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DU BOIS v. CAMDEN FIRE INS. ASS'N

February 19, 1948

DU BOIS
v.
CAMDEN FIRE INS. ASS'N et al.



The opinion of the court was delivered by: BYERS

This is a plaintiff's motion to strike from the answer the first, second and third defenses, pursuant to Rule 12, and for summary judgment pursuant to Rule 56, Federal Rules of.Civil Procedure, 28 U.S.C.A.following section 723c.

The action is based on four fire insurance policies issued by the defendant companies, to recover for a fire loss which may be deemed to have been fixed at the sum of $ 43,564.14.

The defenses sought to be stricken assert the failure of the plaintiff to disclose facts (constructive fraud) in connection with the issuance of the policies, knowledge of which it is said would have caused the defendants to refuse to underwrite the risk.

 The question for decision is whether the defendants have pleaded facts as to which they should be permitted to go to trial. The plaintiff acquired three of the predecessor policies to those in suit, on November 7, 1946, in connection with his purchase of certain improved real estate at Hauppage, Smithtown, Suffolk County, New York; he gave a purchase money mortgage to the sellers in the sum of $ 25,000 on account of the total price of $ 41,500, and paid to the vendors the then unearned premiums upon the following policies: The Camden Fire Insurance Association $ 37,468.00 Globe and Rutgers Fire Insurance Co. 15,000.00 The Home Insurance Co. 17,489.50 $ 69,957.50

 These were one-year policies, expiring January 8, 1947, and through brokers they were duly transferred to the plaintiff according to customary practice in such matters, with the standard mortgagee clause indorsed in favor of the purchase mortgagees (Trustees).

 Prior to the expiration date, renewal policies were issued in the name of the plaintiff, containing the standard mortgagee clause, and these new policies are the ones in suit, as to the first three defendants.

 On March 1, 1947, the plaintiff procured a fire insurance policy from Commercial Union Assurance Company, covering personal property on the same premises, in the sum of $ 5,000.

 On March 12, 1947, a fire destroyed the main dwelling and partially destroyed other property covered by the policies, and the loss was later determined to be represented by the said figure of $ 43,564.14.

 It appears that the first three companies, in accordance with the mortgage clause, paid to the Trustee mortgagees the amount of the said mortgage which was due at the time of the fire, although disclaiming liability as insurers, and thereby became assignees of the mortgage.

 That transaction is the basis for the third defense and counterclaim pleaded separately by each of those defendants, which seems to be to the effect that the policies would not have been issued with the mortgagee clause attached, and therefore liability to the mortgagees would not have arisen, except for the wilful concealment by the plaintiff of the matters later to be stated, whereby these companies took over the mortgage and were subrogated to the rights of the mortgagees to assert the alleged infirmity of the policies.

 In other words, the legal effect of the third defense and counterclaim is understood to be the assertion of another aspect of the first defense, which is that the policies were void for concealment of material facts and circumstances.

 The second defense is highly technical, i.e., that the action was begun prematurely, some twelve days before the signing of his examination conducted by the defendants, and therefore contrary to the terms of the policy. If this were all that required attention, the motion could be speedily determined.

 The motion to strike involves paragraphs 24 to 35; 36 to 43; 44 to 51; and 52 to 77, all inclusive, and these paragraphs embrace but one important question which is comprehended in the first and third separate defenses, the latter being also designated as a counterclaim to the extent of the amount paid by the first three companies named to acquire the mortgage, namely, $ 23,793.75, which was the amount unpaid thereon at the date of acquisition.

 The four companies rely upon the assertion that, by their terms, the policies shall be void if 'whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.'

 Since the breach is said to be of a condition upon which liability was assumed, it will be seen that the foregoing language can be urged to constitute only a wilful concealment before the loss, of a material fact or circumstance respecting the insurance itself, since neither the subject of it, which was structures (and contents), nor the plaintiff's ...


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