Weed v. Hamburg-Bremen Fire Insurance — 45 N.Y. St. Rep. 105

Majority

p. 105

Henry E. Weed, Resp’t, v. The Hamburg-Bremen Fire Insurance Company, App’lt.^[1]

(Court of Appeals,

Filed May 24, 1892.)

Headnote

1. Insurance (Fibs)—Interest oe assured—“ Estate.”

Plaintiff procured from defendant a policy insuring the “ estate of O Richards ” against loss by fire, loss payable to himself, “ mortgagee, as his interest may appear.” The policy provided that it should be void if the exact interest of the assured in the property, whether as owner, mortgagee, or otherwise, was not truly stated. It was shown that after giving the mortgage to plaintiff, Richards, with the knowledge of plaintiff, had conveyed the property in trust for his creditors, with a residuary clause in his own favor, but remaining in possession of the real estate, claiming to own it, and died insolvent prior to plaintiff’s obtaining his insurance. Held. that the word “ estate ” was not used in its restricted sense, but included all the interests in the property left by Richards, and among them those covered by the trust deed.

2. Same.

If the trust deed was invalid, then the title remained in Richards at the time of his death, and passed as his unqualified estate to his widow and heirs. •

3. Same.

The fáct that plaintiff commenced an action for the foreclosure of his mortgage, upon which judgment was entered but no sale made, some years before taking out the insurance, would not prevent plaintiff from recovering upon his mortgage, for lie remained mortgagee in every real sense, notwithstanding the judgment. The omission to mention the judgment in the policy was not a misrepresentation or omission to mention a material fact.

4. Same—Notice oe loss—“Forthwith.”

The word “ forthwith,” as relating to giving notice of a loss, must have a reasonable construction, and where proofs of loss were served nineteen days after a fire, the company, if it intends to claim that the notice was not served in time, must take its position promptly and not put the assured to the expense of complying with the other conditions of the policy.

Appeal from judgment of the supreme court, general term, third department, affirming judgment entered upon a verdict directed for the plaintiff upon the trial at circuit.

On the 30th day of October. 1873, Orson Richards executed to the plaintiff a mortgage upon his grist mill at Sandy Hill in this state,'to secure the payment within three years of all advances to be made by the plaintiff to him, and all bills, drafts and notes on which he should be maker, endorser, drawer or acceptor which the plaintiff should thereafter discount for him, with interest

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thereon. On the 1st day of May, 1875, Richards executed and delivered a deed to Dean Sage conveying to him the grist mill and other real estate, in trust, to have, hold, enjoy and dispose of the same and receive the rents, issues, profits and proceeds thereof so. long as the real estate or any portion thereof should remain unsold and undisposed of under the provisions and .in pursuance of the trusts in the deed contained, and until such period to make application, of the rents, issues and profits of the real estate as in the. deed later provided, and further in trust to make sale of the whole or any portion of the real estate at such time or times as to him, the trustee, might seem best, for cash or upon credit, or partly for cash and partly upon credit, or to otherwise dispose of the same; and after payment of all specific liens and incumbrances on the real estate to make application of the remaining proceeds and all the money and property received by him-, first to the payment of the expenses and commissions of the trustee, and then to the payment of all the debts of Richards, pro rata, and the residue of the property was to be re-conveyed by the trustee to Richards. It does not appear what, if anything, the trustee ever did under the trust deed. Richards remained in possession of the real estate claiming to own the same until his death, September 4, 1879., He died intestate, insolvent, not having real and personal property sufficient to pay his debts, and leaving a widow and three children, all residing at Sandy Hill. The widow and a son, Eber Richards, were appointed administrators of the estate of the intestate, and the widow died in May, 1881.

On the 24th day of November, 1881, the plaintiff procured a policy of insurance from the defendant upon the grist mill and the machinery therein, by which policy it insured the “ estate of 0. Richards against loss or damage by fire to the amount of $1,000; $750 on their frame water power grist mill building; $250 on fixed and movable machinery, shafting, pulleys, hangers and other machinery therein, loss, if any, payable to Henry E. Weed, mortgagee, as his interest may appear.” No mention" was made in the policy of the trust deed. The plaintiff procured the policy without consultation with the heirs or administrator of Richards, and paid the premium for the same with his own money. The mortgage to him did not contain any provision about the insurance of the property, and did not authorize the mortgagee to insure the property at the expense of the mortgagor. The property insured was destroyed by fire on the 4th day of February, 1882, and at that time, and also at the time of the insurance, there was due upon the mortgage about $12,000.

