Brough v. Presidential Fire Marine Ins. Co.

The policy sued on is what is known as the New York Standard Form of Fire Insurance, which is the only form of fire insurance policy permitted in this state, Act No. 105 of 1898, § 22, as amended by Act No. 255 of 1914, § 1. The latter act contains the following proviso: "Where it is stipulated in this policy, that, without the consent of the insurer endorsed hereon or added hereto, the breach of a condition shall avoid the policy, it shall be held such breach does not in fact avoid the policy, but only suspends the operation of the policy during the time the breach continues."

The defendant's policy contains the proviso as required by the Act of 1914. One of the suspensive conditions in the policy relates to the ownership of the property, which must be "unconditional and sole ownership" to prevent the interruption of coverage by the insurer. The argument of counsel concerning the breach of conditions precedent and conditions subsequent having the effect of rendering the policy void or voidable would appear groundless in view of the statutory and policy provision to the effect that such breach shall only suspend the operation of the policy.

The majority opinion holds that the suspension of the policy because of the breach of the condition concerning ownership was not sufficient in and of itself to prevent recovery, and, therefore, the case could not be disposed of on the exception of no cause of action. However, it is said that such breach has increased the moral hazard because there was a mortgage on the property which was subsequently foreclosed. I concede that the preponderance of the authority is to the effect that a mortgage increases the moral hazard. However, see our opinion in Peterson v. Pacific Fire Insurance Company, 148 So. 283. Our Supreme Court has held that the question is one of fact to be determined in each case. Knowles v. Dixie Fire Ins. Co., 177 La. 941,149 So. 528. But whether the mortgage increased the hazard or not, there is, in this case and in this policy, no provision, warranty, or condition relating to a mortgage for the breach of which the hazard may be said to have been increased. There is a clause in the policy which declares that "if the subject of insurance be personal property and be or become encumbered by a chattel mortgage" the policy shall be void (suspended). In this case the subject of insurance is not personal but real property, hence the policy provision concerning incumbrance, present or future, does not appear.

For these reasons I cannot agree with that portion of the majority opinion which holds that plaintiff may not recover for the loss of his dwelling, and, to that extent, respectfully dissent.