When a church and its contents were destroyed by fire, the insurer requested various financial records when it suspected that the fire was of incendiary origin. The insured church refused the request, and sought a court judgment declaring the records confidential and not subject to the insurer's inspection.

The insurance company filed a cross-motion for summary judgment that, in effect, would entitle it to examine the records in order to establish the financial status of the church. The records sought included bank records, monthly expenses, income, tax returns and salaries of the directors and officers.

The court cited the Insurance Law of the State of New York, section 340(e) which prescribes the standard fire policy provisions and states: "The insured. . . .shall produce for examination all books of account, bills, invoices and other vouchers or certified copies thereof if the originals be lost." It also cited various leading cases upholding an insurer's right to examine such records, notably when circumstances indicate the incendiary nature of a fire and it is imperative for financial data to be scrutinized.

The court observed that the wanted documents were relevant to the financial status of the church and that, because the inquiry was a private one rather than governmental, the insurer's enforcement of its contractual rights "did not violate plaintiff's parishioners' constitutional rights to freedom of association." It said that the insured's status as a church did not permit it to avoid contractual obligations, including those spelled out in the insurance policy.

The court cited Matter of Fuhrer, 100 Misc 2d 315 (Sup Ct. Richmond Co. 1979), in which it was held that "the constitutional guarantee of religious freedom and the statutory clergyman-penitent privilege will not operate as a shield to cover up criminal activities."

The court concluded that, by virtue of the fire insurance contract terms, the insurer was entitled to inspect the documents in question. The judgment of the court was in favor of the insurer and against the insured.

(THE CHURCH OF ST. MATTHEW, Plaintiff v. THE AETNA CASUALTY & SURETY COMPANY, Defendant. New York Supreme Court, New York County. 202 N.Y.L.J., No. 93, p.25. November 14, 1989. CCH 1989-90 Fire and Casualty Cases, Paragraph 2311.)