar Lapham, for defendant.

Before LOWELL and COLT, JJ.

COLT J.

On July 9, 1879, the defendant issued a policy of insurance to the plaintiff, running for five years. Afterwards, on November 15, 1880, the plaintiff took out another policy for five years, covering the same property, in the Springfield Fire &amp Marine Insurance Company. The property was destroyed by fire March 8, 1881. Both policies contained a provision that they should be void in case the insured 'shall have or shall hereafter make any other insurance on the property,' without the written consent of the company. No notice was given of other insurance to either company, nor was the fact discovered until after the fire. The Springfield Company, on learning that the plaintiff had another policy in the defendant company, declined to pay the loss. Afterwards, in October, 1881, the Springfield policy was surrendered and canceled on payment of $200 to the plaintiff. The company however, always denied any legal liability. The defendant also refused payment of its policy, on the ground of subsequent insurance in the Springfield Company, and false swearing in relation thereto in the proofs of loss. This suit was brought in February, 1882, in the Rhode Island state court, and afterwards removed here. The case was heard by the court, jury trial having been waived.

The main question to be determined upon this motion is whether the defendant company can hold its policy to be invalid by reason of the subsequent policy taken out in the Springfield Company. What constitutes other insurance, within the meaning of this condition in insurance policies, is a question upon which courts have widely differed. The doctrine laid down by the highest tribunals of Massachusetts and some other states is that the subsequent insurance being invalid, at the time of loss, by reason of the breach of condition therein, the prior insurance is good, even though the second company waive the forfeiture and pay its policy in full. Thomas v Builders' Ins. Co. 119 Mass. 121; Jackson v. Mass. Fire Ins. Co. 23 Pick. 418; Clark v. New England Fire Ins. Co. 6 Cush. 342; Hardy v. Union Ins. Co. 4 Allen, 217; Lindley v. Union Ins. Co. 65 Me. 368; Philbrook v. New England Fire Ins. Co. 37 Me. 137; Gee v. Cheshire Co. Ins. Co. 55 N.H. 65; Gale v. Ins. Co. 41 N.H. 170; Schenck v. Mercer Co. Ins. Co. 4 Zab. 447; Jersey City Ins. Co. v. Nichol, Am. Law Reg. Sept. 1882, p. 620; Stacey v. Franklin Ins. Co. 2 Watts & S. 506; Sutherland v. Old Dominion Ins. Co. 8 Ins.Law J. 181, (Va. Ct. of Appeals;) Ins. Co. v. Holt, 35 Ohio St. 189; Knight v. Eureka Ins. Co. 26 Ohio St. 664; Rising Sun Ins. Co. v. Slaughter, 20 Ind. 520; Allison v. Phoenix Ins. Co. 3 Dill. 480.

On the contrary it is held, elsewhere, that a subsequent policy, whether legally enforceable or not, or whether voidable on its face or voidable for extrinsic matter, works a forfeiture of the prior policy. Somerfield v. Ins. Co. 8 Lea, 547; Funke v. Minnesota Farmers' Ins. Ass'n, 15 Rep. 114, Jan. 24, 1883, (Sup. Ct. of Minn.;) (S.C. 13 N.W. 164:) Suggs v. Liverpool, London & Globe Ins. Co. 9 Ins.Law J. 657, (Ky. Ct. of Appeals;) Allen v. Merchants' Ins. Co. 30 La.Ann. 1386; Lackey v. Georgia Home Ins. Co. 42 Ga. 456; Bigler v. N.Y. Cent. Ins. Co. 22 N.Y. 402; Landers v. Watertown Ins. Co. 86 N.Y. 414; Carpenter v. Providence Washington Ins. Co. 16 Pet. 495; Jacobs v. Equitable Ins. Co. 19 U.C.Q.B. 250; Ramsey, etc., Co. v. Ins. Co. 11 U.C.Q.B. 516; Mason v. Ins. Co. 37 U.C.C.P. 47; Royal Ins. Co. v. McCrea, 8 Lea, 531; Equitable Ins. Co. v. McCrea, Id. 541.

There is still another view taken by the supreme court of Iowa, in the case of Hubbard v. Hartford Fire Ins. Co. 33 Iowa, 325, to the effect that the question of recovery under the prior policy turns upon whether the subsequent policy has been in fact avoided. If the subsequent policy is recognized by the company issuing it as a valid policy, any breach of condition being waived, this makes it a valid insurance, and constitutes it a good defense to an action upon the prior policy; but if the subsequent policy has been avoided by the company, there is no other insurance, so as to defeat a recovery on the prior policy. Although at first this reasoning may strike the mind as a fair compromise between the other conflicting positions taken upon this question, it is a subject of such grave objections that it cannot be considered tenable.

