Mussey against The Atlas Mutual Insurance Company

Mussey against The Atlas Mutual Insurance Company. Two policies were effected on a vessel owned by three persons for account of owners to $11,000, containing warranties against insurance beyond this sum; subsequently two of the owners insured their interest in the vessel to the amount of $10,000 by two other policies, which latter contained provisions that they should become void if any other insurance be made exceeding this sum; Held, that the subsequent policies were valid and rendered the two first void. .¿he prohibitions contained in the two last policies, referred to subsequent insurance; and their validity was not affected by prior insurances, notwithstanding these were unknown to the underwriter. Although the two subsequent policies were not upon the entire interest covered by the prior ones, they are a violation of the warranties against further 'insurance contained in such prior policies. Action upon a policy of insurance issued by the defendant to the plaintiff. The cause was tried before referees. The following facts were established: On the 9th of August, 1852, the plaintiff and Messrs. Reid & Flint executed an agreement which recited that the plaintiff had advanced $ 1.0,300 for the purpose of building the schooner Buckeye State, and that besides this advance debts to the amount of $4400, incurred in the construction of the -vessel, remained unpaid; and by which the parties agreed that the plaintiff should have and hold the schooner for his own use, until Reid & Flint should pay said debts and repay to the plaintiff so much of the amount advanced by him as would make the plaintiff and Reid each the owners respectively of seven-sixteenths, and Flint of two-sixteenths of the vessel; and that the ownership should remain in the plaintiff as stated in the agreement until Reid & Flint should comply with its terms. The ownership and interest in the vessel continued as stated in this agreement, when the policies hereinafter mentioned were issued and when the vessel was lost. On the 4th of September, 1852, the defendant issued to the plaintiff the policy of insurance upon which the action was brought. By this the defendant insured the plaintiff, “ on account of himself and others, as interest may appear,” against loss or damage to the vessel during one year to the amount of $5500, the vessel to navigate the lakes and River St. Lawrence, as specified in the policy. The policy contained a provision as to other insurances, in these words: “Warranted not to insure more than $11,000, and in case of any excess over $11,000 then this policy to be void.” The plaintiff also at the same time procured the Astor Mutual Insurance Company to insure the vessel to the amount of $5500. The policy issued by the latter company was, as to the parties for whose account the insurance was effected and the duration of the risk, the same as the policy issued by the defendant, and contained a similar warranty as to other insurance. Afterwards and on the 1st of November, 1852, the Mutual Insurance Company of Buffalo and the Merchants’ Mutual Insurance Company of Milwaukee, acting by one Eustaphiene, the agent of each, on the application of Reid, did respectively issue to the plaintiff and Reid policies insuring the vessel against loss to and until the thirtieth of said November to the amount of $5000 by each policy. These policies respectively stated that the insurance thereby effected was on account of the plaintiff and Reid; and each contained the following clause : “ And it is hereby agreed that this policy shall become void, if any other insurance be’ made upon the vessel hereby assured, which, together with this insurance shall exceed the sum of $10,000.” Each of the four policies contained the usual provisions that if the assured had made any prior insurance then the insurer should be answerable only for so much as the amount of the prior insurance might be deficient in covering the loss; and that in case of any subsequent insurance the insurer should be liable to the full amount insured without contribution from the subsequent insurer. On the 4th of November the vessel was stranded on Lake Michigan, near Milwaukee, and on the seventeenth of the same month Reid caused a notice to be served on t.he defendant and each of the other companies which had issued policies on the vessel, that the owners abandoned her to the underwriters. The vessel proved a total loss. The companies which issued the two last policies had not, when they issued them, any notice of the two previous ones, and after the loss these companies claimed that the policies issued by them* were void on account of the insurance by the two prior policies. Upon these facts the counsel for the defendant insisted: That the policy in suit was avoided by the two last policies, which were effected in violation of the' provision against insuring the vessel for more than $11,000. The counsel for the plaintiff insisted that these two last policies were never valid and therefore did not avoid the policy in suit: 1. Because they purported to cover a joint interest of the plaintiff and Reid in the vessel, when in fact no such interest existed; 2. Because the vessel was insured for more than $10,000 when these policies were issued and this was unknown to the companies issuing them. The counsel for the plaintiff further insisted that the two policies lastly effected covered a different interest than that covered by the policy on which the action was brought, and therefore they did not render it void. The referees ruled and decided that the policy in suit was rendered void by the two policies subsequently effected, and ordered judgment in favor of the defendant. The plaintiff excepted. The judgment was affirmed at a general term of the supreme court in the 8th district. The plaintiff appealed to this court. N. Hill, Jr., for the appellant. John Ganson, for the respondent. [MAJORITY — Comstock, J. A. S. Johnson, J.] Comstock, J. The policy in suit contains a warranty not to insure for more than $11,000, and to this is annexed a condition, that if any larger insurance shall be effected, the policy shall be void. By this and another policy procured from another company on the same day and through the same agent the .amount of insurance was $11,000. Under this warrantee and condition the first question is whethe? the two subsequent policies for $10,000 more were valid, and this depends on the construction of the clause which they contain declaring that they “ shall become void if any other