The plaintiff brought this action to recover upon the policy, and upon the trial at the close of the evidence the court directed a verdict in his favor.

A. II. Sawyer, for app’lt; G. B. Wellington, for resp’t.

The policy contained this provision : “ If the exact interest of the insured in the property, whether as owner, trustee, consignee, factor, agent, mortgagee, lessee or otherwise, be not truly stated in the policy, then and in every such case this

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policy shall be void;” and the principal contention of the defendant is that the policy was void because the facts in reference to the trust deed were not truly stated therein.

The solution of the question raised by this contention depends upon the scope and meaning to be given to the words “Estate of O. Richards ” contained in the policy.

The policy was valid, although no particular person was named therein as the assured. Clinton v. The Hope Insurance Co., 45 N. Y., 454 ; Weed v. L. & L. Fire Ins. Co., 116 id., 106; 26 St. Rep., 414 .

What is the precise significance of the word “ estate,” when used as it is here, has not been determined in any case, and the law has not assigned to it any definite meaning. It is an indeterminate word, the precise meaning of which is to be¡ascertained from the circumstances under which it is used. It may be used to represent the interest of administrators in personal estate, or the interest of widow and heirs in real estate, or the interest of all these in both personal and real estate, and the scope to be given to it will depend largely upon the persons who procured the policy, and the purpose for which it was procured Here the plaintiff knew of the trust deed. He needed an insurance covering all the interests in the property. He could have had no-purpose to insure any particular or limited interest It was difficult, if not impossible, to specify what particular interest the administrator or the heirs or the trustee had, and hence the comprehensive word “ estate ” was used to cover all the interests. The plaintiff procured this insurance through an insurance broker, and it does not appear that he had any negotiation in reference thereto with the defendant or its agent. He must, therefore, he presumed to have, chosen the phrase inserted in the policy; and the defendant assented to it, and must be held to have assented to its use in the most comprehensive sense that will give validity to the policy. In the absence of proof it cannot be assumed that the defendant used the phrase in any restricted sense, and certainly not in a sense which would' render the policy void ah initia. The estate of one who dies intestate may mean all the property which he leaves for his widow, heirs, next of kin and creditors, the whole body of his property as he leaves it at his death. His creditors have the primary lien and claim thereon, first upon the personal property, and if that be not sufficient, then upon his real estate, and by appropriate proceedings the creditors can enforce their claims against both the personal and real estate. The real estate conveyed by Richards to Sage remained a part of his estate. Sage had no personal interest in it

It was not conveyed to him for his benefit During the life-of Richards he was bound to administer it for his benefit in the payment of his debts as directed in the trust deed, and to return the balance, to him, and after his death, if there was any balance, he was bound to return it to his heirs as a part of his estate. If this real estate was not a portion of the estate of Richards, to whose estate did it belong ? It did not belong to the estate of Sage It was to go under the trust deed precisely where it would have

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gone if the trust deed had not been executed, to wit: to the creditors. It was a part of Richards’ estate, to be administered for the benefit of his creditors, just as it could have been by his administrator if the trust deed had not been executed. Therefore the words- “Estate of 0. Richards” were comprehensive enough to include all the interests in the property- left by Richards, and among them those covered by the trust deed. All the property belonged to the “estate.”

There was thus no defect in or qualification tó the title of the estate, and the exact interest in the property insured was truly stated in the policy when it was represented as belonging to the estate. At least we think this was a possible view of the evidence which the trial judge could take, and that therefore it is sufficient, so far as concerns this point, to uphold the" judgment In Clinton v. The Hope Insurance Company, supra, the policy was procured by an administratrix upon real and personal property on her behalf, and for the benefit of the widow and heirs of the intestate, and the premium was paid out of the estate; and it insured “ The estate of Daniel Russ.” Evidence was given showing that the intention of the parties was to effect an insurance upon both real and personal property for the benefit of the widow and children of the intestate, and it was held that the policy covered the interests of the administratrix, widow and children in the property insured and destroyed by fire: that they were sufficiently described under the words “ Estate of Daniel Russ; ” that where the designation of the assured may be applicable to several persons, or if the description of the assured is insufficient' or amhiguous, so that it cannot be’understood without explanation, extrinsic evidence may be resorted to to ascertain the meaning of the contract, and that when thus ascertained it will be held to apply to the interests intended to be covered by it, and they will be deemed to be comprehended within it who were in the minds of the contracting parties. Nothing decided in the case of Weed v. The L. & L. Fire Ins. Co., supra, is adverse to the views we have expressed.