If the condition in the first policy was violated, it was done at the time the second contract of insurance was entered into, and the subsequent affirmance or disaffirmance of the second contract, should not affect the validity of the first. The validity of the first contract can hardly turn upon what a stranger to it may do with reference to another contract, even after liability upon the first contract has become absolute by a destruction of the property. Funke v. Minnesota Farmers' Ins. Ass'n, supra.

At the trial of the cause, it seemed as if the weight of authority was in favor of holding the prior policy good upon the ground that the subsequent policy was invalid, and this position had been held by Judge DILLON in Allison v. Phoenix Ins. Co. 3 Dill. 480, not to be in conflict with the real point in judgment in Carpenter v. Providence Washington Ins. Co. 16 Pet. 495; but upon further consideration of all the authorities, and the principles which govern them, we cannot adopt this view.

This construction is open to the objection that the insured may collect both policies. It is also subject to the criticism that, in deciding upon the validity of one contract, the court, in the same action, must go outside of it, and determine, first, the validity of one or more independent contracts, involving, perhaps, an inquiry into complicated questions of fact respecting those contracts. Royal Ins. Co. v. McCrea, 8 Lea, 538. But further than this the principle upon which this construction is founded does not appear to be satisfactory. The reasoning in these cases is based largely on the assumption that the second policy is void by reason of the breach of condition therein, and that the issuing of such a void policy is no violation of the condition as to other insurance in the first policy. But is not this assumption too broad? Is it legally true that the second policy is a void contract? Conditions of this character in insurance policies are inserted for the benefit of the insurer, and their violation does not render the policy void, but only voidable at the election of the insurer. It is still a binding contract upon the insured. He can take no advantage of this breach of condition, and the insurer could still enforce the contract against him if anything was to be gained by so doing. 'Although the policy by its terms provides that it shall be void on a breach of any of its conditions, its legal effect is simply to render it voidable at the election of the insurer, and that the insurer can waive the forfeiture and continue the policy in force; or, to state the proposition more broadly, in all contracts where the stipulations avoiding the same are inserted for the sole benefit of one of the parties, the word 'void' is to be construed as though the contract read 'voidable.' This view seems to be sound in principle, just in practice, and is certainly well sustained by authority. ' Masonic Mut. Benefit Society v. Beck, (Sup. Ct. of Indiana;) 11 Ins.Law J.Oct. 1882, p. 755; Armstrong v. Turquand, 9 Irish C.L. 32; S.C. 3 Life & Acc.R. 350.

The party in default cannot defeat the contract. Viele v. Germania Ins. Co. 26 Iowa, 1. The policy is merely voidable, and may be avoided by the underwriters upon due proof of facts, but until so avoided it must be treated for all practical purposes as a subsisting policy. Carpenter v. Providence Washington Ins. Co. 16 Pet. 495. See, also, Baer v. Phoenix Ins. Co. 4 Bush, 242, and authorities before cited.

The doctrine of waiver as applied to conditions in policies of insurance, and which is invoked so frequently, is founded, in part at least, upon the theory that breach of condition only renders the policy voidable. The same principle prevails as to conditions in leases where the term 'void' is used. The lease becomes void only by the lessor's electing to treat it so, and not by the mere happening of the breach, and modern decisions have quite exploded the old distinction in this respect between leases for years and for life. Viele v. Germania Ins. Co. 26 Iowa, 70, note; Taylor, Landl. & Ten. Sec. 492.

As the second policy is not a void contract, but only voidable at the election of the company, as it is a contract entered into by the insured, and which he cannot dispute, and as the reason, if any, why he cannot legally enforce it arises from his own neglect or misrepresentation, may it not be fairly claimed that this is other insurance within the meaning and intent of the condition in the first policy? We think the rule, supported as it is by authorities of great weight, which holds the taking out of a voidable policy a violation of the provisions respecting other insurance in the first policy, the best one, and subject to less serious objections than any other.

What was the position of this plaintiff at the time of the loss? He had one policy of insurance in the defendant company, and he had another policy of later date in the Springfield Company. This second policy was issued in good faith by the Springfield Company and the premium paid. It was a policy the validity of which the plaintiff could not deny, and upon which he obtained $200 by way of compromise. It seems to us that upon any fair...