Court Opinion

ID: 9636186
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:18:59.666536+00
Date Added: 2024-06-11T12:06:38.505467
License: Public Domain

EVANS, Circuit Judge
(dissenting in part).
I believe the District Court properly included in the judgment the sum of $3,-170.28, which is the amount of the unearned premium. Therefore I am unable to agree with the majority opinion in respect to this item.
The complaint states, and the court found, that on December 11, 1941, the defendants advised plaintiff that the policy was void because of concealment and misrepresentation of material facts and by reason of fraud and false swearing by the insured. The complaint also charged that as a result of this statement by the defendants, plaintiff took out new insurance. The court found that plaintiff, relying upon this notice to be true, obtained other insurance. The above letter notifying plaintiff that its policy was void, was followed by a telegram to plaintiff as follows :
“In Answer To Your Telegram This Date We Consider Your Policy Void For The Reasons Stated In Our Letter.”
In one count of its complaint, plaintiff sought to recover the unearned premium for the period from December 11, 1941 to October 31, 1943. This amount was $3170.28. Defendants admitted in their answer that on the 11th day of December, 1941, they informed the plaintiff that the said policy of insurance was null and void.
We are not here considering the cancellation clause of the policy, but the following clause: “This entire policy shall be void if the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.”
It was the clause just quoted which the defendants invoked when they declared the policy void. There was another, a cancellation clause, which is referred to in the majority opinion, but it is of importance only as it influences the construction of the above-quoted provision. Turning to the above provision we find it is somewhat of a catch-all clause, the object of which is to justify a voiding of the policy and the avoidance of a return of the unearned premium, which would result from a cancellation of the policy.
As applied to the instant case, it should be stated that there was no claim of fraud or misrepresentation except in reference to the amount of plaintiff’s loss. Admittedly there was no misrepresentation of any material fact in securing the insurance policy, nor in the loss itself. It is therefore only in reference to the alleged fraud or false swearing by the insured in reference to the proof or claim of loss that this provision may be invoked.
The majority opinion sustains the District Court’s finding that there was no fraud on the part of the insured in its proof of loss. Defendants’ statement to the insured that the policy was void, was therefore unsupported by the facts. Defendants were obligated to return the unearned premium to plaintiff. Had they invoked the provision for cancellation and given five days’ notice, they would have been required, as the policy expressly provides, to pay the “excess of paid premium above the pro rata premium for the expired time.” Their obligation was not lessened by virtue of their invoking a clause respecting the voiding of the policy, where in fact there was no ground therefor. . 29 Amer.Juris. p. 286.
I do not find support for any different conclusion because plaintiff paid an extra $40.08 premium. The policy provision is, “In consideration of $40.08 additional premium this policy covers $4,887.20 on premiums charged for this policy (but not this Endorsement) which, by virtue of a loss under this policy, became earned for the unexpired term.”
If capable of any intelligent meaning, I do not look upon it as in anyway affecting plaintiff’s right to recover the unearned premium, which arose when defendants unlawfully voided their contract.
Regardless of the ultimate outcome of the issue upon which the majority opinion remands the case for further findings, plaintiff is entitled to recover this item with interest.
Inasmuch as the cause is to be returned to the District Court for evidence and additional findings on the issue of waiver (see the majority opinion), I think the court might also hear counsel, and if necessary, additional evidence on the question, Did plaintiff take out other insurance after *19defendants notified it that their policies were void?
The District Court found, as a finding of fact, that plaintiff did take out such insurance. In the majority opinion it is stated that this finding is unsupported by the evidence. This issue should not be left in doubt. Plaintiff’s taking out new insurance and the paying of premiums therefor should be clearly established or disproved when the case is returned to the District Court