Short v. Oklahoma Farmers Union Insurance Co.

HARGRAVE, Justice.

This case arises from an attempt to collect on a policy of insurance issued by Oklahoma Farmers Union Insurance Company by plaintiff Zaida Short. The defendant, Farmers Union, issued the policy to Bobby Short and Zaida Short as joint insureds on June 4, 1974. The following month Zaida Short filed for a divorce. The day he was served with the summons, July 15, 1974, Bobby Short burned the insured dwelling after imbibing spiritous liquors and without the knowledge or assistance of his wife. Mr. Short subsequently plead guilty to a charge of arson.

In August of 1974 the parties were awarded a divorce. The decree awarded all property belonging to the parties, in addition to any proceeds of the insurance policy, to Zaida and she proceeded with efforts to collect on that policy. Farmers Union denied the claim and this action ensued. Zai-da, as plaintiff, alleged a policy of insurance was issued to her and her husband and was in force at the time of the destruction of the residence, and that the loss exceeded the limits of the policy, $11,750.00.

The trial court entertained a motion for summary judgment filed by Farmers. The journal entry states that plaintiff and Bobby Short were married on the day of the fire and that the dwelling house was insured by Farmers and owned by the husband and wife in joint tenancy. The trial court also found the husband and wife were jointly insured on the policy of insurance covering the house. Mr. Short intended to and did burn the dwelling and did so in the absence of collusion or fraud on the part of plaintiff. After recitation of the above facts the trial judge held that

“Because of the marital relationship of the parties and their status as co-insureds on the insurance policy the plaintiff, Zaida Short, may not under Oklahoma law recover for the fire damage suffered ...”

In the institution of this appeal plaintiff urges the court’s ruling is erroneous under Oklahoma law and characterizes the error thusly in her petition in error:

“The Court erred in holding that under Oklahoma law that where a co-insured has not violated the terms of the policy that he or she can be precluded from the protection of the policy by virtue of the acts of another co-insured in spite of the fact that the policy does not exclude such coverage and that the innocent co-insured is not guilty of fraud or collusion.”

In her brief the appellant summarizes the offered error of the trial court, stating that as a matter of law a wife cannot be barred from a cause of action solely by the independent acts of her husband. Secondly, appellant contends that under the language of this contract of insurance the rights, duties and obligations of a co-insured are several.

The general nature of the relation between an insurer and his insured is purely contractual, although its essential personal character does not preclude regulation by the state. German Alliance Ins. Co. v. Lewis, 233 U.S. 389 at 412, 34 S.Ct. 612 at 619, 58 L.Ed. 1011 (1914). As such, an insurance contract must be given the same consideration given other contracts of adhesion. Lester v. Sparks, 583 P.2d 1097 (Okl.1978). The contractual provisions relied upon by the trial court and the appellee to avoid liability for damage caused by the husband-arsonist are first, a provision of the policy defining a spouse as an insured:

“The unqualified word ‘Insured’ includes (a) the named Insured and (b) the residents of his household, his spouse, the relatives of either, and any other person under the age of twenty-one (21) in the care of an Insured... . ”

Indeed, both Bob and Zaida Short were named insureds to this insurance contract. Where the spouse is an insured by virtue of the above language, appellee asserts the following provisions avoid or except coverage for damage caused by the intentional act of the insured spouse:

“CONCEALMENT, FRAUD. 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 in-sur anee or the subject thereof, or the interest of the insured therein, or in the ease of any fraud or false swearing by the insured relating thereto.

“PERILS NOT INCLUDED. This Association shall not be liable for loss by fire or other perils insured against in this policy caused, directly or indirectly, by: ... (i) neglect of the insured to use all reasonable means to save and preserve the property at and after a loss or when the property is endangered by fire in neighboring premises.

“CONDITION SUSPENDING OR RESTRICTING INSURANCE. UNLESS OTHERWISE PROVIDED IN WRITING ADDED HERETO THIS ASSOCIATION SHALL NOT BE LIABLE FOR LOSS OCCURRING (a) while the hazard is increased by any means within the control or knowledge of the insured; ...”

