Howard Insurance v. Scribner — 5 Hill & Den. 298

Majority

p. 298

The Howard Insurance Company of New-York vs. Scribner and others.

Headnote

To constitute a case of double insurance, within the rule of law on that subject, the two insurances must be upon precisely the same property. Per Co wen, J. Where there is a double insurance, and an action is brought on one of the policies, if it contain a clause providing for only a proportional payment in case of loss, the assured cannot recover beyond that proportion. Per Cowen, J.

But in an action on a policy containing such clause and insuring $1000 on fix. tures and $3000 on stock, though it appeared that the plaintiff had procured another policy insuring $5000 on the stock and fixtures, as one parcel; held, not a case of double insurance, and that the underwriter was liable to the same ex- . tent as if the latter policy had never existed.

Error to the superior court of the city of New-York. The action in the court below was by Scribner and others against The Howard Insurance Company of New-York, on a fire policy for qne year, dated November 25fh, 1S3§. The whole amount iusnred was $5000, as follows: “ On frame buildings adjoining and communicating, occupied as a distillery and rectifying establishment, situated on the north-east corner of Sheriff and Stanton streets, marked 1, 2 and 3 on plan on file No. 2963— $750. On frame building about four feet east, of the above, and fronting on Stanton street, occupied as a meal-house and for storage of liquor in the cellar—$250. On tubs, cisterns, still-worms, boilers, pumps, gears and other fixtures - and utensils used in .distilling and rectifying, contained in said buildings— $1000. On stock, consisting of meal and liquors, contained in said buildings—$3000.” [Memorandum.] “ 5000 insured by ¿Etna, and $5000 by Hartford Insurance Company, of Hartford.” The policy was renewed from year to year, and continued in force to the time of the loss, which occurred on the 15th of February, 1841. The following is the substance of certain clauses contained in the'policy, viz. 1. The company agree to make good all such loss &c., not exceeding the amount insured, as shall happen to the property by fire; such loss to be estimated according to the true .and actual cash value of the said

p. 299

property at the time the same shall happen. 2. In case of any other insurance upon the property hereby insured, the insured shall not, in case of loss or damage, be entitled to demand or recover on this policy any greater portion of the loss or damage sustained, than the amount hereby insured shall bear to the whole amount insured upon said property. 3. Notice of previous and subsequent insurances must be given to the company ; and in all cases of insurance this company shall be liable for such rateable proportion of the loss or damage happening to the subject insured as the amount insured by this company shall bear to the whole amount insured thereon, without reference to the dates of the different policies.

When the loss happened, the plaintiffs below were insured by the -¿Etna Fire Insurance Company of Hartford in the sum of $5000, “ on stock of liquors and fixtures contained in the frame buildings adjoining and communicating, occupied as a rectifying establishment, situated on the north-east corner of Sheriff and Stanton streets,” «fee. The policy by which the last named insurance was effected, was dated- February 4th, 1837, and contained a clause in substance as follows: In case of other insurance upon the property hereby insured, the assured shall not, in case of damage, be entitled to demand or recover of this company any greater portion of the loss or damage sustained, than the amount hereby insured shall bear to the whole amount insured on said property. - Due notice of the insurance by the jEtna company had been given to the defendants below, and that was the only other insurance at the time of the loss.

Tire whole amount of loss was as follows, viz. $750 on the buildings occupied as a distillery and rectifying establishment, being the full sum for which such buildings were insured by the defendants below; and $5918,76 on the fixtures, viz. “ on tubs, cisterns, still-worms, boilers, pumps, gears and other fixtures and utensils used in distilling and rectifying, .contained in said buildings.” The total value of all the fixtures lost and not lost, was $9894,91. The loss on the stock was $2684,01, and the total value thereof, including lost and not lost, was $2996,35.

The court below charged, in substance, that the plaintiffs

p. 300

were entitled to recover the whole amount of losses on the buildings, fixtures and stock, to the extent of the sums insured on each respectively, unless the losses were subject to apportionment by reason of the insurance in the ¿Etna company; that inasmuch as the defendants’ policy insured distinct and. separate sums on distinct and separate interests—viz. $750 on the buildings occupied as a distillery and rectifying establishment, $250 on the frame building &c.* $1000 on fixtures and utensils, and $3000 on stock and liquors—and the ¿Etna policy insured $5000 on stock of liquors and fixtures, as one parcel, it could not be deemed another insurance on the property mentioned in the defendants’ policy; and that the plaintiffs were therefore entitled to recover to the same extent as though the ¿Etna policy had never existed. The defendants’ counsel excepted to the charge. The jury rendered a verdict in favor of the plaintiffs; whereupon, after judgment* the defendants sued out a writ of error.

