Opinion
Argued February 18, 1879
Decided March 18, 1879
Jno. C. Hulbert, for appellants.
Harrington Putnam, for respondent.
The defendant took many exceptions to the referee's findings of fact, but as he fails to point out in what respect any one of them is unsupported by evidence, it is unnecessary to consider them. The referee, from his findings of fact, concluded, as matter of law, that the plaintiff was entitled to the money in question. This decision presents the only question to be determined upon this appeal.
1. The plaintiff had an insurable interest in the property covered by the policies. He was not only a creditor, but had, by proceedings duly instituted, acquired a lien upon the premises to the amount of $15,000, and perfected the same by judgment. This was not lost by the arrangement under which the property was bought by defendant Cherry, for in the declaration of trust executed by him it is declared that his purchase was, among other things, in the interest and for the benefit of George Harvey, (the plaintiff) to the extent of a lien held by him amounting to $15,000, besides interest. Under the same agreement and for the benefit of the same parties, the premises were to be leased and ultimately sold, and the proceeds distributed to this plaintiff, among others, and his share applied in discharge of his lien. If a surplus remained, that also was to be divided between him and others, who had become parties to the agreement. He was thus directly interested in the preservation of the property insured, and was so circumstanced with respect to it as to have a benefit from its existence, and prejudice or damage from its destruction. He was therefore entitled to protect this interest and guard against this prejudice by insurance. No right of property in the thing insured was required; it was enough that the plaintiff was so situated as to be liable to loss if it was destroyed by the perils insured against. (1 Arnould on Ins., § 105; Herkimer, Adm'r, v. Rice, 27 N.Y., 163-173; Tyler v. Ætna Fire Ins. Co., 12 Wend., 507; Rohrbach v. Germania Fire Ins. Co., 62 N Y, 47.)
2. By the terms of the policies the loss was payable to the plaintiff. The money has been paid over, and the rights of the plaintiff conceded, so far as the insurance companies are concerned. The defendant Cherry has no right to it, in law or equity. He refused to procure the insurance, and the policies when issued covered only the interest of the plaintiff, although taken in the name of the defendant Cherry, he holding the legal title. It was, however, a mere personal contract inuring solely to the benefit of the plaintiff. I am unable to see how the defendant has acquired any title to or interest in the proceeds of the insurance. It is well settled, that the intention of the party effecting an insurance at the time of doing so must govern the future use of it; and that no one can entitle himself to the benefit of it, without showing that his interest was intended to be embraced by it when it was made. ( Carter v. Rockett, 8 Paige, 438.) It therefore cannot be said that the money received on the policies stands in the place of the property destroyed; although, if it were otherwise, the defendant would be in no better condition, for he might have procured additional insurance, notwithstanding the policies issued to the plaintiff.
3. It is urged, however, that the claim of the plaintiff is against public policy and void, and that this is so because the plaintiff had an interest in common with others in the preservation of the thing insured; that he could, therefore, have no separate transaction in regard to it; that the insurance should inure to the common benefit, and therefore be paid to the defendant Cherry for distribution or use under the trust deed. It may be assumed that the plaintiff incurred certain responsibilities by reason of the relations which the trust and his assent thereto created between himself and other creditors having an interest in the premises referred to in the trust deed. He agreed, in substance, to forego certain rights as a judgment creditor or lienor, to forbear the enforcement of his judgment and permit the property to be purchased on foreclosure by Cherry, who should manage and finally sell it for the benefit of all. He agreed to respond to certain assessments, and consented that the expenses of management, and, among others, insurance should be paid from the rents, when received, and the proceeds of sale, when made, and he has complied with the obligations thus incurred. Did he also agree to refrain from any measure of individual protection? Did he part with the right, which before the execution of the trust deed he had, to insure his interest in the property? Or coming more nearly to the facts in this case, did he agree to be bound by the judgment of the trustee, as to the extent of insurance? And if, on application, the trustee refused to procure as much insurance as the plaintiff thought desirable, was he debarred from procuring the same at his own expense; or having, under these circumstances, procured it, is he now bound to place the moneys received as his indemnity for loss, in the hands of the trustee, who had refused to procure the policies? Such is the appellant's