The action in that case was by this plaintiff to recover upon another policy taken by him upon the same property, and one of the conditions in that policy was that “ if the interest of the insured in the property be any other than the entire, unconditional and sole ownership of the property for the use and benefit of the insured, * * * it must be so represented to the company and so expressed in the written part of this policy, otherwise the policy shall be void.” There the trust deed to Sage was not communicated to the insurance company, and was in no way referred to or mentioned in the policy, and the policy was on that account held void. There the evidence upon-the trial was different from that given upon the trial of this action, and the ’case came before the general term upon appeal from a judgment in favor of the plaintiff, entered upon the report of a referee, who, among other facts, found that at the time of the issuing of the policy the interest of the “ estate of 0. Richards ” in the property insured was not “ the entire, unconditional and sole ownership thereof for the

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use and benefit of the assured.” That finding was regarded as binding upon the plaintiff, and in the end it defeated his action. Here there was no finding adverse to the plaintiff, and he is entitled to every inference which can be drawn from the evidence in his favor. It was well said in that case that such a construction should be adopted as will uphold the whole contract and give effect to all its provisions in preference to one that will render .some of the 'provisions nugatory; and that the court should, therefore, endeavor to give to the phrase “ estate of 0. Richards ” such meaning as will harmonize it with the condition of the policy if it ■can do so without doing violence to the words used. And the learned judge writing the opinion said: “ Applying these rules of ■construction to the evidence in this case, it leaves no reasonable doubt as to the persons intended by the expression1 estate of O. Richards.' Mo doubt the phrase might include the administrator. So it might, without doing violence to language, include the trustees under the Sage deed. But the question here is, who did the defendant intend to designate ? It could not have been the trustee, as the agent had no knowledge of the Sage deed ■ Mor do I think it was intended to include the administrator.”

And he came to the conclusion upon the evidence in that case that the intention of. the parties to that policy was to insure the heirs of Richards who succeeded upon his death to his title, and that in consequence of the trust deed they had no title. It is sufficient to say that in this action the evidence is different, and that it is a possible and allowable inference that the intention was to insure all the interests which comprehended and represented the estate of Richards.

We have thus far proceeded upon the assumption that the trust ■deed was valid and sufficient to pass the title of the property to the trustee. But we do not determine whether it was valid or not, as it is wholly immaterial. If it was not valid, then the title remained in Richards at the time of his death and passed as his unqualified estate to his widow and heirs. But other objections are made to this recovery which must be noticed.

The plaintiff commenced an action for the foreclosure of his mortgage in 1877, and judgment of foreclosure was entered in that action. Mo sale took place under the judgment, and at the time of the insurance the plaintiff held both the mortgage and the judgment. The judgment was not mentioned in the policy, and the plaintiff was simply named as mortgagee, and hence it is claimed that there was a misrepresentation and omission to mention a material fact. , We think the plaintiff remained mortgagee in every real sense, notwithstanding the judgment. That was ■simply one of the steps in a proceeding to foreclose and realize upon the mortgage. It gave the plaintiff no new right except the right to sell the mortgaged property for the satisfaction of the mortgage. It did not satisfy or destroy the mortgage, and it gave the plaintiff no new or increased interest in the property. There was, therefore, no material misrepresentation as to the ¡mortgage.