W. C. Noyes, for the plaintiffs in error.

■M. T. Reynolds, for the defendants in error.

J. The defendants’ policy was ón buildings described and insured as two distinct parcels, about which there is no dispute. By the same policy they insured $1000 on fixtures and utensils, and $3000 on stock. The ¿Etna company subsequently insured $5000 on the fixtures and stock as one parcel. Out of fixtures worth $9894,91, the plaintiffs lost $5918,76; and out of stock Worth $2996,35, they lost $2684,01.

The defendants’ policy contained a clause in these Words: “ And in case of any other insurance upon the property hereby insured, whether prior or subsequent to the date of this policy,, the insured shall not, in case of loss or' damage, be entitled to demand or recover on this policy any greater portion of the loss or damage sustained than the amount hereby insured shall bear

p. 301

to the whole amount insured upon said property.” The .¿Etna policy contained a clause to the same effect.

Were this the ordinary case of double insurance, no question is made that the plaintiffs’ recovery should have been cut down to a proportional amount. (Lucas v. The Jefferson Insurance Company, 6 Cowen, 635.) A man may insure the same subject against fire in several offices, to any amount, due notice being given to each, and the fact noted on the respective policies. (1 Bell’s Com. 629; 2 Phill. On Ins. 59, 2d ed.) The effect is, that each office then stands in the relation of co-surety with the other, according to the several amounts for which they undertook, just as if they had all underwritten the same policy. The several policies are considered as one. Stopping here, therefore, the insured may sue and recover on one or more of them to the extent of his entire loss, if the sums subscribed will cover it; and those who pay the loss may compel contribution for the payment from the others, in the proportion that each of the sums subscribed by them bears to the whole amount of subscriptions. (6 Cowen, 635 ; 2 Phill. On Ins. 606; See Hughes On Ins. 45; Millar On Ins. 271, 2; Park On Ins. 373 ; Condy's Marsh. 146.) To avoid this circuity, the clause in question was introduced. By this, the double office of recovery and contribution is performed in a single action; the defendant being allowed to recoupe the same amount which he must formerly have recovered over against those who stood by his side. The clause, it seems, has not always been received with perfect favor. (Stacey v. The Franklin Ins. Co., 2 Watts & Serg. 506 , 542.) But no question has ever been made that this and the like clauses in policies must have effect, when the case for which they provide clearly exists. Parties to a contract may fix the damages for a breach, by a provision in the contract itself, if the measure prescribed violate no rule of policy or equity. The clause in question was probably intended to substitute proportional abatement for' contribution, in all those cases in which the latter would otherwise have been required by the common law: and is perhaps sufficient to answer that end. Have we here that single policy, that rcla

p. 302

tion of sureties which calls for contribution 1 The sums sub* scribed may be and often are different; but none of the numerous books cited show that the right to contribution has ever been supposed to arise without the subject matter insured being exactly the same in each policy. It is not enough that the insured be the same. He may take policies on different things, on different risks pertaining to the same thing, or on different interests in respect to the same thing. In each case the demand for a loss against one insurer is in no way affected by the subscription of another. (Godin v. Lond. Ass. Co., 1 Burr. 489, 495 ; 1 W. Bl. 103, 105, S. C.; Park On Ins. 375.) We must here regard the first as in effect two separate policies insuring $1000 on the fixtures and $3000 on the stock. Then, to warrant contribution, we want 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 contracts of parties. Something like it was, I perceive, once attempted by a private hand, and with about the same success as has attended the efforts of counsel here. (Stevens On Average, 194, Am. ed. of 1817.) The struggle of the learned author was to make at least a single indemnity out of both policies; and any thing short of indemnity would not be just to the assured. If we were authorized to impute fraud or evasion to the assured, we might then allow the defendants to divide and apply the sum^in ffieir own way. But the policy from which they claim to benefit, was noted on their

p. 303

own, and they admit that due notice was given to them. They have acquiesced, either knowing of the variance, or at least neglecting to obtain proper information and to take measures for having it corrected or explained. The plaintiffs evidently intended to insure only the balance of an interest which they thought was not covered by the defendants’ insurance—an insurance that proves in fact unequal to the loss. Possibly the second policy may, under the circumstances, be so construed as to effect the intended object; but how much may be recovered upon the ¿Etna policy is not now the question. It is enough to see that the insurance is not double. The case of Harris v. The Ohio Insurance Company (5 Ham. 466, 468) did not raise the question of contribution or abatement. 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.

We are of opinion that the court below was right in holding that the plaintiffs might recover on the defendants’ policy without reference to the ¿Etna policy.

Judgment affirmed.