Summary
In Tasty Candy Products, Inc. v. Great Eastern Insurance Co., 28 A.D.2d 1123, 285 N.Y.S.2d 160 (1st Dep't 1967), the insurer was aware of changes to the insured's property but "continued to accept premiums up until the time of the fires in question, and paid out on a prior claim and never sought to alter or cancel the policies issued to the plaintiff."
Summary of this case from Si Meat Vill., Inc. v. Amguard Ins. Co.Opinion
November 30, 1967
Order entered on July 7, 1967, denying plaintiff's motion for summary judgment, reversed, on the law, with $50 costs and disbursements to appellant and motion granted. There is no defense to this action on fire insurance policies issued by defendant insurance company to plaintiff. It is clearly demonstrated that the defendant did receive timely notice of both fires, the one of November 25, 1965 and the one of December 5, 1965. In fact, it is not denied, that on the 26th day of November, the Loss Committee's adjuster and the assured's adjuster made an inspection of the damaged premises and began taking inventory. While they were so engaged there on the 5th day of December, the second fire took place and, as a result thereof, defendant had knowledge of this, through its representative who was on the scene. In any event, there is no denial by the defendant that there was both a hand-delivery of a report of the loss to the Loss Committee and a mailing of said report to the issuing agent of defendant on December 7, 1965. As to the claim by the defendant that there was an increase of risk on the insured property by reason of the fact that plaintiff had added welded trailers, constituting extensions attached to the manufacturing facilities, it is noteworthy that, about six months before the fires which are the subject of this suit, an agent of the defendant visited the premises and inspected them in connection with a prior claim, which was subsequently paid by defendant's check No. 10450. Additions and extensions mentioned were in existence at that time and, according to plaintiff's moving affidavits, were seen by that agent, and, therefore, the defendant had notice, through such agent. This is not denied by defendant. Moreover, no affidavit of this agent has been supplied by defendant to contradict this conclusion and no explanation is offered for such failure. In addition, this defendant does not deny that, under the established practice in the insurance industry, the New York Fire Insurance Rating Organization was notified of these additions and extensions. This organization issued a new rate, computed at .680, whereas the old rate, before the additions and extensions, was .685. In view of this, it is difficult to understand the contention of the defendant that the risk was increased. Nor does the defendant deny that it knew of the additions in plaintiff's premises by virtue of the practice of the Rating Organization to notify all its member companies of such physical changes. The affidavit of defendant's claims manager, submitted in opposition to plaintiff's motion, in discussing this phase of the case, sets forth general argument that if the courts were to hold insurance companies responsible for any change sent through the Rating Organization chaos would result in the insurance industry. It is to be noted that he carefully avoids denying that the defendant did have such notice. The important question is, was he notified by the Rating Organization of said changes or not and on this point he is silent. Determinative of the insufficiency of defendant's defenses of increase of hazard is the fact that, notwithstanding the notice of the physical change in the premises which defendant had through its agent and through the Rating Organization, it continued to accept premiums up until the time of the fires in question, and paid out on a prior loss and never sought to alter or cancel the policies issued to plaintiff. For the same reasons defendant's defenses of breach of warranty are also insufficient and without merit. Accordingly, defendant may not deny coverage. While not determinative of the issues presented in this case, it is nevertheless interesting to note that out of the fourteen insurance companies involved in this loss, thirteen of them have already paid their proportionate share.
I would dissent and affirm the order appealed from. There are issues of fact which preclude the grant of summary judgment to either plaintiff or defendant. These issues include (1) the question as to whether plaintiff gave defendant that immediate notice of losses required by its fire insurance policy, (2) the question whether the construction by plaintiff of trailer additions upon its premises constituted a breach of warranty which voided the policy because the structures were not "fire resistive", increasing the hazard insured, thus suspending the policy, and (3) the question as to whether or not defendant had prior knowledge of these conditions and failure to cancel the policy constituted a waiver of the condition and the warranty. Defendant denied such knowledge. Accordingly, both the motion and the cross motion for summary judgment were properly denied.