Sloat v. Royal Insurance

The opinion of the court was delivered, by

Read, J.

“Double insurance,” says Arnould, “takes place when the assured makes two or more insurances on the same subject, the same risk; and the same interest. If there be double insurance, either simultaneously or by successive policies, in which priority of insurance is not provided' for, all are insurers, and liable pro rata. All the policies are considered as making out one policy, and, therefore, any one insurer who pays more than his proportion, may claim a contribution from others who are liable. Eire policies usually contain express and exact provisions on this subject.”

The clause in the policy of-the defendant, is in these words: “Persons insuring property in this office must, when required, give notice of any other insurance made elsewhere on the same property on their behalf, and cause a minute or memorandum of such other insurance to be endorsed on their policies: in which case this company shall only be liable to the payment of a rateable proportion of any loss or damage which may be sustained ; and unless such notice be given, the insured will not be entitled to any benefit.” And the following memorandum was made on each of the policies of the defendants : “ Other insurances permitted without notice to this company until required.”

The question arises on the $2000 insured by the Royal Insurance Company on the building only, and the policy of the Philadelphia Eire and Life Insurance Company for $2500, on building, machinery, shafting, belting, tools, lathes, planes, chills, and stock finished and unfinished — was this a double insurance ? The case of The Howard Insurance Company of New York v. Scribner, 5 Hill 298, is a distinct authority that this is not a case of double insurance. It was decided, twenty-one years ago, by the Supreme Court of New York, then the highest judicial tribunal of .the state, and consisting of Chief Justice Nelson and Justices Bronson and Cowen, with an appeal, it is true, to the Court of Errors under the old Constitution. The present Supreme Courts are simply local courts, like our Courts of Common Pleas, excepting that each judicial district'has four law judges.I cannot find that this decision has ever been impugned or denied by any judicial tribunal in the state of New York, and it is to be remarked that it is an affirmance of a judgment of the Superior Court of the city of New York. The first policy was divided, $1000 on fixtures and utensils, and $3000 on stock. The second policy of the PBtna Company was for $5000, on the’ fixtures and stock as one parcel. Both policies contained a clause as to the recovery of only a pro rata amount, similar to the clause in the present case to warrant contribution. “We want,” said the court, “ two other separate policies, or one insuring separate sums on each. The assured, however, took only one policy, insuring an entire sum on one parcel. The subject ■was, therefore, different. In the first it was separate — in the second compound; and such a difference may as well be extended to fifty as to only two subjects. The several subjects are found to be substantially different, when an effort is made to effect contribution. The counsel for both parties agree, that, in order to do so, the $5000 must be divided into two parts, one being applied to the fixtures, and the other to the stock. It is not denied that the division must be entirely arbitrary; and the different methods proposed by the parties best accord with their respective interests. Neither has cited any case where such a thing has been done, nor mentioned any principle by which we should be authorized thus to modify the contests of the parties.”

With regard to the case of Harris v. Ohio Insurance Company, 5 Hammond 466, decided in 1832, the court say, it “ did not raise the question of abatement or contribution. The first policy was declared void because notice of the second was not given. It comes out in the course of the opinion, that one was on goods and the other on store and goods; but the latter might have been for separate sums on each.”

' Mr. Phillips, in his third edition (1853) of his treatise on the Law of Insurance, Vol. 1, p. 203, No. 366, says, to constitute double insurance, the insurances must be on the same subject. After stating his views, he says, “ accordingly I cannot but doubt a decision in New York. It was a case of insurance of $1000 on fixtures and $3000 on stock in one policy, and then $5000 on fixtures and stock in another, without discriminating any proportion for each. It was adjudged that the assured was entitled to recover on the full amount insured in the latter without apportionment, though the amount in the two exceeded the actual value, on the ground that the premium on the prior policy could not be apportioned between the stock and fixtures. The court does not mean that no estimate could be made of such an apportionment, for plainly nothing is easier, but that they are precluded from making it; a notion derived from some of the early English precedents.”

■ It is singular, that so accurate a writer should have misstated the case he was commenting upon, and of course his conclusion is erroneous. The first policy on which the suit was brought, was dated November 25th 1836, and was the divided policy; the second policy of the ¿Etna was dated 4th February 1837, and was a compound policy, and was not in suit at all. The first policy did not cover the loss, and the decision was that the assured could recover the whole sum insured by it, as if the latter policy had never existed. In a suit therefor on the second policy the assured would only have recovered the amount of his loss,, after deducting the amount previously received from the first policy.

In the present ease there was no over-insurance, for the loss exceeds the whole amount of all the policies. In The Associated Firemen’s Insurance Company v. Frederick Assum, 5 Maryland Rep. 165 (December Term 1853), it was held, reversing the judgment of the Supreme Court of Baltimore City upon a covenant, that, if the assured “ shall hereafter make any other insurance on the hereby insured premises, he shall with all reasonable diligence notify the same to this corporation, or in default thereof this policy shall cease and be of no effect;” that if-any part of the goods mentioned in the policy was afterwards insured in any other office without notice, the whole policy thereby becomes void.

In the case in 2 Wright 250, whatever might have been the facts of the case, the question does not appear to have been brought to the notice of the court for its decision. In Hardy v. Union Mutual Fire Insurance Company, 4 Allen 217, the case was decided upon the ground that the second policy was invalid, and of course no question as to want of notice of it arose. This case is in conformity to their former decisions, and ours in Stacey v. Franklin Fire Insurance Company, 2 W. & S. 506, but contrary to the doctrine held by the courts of New York, and the Supreme Court of the United States. The case in 5 Hill has produced an alteration in the clause in New York, by providing that if insurance is effected covering the whole or any portion of the property insured by the company, the policy shall be void unless the company had notice thereof, and gave a consent in writing thereto : Vose v. Hamilton Mutual Insurance Company, 39 Barb. 302.

In the case before us there is no over-insurance, all the policies if paid will not pay the loss sustained by the assured; a calculation, therefore, which will cut down the payments must be based on erroneous principles. Upon the principle adopted by the defendant, it is the same as if there were three policies of $2500 each, $7500, instead of one policy for $2000, which clearly cannot be the law, as this is a mode adopted by the insurance companies to reduce their own liability without any foundation but their simple arbitrary will.

Under these circumstances it appears to be the simplest and most equitable mode to adopt the plain rule laid down by the Supreme Court of New York, and to hold that it is not a case of double insurance, and of course the clause in question has no application whatever.

Judgment reversed, and judgment entered on the case stated for the plaintiff for $431.53, with interest.