Donley v. Glens Falls Insurance

McLennan, P. J.

(dissenting): I do not think it is the law of this State that a person may procure a .building and the personal property therein to be insured against loss by fire upon an application in which he warrants that he is the owner of the building, free and clear, of all incumbrance, as well as of the personal property, and in case all is destroyed by fire, even although the amount of insurance upon each kind of property is specified, may admit he did not own the building, that his statement in that regard was false, and still recover the. value of the personal property, the only part of the subject of insurance in which he had any interest; and so, notwithstanding it was expressly agreed in the contract that such statement, if false, whether material or not, would render the policy of insurance absolutely void. That, however, is, in effect, the holding of the court by the decision which is about to be made in this case.

The contract- which is the subject of this litigation is evidenced by a single policy of insurance, based upon one application, signed by the insured. By its terms it purported to insure the plaintiff against loss by fire for three years from the 8th of September, 1903, in the sum of not to exceed $2,500, as follows: “ $700 on two-story .* * ■* frame' building * * * occupied as a private family residence; $450 on barn; * -* * $1,000 on farm produce and feed while therein; * - * $100 on farming tools * * "x" *76while in said barns; $200 on pine shingles and lumber in said barn; all situated on the farm owned by assured while occupied by tenant, in the township of Italy, County of Yates, and State of ..New York. For a more particular description reference .is had to the application and survey of the assured, No. 1213 on file with this company, which is a warranty and is made a part of this contract.”- ■ Concededly, the plaintiff made several statements in his appfi-.cation for insurance respecting his title to or ownership of the premises upon which the buildings were situate, and in which the. personal-property was, which'were false and untrue ;• bnt, notwitli-. standing such false-statements, the application, contained the following : “ And the said applicant hereby warrants, covenants and agrees to and with said company, that the foregoing is a full, j.ust and true exposition of all the facts and circumstances, conditions, situation , and values' of and title to the. property to be insured, and is offered as a basis of insurance requested, and.is made a- special warranty,, the same as if written on the face of the ■ policy, and the statement is offered and received, and to be taken and to have'the effect of a Warranty-and not a representation.”

I cannot agree, with the majority of the court that such - false statements, which werer expressly made- warranties, only rendered the insurance upon-the buildings void, and did not affect the insurance upon the personal property which; was kept or stored in such buildings. -It is elementary that a warranty.is in.the nature of a. condition precedent, and, therefore, must be performed- by. the; insured before he can demand performance. of the contract on the part of the-insurer, and it is quite immaterial for what purpose such warranty was made, or whether or hot it was material to the risk or whether the hazard was enhanced by reason of its falsity. (Rohrbach v. Germania Fire Ins. Co., 62 N. Y. 47; Chaffee v. Cattaraugus Co. M. l. Co., 18 id. 376; Bryce v. Lorillard Fire Ins. Co., 55 id. 240; Alexander v. Germania Fire Ins. Co., 66 id. 464; Graham v. Fireman's Ins. Co., 87 id. 69.)

As was. said by Hr. Justice Adams, writing for this court in the case of Clements v. Connecticut Indemnity Co. (29 App. Div. 131): “ It is now a,well-established principle of the law of insurance that the effect of a warranty is to make void the policy if all the representations of the assured, upon which the policy is issued, *77are not substantially true, and this without regard to their actual materiality.” ,

In the case at bar it is apparent that the statements of the assured were material to the risk, and the defendant may well claim that it would not have insured either the buildings, which were a part of the realty, or the personal property in such buildings, if the plaintiff had truthfully stated the nature of liis title and the interest which he had in the farm upon which the buildings were situated. As matter of fact, the plaintiff had no title to, and really no valuable interest in, the farm. The insurance upon the buildings aggre-. gated only $1,150, whereas there was $1,400 of insurance upon the personal property, all stored in a barn, which was insured for only $450. The defendant might very well have refused to insure the contents of such barn if it had known-the plaintiff had no interest in protecting it against destruction by fire. The representations made by the plaintiff that he was the owner in fee of the farm and that it was unincumbered, were material to the risk which the defendant assumed in insuring the personal property upon the premises. But under the authorities it is entirely immaterial whether the risk was thus enhanced or not. As was said in Graham v. Fireman's Ins. Co. (supra): “ The cases cited establish the principle that where the provisions of the contract explicitly declare that it shall be void in case of misrepresentation and certain conditions which are enumerated are not performed, the truth and not the .materiality of the misrepresentations is the real question.” And at page 77 the court further said : “ The insurer has a right to know to what extent the insured has the ability to protect, or an interest in protecting against the perils insured against. (Savage v. Howard Ins. Co., 52 N. Y. 502, 504.) And .in a case like this, when a specific inquiry is made, the question of the materiality of the statement in respect to the risk is settled by the parties as a matter of contract. A broad distinction exists whether the statement is made in answer to inquiries or otherwise. In the one case the answers are made material by the act of the assured, whether they are in fact or not, while in. the other case, even though the statements are made a part of the policy, they are not efficacious as warranties, although material in fact.”

