Court Opinion

ID: 5704743
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:45:29.919672+00
Date Added: 2024-06-11T08:40:24.056434
License: Public Domain

Williams, J. (concurring).
I agree with my associates that there must be a reversal and a new trial because of the exclusion of evidence which might have demonstrated that at the time of the *338fire plaintiff no longer had an insurable interest in the property. I cannot agree, however, that the Trial Justice properly excluded evidence as to the quantum of plaintiff’s financial loss. For the purpose of discussion of this latter point, I shall assume that plaintiff had an insurable interest and some financial interest at the time of the fire.
The policies in question are in the form prescribed by section 168 of the New York Insurance Law. Insofar as it is material to the question posed, the standard fire policy form provides that the insured may recover “ to the extent of the actual cash value of the property at the time of the loss, but not * * in any event for more than the interest of the insured ”. Before the amendment of section 168 in 1943, the latter part of this clause was not found in the standard policy. Its addition quite clearly was intended to measure and limit the amount of the loss for which the insured could recover. As was pointed out in the report submitted in 1941 by the Honorable R. Foster Piper to the Joint Legislative Committee for Revision of Insurance Law (p. 11): “It is claimed that the present form needs modernization and improvement both from the standpoint of the insured and the insurer. ’ ’
Unfortunately, no decisive legislative history is available to reveal the reason for the inclusion of the phrase, so we must determine intent from the language itself. This language is so simple and expressive that its purpose is self-evident. On its face, the phrase points quite compellingly to an attempt to limit recovery to what an insured really might lose. Law review articles have recognized that the amendment makes judicial reconsideration of the question of amount of recovery desirable (33 Texas L. Rev. 1091, 1093; 50 Col. L. Rev. 960, 962, n. 14).
We must not lose sight of the contrast between such an interest-type policy and a valued-type policy, the former being based essentially on the principle of indemnity, the purpose of which is to make an insured whole after a loss. Indemnity insurance is not intended to permit an insured an undeserved gain. Such a result would be contrary to the theory of indemnity and obviously inconsistent with considerations of moral hazard and public policy. As was stated in Flint Frozen Foods, Inc. v. Firemen’s Ins. Co. of Newark (8 N. J. 606, 610): “ This conclusion, reached under the clear terms of the policy [no recovery ‘ in any event for more than the interest of the insured’], is consonant with the fundamental principle of all insurance on property that the policy is a contract of indemnity.”
*339In McWilliams v. Farm & City Mut. Ins. Assn. (248 Iowa 233, 235) the court stated: “ A contract of fire insurance is simply a contract of indemnity, personal between insured and insurer, and does not run with the property covered therein. Where the contract, as here, is limited to ‘ the interest of the insured in the property ’ it simply assures reimbursement for his actual loss not exceeding a stated sum.”
The 1943 amendment of section 168 not only added the phrase discussed above, but it also removed two of the more important moral hazard clauses, namely, those which voided the policy, (1) if the interest of the insured was other than unconditional and sole ownership, and (2) if the subject of the insurance was a building on ground not owned by the insured in fee simple. These clauses had necessitated the use of riders to preclude the voiding of policies. When these clauses were eliminated, the need for such riders was also eliminated and the legislative purpose effected, as the language in itself accomplished that result.
I see no need for a detailed analysis of cases decided before the statutory change. The Legislature evidently decided that an amendment was required to obviate the confusion which had existed and to simplify the meaning of policies. We should not treat the policy as though there had been no amendment and thus nullify the effect of the change. The purpose of the change was patently to eliminate confusion, not to perpetuate or increase it. We now have an opportunity by following the language of the present policy, to establish the principle firmly that a person who has an insurable interest may recover the actual cash value of the property but not in any event more than his financial loss. Any other conclusion would allow recovery of the actual cash value, regardless of how little financial loss might be suffered by the insured. The problem of moral hazards involved in the latter interpretation needs no elaboration.
The case of Alexandra Restaurant v. New Hampshire Ins. Co. (272 App. Div. 346, affd. 297 N. Y. 858) mentioned in the prevailing opinion does not assist in interpretation. There, the insured had made certain improvements of a structural character in the premises which it leased and these improvements were damaged by fire. The policy contained a proviso, whereby the insured was considered “ sole and unconditional owner of such improvements and betterments any contract or lease the assured may have to the contrary notwithstanding.” Naturally, under that language, the insured was permitted to recover the full value of the improvements,
*340I believe that the 1943 amendment, as was intended, improved the standard fire insurance policy by bringing it more clearly into conformity with principles of true indemnity. Upon the new trial, the defendant should be permitted to introduce proof bearing on the actual financial loss suffered by the insured.
All concur, Williams, J., in a separate opinion.. Present — McCubn, P. J., Williams, Bastow, Goldman and Halpbrn, JJ.
Judgment and order reserved, on the law and facts, without costs of this appeal to any party, and a new trial granted.