In the mortgage, the complaint and the proofs of loss, the

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plaintiff appears as the mortgagee in his own right. He alleges-in his complaint that he advanced upon the security of the mortgage upwards of $15,000. The defendant in its answer denied that the plaintiff advanced any money upon the mortgage, or that he ever owned it, and alleged that it was made and executed to secure the Manufacturers’ National Bank of Troy for such loans and advances as might be made by it to or for the benefit of or at the request of Richards, and that the plaintiff had no interest in the mortgage; that if the mortgage was executed to and in the name of the plaintiff as mortgagee, it was so made and held by the plaintiff in trust, secret or otherwise, for the benefit of the bank, and not. otherwise, and that this action is not prosecuted in the name of the real party in interest. Upon the trial the plaintiff -proved the-mortgage and testified that he advanced to Richards upon the-mortgage upwards of $15,000. Upon his cross-examination-he testified that he was formerly president of the bank for many years. The defendant’s counsel asked him this question: “ Can you tell me when you were president?” This was objected to-on the part of the plaintiff as immaterial and as not the subject, of cross-examination; and the trial judge sustained the objection. Defendant’s counsel then offered to prove that the mortgage “was not at the time of the commencement of the action,, and never had been in -fact, owned by the plaintiff; that the mortgage was made and executed to secure the Manufacturer’s National Bank of Troy for such loans and advances as might be made by the bank at the request of or to or for the benefit of said Richards p and that said Henry B. Weed, the plaintiff in this action, had no-interest in said mortgage, and that the same was made to and held by the plaintiff in trust for the benefit of the bank, and not-otherwise.” The plaintiff’s counsel objected to this evidence as immaterial, and the judge sustained the objection, and it is-claimed that in excluding this evidence he committed error. There was no offer to prove that the plaintiff did not, as he testified, in fact advance the money upon the mortgage. We have-thus these facts: the plaintiff took the mortgage in his own name. He advanced the money upon the mortgage and took the-policy making it payable, to himself as mortgagee, and he paid the premium of insurance. There was no offer to show that the-bank had advanced any money upon the mortgage.

Under such circumstances, it is difficult to perceive what the-defendant meant to prove or could prove, to show that the plaintiff was not the real party in interest in the mortgage and the policy. But if we assume that the offer was to show that the plaintiff advanced the money upon the mortgage in some way as the representative and trustee of the bank, doing the business in his own name, and possibly (there being no proof upon the subject) not disclosing his representative capacity to Richards, then, as between him and Richards, the liability of Richards was to* him, and the contracts with Richards were his contracts. The-source from which the money came did not concern Richards. He received the money under a contract with the plaintiff, and agreed to pay the plaintiff, and gave him the mortgage to secu re

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payment to him. The transactions were between these two persons, and the right of action to enforce payment and the mortgage were in the plaintiff.' He could at least sue as the trustee of an ■express trust under § 449 of the Code, and this he could do without alleging the-trust, as his representative capacity did not anywhere appear in the transactions. It is a general rule of law that in the case of written contracts the right of action follows the legal title, and the party entitled to maintain an action upon a written contract is the one to whom by its terms it is to be performed. Considerant v. Brisbane, 22 N. Y., 389 : Noe v. Christie, 51 id., 270; Pitney v. The Glens Falls Ins. Co., 65 id., 6.

The fire took place on the 4th day of February, 1882. It does not appear that any notice of the loss was given to the' defendant But proofs of the loss were served upon it about the 23d day of February, and it claims that the plaintiff cannot recover upon the policy because he did not forthwith give notice of the loss as required by the policy. .There can be no doubt that the proofs of loss served upon an insurance company are a sufficient notice of the loss if served in time.

In the absence of special circumstances justifying delay it cannot be said that- a notice of loss served nineteen days after a fire is •“ forthwith.” But the word “ forthwith ” in such cases must have a reasonable construction. The assured must have a fair opportunity to serve his notice, and a delay of a few days, depending as to the length of time upon all the circumstances of the case, ought not to defeat a recovery upon the policy. So, too, if the insurance company intends to claim that the notice of loss was not served in time it should take its position promptly and not put ithe assured to the expense of complying with other conditions in the policy upon the assumption that adequate notice had been given. Here the proofs of loss were received and retained with-<rat any objection that the proper notice of loss had not been given. Hot only this, but the defendant requested the plaintiff to amend his propfs from time to time without any suggestion that the proper notice had not been given. The defendant had undoubtedly obtained through its agent early notice of the loss and was satisfied with that. Under all the circumstances the defendant may properly be held by its conduct to have waived the preliminary notice of loss.

The defendant makes the further objection that the proofs of loss were not sufficient in that they were not made by any person authorized to make them. They were made by the plaintiff and by the administrator and one of the heirs of Richards, and it does not appear that the defendant objected to them on the ground that any other person should join in making them. If the defendant claimed that the trustee Sage, or any other person, should join in making them, it should have specified the objection so that the plaintiff could obviate it.

We, therefore, reach* the conclusion that the judgment should be affirmed.

Judgment affirmed, with costs.

All concur.