In Bryce v. Lorillard Fire Ins. Co. (supra), in discussing the *78effect of such, a false statement, the court. said (p. 244): “And it was * * * a‘ condition precedent not to be avoided by the fact that the truth.of the description was not-essential to the risk nor an inducement to the defendant to enter into the contract. This rule is so well established in the law of insurance as that it must be adhered to, though it may work hardship in a particular case.”

Upon principle the .warranties contained in the application,for the policy of insurance in. question should be regarded as applicable to the personal as well as to the real property., . By the contract the parties stipulated that they should so apply. ’ The contract is“This entire policy shall be void if the insured has concealed or misrepresented * * . * concerning this insurance or the subject thereofP

We think the authorities to which attention has been, called in the prevailing opinion i dó not in any manner overrule the broad principle adverted to, that a false statement contained in an application for a policy of insurance, which by- the term's of the instrument is made a warranty, vitiaies and renders void the entire contract. The precise proposition, was last decided by.the Court of Appeals in Smith v. Agricultural Ins. Co. (118 N. Y. 518), and it was there held that 'the false warranty vitiated the entire policy. In that case it is said that it was expressly stipulated in the, policy that if either.the real or personal property or any part of it be incumbered,, it must be so represented to.the company in the applb cation,. otherwise the en tire policy and every .part of it shall be void. Practically the same stipulation is contained in the policy involved in this case. It provides1: “ This entire policy shall, be void if the insured has concealed or misrepresented, in writing or otherwise, any material- fact or circumstance concerning this insurance or the subject thereof \ ■ * . *,. * or in cáse of any. fraud or false swearing by the insured, touching any matter relating to this insurance- or the subject .thereof.” “This insurance or. the subject thereof” covers and: relates to. real and personal property alike. Those words are quite as comprehensive as those employed in the policy in the Smith Case (supra) and their effect is the same.

In Wilson v. Herkimer Co. M. I. Co. (6 N. Y. 53) and Chaffee v. Cattaraugus Co. M. I. Co. (supra), which were cases exactly like the one at bar, it was expressly.held that no recovery could be had, either for loss to the personal property or realty. Merrill v. *79Agricultural Ins Co. (73 N. Y. 452) was a case where the policy provided that if the property insured became incumbered by mortgage, judgment or otherwise, the policy should be void, until the written consent of the company was obtained.

In Herrman v. Adriatic Fire Ins. Co. (85 N. Y. 162) the policy provided that if the premises should become vacant or unoccupied and so remain for more than thirty days without the consent of the company, the policy should be void.

In those and similar cases the court held that where the breach of a condition subsequent did not affect the entire property insured, and did not enhance the risk, recovery could be had for the loss of the property not affected by such breach. Frank v. Mutual Life Insurance Company of New York (102 N. Y. 266) was a case where the alleged false statements were not warranties. In that case the jury were permitted to determine whether such representations were material to the risk; enhanced the hazard. That is always the issue in case of false representations,, but never in the ease of breach of warranty. So in the case of Knowles v. Am. Ins. Co. of Boston (66 Hun, 220; affd., 142 N. Y. 641, on opinion below). The statements contained in the application in that case were not made warranties by the express language of the contract, but they were regarded as representations, and, therefore, it having been found that the fact of their falsity was not material to a certain specific part of the risk and that they did not induce the making of the contract, it was held that a recovery could be had for the loss of such specific property. We have been unable to find any case decided or approved by the Court of Appeals which held that a false statement contained in an application for insurance, which by the express language of the policy was made a warranty and declared to be material, did not render void the entire contract. On the contrary, as we interpret the decisions it has been uniformly held that under such circumstances no recovery can be had.

We, therefore, conclude that the judgment and prder appealed • from should be reversed and judgment directed in favor of the defendant dismissing the complaint upon the merits, with costs.

Stover, J., concurred.

Judgment, in so far as appealed from, and order affirmed, with costs.