Michigan Mortgage-Investment Corp. v. American Employers' Insurance ( 1928 )

I am not persuaded that we should follow the Illinois case cited by my Brother. The Illinois court did not seem to regard as controlling the question of whether the renewal created a new contract or not. To my mind that is the controlling question. If there is but one contract agreeing to indemnify up to a certain sum, manifestly that sum is the limit that may be recovered; if there are two contracts each agreeing to indemnify for loss during the period covered by it up to a certain sum, and a loss occurs during both periods, I see no impediment in a recovery on both contracts up to the limit fixed in each. If this is not the rule, then plaintiff received no consideration for the premiums paid on the second or renewal policy, and the only way employers may be protected by this character of insurance will be to take a new policy in a different company each year. If there had been two original policies issued by defendant to plaintiff covering different periods, each containing the language limiting recovery quoted by my Brother, I do not think we would hesitate in holding that such limitation was a limitation on the amount recoverable under each of the policies for loss during the period covered. I do not believe we would extend the limiting languages to losses arising under the other policy. In the instant case the original policy was for $20,000, covering the officers set out in a schedule attached to it; they were: "Clarence H. Palmer, Secy. and Treas., $10,000, Clarence H. Palmer, Asst. Secy. and Treas., $5,000, Gretchen K. Colt, Cashier, $5,000." To the second policy or renewal there was also attached a schedule showing the coverage to be "Vernon J. Padgett, Secy. and Treas., $10,000, Clarence H. Palmer, Asst. Secy. and Treas., $5,000, Gretchen K. Colt, Cashier, $5,000." Could it be said that if Mr. Palmer as treasurer defaulted in the sum of $10,000 the first year and Mr. Padgett defaulted in the same office in the same sum the second year, that the language used would limit recovery for both defalcations to the sum of $10,000, or would it be held that the language used limiting recovery was applicable only to the policy in which it was used?

The courts of the country are not in unison on the question of whether the renewal of a policy of insurance is a new contract or a continuance of the old one. Early in its history this court in plain, unequivocal language aligned itself with those courts holding that the contract was a new and independent contract. Brady v. InsuranceCo., 11 Mich. 425. This case was followed and applied to fidelity insurance in Ladies of Maccabees v. Surety Co.,196 Mich. 27. In addition to the authorities there cited, see Mayorand Council of Brunswick v. Harvey, 114 Ga. 733 (40 S.E. 754); Florida, etc., R. Co. v. Surety Co., 99 Fed. 674;Hawley v. Guaranty Co., 100 N.Y. App. Div. 12 (90 N.Y. Supp. 893), affirmed without opinion, 184 N.Y. 549; Alex. CampbellMilk Co. v. Guaranty Co., 161 N.Y. App. Div. 738 (146 N.Y. Supp. 92); United States Fidelity Guaranty Co. v.Williams, 96 Miss. 10 (49 So. 742); Proctor Coal Co. v.Guaranty Co., 124 Fed. 424. In most of these cases the insurance companies have invoked the rule that the renewal created a new contract. This they have done in the main to secure the advantage of the time limit in which an action on the policy may be brought. But manifestly if it be the rule that a new contract has been created for one purpose it must be a new contract for all purposes.

If there are two separate and distinct contracts of insurance covering different periods, for different considerations involved in the instant case, and our former decisions so hold, recovery for loss during the period covered by the first policy is limited, and limited only, by the amount named in the schedule attached to that policy, and recovery for loss during the period covered by the second policy is limited, and limited only, by the amount named in the schedule attached to that policy. If I am right in my conclusion, the judgment should be reversed and a new trial granted, with costs to plaintiff.

CLARK, J., concurred with FELLOWS, J.