Vogel v. Northern Assur. Co.

• Decision Date: 08 September 1953
• Docket Number: No. 12845.,12845.
• Citation: 114 F. Supp. 591
• Parties: VOGEL et al. v. NORTHERN ASSUR. CO., Limited et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

114 F. Supp. 591

VOGEL et al. v. NORTHERN ASSUR. CO., Limited et al.

No. 12845.

United States District Court E. D. Pennsylvania.

September 8, 1953.

Lindenmouth & Class, Media, Pa., W. Glenn George, and A. J. Goldin, Philadelphia, Pa., for plaintiffs.

Horace Michener Schell, Philadelphia, Pa., for Northern Assur. Co.

J. Ward Hinkson, Chester, Pa., for Mount Joy Ins. Co.

GRIM, District Judge.

On October 16, 1950, Samuel Shank was the owner of a frame dwelling house in Delaware County, Pennsylvania. On August 29, 1950, Shank had entered into a written contract with Lawrence B. Vogel and Harriet F. Vogel, his wife, to sell the property to the Vogels.¹ On October 16, 1950, Shank placed fire insurance on the house insuring his interest therein in the sum of $6,000. The next day the Vogels insured their interest in the house in the sum of $12,000. The Shank insurance company was defendant Northern Assurance Co., Ltd. The Vogel insurance company was defendant Mount Joy Mutual Insurance Company.

On October 28, 1950, while the Shank and the Vogel insurance were in force a fire destroyed the house causing damage in the sum of $12,000.²

On November 24, 1950, Shank, along with his wife, executed and delivered to the Vogels a deed to the property and received from the Vogels the full balance of the consideration for the property as it was fixed in the agreement of sale dated August 29, 1950. When Shank received the balance of the consideration for the sale of the property on November 24, 1950, he not only delivered a deed to the Vogels, but he also executed an assignment to the Vogels of his claim against the Northern Assurance Co., Ltd. arising out of his fire insurance policy with the Northern company and the fire of October 28, 1950.

In the present action the Vogels are claiming from Northern Assurance Co., Ltd. the full amount of the fire insurance which Shank placed on the property and they also claim from Mount Joy Mutual Insurance Company the full amount of the insurance which they placed on the property with the Mount Joy company.

Here we have a situation where an owner of real estate and a prospective purchaser thereof execute an agreement of sale. Each one of them protects his interest in the property by placing fire insurance on it. Before the deed is delivered to the purchaser the property burns. When the owner delivers the deed to the property to the purchaser he also transfers to the purchaser his claim under the fire insurance he had placed on the property.

There seems to be no doubt under the law of Pennsylvania, which is the law which must be followed in this case, that when a fire damages a property after an agreement of sale has been entered into and before delivery of the deed the fire insurance company of the seller is liable to the seller of the property for the loss up to the limit of the policy, even though he may have been paid by the purchaser the full value of the property. Heidisch v. Globe & Republic Ins. Co., 368 Pa. 602, 84 A.2d 566, 29 A.L.R.2d 884. Since the seller in the present case has assigned his claim to the Vogels, the plaintiffs herein, it is clear that the Vogels can recover the full amount of the Shank insurance from defendant Northern Assurance Co., Ltd. Indeed, even if Shank had not assigned his claim to the Vogels it appears that the Vogels could collect the full amount of the Northern Assurance Co. insurance by filing an action equitable in nature asking that Northern Assurance Co. pay the insurance money to Shank and that Shank be declared a trustee for the Vogels. Dubin Paper Co. v. Insurance Co. of North America, 361 Pa. 68, 63 A.2d 85, 8 A.L.R.2d 1393.

Mount Joy Insurance Co. concedes that the Vogels had a right to insure their interest in the property, but it contends that it is not liable because of a clause in its policy known as the "other insurance" clause, which reads:

"Other insurance — Other insurance is hereby prohibited unless the total insurance including this policy is listed in the following spaces * * *

"It is provided * * * that this policy shall be void while the insured shall have any other contract of insurance, whether valid or not, upon such property, not permitted in writing thereon."

Apparently this clause is placed in fire insurance policies as a deterrent to fraud which can come about from the placing of excessive fire insurance on a property. This clause causes prospective fire insurance purchasers to disclose all their insurance on their property and it thus puts fire insurance companies in a position where they can decide with more certainty whether or not prospective insurance purchasers are likely to commit a fraud.

In the present case the Mount Joy policy did not in any way disclose the Northern Assurance Co. insurance. The Mount Joy company concedes that the "other insurance" in fire insurance policies has been defined to mean insurance on the same property and the same interest in the property. See Meigs v. Insurance Co. of North America, 205 Pa. 378, 54 A. 1053; Vrabel v. Scholler, 369 Pa. 235, 85 A.2d 858; Turk v. Newark Fire Ins. Co., D.C., 4 F.2d 142; Newark Fire Ins. Co. v. Turk, 3 Cir., 6 F.2d 533, 43 A.L.R. 496. It also concedes that the Mount Joy insurance did not insure the same interest as did the Northern Assurance Co. insurance. It therefore concedes that its insurance was valid when it was taken out and at the time of the fire, but it contends that its insurance became void under the "other insurance" clause when the Vogels accepted the assignment of the claim against the Northern Assurance Company.³

The rule, which is supported by many authorities and which the Mount joy company contends governs its situation, is set forth in 29 American...