
    Ampersand Hotel Company, Respondent, v. Home Insurance Company, Appellant, Impleaded with The Mutual Life Insurance Company of New York, Defendant. (Action No. 2.)
    Third Department,
    March 10, 1909.
    Insurance — covenant not to increase hazard — conspiracy — plan to burn property — sufficiency of pleading.
    In determining the sufficiency of a pleading, not oulv the facts specifically alleged but also such facts as can by reasonable and fair intendments be implied from them, must be considered.
    In an action on a policy of fire insurance which provided that it should be void in case of fraud touching any matter relating to the insurance or the subject thereof, and also in case the hazard was increased by any means within the control and knowledge of the insured, an answer alleging that plaintiff’s treasurer, who owned nearly all its stock, entered into a conspiracy to procure some person to burn the property; that while such plan was still in existence and process of accomplishment, the fire occurred, and that said plan was a fraud on defendant and greatly increased the hazard, is not demurrable for failing to state a defense.
    Although under such pleading, no inference that the fire occurred as a result of the conspiracy can be drawn, the defendant was entitled to prove not merely a mental attitude, but the fact that plaintiff had paid some person to burn the property, and that the person employed was proceeding in the fulfillment of such design. Proof of such facts would vitiate the policy.
    Appeal by the defendant, the Home Insurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Franklin on the 27th day of .August, 1908, upon the decision of the court, rendered after a trial at the Franklin Trial Term,- a jury having been waived.
    
      Hartwell Cabell, for the appellant.
    
      William B. Ellison and Arnold, L. Davis, for the respondent.
   Cochrane, J.:

This is an action on a policy of fire insurance issued by the appellant on a hotel of the plaintiff known as the Hotel Ampersand and on personal property contained in said hotel. The property ivas destroyéd by fire September 23, 1907. The policy was in the usual standard form containing the customary provisions generally found .therein.

At the opening of the trial,, on .motion of plaintiff, the court dismissed one of the defenses in the answer on the ground that the facts therein stated were insufficient in law. The court treated such motion as in effect a demurrer to the defense. The question for us' to determine is whether such defense as pleaded would be sufficient as against a demurrer.

The policy contained the following provision : “ This entire policy shall be void * * * in- case of any fraud or false swearing by the assured touching any matter relating to this insurance or the subject thereof, whether before or after a loss,” and also this further provision: “ This entire policy * * * shall be void * * * if the hazard be increased by any means -within the control oi"knowledge of the insured.” The' defense in question after alleging the foregoing provisions of the policy continues as follows : “ That at the time of said fire of September 23d, 1907, and for a long time prior thereto, one Charles M. Eaton was the owner of, to wit, $110,900 par value of the stock of plaintiff; that the total amount of plaintiff’s capital stock issued and outslanding was $115,000 par value; that said Eaton has been continuously since the organization of plaintiff, and is now, the treasurer and a director of plaintiff, and in complete control and management of its business and affairs; that on or about the 10th day of September, 1907, plaintiff, through said Eaton, and for the purpose of collecting upon said policy of insurance, entered into a fraudulent conspiracy with one Herman Yan de Wall, alias Frank, and others, wherein it was' planned that said Yan de Wall should procure some person or persons to cause the destruction of said property by fire, to enable the plaintiff to recover from the defendant the insurance mentioned in said .policy described in the Eighth paragraph of this Answer; that while said plan and conspiracy was still in existence and in process of accomplishment, the said fire of September-23d, 1907, occurred ; that said plan and conspiracy was a fraud on this defendant, and that the hazard insured against under said contract of insurance was thereby greatly increased, whereby and by reason of said fraud and increase of hazard said policy became and was on the date of said fire null and void.”

The appellant disclaims that the fire occurred as the result of the conspiracy alleged in this defense, and we do not indulge in such an inference. But it is a proper inference from the phraseology employed, that plaintiff was actually procuring some person or persons to burn the-- property when the fire occurred. In Coatsworth v. Lehigh Valley R. Co. (156 N. Y. 451, 457) it was said : “Under the more recent authorities, pleadings are not to be construed strictly against the pleader, but averments which sufficiently point out the nature of the pleader’s claims are sufficient, if under them he would be entitled to give the necessary evidence to establish his cause of action.”

