Case Name: LAGDEN v. CONCORDIA MUTUAL FIRE INSURANCE CO. OF BAY, SAGINAW & ARENAC COUNTIES
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1915-09-28
Citations: 188 Mich. 689
Docket Number: Docket No. 107
Parties: LAGDEN v. CONCORDIA MUTUAL FIRE INSURANCE CO. OF BAY, SAGINAW & ARENAC COUNTIES.
Judges: Brooke, C. J., and Kuhn and Moore, JJ., concurred with Bird, J.
Reporter: Michigan Reports
Volume: 188
Pages: 689–699

Head Matter:
LAGDEN v. CONCORDIA MUTUAL FIRE INSURANCE CO. OF BAY, SAGINAW & ARENAC COUNTIES.
1. Insurance — Mutual Benefit Poucy — Fire Insurance — Breach.
Act No. 128, Pub. Acts 1911, limiting tbe effect of tbe breach of any condition in a fire insurance policy to instances where the insurer has suffered prejudice from the breach or where the loss took place because thereof, protected plaintiff, who procured additional insurance in violation of the stipulations of his mutual fire policy and he was entitled to recover the loss sustained in the destruction of his farm buildings, although the by-laws of the insurer provided that a member should forfeit his policy if he procured additional insurance in another company, without defendant’s written consent.
2. Same — Statutes—Forfeiture.
The contention of the defense that, the fire occurring while the violation was in effect, barred plaintiff’s recovery, was not sufficient, it appearing from the title of the statute that the purpose was to prevent the forfeiture of policies unless the violation of some condition actually prejudiced the insurer.
3. Same — Evidence—Burden of Proof.
Under the statute the burden was on the insurer to show that it had suffered prejudice therefrom.
4. Same — Appeal and Error.
Held, on rehearing, that defendant could not avail itself of the point, not made in its briefs or on the former argument, that the statute as amended did not affect a policy in force at the time it was enacted.
Stone, Ostraítder, and Steere, JJ., dissenting.
Error to Bay; Collins, J.
Submitted April 22, 1914.
(Docket No. 107.)
Decided September 28, 1915.
Reargued June 6, 1916.
Former judgment reaffirmed July 21, 1916.
Assumpsit by Harry T. Lagden against the Concordia Mutual Fire Insurance Company of Bay, Saginaw & Arenac Counties, on a certificate of fire insurance. Judgment for defendant. Plaintiff brings error.
Reversed.
G. C. Leibrand, for appellant.
Curtis E. Pierce, for appellee.

Opinion:
Bird, J.
The defendant is a farmers' mutual fire insurance company, incorporated under the laws of this State. In. February, 1908, the defendant issued to plaintiff a fire policy, insuring him in the sum of $1,400, against loss to his farm buildings and personal property. On the 23d day of November, 1911, plaintiff, took out another policy for the sum of $1,665 in the Patrons' Mutual Fire Insurance- Company, covering the sanie property and more. On January 21, 1912, fire destroyed the dwelling, together with its contents. The day following that of the fire, plaintiff notified John Myers, the defendant's secretary, of the loss, and Myers advised him that he would visit the scene of the fire the next day. Myers did not come, but in his stead Mr. Feinhaur, one of the directors, came. While there, plaintiff informed him of the other policy in the Patrons' Company. Mr. Feinhaur instructed the plain tiff to make out a list of the property destroyed and present it at the next meeting of the board of directors, informing him that he would be notified of the date of the next meeting by the secretary of the company. On February 12th the secretary notified plaintiff of the meeting of the board on the 19th, and requested him to meet with them at that time. On that date plaintiff appeared before the board with his proofs of loss. While there he was informed by the president of the company that the company refused to pay the loss, because of his failure to give notice of the additional insurance. The provisions of the charter and by-laws upon which such refusal were based follow:
Section 6 of the by-laws provides:
"Any member insuring the same property with another company, after receiving a policy in this company, without first obtaining the written consent of this company, forfeits his insurance in this company."
Section 21 of the charter provides:
"If any person, having property insured in this company, shall procure the same to be insured in any other company, it shall be his duty to at once give notice of such other insurance to the secretary; and the president and secretary may, in their discretion, cancel his policy, and, in case he shall fail to give such notice, his policy shall be void from the date of such other insurance, and this company shall not be liable for any loss occurring after that date."
Section 7 of the charter provides:
"Any member who shall neglect or refuse to comply with the by-laws, or with this charter, shall not be entitled to receive payment for any loss, unless it shall be satisfactorily ascertained that the loss was not caused by such neglect or refusal."
