John Mead, Respondent, v. The American Fire Insurance Company, Appellant

John Mead, Respondent, v. The American Fire Insurance Company, Appellant. Double insurance, intention is essential to it—■mistake in proofs of loss—conditions construed against the insurer. Double insurance, resulting from the operation of law and without design upon the part of. the insured, is not a violation of the true spirit and intent of a condition contained in a policy that it shall be void if the insured shall, without the consent of the insurer indorsed thereon, “ hereafter make or procure any other contract of insurance, whether valid or not,’ on. property covered in whole or in part by this policy;” and, where there is no imputation of fraud, the insured may show, by facts and circumstances outside of the policy, that it was not his intention to obtain double insurance. In an action upon a fire insurance policy the plaintiff is not concluded by a statement contained in the proofs of loss, that there was other insurance upon the property insured, but may show that this statement was made by mistake, arid that as a matter of fact there was no such additional insurance. . It seems, that the risk covered b.y a policy of insurance upon “wagons, harnesses,” etc., situate in a certain place, constituting part of the paraphernalia of a traveling circus, which is being stored during the winter, is not “ shifting,” and will not be construed to cover wagons and harness, also constituting part of such paraphernalia, which are subsequently brought to that place, and that, therefore, the obtaining of a policy of insurance upon the goods subse- . quently brought there does not as matter of law constitute double .insurance. A condition in a Are insurance policy relative to additional insurance should be construed strictly against the insurer, and where the breach of such a condition is asserted as a defense, the burden is upon the insurer to establish it by competent and satisfactory evidence. Where the terms of a policy of insurance may be understood in more than one sense, the words are not to be taken in their broadest sense, but in that in which there is reason to suppose that they were understood by the assured. Appeal by the defendant, The American Fire Insurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Orleans on the 25tli day of May, 1896, Upon the decision of the court rendered after a trial at a Trial Term of the Supreme Court held in and for the county of Orleans before the court without a jury. In the summer of 1894 one B. J. Cummings was the owner of a traveling circus, and in the autumn of that year he stored the property and paraphernalia of his establishment in several different places in the village of Medina, Orleans county. The storage of this property was temporary only, and was to continue until the opening of the exhibition season the following spring. While thus stored, and upon the 19th day of September, 1894, the owner procured of the defendant’s agent a policy of insurance, by the terms of which the defendant insured him against loss or damage by fire in the amount of $800 “ on his wagons, harnesses, canvas, poles and stakes, ropes and other tent equipments not more hazardous, all while contained in the frame, shin'gle-roof barn, south side of Oak Orchard street, Medina, New York.” At the time such insurance was effected there were but two wagons and two harnesses in the barn specified in the policy, and thereafter, and in the latter part of the month of October following, they were removed from the barn and were never returned. Subsequently, and about the tenth day of December following, it became necessary to vacate a portion of a certain Warehouse wherein some of the remaining circus property had been stored, and in consequence such property was removed to the Oak Orchard street barn, which was owned by C. S. Hoag. Embraced in the property thus transferred to the Hoag barn were seven wagons and a padded harness, the harness having been taken from the house of one Gallagher. These wagons and .the harness were worth in the neighborhood of $2,000. Upon the day that the last-mentioned property was removed to the Hoag barn, Gallagher applied for and obtained from the Springfield Fire and Marine Insurance Company a policy of insurance, by the terms of which it insured Cummings against loss ór damage by fire in the amount of $1,700, “ on wagons, harness, tools, planks, hay, grain and barn equipments, all while contained in C. S. Hoag’s frame barn, situate south side of Oak Orchard street, Medina, N. Y.” On the 26th day of January, 1895, the property covered by these two policies was totally destroyed by fire. Thereafter, and in due course of time, proofs of loss were made out by a lawyer residing in Medina, and were verified by Cummings and served upon both companies. In the proofs of loss thus served upon the defendant, Cummings stated that, in addition to the amount named in the defendant’s policy, there was $1,700 other insurance upon part of the property covered by such policy, as. specified in Schedule B, which accompanied the proofs. Schedule B, thus referred to, specifies the property covered by the Springfield policy, in language identical with that which describes it in the policy. Subsequently Cummings assigned his cause of action upon the policy in suit to the plaintiff, who claimed, and upon the trial offered evidence tending to show, that the statement contained in Schedule B was erroneous, and was the mistake of the draughtsman who drew the proofs of loss. William Nathaniel Cogswell, for the appellant. S. E. Filkins, for the respondent. [MAJORITY — Adams, J.:] Adams, J.: The policy in suit contains the following provision: “ This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void, if the insured now has, or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy.” It does not appear that any agreement for additional insurance was indorsed