Holbrook v. Baloise Fire Insurance

Britt, C. Action on a policy of fire insurance which contained a clause against double insurance as follows: “ This entire policy, unless otherwise provided by agreement .... shall be void if the insured now has or shall hereafter make or procure any other contract of insurance .... on property covered by this policy.” The defense relied on is that the insured committed a. breach of this condition by obtaining additional insurance without defendant’s consent.

Plaintiffs loaned a sum of money to one J. O. D. McMahan. In the course of the negotiation of such loan it was agreed that plaintiffs should have as security a mortgage upon land of the borrower in the city of Stockton and a policy of insurance on a building to be erected thereon. The mortgage was executed by McMahan on November 9, 1892; it provided, among other things,, that he would keep the buildings on the land insured to the amount of at least one thousand dollars and assign the policies of insurance to the plaintiffs. One Henderson negotiated the said loan as broker both of the mortgagor and the mortgagees; he was also the local agent for the defendant insurance company; on December 5, 1892, he filled out a blank form of application to-defendant for insurance to the amount of one thousand dollars on McMahan’s building, then in course of erection; the paper was entitled ‘Application and Survey of J. 0. D. McMahan,’ and it was stated therein that the insurance was for the security of a mortgagee; Henderson signed the name of McMahan thereto as applicant. Thereupon he issued on behalf of defendant the policy in suit, wherein it was stated that the Baloise Company ‘does insure ’ J. C. D. McMahan for the term of three years against loss by fire to the amount aforesaid on his said building; loss, if any, payable to said mortgagees. The policy was delivered to the mortgagees; the premium was paid from funds of theirs in the hands of Henderson, but on the completion of the building Mc-Mahan gave to them his note for the amount thereof. After the issuance of this policy, and after the execu[565]tion of his note to plaintiffs for the said premium advanced by them, McMahan obtained a policy from the Insurance Company of North America to the amount of twelve hundred dollars upon his interest in said building. Defendant had no notice of such subsequent insurance until after the fire by which the building was destroyed. After such notice, however, defendant joined the North American company in an agreement with McMahan to submit the question of the amount of the loss to appraisers; and such amount was thus ascertained to be the sum of $1,210.37. Said agreement for appraisement contained a provision that the submission was without reference to any other matter of difference within the conditions of the insurance and should be of binding effect only so far as regarded the damage to the property; and it was one of the clauses'of defendant’s policy that it should not be held to have waived any condition of the policy by proceeding on its part to an appraisal in the manner stated. The findings of the court disclose the matters above set out: it was further found that defendant did not intend to insure the interest of plaintiff as mortgagee in said building, but did intend to insure the interest of McMahan therein “ for the benefit and security of plaintiffs”; also that Mc-Mahan “ had no actual personal knowledge of the issuance” of said policy of defendant. Judgment was for plaintiffs in the sum of $550.15; the court prorating the liability of defendant with that of the North American company.