vintage position of the Pennsylvania courts" bound it to conclude that the innocent spouse was barred by the fraudulent acts of the other if the jury determined that the other was responsible for the fire. Mele v. All-Star Insurance Corp., supra, at 1342.
Our own reading of Bowers v. London Assurance Corp., supra, does not convince us that it is so clearly on point as to direct a conclusion under the facts of this case. It is true that in Bowers the court ruled that "(if) the insurance is taken in the joint names of two or more persons the general rule prevails and all the assured must join in the action," 90 Pa.Super. at 126, and that "(if) the action is joint it follows that recovery on the policy is prevented by the fraudulent act of either of the assured whether participated in by the other or not." Id. at 127. We find it important, however, that the court in Bowers discussed the facts which led to the conclusion that the insurance contract was joint. The insureds named in the policy were "John A. Perry and L. S. Bowers Company as their interests may appear." Bowers Company was a car dealer which sold a car to Perry under a bailment lease which required Perry to insure the car against damage by fire, loss if any payable to Bowers as its interest might appear. As Perry made payments on the car, his interest in it increased and Bowers' interest decreased. The court noted that until final payment had been made, and Perry had obtained the entire interest in the car and Bowers retained no interest, Perry and Bowers "did not have separate and distinct interests in the policy-as distinguished from the automobile-which each could enforce by his own separate action irrespective of the rights of his joint assured." 90 Pa.Super. at 124. The court clearly found from the facts that the rights of Perry and Bowers being interrelated, "the policy did not purport to insure the interests of the assured in severalty but jointly, the two interests combined constituting one whole subject of insurance." Id. at 125. The policy being joint, the court concluded that Bowers could not bring the action alone, and would be prevented from recovering on the policy if it were established that Perry had fraudulently burned the car. The court noted that Bowers could have avoided this result by using a provision similar to a standard mortgage clause which has been held to create a separate contract between the insurance company and mortgagee.
The court in Mele v. All-Star Insurance Corp., supra, acknowledged that the interests of the co-insureds in the property in Bowers were not the same as the interests of the husband and wife in the case before it. Nevertheless, it reached the conclusion that the Bowers rationale applied with the equal force to the situation in that case. We do not have available for review all the facts which the court in Mele might have considered in determining that the insurance policy in that case constituted a joint contract. However, to the extent that the ruling was based on the assumption that because the property covered by the policy was jointly held, the policy itself was a joint contract, we must respectfully disagree.
We observe that in Bowers the court determined that Perry and Bowers had joint interests in the policy not because they were both named as insureds, nor because they held joint interests in the property insured, but because the specific nature of their joint interests in the property made it clear that "the two interests combined constituting one whole subject of insurance." 90 Pa.Super. at 125. Thus in deciding whether to apply the rule of Bowers that the fraud of one insured will bar the recovery by another, non-culpable insured, we must first determine whether the insurance policy was a joint contract.
We note that although the theory of tenancy by the entirety contemplates a "oneness" of husband and wife such that the property is owned by the marriage unit, each spouse possesses an undivided interest in the whole property. The interest of one spouse in the entirety property has been determined to be an insurable interest, see Shores v. Rabon, 251 N.C. 790, 112 S.E.2d 556 (1960); 27 A.L.R.2d 1061.
Thus a husband and wife might separately insure their interests in property which they hold by the entirety. It does not follow as a certainty from the mere fact that a policy names as the insured a husband and wife that the policy insures their joint interest rather than their separate interests. Nor does it follow that because the property insured is held jointly, the insurance policy is held jointly as well. "The insurance policy on the entirety property is a personal contract, appertaining to the parties to the contract and not to the thing which is subject to the risk insured against." Lovell v. Rowan Mutual Fire Ins., 302 N.C. 150, 274 S.E.2d 170, 173 (1980). We must, then, examine the insurance policy and the circumstances surrounding it to determine whether the contract should be considered joint.
The rules of contract construction as applied to insurance policies have been stated numerous times. The court must give the words of a policy a reasonable interpretation so as to effectuate the intent of the parties, but ambiguities are to be resolved against the writer of the policy and the presumption favors coverage when a policy provision is unclear. Papadell v. Harleysville Mutual Casualty Co., 411 Pa. 214, 191 A.2d 274 (1963); Evans v. Baltimore Life Insurance Co., 216 Pa.Super. 425, 268 A.2d 155 (1970). The policy we now consider lists as "Insured's Name," "Opat, David W. and Janice M." In the definitions section of the policy it is provided that " "Insured' means (1) the Named Insured stated in the Declarations of this policy; (and) (2) if residents of the Named Insured's household, his spouse, the relatives of either, and any other person under the age of twenty-one in the care of any insured..." The General Conditions applicable to the policy provide that "(In) the event of death of the Named Insured, the definition of "Insured' is modified as follows: (a) the spouse, if a resident of the household at the time of such death..." In our view, these sections identifying and defining the "Insureds" and "Named Insureds" add nothing helpful in determining whether the interests and obligations under the contract are joint or several. (We note, however, that if we were to assume from the estate in the property that the policy was likewise held by the entirety, the clause cited from the General Conditions of the policy would appear to be superfluous.)
