First Savings & Loan Ass'n v. American Home Assurance Co.

Stevens, P. J.

The facts are fairly stated in the dissenting opinion and need not now be restated at length. The issue to be resolved is whether the policy in question was divisible. In other' words did the February 14, 1969 notice of cancellation affect the entire policy, or did it apply, in effect, only to the increased coverage for which concededly the premium had not been paid some five months after the increase was granted.

‘ ‘ Fundamentally and primarily, the question of divisibility or severability rests upon the question of intention of the parties deducible from the stipulations of the contract and the rules of construction governing the ascertainment of that intention. As a general rule, a contract is entire when by its terms, nature, and purpose, it contemplates and intends that each and all of its parts and the consideration therefor shall be common each to the other and interdependent. On the other hand, the contract is considered severable and divisible when by its terms, nature, and purpose, it is susceptible of division and apportionment.” *345(29 N. Y. Jur., Insurance, § 643; American Sur. Co. of N. Y. v. Rosenthal, 206 Misc. 485.) 11 The contract is said to be severable when the part to be performed by one party consists of several distinct and separate items, and the price to be paid by the other is apportioned to each item or is left to be implied by law ” (Ming v. Corbin, 142 N. Y. 334, 340-341).

The policy in question, No. D7539681, was issued originally for $7,000 coverage. The general indorsement when increased coverage was obtained specifically provided that it formed part of Policy No. D7539681. It provided, inter alia, “ in consideration of an additional premium of $119. it is hereby understood and agreed that insurance is increased from $7,000 to $15,000.” The subject property covered in the original policy and further described in the added indorsement was “ on brick apartment ” at premises 46 Brooklyn Avenue, Brooklyn, New York. There were not separate items or varied items of property (e.g., real and personal) such that it might arguably be maintained that the intention of the parties applied to one category to the exclusion of the other. It is clear that the parties gave a single assent to the whole transaction rather than separate assents to several things. As was stated in Donley v. Glens Falls Ins. Co. (184 N. Y. 107, 111) ‘ where, by the same policy, different classes of property, each separately valued, are insured for distinct amounts, even if the premium for the aggregate amount is paid in gross, the contract is severable and a breach of warranty as to one subject of insurance only does not affect the policy as to the others, unless it clearly appears that such was the intention ”.

A divisible contract is always one contract, not several contracts. However, there must either be successive divisions upon performance of which the other party becomes bound, or categories with such identifiable lines of demarcation that it becomes apparent the parties assented separately to several things (cf. Rhine v. New York Life Ins. Co., 248 App. Div. 120, affd. 273 N. Y. 1). Such is not the case before us. Upon the agreement for extended coverage the insurer became at risk in the total sum of $15,000. The policy is in statutory form (Insurance Law, § 167) and the notice of cancellation, in form, complied with the statutory directive. The policy could be canceled at any time, by its terms, by giving 5 days’ written notice of cancellation to the insured and 10 days ’ written notice to the mortgagee. This was done. Section 167-b of the Insurance Law, requiring that a reason for cancellation be given, was added by section 2 of chapter 189 of the Laws of 1969, effective September 1,1969. The fact that the notice of cancellation stated ‘ ‘ for *346Non-payment of Premium ” neither added to nor detracted from the respective rights and obligations of the parties.

For the reasons stated the order entered April 3, 1970, herein appealed from, should be affirmed, with costs to defendant-respondent.