upon the policy, nor is it claimed that the defendant ever consented that such additional insurance should be, or received any notice that it had been, obtained from the Springfield Fire and Marine Insurance Company prior to the service of the proofs of loss. The single question, therefore, which we are called upon to consider, is whether or not the procuring of this additional insurance was such a violation of the condition heretofore referred to as vitiated the defendant’s policy. There is, of course, no claim that the wagons and harness,, specified in the second policy, were the identical property covered by the defendant’s contract of insurance; but it is insisted that, inasmuch as the policy in suit referred to the subject-matter of the insurance in general terms, without specifying any particular wagons or harnesses, the risk thereby assumed was what is termed a “ shifting ” risk, and one which attached to and embraced any and all wagons and harnesses which happened to be stored in the Hoag barn at any time during the life of the policy. - The principle contended for by the learned counsel for the defendant, and which he seeks to have applied to this case, is one which has often been adopted by the courts in cases where it was the obvious intent of the parties that such a principle should apply, as indicated either by the language of the policy itself, the nature of the property insured, or the uses to which it was to be devoted. (Wood on Fire Ins. § 46.) A familiar illustration-of a case in which this rule might apply is that of a merchant who obtains an insurance upon merchandise which is liable to fluctuate and change in character, quantity and value, by reason of daily sales and purchases. In these circumstances, to hold that the policy covered only such goods as were actually in stock at the time it was issued would deprive the contract of any practical value to the merchant, and, therefore, the only equitable construction to be adopted would be the one contended for by the defendant. But can it be said with equal propriety that the same or a similar reason exists for its adoption in the case we are considering % The wagons and harnesses covered by the defendant’s contract were not articles of trade and commerce, nor were they articles which were likely to be affected by use. They constituted simply a portion of the paraphernalia of a traveling circus, which had been stored in the barn in question to await the opening of another season. Can it be claimed, then, that when the two wagons and harnesses, which were in the building when the insurance was effected, were removed, and seven other wagons of greater value and a single padded harness were substituted in their place, the defendant’s policy attached to and covered the last-mentioned property ? How would the defendant have met such a claim as this had it been pressed by the plaintiff \ But the question which has thus far been discussed, while full of interest, and, perhaps, not altogether easy of solution, is, nevertheless, one which,.in our opinion, is not necessarily controlling in the case. The learned justice before whom-this action was tried has found, as a fact, “ that at the time the policy of the Springfield Fire and Marine Insurance Company was issued a list of the property thus insured was shown to the agent of that company by the agent of said Cummings, and it was not the intent of said company to insure any of the property insured by the defendant.” And as a conclusion of law, he further finds “ that the policy in suit did not cover any of the property covered or insured by the policy issued by the Springfield Fire and Marine Insurance Company.” . ' It is apparent from the language here quoted that the decision of the trial court involved, to a very considerable extent, the intent of the parties when the insurance represented by the two- policies, which have been referred to, was effected, and that such intent was ascertained, not. only from the policies themselves, but from extrinsic facts and circumstances. , The duty, therefore, devolving upon .this court is .to determine, (1) what was the real intent of the parties; .and (2) whether the trial court was justified in considering evidence dehors the written contracts in order to ascertain that intent. In entering upon a discussion of these propositions, it may be well at the outset not to underrate the difficulties to be encountered, for, as has been well said by a text writer upon the subject of insurance, “ The problem of two policies each containing a condition against other insurance has worried the judges a great deal. . * * "li" Almost every conceivable solution has been adopted in some juris- . diction or other, and there hardly exists in the law a more variegated chapter than this.” (2 May on Ins. § 365b.) It will be helpful, therefore, in our undertaking, if we bear in mind that, not only is the burden cast upon the defendant of establishing by competent and satisfactory evidence the breach of the condition relative' to additional insurance which is relied upon as a defense to the action (Richmond v. N. F. Ins. Co., 79 N. Y. 230), but that it is also the settled policy of the law to construe such a condition strictly against the insurer. (Darrow v. Family Fund Society, 116 N. Y. 537.) In the case of Rann v. Home Ins. Co. (59 N. Y. 388) it was said by Allen, J., that “ In the interpretation of conditions inserted in and making a part of the contract by insurers, and in language chosen by them, care .should be taken that a strained and unnatural effect should not be given to words' and terms to the prejudice of the insured.” And in Hoffman v. Ætna Fire Ins. Co. (32 N. Y. 405, 413) it was held that where words “ were used in an enlarged or a restricted sense, other things being equal, that construction should be adopted which is most beneficial to the promisee.” Proceeding, therefore, upon the lines thus pointed out