Court Opinion

ID: 7948731
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:23:52.516012+00
Date Added: 2024-06-11T16:34:03.038998
License: Public Domain

Ostrander, J.
(dissenting). The written application of the plaintiff contained the following:
“And I hereby, for myself, my heirs, executors, and administrators, agree to abide by the charter and by all existing by-laws, and also by all amendments and additional by-laws of the said company. * * * Refusal or neglect on my part to comply with the charter and by-laws of said company, and this agreement, shall render the policy void.”
When this is read with section 21 of the by-laws, set out in the opinion of Mr. Justice Bird, it is made plain that, in so far as the parties could, by agreement, provide for avoidance of the policy in suit, they have done so. There is something here more than a mere condition imposed by the insurer. There is a promissory warranty of the insured, which he has admittedly breached. The act of 1911, pleaded by plaintiff in avoidance of the forfeiture of the policy, which by the terms of the agreement became void when the additional insurance was procured, does not relieve from breach of a warranty. Benham v. Insurance Co., 165 Mich. 406 (131 N. W. 87, Am. & Eng. Ann. Cas. 1912C, 983) ; Shelden v. Insurance Co., 124 Mich. 303, 311 (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).
There is another sufficient reason for the conclusion that the statute invoked will not relieve the plaintiff. Treating the provision in question as a condition merely, it is one of several found in all policies of fire insurance in this State, which, when the policy is issued — the contract made — and thereafter, relate to the very subject of the insurance, relate to the property in risk, its status, and the interest of the insured therein. For example, there are those relating to the title to the property insured, and whether it is incumbered or free from incumbrance. If the construction and ap*696plication of the statute which are made by Justice Bird are sound, then what will prevent A. from procuring insurance upon the property of B., and, if it burns, recovering upon the policy? Or, if real estate insured is incumbered for more than its value, what is to prevent the owner recovering upon a policy, despite his representations that the property was free from incumbrance, and his agreement that, if it was not, the policy should be therefore void, if the insurer cannot show that the fact of the incumbrance was, in fact, the occasion of the loss ?
There is another class of conditions found in insurance policies generally, and in our own standard policy, which affect only particular hazards to which insured property may or may not be liable. That a house shall not be vacant for a considerable period of time, that gasoline or other inflammable or explosive substances shall not be kept upon the premises, are common conditions, and failure to observe them may be the occasion of a loss. Breaches of such conditions may be occasional, and not mischievous. It is only while they continue that they affect the risk. In the days when policies of insurance were prepared by the insurer — were substantially unilateral with respect to terms and conditions — and were therefore construed most strongly against the insurer, it was uniformly considered,' in fact and in law, that representations of the insured as to the title to the property, the incumbrances thereon, the insurance carried, and the provisions for a continuance of the risk assumed in’the first instance by the insurer, without substantial change,, were vital. The courts have always recognized the moral hazard in fire insurance. Quoting from Ostrander on Fire Insurance, Mr. Justice Moore, in Excelsior Foundry Co. v. Assurance Co., 135 Mich. 467, 474 (98 N. W. 9, 3 Am. & Eng. Ann. Cas. 707), said:
“The character- of the hazard being established to *697the satisfaction of the insurer, its next concern is that no material change shall take place without its consent; and this, too, is provided for by the terms of the policy. The insurer cannot watch its many ventures. They are often remote and widely scattered, and besides, too, the greatest dangers that menace property are those that are frequently hidden from public scrutiny. The only practicable plan, therefore, of preserving the status of the risk, is to make the validity of the policy depend upon the insurer being informed of any material changes made, and its consent obtained.”
It cannot be presumed that a breach of a condition which increases the moral hazard does the insurer no injury. Quite the contrary. Courts have uniformly avoided the policy upon breach of such conditions, upon the ground that an essential and material change of the contract was thus effected and the insurer prejudiced. In the case at bar the plaintiff placed upon his property an estimated cash value of $750, and the defendant insured it for $500. In applying to the Patrons’ Insurance Company for further insurance, he placed on the property a value of $700. That company issued a policy for $465. The total insurance was therefore $965 upon property valued by plaintiff at $700. Both companies, to his knowledge, insured on the basis of two-thirds actual value.
The statute invoked by plaintiff may be construed, and I think should be construed, as applying only to that class of conditions which relate, usually, to casual risks, and as not applying to those which relate to matters which are of the very essence of the contract —those which must always be considered as controlling in accepting and in continuing the risk. So construed, it may be sensibly read and applied along with the statute which prescribes a standard form of policy, in which breaches of various conditions do, in terms and at once, make the policy void.
*698. The question whether the defendant waived the breach of condition complained about was submitted to the jury. I am of opinion that it was properly a question of fact, and, while the charge of the court is criticised, do not find error in the instructions. Two letters were offered in evidence by plaintiff, and were excluded. They were written by the secretary of defendant, and of them it is said they tend to support, to corroborate, the testimony of plaintiff and his wife. In my opinion, they’have no such tendency. They were not addressed to or received by plaintiff, and do not affect the question whether plaintiff was induced, by a promise or by conduct, to assume or believe that the defendant waived or would waive its rights under the policy.
Counsel have not made the point that the statute relied upon by plaintiff became effective in 1911, while the policy in suit was issued in 1908, and therefore is not affected by it. Counsel for plaintiff does rely, however, upon a provision of the charter of defendant which reads as follows:
“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.”
His contention is answered by saying that this provision may be given force and may have application, but not in cases where by the express terms of the charter and the policy the policy is void.
For the reasons stated, I disagree with the conclusion of my Brother Bird, and think the judgment should be affirmed.
Stone and Steere, JJ., concurred with Ostrander, J.