In determining the sufficiency of a pleading, we are obliged to consider not only the facts specifically alleged, blit also such facts as can by reasonable and fair intendment be implied from them. (Coatsworth v. Lehigh Valley R. Co., supra; Marie v. Garrison, 83 N. Y. 14; Sanders v. Soutter, 126 id. 193.)

• Guided by these rules, the question is what might have been established under the pleading. It is expressly alleged that thé conspiracy between plaintiff and Van de Wall.was “in process of accomplishment,” and such conspiracy was that Van de Wall should procure some person to burn the property. ' It is quite clear that appellant under this pleading might have established that plaintiff in conjunction with Van de Wall had paid or agreed to pay some person or persons to burn the property in order that plaintiff might recbver the amount of insurance thereon, and that the persons so .employed , were actually proceeding in the fulfilment of such design ; or plaintiff might have established other facts equally potent and effective towards the accomplishment of the same result.

That such facts, if established, would constitute both .a fraud against the insurer and an increase of the hazard within the meaning of the provisions of the policy so as to vitiate the same, seems to me to be quite clear. The learned trial justice was of the opinion that the facts alleged were merely a mental conception or a formation of a purpose to burn the property. If that were all which is alleged, the. question would be entirely different. But it seems to me that the appellant was at liberty to prove- under this pleading facts entirely beyond the zone of mental existence. The plan was in process of accomplishment. Steps had been taken to carry it into execution. The pleading, alleges overt . acts and not merely . a resolution or mental attitude.

It. is not a question as to whether or not such acts■ unconsiimraated or unproductive of actual damage would constitute a cause Of action against plaintiff. Ordinarily tliey would -not.. But the question is ' whether plaintiff by this attempted fraud and by this increase of hazard has brokbn the condition of its contract whereby it ¡agreed that for such or similar acts its contract should be void. In F. Dohmen Co., Ltd., v. Niagara Fire Ins. Co. (96 Wis. 38) it was said in reference to" this question: In Maher v. Hibernia Ins. Co. (67 N. Y. 283) Folger, C. J., said, in effect, that. fraud, as used herej means any trick or artifice by one to induce another to fall into error to his harm. To the same effect is Claflin v. Comm. Ins. Co. (110 U. S 81), cited by appellant’s counsel, and many other cases that might be cited.. And the same rule applies whether the term used is 6 fraud or false swearing,’ or fraud or attempted fraud or false-swearing.’ Ho authority can be found, we may safely say, to sustain the contention that fraud which will -avoid a policy under such a clause must have the elements necessary to constitute a cause of action based on fraud. Where the deception or artifice practiced results in payment of the loss, in an action brought to recover back the money, all the conditions which the learned judge held requisite to make out fraud would -be essential to sustain the cause of action. His .difficulty grew out of a failure to distinguish between deception and artifice constituting fraud liable to do harm, which avoids -a policy of insurance under a contract which so provides, and a¡ cause of action based on fraud-. The effect of the foregoing is - that any trick, artifice or deception practiced with the -object -of. securing some advantage in the adjustment or payment .of a loss-under a policy of insurance, to the prejudice of the insurer, and liable to have that effect, avoids the policy.”

.And" 'admitting, as it must, on this appeal the existence of this wicked bargain and effort on its part, I am qt a loss to -see how 'the plaintiff can claim that it has not increased the hazard incnrred by the appellant under this contract of insurance. One is "presumed to intend the natural consequences of his own acts.. The plaintiff intended.to destroy this property. It took effective and aggressive steps in that direction. It set in motion agencies with that in view. How can: it say that it's efforts would not have proved successful or that the hazard was not thereby increased ? I think we are bound to assume under this pleading that had the property not burned as it did from other causes, it would have burned as the result of this plan and conspiracy fomented by plaintiff and which was in actual “process of accomplishment” when it was interrupted by the accomplishment of the desired result by other agencies. To say that this was not a fraud on the insurance company or an increase of hazard seems to be the denial of a self-evident proposition. When plaintiff set in motion a plan to burn the property and procured others to execute the plan the property was in greater danger than it would have been otherwise. I think, therefore, it was error to hold that this defense failed to allege facts sufficient to defeat the policy and that the appellant must be given an opportunity to make good its allegations.

. Other objections are raised against this judgment but inasmuch as on another tidal some or all of them may be eliminated by a possible change in the facts it is unnecessary now to consider them.

The judgment must be reversed and a new trial granted, with costs to the appellant to abide the event.

All concurred.

Judgment reversed and new trial granted, with costs to appellant to abide event.  