Henderson v. Ohio Farmers' Insurance

2 Ohio N.P. 17
CourtAshtabula County Court of Common Pleas
DecidedNovember 15, 1894
StatusPublished

This text of 2 Ohio N.P. 17 (Henderson v. Ohio Farmers' Insurance) is published on Counsel Stack Legal Research, covering Ashtabula County Court of Common Pleas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Henderson v. Ohio Farmers' Insurance, 2 Ohio N.P. 17 (Ohio Super. Ct. 1894).

Opinion

Howland, J.

The plaintiff states in the petition a cause of action upon a policy of insurance, and asks for a judgment Of seven thousand dollars and more.

[18]*18For a defense it is averred in the answer, in substance, that the plaintiffs mortgaged the buildings insured during the life of the policy, without the consent of the defendant, and in violation of an express provision in the policy that it should thereby be null and void ; but the answer contains no averment that the risk was increased thereby.

The reply admits these allegations in the answer, but avers the risk was not increased thereby. The question under consideration is raised by a general demurrer to that reply.

We have examined each case cited in argument, and find that the precise question here raised, and raised in the case of the Dwelling-House Insurance Company v. Webster, 7 C. C. R. 513, has not been raised in either one of the other cases. It is well settled, however, that this incumbrance, in violation of the express provision of the policy, would have avoided it, under the law in force before the passage of the act of March 5, 1879. 35 Ohio St. 606; 11 Ohio St. 477 ; 42 Ohio St. 519; 22 Wallace, U. S. 47. The question raised by this demurrer is, whether the provisions of that act are applicable in this case, and whether the company is required to ascertain the amount of the insurable interest of the applicant in each ease, and fix the insurable value thereof. The determination of this question, depends upon the legal construction to be placed upon said act, which consists of two sections : section one thereof is now section 3643, and section two thereof, is now section 3644, of the Revised Statutes, and they read as follows: “ Sec" tion 3643. Any person, company or association, hereafter insuring any building or structure, against loss or damage by fire or lightning, by a renewal of the policy heretofore issued, or otherwise, shall cause such building or structure to be examined by an agent of the insurer, and a full description thereof to be made, and the insurable value thereof to be fixed by such agent; in the absence of any change increasing the risk; without the consent of the insurers, and also of intentional fraud, on the part of the insured, in case of total loss, the whole amount mentioned in the policy or renewal upon which the insurers receive a«premium shall be paid, and in case of a partial loss the full amount of the partial loss shall be paid, and in case there are two or more policies upon the property, each policy shall contribute to the payment of the whole of the partial loss, in proportion to the amount of insurance mentioned in each policy; but in no case shall the insurer be required to pay more than the amount mentioned in his policy.”

“ Section 3644. A person who solicits insurance, and who procures the application therefor, shall be held to be the agent of the party hereafter, issuing a policy, upon such application or renewal thereof, anything in the application or policy to the contrary notwithstanding.”

In construing this act, we should look to all the legislation in this state, upon the subject of fire insurance. 13 Ohio St. 454 ; 23 Ency, 311, 315, notes.

This act is to be liberallv construed. 8 Ohio St. 456; Duer on Ins. 161; 2 C. S. C. R. 474.

The business of fire insurance, is a necessity of the age and times; it is alike beneficial to the public and to the private citizen ; by it the citizen obtains cheap protection to his property; it affords a safe and convenient security for loans; the largest business enterprises are undertaken and operated upon its assurances. To secure these benefits, public and private, to the people of Ohio, the legislature authorized the incorporation of companies, to do the business of fire insurance; passed and codified laws, to compel the companies to make themselves responsible, for the performance of their contracts; and passed the act under consideration, to regulate their contracts, by doing away with the “ open policy,” and the multitude of technical and unreasonable defenses, which were an outgrowth of the [19]*19“open policy” system; and to require the companies to issue “valued policies,” and purge the business of the evils of over-insurance, and unreasonable defenses, with which it was permeated.

In construing this act, we should keep in view the purpose of the legislature, in all its legislation, upon fire insurance. The companies and agents were not'so much in fault, for the existence and growth of these evils, as the law, by which they were sustained and upheld.

A rule of construction, which is well established, requires the court construing an act, to ascertain the evils which the law was designed to remedy; for that purpose the court must call to its aid all those contemporaneous, external and historical facts, which are necessary for that purpose, and which led to, and caused the enactment. 23 Ency. 336, note; 2 Ohio St. 441; 22 Ohio St. 194; 1 Ohio, 469; 43 Ohio St. 267; 91 U. S. 72; 143 U. S. 457; 43 N Y. 130.

The following are the evils said act was designed to remedy. In all policies the amount of insurance was stated in two ways. The premiums and commissions were computed upon one statement; and the losses paid upon another. The first, was estimated at the time the policy was issued, which we call the estimated insurance. In the other, was stated the highest amount for which the company could be made liable, in any event; and that was the cash value of the property at the time of loss. We call this, the cash value.” There was no limit upon the amount of estimated insurance, which might be carried into the policy. When toe estimated, was le3S, or just equal, to the “ cash value,” the amount of insurance purchased, by the insurer, and the amount sold by the company, were equal. When the “ estimated insurance ” exceeded the “ cash value,” the amount of insurance purchased, exceeded the amount sold, by just the amount which the “ estimated” exceeded the “ cash value.” As the liability of the company was limited to the cash value,” the company incurred no liability whatever for such excess. This excess is usually called over-insurance, but it is more accurate, to call it, inflated insurance, as the company incurred no liability for it. The agent received the same commission, and the company the same premium, on each dollar inflated, that they did upon actual insurance. The agent obtaining the most inflation was the most efficient agent. The company which held the largest amount of it, in proportion to its actual insurance, was doing the most successful, and prosperous business. Inflation tended then and now, to induce moral hazard and incendiarism — inflated policies, in the proportion they were inflated, tended to induce carelessness and criminality in the use of fire, in and about the buildings insured by them.

The system of “open policies” did not include technical defenses.

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Cite This Page — Counsel Stack

Bluebook (online)
2 Ohio N.P. 17, Counsel Stack Legal Research, https://law.counselstack.com/opinion/henderson-v-ohio-farmers-insurance-ohctcomplashtab-1894.