insurance be made which together with this insurance -hall exceed the sum of ten thousand dollars.” I agree with the supreme court that this relates to subsequent and not to' prior insurance; and there being none subsequent, it follows that the policies are valid. The policy in suit is therefore void in consequence of the subsequent insurance, if the interest and risk in both are the same. That the risk is the same is not questioned. In respect to the interest, the two subsequent policies are issued to the plaintiff and his associate Reid, by name, but not for the account of any one else. Their interest alone was therefore insured. Mr. Phillips, upon the authorities which he cites, states the rule to be, that if a policy does not contain the general clause (‘ for account of the owners,’ or ‘ for whom it may concern,’ or ‘as interest may appear’), no others than those named as insured, or on whose account it is expressed to be made, can avail themselves of it.” (1 Phillips on Ins., 160, 2d ed.) In such a case it was held in Dumas v. Jones (4 Mass., 647) that the insured could recover upon his own interest only, and not upon that of his associate owner. The result is that the subsequent policies cover the interests of only two of the associates, while the one in question covers that of all three. In this view it is claimed that the subsequent policies are upon a different interest and therefore not a violation of the warrantee and condition of the one in question. I cannot, however, come to that.conclusion. The subsequent policies are upon the same interest as the prior one, although not upon the whole of the interest. The engagement in the first policy is not to insure more than $11,000, and I think this is clearly broken when two of the three parties thereby insured effect a further insurance upon their interests in the same subject. Any one of them it seems to me could violate the contract by a subsequent insurance. The clause is intended as a check upon over insurance and the temptations to fraud induced thereby. But an over insurance obtained by one of the parties interested in the first policy is quite as dangerous to the underwriter as it would be if procured by all of them. There is the same temptation to fraud, and the same mischiefs are likely to arise. Moreover, the clause in question does not say that the interest covered by the subsequent insurance must be no greater and no less than the one embraced in the first. The warrantee is against over insurance generally, upon the same subject. If its force can be evaded in this way, then three owners may insure jointly and warrant against any further insurance, and each and all of them may afterwards take separate policies to any amount and the warrantee will still remain unbroken. This is certainly not the spirit of the contract, and I think its letter does not call for such an interpretation. The judgment should be affirmed. A. S. Johnson, J. Upon the policies issued by the Mutual Insurance Company of Buffalo and the Merchants" Mutual Insurance Company of Milwaukee, on “ account of Henry E. Mussey and Conrad Reid,” the interests which they had in the vessel insured were covered. Whether any other person had also an interest in the vessel, either jointly with them or otherwise, which might also have been the subject of insurance, was immaterial, except in its bearing upon the amount which they could recover. It in no way affected their right to insure to the extent of their interest, (Pacific Ins. Co. v. Catlett, 4 Wend., 75.) The policy in suit was issued to “ Henry E. Mussey, on account of himself and others, as interest may appear,” and it covered the interests of those by whose direction it was effected and for whose benefit it was intended 'to be made. Whether, therefore, it was effected for the benefit of Mussey alone, or for the benefit of Mussey and Reid, as I think the evidence indicates, there can be no question that the whole interest of Mussey was protected by it. If both sets of policies were upon the interests of Mussey and Reid, or in the other veiw, if the policy in suit was on Mussey’s interest, and the two first mentioned policies were upon the interests of Mussey and Reid, a case of double insurance exists. In both cases Mussey’s interest is twice insured, and if both policies could stand and be enforced according to their tenor and unaffected by the special, stipulations in respect to double and over insurance, he would be entitled to double compensation. (1 Phil. on Ins., 3d ed., 201—8.) The policy in suit, which is also .earliest in date, contains a warranty not to insure over $11,000, and provides that in case of any excess over $11,000, the policy shall be void. The question is, whether that warranty has been broken. The subsequent policies, by which, as the defendants contend, the policy in suit became void, contain the clauses usual in American policies, that in case of prior insurance the insurers shall be answerable only for so much as the prior insurance may be deficient towards fully covering the premises insured; and that in case of subsequent insurance, they shall be answerable to the full amount, without right to claim contribution from such subsequent insurers. They also contain the following clause, upon the construction of which the rights of the parties are materially dependent: “ It is hereby agreed that this policy shall become void if any other insurance be made upon the vessel hereby assured, which together with this insurance shall exceed the sum of $10,000.” On behalf of the plaintiff it is contended that this last clause embraces both prior and subsequent insurances, and that as the policy in suit and that effected at the same time and for the same parties in the Astor Insurance Company, together amounted to $11,000, the two polices which contained the clause in question never became effectual, and that therefore there has been no breach of the warranty in the policy in suit against insurance beyond $11,000. The defendants insist that subsequent insurances alone are intended by the provision in question. The language of this provision relates to subsequent insurances. The policy, it says, shall become void in case other insurance be made beyond a fixed amount. The insurers could have no contribution from subsequent insurers, and they chose to insist that beyond the fixed amount the insured should make no sunsequent insurance, but should bear the risk nimseii. The judgment should be affirmed Hubbard, J., dissented. Selden, J., took no part in the decision. Judgment affirmed.