Opinion
June Term, 1858
Nicholas Hill, for the appellant.
W.A. Beach, for the respondent.
The application for insurance, which became a part of the contract between the parties, stated truly that the property was owned by a company, of which Tuthill and the plaintiff were members, and that it was mortgaged to the plaintiff to secure $9,000. I am inclined to think the policy, issued under these circumstances, would enure to the benefit of all the parties interested in the property; primarily, perhaps, to the benefit of the mortgagee, and ultimately to the benefit of the owners. But this is a question which, though discussed at the bar, it is deemed unnecessary to determine.
After the insurance had been effected, and while the policy was still in force, the plaintiff foreclosed his mortgage, and, upon the sale, became himself the purchaser. The interest of all the other owners having thus been extinguished, the plaintiff entered into a contract to sell the property to Brainard. This contract was made on the 1st of May, 1846. Subsequently, and before the thirty-first of July, the plaintiff informed the defendants of this sale. The letter containing this information was not produced upon the trial. But it may be fairly inferred, I think, from the reply received by the plaintiff, that he had informed the defendants that he had become sole owner of the property, and had entered into a contract to sell it to Brainard, and had requested the consent of the defendants to the continuance of the insurance, notwithstanding this change in the ownership. The defendants, accordingly, wrote to the plaintiff on the 31st of July, 1846, consenting to the contract he had made with Brainard, and agreeing that the policy should remain valid until the title of Brainard should be perfected. After this change of ownership, and the consent thus given by the defendants, several assessments were made upon the premium note of the plaintiff, which were paid.
The legal effect of this change of ownership, and the consent of the defendants after notice of such change, that the policy should remain valid until a specified event should happen, was to create a new contract between the parties. Thereafter, however it may have been before, the plaintiff was the real party insured. Being himself the sole and absolute owner of the property, the policy became as effectual for his indemnity, as a new policy issued to him in his own name, and describing him as such owner, could have been. Indeed, the transaction was but a short mode of making an entirely new contract of insurance.
At the time of the loss, the plaintiff was still the legal owner of the property. By the terms of their contract, the defendants agreed with the plaintiff that they would pay him all losses or damage, not exceeding the sum specified, which should or might happen to the property by fire, during the time the policy should remain in force. The loss or damage was to be estimated according to the true and actual value of the property, and not according to the state of the accounts between the plaintiff and his vendee at the time the loss or damage should happen. To the extent of this loss, by the very terms of the contract, the plaintiff was entitled to recover.
Nor, whatever may be the doctrine on the subject when a mortgagee obtains an insurance for his own benefit, are the defendants in this case entitled to be subrogated to the claim of the plaintiff against his vendee. By the terms of the contract of sale, of which the defendants had notice, the vendee agreed to pay the plaintiff the premium for keeping the property insured for at least the sum of $6,000. Whether he, in fact, paid the assessments upon the plaintiff's note to the defendants, does not appear, but I think the fair interpretation of the agreement that the policy should continue valid until the title should be perfected in Brainard, is, that the indemnity for which the policy provides, should enure to the benefit of Brainard, as well as the plaintiff. To the extent of Brainard's equitable interest in the property, the plaintiff is to be regarded as holding the policy in trust for him.
One other question remains to be noticed. The policy contains the usual condition that if any other insurance should be made upon the property, the plaintiff should, with all reasonable diligence, give notice thereof to the defendants, and have the same indorsed on the policy, or otherwise acknowledged in writing. Further insurance was effected to the amount of $6,000, of which the defendants were notified. But, by mistake, and without any fraudulent design, as the judge who tried the cause has found, it was stated in the notice of such further insurance, that the whole amount had been effected in the Howard Insurance Company, whereas, in fact, half the amount mentioned in the notice was insured by another company. It is insisted that this mistake amounted to a violation of the condition of the policy on this subject, and thus rendered the contract void. But this position cannot be maintained. The policy provided that in case of other insurance, the defendants should only be liable for such ratable proportion of any loss or damage which might happen to the property, as the amount of their insurance should bear to the whole amount insured. It was, therefore, for the interest of the defendants, that other insurances should be effected. The greater the amount of insurance, the more their risk would be diminished. For the same reason, the defendants had an interest in knowing what other insurances were made upon the property; that thus they might also know for what proportion of any loss which might happen, they would be liable. But they were only interested in knowing the amount of such further insurance. By whom it had been made, it did not concern them to know. Both the terms and the object of the condition in the policy would be satisfied by a notice of the fact that further insurance to a specified amount had been effected without specifying the particular persons or companies who had made such insurance. It was enough, in this case, for the plaintiff to inform the defendants of the true amount of insurance he had effected. This was all that it was material for them to know. It was all, too, that the condition of their policy demanded.
I am of opinion that the facts established upon the trial, as they were found by the judge, entitled the plaintiff to recover. The judgment should therefore be reversed, and a new trial granted, with costs to abide the event.
COMSTOCK, J. did not sit in the case; all the other judges concurring,
Judgment reversed, and new trial ordered.