The defendant's prorating clause reads:
"In case of loss, if there be other insurance upon the property, the insured shall not be entitled to demand or recover on his policy any greater amount or proportion of the loss or damage sustained to the property insured than the amount insured in this company shall bear to the whole amount of insurance on said property."
The Patrons' Company had a similar clause. Its-prorated share of the loss was $501.99, and was paid by that company.
At the close of the testimony, both parties requested a directed verdict. The trial court declined them, and submitted to the jury the question whether the defendant had waived the forfeiture.
Plaintiffs motion for a directed verdict was based upon Act No. 128, Pub. Acts 1911, which follows:
"No policy of fire insurance shall hereafter be declared void by the insurer for the breach of any condition of the policy if the insurer has not been injured by such breach, or where a loss has not occurred during such breach and by reason of such breach of condition."
Plaintiff contends that this provision of the statute is applicable, and inasmuch as it did not appear that the defendant was injured by the violation claimed, the court should have directed a verdict as requested. Defendant's position is that the provision does not apply, because it was shown that the fire occurred during the breach of a condition of the policy.
The act was originally passed by the legislature at its session of 1897. The legislature at its session of 1911, amended it, by striking out the word "or" and inserting in its stead the word "and," which appears in the foregoing in italics. As the act was originally passed, it was many times before this court for construction, and it was uniformly held, in substance, that if there were an existing breach of condition of the policy when the fire occurred, the act would not be available to the insured, even though the fire did not occur by reason of such breach. Boyer v. Insurance Co., 124 Mich. 455 (83 N. W. 124, 83 Am. St. Rep. 338) ; Shelden v. Insurance Co., 124 Mich. 303 (82 N. W. 1068) ; McGannon v. Insurance Co., 127 Mich. 636 (87 N. W. 61, 54 L. R. A. 739, 89 Am. St. Rep. 501) ; A. M. Todd Co. v. Insurance Co., 137 Mich. 188 (100 N. W. 442); King v. Insurance Co., 140 Mich. 258 (103 N. W. 616, 6 Am. & Eng. Ann. Cas. 87). See, also, Benham v. Insurance Co., 165 Mich. 406 (131 N. W. 87, Am. & Eng. Ann. Cas. 1912C, 983; Macatawa Transportation Co. v. Insurance Co., 179 Mich. 443 (146 N. W. 396).
Obviously for the purpose of avoiding this construction, and making the act effective to do what its title indicates it was originally intended it should do, the legislature made this change. We are now asked by defendant to give the act the same construction that was given to it before the amendment was made. To do this we must say that the act means the same now as before the amendment was made, and that the legislature did an idle thing, and had no purpose in view in making the amendment. The title to the act reads:
"An act to prevent the forfeiture of fire insurance policies by the violation of any condition of the policy when such violation has been without prejudice to the insurer." Act No. 167, Pub. Acts 1897.
A mere glance at this title is convincing that the evident purpose of the legislature was to prevent forfeitures of fire insurance policies for violation of conditions which did not cause the fire. This evident purpose was thwarted by the construction which this court felt obliged to give to the wording of the act. To obviate this construction the amendment was presumably made. The act as amended makes it clear:
(а) That no forfeiture is to take effect if the insurer has not been injured by a breach of condition.
(б) That no forfeiture is to take effect if the fire was not caused by a breach of condition, even though the breach was existing at the time of the fire.
Our conclusion is that the plaintiff was right in his contention as to the application of the statute.
2. The further argument is made that, even if this is the proper construction, the court was right in refusing to direct a verdict because the burden of showing that defendant was not injured by reason of the violation rested upon the plaintiff; the proofs being silent upon the question as to whether the violation was in any wise responsible for the loss. It would seem to have been the intention of the legislature, in passing this law, to prohibit defenses based upon such violations, unless there was some connection shown between such violations and the loss. The plaintiff, by introducing the policy and showing his loss, makes a prima facie case, which entitles him to recover in the absence of proof of a breach of the contract. The burden is then upon the defendant to show that the policy has been avoided by a breach of its conditions. In order to make that defense effective, it is necessary to further show some connection between the loss and the breach of the condition, and this burden would seem to properly rest upon the defendant. By this provision the legislature has prescribed the conditions under which such a defense can be made, and it has in effect read this provision into each condition of the policy. Therefore the burden of showing that the facts are such as make the condition, as amended by the act, an effective defense, lies with the defendant. The request should have been granted. In view of these conclusions, we think plaintiff's motion should have been granted.
The judgment of the trial court will be reversed, and a new trial ordered.
Brooke, C. J., and Kuhn and Moore, JJ., concurred with Bird, J.
The late Justice McAlvay took no part in this decision.