The provision which State Farm cites as the basis for refusing payment here, provides that the policy shall be void "in case of any fraud or false swearing by the insured." This clause makes it apparent that the obligation to refrain from fraud is imposed not only on those named as "Insured" in the declarations, but on other relatives and dependents residing in the property. It sheds no light, however, on whether the obligation is imposed jointly or severally. Indeed, in our view, nothing in the policy itself sheds any light on whether the interests of the named insureds are joint or several or whether the obligations of the insureds are joint or several.
We have previously noted that we cannot presume from the fact that the property insured is jointly owned that the insurance policy covers the joint interest. At the same time, we agree with the Supreme Court of New Hampshire that "an ordinary person owning an undivided interest in property ... would naturally suppose that his individual interest in the property was covered by a policy which named him without qualification as one of the persons insured." Hoyt v. New Hampshire Fire Ins. Co., 92 N.H. 242, 29 A.2d 121, 123 (1942). We do not believe it necessary to cite specific authority in developing the point that, despite the survival of the estate of tenancy by the entirety, the legal fiction of the "oneness" of husband and wife has largely disappeared. Separate ownership of property, both real and personal, by spouses is commonplace. And one spouse may not be held vicariously liable for the crimes or torts of the other simply because of the existence of the marriage relationship. Given the rules of construction, then, in the present case where there is no specific indication in the contract that the interests and obligations of the "Named Insured" are joint, we find it to be a reasonable interpretation of the policy that the term "insured" in the fraud clause refers to "the insured who (1) is responsible for causing the loss and (2) is seeking to recover under the policy," Hildebrand v. Holyoke Mutual Fire Ins. Co., 386 A.2d 329, 331, (Me.1978), and not jointly to all the insureds.
Having determined that the interests and obligations of the insureds under the policy are several rather than joint, the rule in Bowers, supra, is not controlling in this case. The only decided case in Pennsylvania which addresses the specific fact situation here is Matyuf v. Phoenix Insurance Co., supra. While this court is bound in diversity cases to follow the law of Pennsylvania as enunciated by the Supreme Court, or, in the absence of a Supreme Court decision by the Superior Court, Pritchard v. Liggett & Myers Tobacco Co., 350 F.2d 479, cert. den. 382 U.S. 987, 86 S. Ct. 549, 15 L. Ed. 2d 475 (3d Cir. 1965), we need not follow a decision from a Court of Common Pleas unless it reflects "a sufficient body of nisi prius opinion to form a consensus of legal thought" on the subject. The decision in Matyuf being the only opinion on the question, we are confident that there is no consensus of legal thought which would so bind us,
and we therefore attempt to "predict" what ruling the highest court in Pennsylvania would make.
The considerations which lead us to conclude that the insurance contract may not be presumed to be joint simply because the insured property is held by the entirety, also lead to the conclusion that the innocent spouse should not be precluded from recovery by the fraudulent acts of the culpable spouse. At one time, the complete acceptance of the "oneness" of husband and wife might have required the conclusion that, unless clearly indicated to the contrary, the interests and obligations named in a policy were joint and several. Under the present state of the law in this and other jurisdictions, we believe the reverse is true. Consequently, we hold that David Opat, who was admittedly not involved in the intentional setting of the fire found by the jury to have been committed by Janice Opat, is entitled to recover under the policy to the extent of his interest in the damaged property, that is, one-half of the loss. The trial was bifurcated on the issues of liability and damages. As a result the damages have not yet been liquidated.
Finally, we address the counterclaim asserted by State Farm against the plaintiffs in the amount of the payment made by State Farm to the mortgagee of the property, Mellon Bank. We think it is clear that under the standard mortgage clause of the policy State Farm was required to make payment on the mortgage under the circumstances and they thereby either became subrogated to the rights of Mellon Bank, or received full assignment of the mortgage. In either case, the plaintiffs are now liable to State Farm for the amount paid Mellon Bank on the mortgage, $ 10,955.51. The mortgage was clearly a joint obligation of both David and Janice Opat. Thus although Janice was separately responsible for the fraud and may therefore not recover under the insurance policy while David may recover for his interest, both David and Janice are liable for payment of the judgment against them on the counterclaim.
The motion for judgment by State Farm against both David and Janice Opat will be granted. Interest must be adjusted on the judgment against both for the payment of the mortgage.
An order follows.
AND NOW, July 7, 1982, it is ordered that the verdict of the jury shall not bar a claim for one-half of the fire loss asserted by the husband. This loss is not yet liquidated.
Judgment is entered against both David and Janice Opat for $ 10,955.51 in favor of State Farm, with interest.
The motion for a new trial for Janice Opat is denied.
The motion that plaintiffs be permitted to appeal in forma pauperis is denied. The judgment entered against David and Janice Opat is entered jointly and severally.