[130 NJSuper Page 352] Plaintiff and her husband owned the house here involved as tenants by the entirety. Defendant had issued them a homeowners insurance policy providing coverage for fire loss or damage to the "dwelling building" and personal property "usual or incidental to the occupancy of the premises as a dwelling and owned or used by an Insured, while on the described premises [the house]." If the property loss rendered the premises untenantable, the policy covered additional living expense, that is, "the necessary increase in living expense incurred by the Named Insured to continue as nearly as practicable the normal standard of living of the
Named Insured's household" until the repairs to the premises are completed or such household has become settled in permanent quarters, whichever period is less. The policy designated the named insured as "Gene K. Howell and/or Donna L. h/w." The term "Insured" was defined therein as meaning the "Named Insured" and the named insured's spouse if a resident of the named insured's household.
Gene Howell, plaintiff's husband, intentionally set fire to the house and took his own life while it was in flames. The house was rendered uninhabitable and the personal property therein, including household furnishings, was destroyed or severely damaged. Apparently since there was an innocent mortgagee involved, defendant paid for the repairs to the house. It refused to pay plaintiff for the personal property or for her living expenses. It contended that her husband's arson constituted fraud by the "Insured" voiding the policy.
Cross-motions for summary judgment were made. In an opinion reported at 124 N.J. Super. 414 (Law Div. 1973), the court below granted summary judgment in favor of plaintiff in the amount of one-half of the damages within the policy limits.*fn1 A jury trial thereafter on the issue of damages resulted in a verdict for plaintiff of $15,000 for personal property loss and $3,000 for additional living expenses. The policy limit was $13,500 for personal property loss and $5,400 for additional living expenses. The court accordingly molded the verdict to conform with its determination on the summary judgment motions to one-half of $13,500 ($6,750) and $3,000 ($1,500), respectively, and judgment was entered in favor of plaintiff for $8,250.
Both parties have appealed.
In the reported opinion the trial court properly held that the intentional burning of one's own house is fraud voiding the policy. It phrased the issue before it as to
whether the intentional burning by one spouse of a homestead held by tenancy in the entirety will bar recovery under a fire insurance policy by the innocent spouse. It concluded that the fraud of the husband in this respect was no bar to recovery under the policy by the innocent wife. It held that the interest of the wife in the real estate held as tenants by the entirety or, in the alternative, in the contract rights under the policy, was several, not joint, and thus not subject to forfeiture by the unilateral acts of her husband. As indicated, it then found that since the interest was several, recovery should be had to the extent of the wife's interest, which it concluded amounted to one-half of the damages within the limits of the policy.
We hold that the trial court correctly determined that the fraud of the husband was no bar to recovery under the policy by the innocent wife. However, we reach this result irrespective of whether the interests of the wife and husband in the tenancy by the entirety, in the personal property, or in the contract rights under the policy are deemed to be joint or several. The significant factor is that the responsibility or liability for the fraud -- here, the arson -- is several and separate rather than joint, and the husband's fraud cannot be attributed or imputed to the wife who is not implicated therein. Accordingly, the fraud of the co-insured husband does not void the policy as to plaintiff wife. N.J.S.A. 37:2-1 et seq. See Patusco v. Prince Macaroni, Inc., 50 N.J. 365 (1967); Immer v. Risko, 56 N.J. 482, 488 (1970); Long v. Landy, 35 N.J. 44, 50 (1961); Simon v. Security Ins. Co., 390 Mich. 72, 210 N.W. 2d 322 (Sup. Ct. 1973). See also Hoyt v. New Hampshire Fire Ins. Co., 92 N.H. 242, 29 A.2d 121 (Sup. Ct. 1942); Mercantile Trust Co. v. New York Underwriters Ins. Co., 376 F. 2d 502 (7 Cir. 1967), 24 A.L.R. 2d 443 (1969). Cf. Jackson v. Prudential Ins. Co. of America, 106 N.J. Super. 61, 69, 75 (Law Div. 1969); In re Kalfus, 81 N.J. Super. 435 (Ch. Div. 1963); Campbell v. Ray, 102 N.J. Super. 235 (Ch. Div. 1968), aff'd o.b. 107 N.J. Super. 509 (App. Div. 1969).
This conclusion is supported by the policy provisions prepared by defendant carrier, even though we do not deem them necessarily controlling here. The "Named Insured" is the husband "and/or" plaintiff wife. Although the term "Insured" means the named insured, the use of the ambiguous phrase "and/or" and the reasonable expectations of the insureds by reason thereof compel a determination that the fraudulent conduct by one insured should not void the policy as to the other who is completely innocent thereof. See Bryan Const. Co. Inc. v. Employers' Surplus Lines Ins. Co., 60 N.J. 375, 378 (1972); Mazzilli v. Acc. & Cas. Ins. Co. of Winterthur, 35 N.J. 1, 7-8 (1961); Cooper v. Government Employees Ins. Co., 51 N.J. 86, 93 (1968); 12 Appleman, Ins. Law & Practice, § 7006 at 22 (1943); Fisher v. Healy's Special Tours, Inc., 121 N.J.L. 198 (E. & A. 1938); Annotation "And/or," 154 A.L.R. 866 (1945).
We are not concerned here with the question of whether the rule should be different where the incendiary is a person in control of a corporation or a partnership or is an agent for an innocent principal, and express no opinion with respect thereto. See Charles Stores, Inc. v. Aetna Ins. Co., 428 F. 2d 989 (5 Cir. 1970); Miller & Dobrin Furniture Co. v. Camden Fire Ins. Ass'n., 55 N.J. Super. 205 (Law Div. 1959). See also, Hoyt v. New Hampshire Fire Ins. Co., supra; Arenson v. National Automobile & Cas. Ins. Co., 45 Cal. 2d 81, 286 P. 2d 816 (Sup. Ct. 1955); Walker v. Lumbermens Mutual Cas. Co., 491 S.W. 2d 696 (Tex. Civ. App. 1973); Annotation, "Fire insurance on corporate property as affected by its intentional destruction by a corporate officer, employee or stockholder," 37 A.L.R. 3d 1385 (1971). With respect to a fire insurance policy covering the interests of more than one insured, however, there is much to commend the ...