Seyberts Administrators versus Pennsylvania Mutual Fire Insurance Company

Supreme Court of Pennsylvania1883-04-30No. No. 298

103 Pa. 282

Summary · law.co

Holding. The judgment against the insured created a lien that constituted an incumbrance under the policy's terms, obligating the insured to notify the company and pay additional premiums; because the insured failed to prove he had done so, the court affirmed the denial of coverage.

An insurance policy contained a clause requiring the insured to notify the insurance company in writing and obtain its consent if the risk increased or if the insured property became encumbered by judgment, mortgage, or other lien. During the policy period, a judgment was entered against the insured, creating a lien on the property. The insured argued the judgment was not the type of incumbrance contemplated by the policy because the underlying bond condition had not been breached and no execution could issue. The court rejected this reasoning, holding that the existence of a judgment and lien constitutes an incumbrance regardless of whether an execution could be pursued. The court reasoned that encumbered property presents a greater insurance risk, which is why insurers charge higher premiums for such property.

The insured also contended he lacked actual knowledge of when the judgment was entered. The court found this argument unavailing because the judgment resulted from the insured's own confession, making him chargeable with knowledge of its entry. The court distinguished cases from New York holding that mechanics' liens do not constitute incumbrances under similar policy clauses, noting those cases turned on the fact that the liens were not entered with the assured's consent or procurement. Since the insured presented no evidence that he had notified the company and obtained written consent to continue the policy, the court presumed he had not done so.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a judgment entered by confession constitutes an 'incumbrance' triggering notice and premium requirements in an insurance policy
Whether the insured's lack of actual knowledge of the judgment's entry timing excuses compliance with policy notice requirements
Whether the policy clause is ambiguous and requires construction or is plain and unambiguous

Procedural posture

The trial court ruled against the insured-claimant, and the insured appealed the judgment.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Mr. Justice Paxsox

delivered the opinion of the court,

We cannot reverse this case without making a new contract between the parties. Tlie policy of insurance under which the plaintiffs claim to reeovei, contains this clause : “If, after insurance, the risk shall be increased by any means whatsoever, or if the property . . . shall be incumbered by judgment, mortgage or otherwise, . . . and the assured shall neglect or fail to give written notice thereof, and pay such additional premium as the company shall determine, and obtain written consent of the company to a continuance of the policy, such insurance shall be void and of no effect.”

It was not denied that during the life of the policy a judgment was entered against the assured in the sum of $8,000. This judgment was an incumbrance upon the insured premises within the meaning of the policy. It was contended, however, that as the condition of the bond was to restore certain personal property which had been levied upon by the sheriff, or pay the amount of the execution with costs, and said condition had never been broken, there was no point of time when execution could have been taken out on the judgment, and hence it was not such an incumbrance as was contemplated by the policy. This is arguing in a circle. It is not a question of execution but of incumbrance. There was a judgment and a lien. That the condition of the bond was not broken is not material. A judgment for borrowed money may be upon record for years, and yet no right to an execution exist during all that time. This is always the case when the money is paid at maturity. In either case an execution may issue upon breach and not before. I am unable to distinguish this case from that of an ordinary judgment for borrowed money. The theory upon which tiie clause in the policy rests, is that encumbered property is not as safe a risk as property that is free from liens, and many companies require a higher rate of insurance in such cases. It is so with the defendant company, and it defends upon the ground that the assured has not paid the inmeased premiums for the increased risk. That it was an increased risk is fixed by the terms of the policy and the agreement of the parties. It is not an open question for our consideration. The terms of the policy are not ambiguous and do not need construction; henee, Butz v. The Insurance Company, 6 Wright 285, and other eases cited, have no application.

The argument that the judgment was entered without the knowledge of the assured is without force. It was entered upon liis confession, and he is chargeable with knowledge. A man who gives a judgment or mortgage knows that it may, and probably will be, placed on record. He may not Lave actual knowledge of the time of its entry, but the act is his, and he must be held responsible therefor.

I am aware that it has been held in Green v. Homestead Fire Ins. Co., 82 N. Y. 517, and other New York cases, that mechanics’ liens are not incumbrances within the meaning of similar clauses in lire insurance policies. These cases, however, go upon the ground that the liens were not entered by the consent or procurement of the assured. These cases are not analogous and do not apply.

If the assured here had notified the company defendant of the incumbrance, and had obtained its written consent to the continuance of the policy, that fact was peculiarly within his knowledge and should have been proved by him. As he did not do so, we may fairly presume the fact is not so.

This may be a hard case, but the less we say about that the better. Onr province is to administer the law as we find it. Its proper administration will sometimes work individual hardship, but this is true of the application of all general rules. It is a much less evil than to construe the law to meet the supposed hardship of particular cases.

Judgment affirmed.