McGowan v. People's Mutual Fire Ins.

The opinion of the court was delivered by Taft, J.

The policy in question contained the following provision:

“ Whenever any one hereafter insured shall alienate conditionally, by mortgage, his policy shall be void, unless he shall make *214 a representation thereof in writing to the secretary, stating the amount, and to whom mortgaged, and the cash value of lands and buildings separately, and when approved by a director, the secretary shall enter a minute thereof on the record of said policy and forward to the insured a certificate thereof.”

The assured mortgaged the real estate covered by the policy on the 24th day of July, 1878 ; the property was destroyed by fire on the 18th day of the following month; notice of the mortgage was given to the secretary on the 12th day of September afterwards, —fifty days after its execution, and twenty-five days after the fire. The orator contends that he was entitled to a reasonable time to represent the mortgage to the company. He delayed for twenty-five days and until the destruction of the property. He could have communicated with the secretary daily. There is much good sense in saying that upon the execution of the mortgage the policy was void, as though the contract had read “ until he shall make a representation,” &c., instead of “ unless he shall make,” &o. But construing the clause most favorably to the assured, and giving it the construction contended for, we think the delay of twenty-five days, when he could have communicated with the company daily, an unreasonable one. This disposes of this branch of the case, and renders it unnecessary to determine what the rights of the assured, to have had the contract continued, would have been in case he had applied for that purpose within a reasonable time. The case of Boynton v. Farmers' Ins. Co., 43 Vt. 256 , does not aid the orator. In that case, upon the alienation of the property, the policy was actually assigned, and by its terms the assignee had thirty days to apply to the company for a ratification of the assignment; only eight which had elapsed ; and the company by its demurrer, admitted that it had no cause for the refusal to ratify the assignment. That case might be invoked as an authority in this case, provided notice of the mortgage executed by the orator, had been given by him within a reasonable time, and the defendant had without cause refused to approve it. The policy therefore, by reason of the execution of the mortgage by the orator, became void ; but the orator claims that it was valid as to the personal property, situated in the. dwelling-house, which was the first item insured by the policy.

*215 This is a question of great practical importance, as a large proportion of insurance contracts embrace more than one item of property insured. The decisions are apparently conflicting; but we think are easily reconciled by referring to the plain principles which should govern them. The general rule, “ void in part void in toto,” should apply to all cases where the contract is affected by some all-pervading vice, such as fraud, or some unlawful act, condemned by public policy or the common law; cases where the contract is entire and not divisible ; and all those cases where the matter that renders the policy void in part, and the result of its being so rendered void, affects the risk of the insurer upon the other items in the contract. Keeping these rules in mind, the leading cases upon this subject can all be reconciled. A recovery should be had in all those cases where the contract is divisible; the different properties insured for separate sums ; and the risk upon the property, which is claimed to be valid, unaffected by the cause that renders the policy void in part. Such are the cases of Howard v. Cornick et al., 24 Ill. 455 ; Hartford Fire Ins. Co. v. Walsh, 54 Ill. 164 ; Clark v. New Eng. M. F. Ins. Co., 6 Cush. 342 ; Date v. Gore District M. F. Ins. Co., 14 Up. Can. C. P. 548 ; Phoenix Ins. Co. v. Lawrence et. al., 4 Met. (Ky.) 9 ; Lochner v. Howe M. Ins. Co., 17 Mo. 247 ; Koontz v. Hannibal S. & I. Co., 42 Mo. 126 ; Cucullu v. Orleans Ins. Co., 18 Mar. (La.) 11.

In French v. Chenango M. Fire Ins. Co., 7 Hill, 122 , the policy covered a building and its contents, and was held void as to the former by omitting to state the existence of a plough shop within ten rods of the property insured; but valid as to the contents. Upon what principle a policy could be held void in part and valid in part, for a misdescription of adjacent buildings, affecting the various items of the risk in equal degree, we are unable to determine. The case was substantially overruled by Wilson v. Herkimer Co. M. Ins. Co., 6 N. Y. 53 .

The cases following have held the contracts entire, indivisible, and no recovery could be had upon them. Hinman v. Hartford Fire Ins. Co., 36 Wis. 159 ; Associated F. Ins Co. v. Assum, 5 Md. 165 ; Bowman v. Franklin Ins. Co., 40 Md. 620 ; Fire Association v. Williamson, 26 Penn. St. 196; Gottsman v. The Penn. *216 Ins. Co., 56 Penn. St. 210 ; Bleakley v. Niagara D. M. Ins. Co., 16 Grant’s Ch. Rep. U. C. 198.

In the case at bar the whole property was insured for eight hundred and seventy-two dollars, divided into specific items, but one premium was paid, and one premium note given. We think the authorities justify us in holding that the contract was an entire one ; separate and distinct only so far as to limit the extent of the risk assumed by the company on each kind of property. The cost of the insurance was to be assessed upon the premium note, and the company had a lien upon the buildings insured, as security for the payment of any assessment which might be made upon the note. The encumbrance upon the buildings affected the security the company held for the payment of assessments which might be laid upon the note ; thus the risk upon the personal property was affected by the cause which rendered the policy void as to the real estate. We think for these two reasons that the whole policy was void. Friesmuth v. Agawam M. F. Ins. Co., 10 Cush. 587 ; Brown v. People’s M. Ins. Co., 11 Ib. 280 ; Love-joy v. Augusta M. F. Ins. Co., 45 Me. 472 ; Gould v. York Co. M. F. Ins. Co., 47 Me. 403 ; Day v. Charter Oak F. & M. Ins. Co., 51 Me. 91 ; Barnes v. Union M. F. Ins. Co., Ib. 110.

The views expressed render it unnecessary to pass upon the questions in the case as to proofs of loss, fraud, and false swearing. The pro forma decree of the Court of Chancery is reversed, and cause remanded with a mandate that the bill be dismissed.

Veazey, J., did not sit, having heard the case on demurrer.