These are cross motions to settle the form of judgment and for new trial by plaintiff. Although denominated as motions to settle the form of judgment, they are motions to mold the verdict based upon the evidence and applicable law. R. 4:42-1(c), R. 4:50-1(e). The motion requires this court to resolve the open question as to the extent of the interest of an innocent spouse in the proceeds of a fire insurance claim based on a real property fire loss when she continues to cohabit with the guilty spouse. A review of the facts is necessary to an understanding of the issue.
Plaintiffs are husband and wife and under their previous name, Jones, took title on December 15, 1976 to a residential piece of property known as 9 Brookside Avenue, Old Bridge, New Jersey. The parties continued to reside there until October 29, 1982 when the premises were destroyed by fire. Allstate Insurance Company had issued a policy of insurance on the premises. That policy, inter alia, provided that:
The named insureds were Charles and Vivian Jonax who held title as tenants by the entireties.
The policy also contained a standard fraud disclaimer provision:
This policy shall be void if, whether before or after the loss the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or subject thereof, or in any case of any fraud or false swearing by the insured relating thereto.
Plaintiffs had been experiencing some financial difficulties prior to the fire and had been trying unsuccessfully, to sell their home. The fire occurred in the early morning hours of October 29, 1982 when, by chance, none of the family members were at home except Charles Jonax who was seen running from the building shortly before or contemporaneously with the discovery of the fire. Plaintiffs immediately initiated a loss claim and received their first payment toward emergency living expenses of $750 on November 4, 1982. Because of the abrupt onset of the fire and its quick spread throughout the residence, arson was immediately suspected and there was an investigation by the Middlesex County Arson Task Force as well as by an expert retained by defendant. Suspicion quickly fastened on Charles Jonax. Thereafter, Allstate declined to compensate Charles Jonax for his interest in the property loss claim but did agree to pay Vivian Jonax for her property loss and living expenses. It should be noted that during this time Charles Jonax continued, as he does to the present, to reside with his wife.
On December 17, 1982, defendant paid $150 for board-up costs. On January 5, 1983, Allstate notified plaintiffs that, while it would pay Vivian Jonax to the extent of her interest in the loss, it would not honor any claim by Charles Jonax. Plaintiffs were already represented by public fire adjusters, Commonwealth Adjusting Company who were at the scene of the fire while the firemen were still fighting the blaze. Thereafter, Allstate received a claim by the mortgagee, The Lomas and Nettleton Company, as to its interest in the property, which was the joint obligation of both plaintiffs. That January 13, 1983 claim totalled $24,283.89. Both parties concede that was a correct balance owing on the full mortgage loan due from both plaintiffs. Allstate paid that claim directly to the mortgagee on
January 18, 1983. Subsequently, Allstate offered to pay Vivian Jonax $12,014.50 towards her half interest in the personal property contents loss and additional living expenses of $3,561.06 for herself and her children. That offer was conditioned upon her execution of a proof of loss under oath. She never executed the attached proof of loss. That proof of loss contained the usual fire loss claim averment:
The said loss did not originate by any act, design or procurement on the part of your insured, or this affiant; nothing has been done by or with the privity or consent of your insured of this affiant, to violate the conditions of the policy, or render it void; * * * and no attempt to deceive the said company as to the extent of said loss, lies in any manner made. . . .
Charles Jonax never executed the proof of loss. Plaintiffs, thereafter, sold the premises in its damaged condition for $31,500, free of any mortgage obligation, which ...