claim. In support of it he refers to no agreement, but cites a rule of law by which one is bound to protect the interest of those who stand in the same relation with himself to property, and is forbidden to take a title or advantage to their prejudice, and which makes the title or advantage inure to the common benefit. But this case is not within the rule. The insurance obtained by the trustee upon the trust property was, in the opinion of the plaintiff, inadequate; in the opinion of the trustee it was sufficient, and he refused to extend it. The plaintiff, having in vain urged the trustee, acts for himself. Does he thereby prejudice the other beneficiaries, or by his foresight and diligent care of his own interests, exerted after due notice to the trustee, create an equity which will permit the latter to deprive him of the advantage so acquired? Clearly not. The referee finds that the trustee had previously declined effecting additional insurance for the benefit of the associates. He cannot now have the benefit of the policies obtained, after such refusal, at plaintiff's expense. The plaintiff was guilty of no unfair dealing, nor did he violate the letter or spirit of the contract by which he was bound. I have examined the various cases referred to by the learned and diligent counsel for the appellant, but can find none which supports his position. They relate to the acts of persons standing in a fiduciary relation to others, and who are, therefore, held incapable of raising in themselves an interest adverse to that of the party for whom they act. No such relation existed between this plaintiff and his fellow creditors, in reference to the matters included in this controversy. His duty was defined by the trust deed. That duty he performed. His act in procuring insurance on his separate interest was no infringement of any obligation imposed by that deed. It was wholly outside of it. There was no fraud, no concealment, nor any advantage taken by him either of the trustee or of the beneficiaries. There would be force in the appellant's argument, and the cases cited by him would apply, if, under the arrangement relating to the property, it was made the duty of the plaintiff to insure it for the mutual benefit of the beneficiaries; but it was not. That duty rested upon the defendant; and it was only when he refused to discharge it, according to the measure of the plaintiff's wishes, that the latter took care of his own interest in the property. In doing so, he worked no injury to others, and violated no trust or confidence reposed in him.
If the plaintiff, and defendant Cherry, and those whom the latter represents under the trust deed, are regarded as joint owners or owners in common of the property insured, the appellant's position is equally untenable. Their interests are as distinct for all purposes of indemnity against loss, and, therefore, of insurance, as if they owned different and distinct things, and hence an insurance affected by one will not serve to protect the share or interest of another. In Lawrence v. Van Horne, 1 Cai., 276, it was argued that: "Every man who is an owner of an undivided part may insure his part, and bring an action on it; for a joint connection will not prevent the insurance of what one has;" and so the court held. Judge WOODRUFF, in delivering the opinion of the court in Miller v. Eagle L. and H. Ins. Co., 2 E.D. Smith, 268, says at page 299: "I am not aware of any rule or principle that prevents one of two joint owners or co-partners insuring his separate share or property held in common. * * * On no principle could the amount recovered be deemed joint property." We have already seen that the trust deed imposed no obligation on the plaintiff to insure the property for the benefit of the owners; nor was he, as part owner, under any such obligation: (5 Burr., 2727.) In Turner v. Burrows, 5 Wend., 541, the plaintiff claimed to recover one-sixth of the amount of moneys received by the defendant under a policy of insurance on a brig, in which they were jointly interested, the plaintiff owning one-sixth, and the defendant five-sixths. The defendant obtained a policy, and a loss occurring, received the whole insurance. The plaintiff was nonsuited, and a new trial denied, SAVAGE, Ch. J., saying: "It is well settled in this State that a part owner may insure his individual interest; * * * it is sufficient if he has an insurable interest to the amount in question;" and the judgment was affirmed in the Court of Errors: (8 Wend., 144.) I see no ground, therefore, upon which the appellant can be entitled to the moneys in question.
Another exception is presented by the appellant to the exclusion by the referee of a memorandum offered in evidence by the defendant. We think the ruling was correct. The paper was prepared by the witness, the defendant; had never been submitted to the plaintiff, or produced in his presence; and the various items contained in it had all been testified to by the witness. He testified as one possessing a distinct recollection of all the facts. There was, therefore, no necessity for the introduction of the memorandum: ( Russell v. H.R.R.R. Co., 17 N.Y., 134, 140.)
The judgment should be affirmed.
All concur.
Judgment affirmed.