for our guidance, what interpretation shall the condition in the defendant’s policy receive % The language of this condition, so far as it is necessary to refer to the same in this connection, is that the entire policy shall be void if the insured shall, without the consent of the insurer indorsed thereon, “ hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy I Now, in one aspect of the question, this language is perfectly plain and free from ambiguity. It means precisely what it says, which is, that if the insurer obtains additional insurance upon the specific property covered by the policy, he must jirocure the written consent of the insurer thereto, or else be deprived of whatever security his contract of insurance was designed to afford him. But can it, by any rule of construction which is not strained or unnatural, be held to mean that if. the insured obtains a policy in. another company, which was not designed to cover property already insured, and which can only be said to have that effect by operation of law, he violates the condition contained in his policy ? We think the mere statement of this latter proposition.is sufficient to show that the construction which is sought to be given to the language quoted necessarily involves a. consideration of the intent of the parties, which may be ascertained from the policy itself, as well as from “ such extrinsic evidence as may be necessary to identify the property described.” (Sanders v. Cooper, 115 N. Y. 279, 285.) And just here another rule applicable to .the construction of contracts of insurance may be invoked, which is, in substance, that, where the terms of the policy may be understood in more than one sense, the words are not to be taken in their broadest sense, but in that in which there is reason to suppose they were understood by the assured, that is, in their apparent intent. (Hoffman v. Ætna Fire Ins. Co., supra.) We think we have already shown what was the apparent intent of the parties, as deduced from the policy itself, and the only sense in which there .is any reason to suppose the language quoted was understood by the assured. But, if such language is capable of more than one construction, that is, if its proper construction is involved in doubt, then, most certainly, the trial court was justified in receiving evidence of extrinsic facts and circumstances to determine the intent of the plaintiff’s assignor in obtaining the second policy of insurance. In this connection, it may be well to advert very briefly to the 'evidence of this character which is relied upon by the plaintiff as justifying the conclusion reached by the court below. The first circumstance which suggests itself in this connection is that, upon the very day the seven wagons and the padded harness were removed to thei Hoag barn, the second policy was procured, and this, indicates very clearly that Cummings, or his agent, was acting upon the assumption, that this particular property was not embraced in the policy obtained from the defendant, Again, the limit of the defendant’s liability under its policy was $800, and the evidence tends to show that the value of the property destroyed, which was covered by the policy in suit, largely exceeded that sum. Is it reasonable, therefore, to- suppose that the insured intended or understood that, by placing his seven wagons, which were worth nearly $2,000, in the Hoag barn, he was to derive ■ any benefit from the first policy ? Still another circumstance, which is not without its significance, is that the second policy, in describing the property insured, makes use of the term “ wagons, harness,” instead of “ wagons, harnesses,” as in the first policy, which is some evidence, at. least, upon the question of intent. On the other hand, it appears that, after the fire, proofs of loss were made out, which were signed and verified by Cummings' and forwarded to the defendant. These proofs contained the statement that the Springfield policy covered a portion of the same property insured by the defendant; and it is insisted that this is such an admission' of additional insurance as concludes the plaintiff upon that question. Without any explanation, this declaration would, perhaps, have the effect claimed, for it, but it does not estop the plaintiff from showing that it was made by mistake, and that, as a matter of fact, there was no such additional insurance. (McMaster v. Ins. Co. of N. A., 55 N. Y. 222.) It appears that both of these policies were obtained by one Gallagher, who was the managing agent of Cummings and who knew all about the property and had a printed list of the same, Cummings himself testifying that, personally, he had very little knowledge of it. After the fire Cummings took the two policies to a lawyer and requested him to make out the proper proofs of loss, in doing which it is apparent that the latter was forced to rely upon such data as were -furnished him. Whether or not the statement then made was erroneous was a question of fact for the trial court, and we are not disposed to interfere with its conclusion thereon. To epitomize the whole matter, then, we think that double insuis anee, resulting from the operation of law, and without design upon the part of the insured, is not a violation of the true spirit and intent of the condition contained in the defendant’s policy (Vose v. H. M. Ins. Co., 39 Barb. 302); that even if the risk covered by the policy in suit did attach to the property thereafter removed to the Hoag barn, there being no imputation of fraud in the case, it may be shown by facts and circumstances outside of the policy that it was not the intention of the insured to obtain double insurance (May on Ins. § 366); and, lastly, that the trial court having found, upon conflicting evidence, that there was no such intent, its decision ought not to be disturbed. The judgment should be affirmed, with costs. All concurred. Judgment affirmed, with costs.