The question of whether a jointly insured party is precluded from recovering on a contract of insurance where the insured property is destroyed intentionally by another joint insured has been reached in several jurisdictions, but not Oklahoma. The majority view is exemplified by such cases as Bellman v. Home Insurance Co., 178 Wis. 349, 189 N.W. 1028 (1922), and Kosior v. Continental Ins. Co., 299 Mass. 601, 13 N.E.2d 423 (1938). Bellman, supra, holds, as does Klemens v. Badger Mutual Insurance Co., 8 Wis.2d 565, 99 N.W.2d 865 (1959), that where the policy is issued jointly one spouse is precluded from recovering on the contract after the other spouse intentionally burned the property under a clause denying liability where the insured neglected to save and preserve the property at and after loss. There the Court stated the neglect provision of the policy was a joint obligation of the insured; breach thereof removed the risk from coverage by the contract. A second basis is discernible for denial of coverage in instances such as that considered here. These cases are based on the joint nature of the property ownership and not the breach of a joint obligation of the insureds. Jones v. Fidelity & Guaranty Ins. Corp., 250 S.W.2d 281 (1952 Tex.Civ.App. error ref.), Bridges v. Commercial Standard Ins. Co., 252 S.W.2d 511 (1952 Tex.Civ.App.). There the Texas courts have stated that where property is jointly owned an innocent owner could not recover on a policy where a joint owner willfully set fire to the property.

Arson is a crime whose threat to the public is general. The burning of a building not only threatens the financial well-being of its owner but endangers the public at large regardless of the structure’s current profit position in the marketplace. Arson has been said to be difficult to detect because the intended result is the destruction of the premises that is .evidence of the crime itself. In today’s increasingly urban environment arson is a continuing threat to adjoining landowners, the public at large and the municipality which must combat such conflagrations. To allow recovery on an insurance contract where the arsonist has been proven to be a joint insured would allow funds to be acquired by the entity of which the arsonist is a member and is flatly against public policy. Arson has been held to be a fraudulent act, as any intentional destruction of the insured property. Klemens v. Badger Mutual Ins. Co., 8 Wis.2d 565, 99 N.W.2d 865 (1959). Where, as here, the title to the property is held jointly and that property insured under a single policy and is destroyed by a joint insured’s act of arson, the entire policy is voided under the first quoted contract provision declaring the policy to be void in the case of fraud or false swearing on the part of the insured.

The appellee contends the provision of the contract providing that the insuror is not liable for loss caused directly or indirectly by neglect of the insured to use all reasonable means to save and preserve the property at or after loss applies here. Additionally, the appellee points to the clause refusing liability while the hazard is increased by any means within the control or knowledge of the insured. Both clauses are applicable.

The appellant contends the Summary Judgment granted the appellee-de-fendant is improper by virtue of the letter and spirit of 32 O.S. 1971 § 15:

“Woman shall retain' the same legal existence and legal personality after marriage as before marriage, and shall receive the same protection of all her rights as a woman, which her husband does as a man; and for any injury sustained to her reputation, person, property, character or any natural right, her own medical expenses, and by reason of loss of consortium, she shall have the same right to appeal in her own name alone to the courts of law or equity for redress and protection that her husband has to appeal in his own name alone.”

Similarly 32 O.S. 1971 § 9(1) provides that neither the husband nor wife as such is answerable for the acts of the other. These statutes do go far to establish that a married person has the same rights under the laws as a single individual. They do not exempt individuals from the binding effects of their contracts, however. It is the contractual agreement that is here controlling and measured by 32 O.S. 1971 § 9(1). It is correct to state that both spouses are accountable and bound by their contractual agreements in the same manner as any other two insureds would be. Here the spouse is not answerable for the arson of her husband simply because of their marriage as such but she is bound by the contract. The statute is not designed to afford protection to a spouse but to insure that a spouse is accorded the same treatment a single person is accorded when placed in the same position as the spouse. Under this insurance contract, a jointly insured party owning property jointly with an arsonist would be precluded from recovery under the contract without regard to his or her status as a spouse.

The summary judgment granted defendant is therefore AFFIRMED.

LAVENDER, C. J. IRWIN, V. C. J., and BARNES, SIMMS and OPALA, JJ., concur. WILLIAMS, HODGES and DOOLIN, JJ., dissent.