Cherewaty v. Grangers Mutual Fire Insurance

Collins, J., delivered the opinion of the Court. Appellants, plaintiffs below, entered suit against appellee, The Grangers Mutual Fire Insurance Company, a corporation, defendant below, on a fire insurance policy issued by defendants to plaintiffs, Alexander Cherewaty and Mary Cherewaty, as tenants by the entireties, by reason of loss or damage by fire. Defendant filed the general issue pleas and also the following special plea, being the fpürth plea: “That the policy of insurance sued on and the endorsements thereto provide that said policy shall be void and that defendant shall not be liable for any loss or damage if the insured shall have any other contract of insurance, whether valid or not, covering the insured property, unless permitted in writing thereon; and that the insured did have another policy of insurance in force covering the loss of the said barn ¹⁵¹ and silo at the time they were destroyed by fire on June 28, 1940, to wit: a policy of insurance No. A3390, dated October 1, 1935, and issued by the Mutual Fire Insurance Company of Chester County, Poolesville, Pennsylvania, in which policy Alexander Cherewaty, one of the plaintiffs herein, was named as the insured; and the defendant did not permit the same, in writing or otherwise.” Plaintiffs’ demurrer to the special plea was overruled and plaintiffs having elected to stand on demurrer, judgment was entered in favor of the defendant by the Circuit Court of Cecil County, on the motion by the defendant for the failure of plaintiffs to plead to said fourth plea. An appeal is taken to this court from that judgment.

The question for our decision is whether the policy on which suit was brought, issued to Alexander Cherewaty and Mary Cherewaty, as tenants by the entireties, was made void by reason of a prior policy in another company issued to Alexander Cherewaty alone, permission having not been obtained for other insurance and therefore whether the demurrer was properly overruled. In a previous ruling by this court in the case of National Union Fire Insurance Co. v. Menke, 166 Md. 513 , at page 518, 171 A. 719 , at page 721, Judge Urner said: “There can be no question as to the validity and reasonableness of the provision against other insurance, whether valid or invalid, without the insurer’s consent. The validity of such a provision was recognized in Sweeting v. Mutual Fire Ins. Co., 83 Md. 63, 70 , 34 A. 826 , and its reasonableness is supported by considerations affecting the moral hazard when the insurance is excessive. 26 C. J.

(Insurance) 256; 5 Couch on Insurance, Sec. 1041.” As pointed out in the case of Northern Assurance Co. v. Grand View Building Assn., 183 U. S. 308 , 22 S. Ct. 133, 136 , 46 L. Ed. 213 : “Over insurance by concurrent policies on the same property tends to cause carelessness and fraud, and hence a clause in the policies rendering them void in case other insurance had been or shall be made upon the property and not consented to in writing by the company, is customary and reasonable.” Not only ¹⁵² is a provision such as this a protection against the gross carelessness of‘the insured in respect to his own acts and the acts of others, but it also tends to prevent any fraudulent destruction of property-by insured. It is necessary that the two policies cover the same property and the Nsame interest. “Other or double insurance exists where there are two or more policies on the same interest and subject, and against the same risk.” Richards on Insurance, 4th Ed., Sec. 250. “Other or double insurance exists where two or more policies of insurance are affected upon or cover the same interest in the same, or part of the same, property against the same risk and either in the name or for the benefit of the same person.” Encyclopedia of Insurance Law (Couch), Vol. 5, Sec. 1039. As Lord Mansfield said in Godin v. London Assurance Co., 1 Burr 489, 97 Eng. Reprint 419, 421; Id., 1 W. Bl. 103, 96 Eng.

Reprint 58: “If the same man, really, and for his own proper account, insures the same goods doubly, though both insurances be not made in his own name, but one or both of them in the name of another person, yet that is just the same thing: for the same person is to have the benefit of both policies.” It cannot be contended that double insurance does not apply in the instant case, since the first policy was invalid because it was issued in the name of the husband alone, while the property was owned by the husband and wife as tenants by the entireties, for the reason that the restriction applies to other insurance “whether valid of not.” It, of course, is not contended that both policies do not cover the same, property. Appellants, however, argue that because the second policy is in the name of husband and wife as