Mellen v. Hamilton Fire Insurance — 12 N.Y. Super. Ct. 101

Majority

p. 101

William H. Mellen v. The Hamilton Fire Insurance Company.

Headnote

An assignee, for the benefit of creditors, to whom, among other property, a policy of insurance was assigned, after a fire had occurred, may sue in his own name, without those provided for by the assignment being made parties, to recover the loss.

An assignment of this character is not within the meaning of the clause in policies, requiring the written consent of the assurers, to an assignment. It is merely the transfer of a debt.

An insurance was effected, by the plaintiff’s assignor, with the defendants, on the 12th of April, 1854. On the 23d of June, 1854, he effected another insurance, with another company. The fire took place on the 13th of July, 1854, and the preliminary proofs were furnished on the 26th of that month. No notice of such further insurance was given to the company, until that time, and accompanying such proofs.

Sold, that this was not a compliance with the provision of the policy, requiring the assured to give notice to the company, with all reasonable diligence, of any further insurance that might be effected by him; and the policy was made void by such neglect.

The knowledge of such other policy by an insurance broker, who procured the policy, for the plaintiff’s assignor, with the defendants, is not the knowledge of the company, to bind them. There was no proof of his being such a general agent as would make the company responsible for his acts or knowledge.

(Before Dues, Bosworth and Slossok, J.J.)

Heard, October term;

decided, December term, 1855.

Motion for judgment, on a verdict taken, subject to the opinion of the court on the whole case, to be heard, in the first instance, at General Term, with liberty to direct a dismissal of the complaint, and with liberty to either party to turn the case into a bill of exceptions.

The action was brought upon a policy of insurance, dated the 12th of April, 1854, for $2,000, executed by the defendants, in favor of Mark O’Brien, upon a stock of goods, in a store Ho. 216 Bowery. The policy was assigned, by O’Brien, to the plaintiff, after the fire, for the benefit of creditors. The fire occurred on the 13th of July, 1854.

The policy is set forth in the complaint, and is in the usual form. It contains the clause, “that if the said insured, or his assigns, shall

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thereafter make any other insurance on the same property, and shall not, with all reasonable diligence, give notice thereof to these defendants, and have the same endorsed on the said policy, or otherwise acknowledged by them, in writing, the policy shall cease, and be of no further effect.”

The defence was, that, since the making of the policy, and before the fire, the said O’Brien, without the knowledge or assent of the defendants, procured a further and other insurance, upon the same property covered by this policy, in the St. Nicholas Eire Insurance Company, of the city of New York, to the extent of $1,000; that such policy was made, and issued, on the 23d of 'June, 1854; and that no notice was given to the defendants of such further or other insurance.

Another ground of defence was, that, by the terms of the policy, it could not be assigned, without the assent of the defendants, manifested in writing; and that no assent had been given, to the assignment to the plaintiff.

The assignment, which was produced in evidence, was of this and certain other policies of insurance, in trust, to pay certain scheduled creditors, fully or pro rata.

The policy, and the loss and value, having been proven at the trial, as well as the subsequent policy, effected at the St. Nicholas Insurance Company, and no evidence of the assent of the defendant to such subsequent insurance being given, a motion was made foranonsuit,whichwasdenied,andsuohrefusalwasduly excepted to.

W. A. Butler and J. T. Brady, for the plaintiffs.

They cited 8 Hill, 101 ; 9 John. 191 ; 14 John. 20 ; 6 Cow. 645 ; 23 Wend. 18 .

A. Wakeman, for the defendants.

He cited 16 Peters, 495; 4 Howard, 185 ; 5 Hill, 147 .

The objections taken on the trial to the sufficiency of the preliminary proofs, and to the right of the plaintiff to maintain the action in his own name, were properly abandoned on the argument before us. Where an action is

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brought by a trustee, in whom the legal title is vested, it is certainly not necessary that the cestui que. trust should be made parties, either as plaintiffs or defendants, unless where the action is brought for the purpose of determining, or involves the determination of, their respective rights and interests under the instrument creating the trust.

The objection, that the assignment to the plaintiff was made without that consent in writing of the defendants which the policy requires, although not abandoned upon the argument, is, in our opinion, quite as untenable as those that have been mentioned. The restrictive clause in the policy, upon which the objection is founded, refers only to an assignment of the policy during the pendency of the risks, and accompanying the transfer of an interest in the property insured. Thus interpreted, there are evident reasons for its introduction; but when the assignment is made, as in the case before us, when the risks have ended, for the sole purpose of enabling the assignee to recover a loss, it is, in reality, no more than the assignment of a debt, which, as the company has no motive of interest for preventing, it would be unreasonable to suppose, was meant to be prohibited. This limited interpretation of the clause was adopted by this court many years since in the case of Britchta v. the Lafayette Ins. Co.; and as we see no reason to doubt the propriety of the decision, and are not aware that it has ever been departed from, we hold ourselves bound to follow it. (2 Hall’s S. C. Rep. 372, and also, Lazarus v. Commercial Ins. Co., 5 Pick. 79 , and 2 Duer on Ins., pp. 64-66.)

The plaintiff would be entitled to judgment were there no other objection to his recovery; but an objection remains to be stated, to which no answer, that we can deem satisfactory, has been given. It is insisted, that before the happening of the loss, the insurance had been rendered void by the violation, on the part of the assured, of that provision in the policy which made it his duty to give notice to the company, with all reasonable diligence, of any further insurance that might be effected by him, and have the same endorsed -on the policy, or otherwise acknowledged by the company in writing. A further insurance was effected by him on the 23d June, 1854i No other notice of the fact was given to the company than that contained in the preliminary proofs, upon which payment of the loss was demanded; and those, the case

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shows, were not made up and served until the 26th of July following. The delay, it is contended, was unreasonable, and has not been justified or excused.

On the part of the plaintiff two replies have been made to the objection. First. That the witness Wales was the general agent of the defendants; and that, as the subsequent insurance was procured by him, his knowledge of the fact was equivalent to notice to the company; and several adjudged cases were referred to as sustaining this position. Second. That there was no want of reasonable diligence, even on the supposition that no other notice was given to the company than by the service of the preliminary proof.

Neither reply can we hold to be sufficient.

The allegation that Wales was the general agent of the defendants, to whom a notice, binding on the company, of a subsequent insurance, could properly be given, is not only not sustained, but in our opinion, is plainly contradicted by the evidence. He was an insurance broker, and from the nature of Ms business as such, was no more the general agent of the defendants than of any other company or individuals to whom Ms professional services had been rendered. In procuring the insurance he was the agent of the assured, and if, before the transaction was complete, he became, for any purpose, the agent of the defendants, that agency wholly ceased, when he had delivered the policy to the assured, and had paid over to the company the premium wMch he had received.

From this time, there was no such relation between him and the defendants, as could make it his duty to communicate to the company his personal knowledge of a subsequent insurance, or could justify third persons in believing that this duty was imposed on, and would be discharged by, Mm; and we think it would be extravagant to say, that the knowledge wMch, in a separate transaction, he acquired of a farther insurance, was alone sufficient to affect the company with notice of the fact. The cases, therefore, to wMch we were referred, bear no analogy to the present; and it is needless to consider whether we should have held them to be applicable or controlling, had the general agency of Wales, or the fact that he was held forth to the public by the defendants as such agent, been established on the trial. The question whether, had express and timely notice of the subsequent Msurance been given

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to the defendants, they might not, by refusing to endorse it on the policy, or otherwise to acknowledge it in writing, have discharged themselves from all further liability, we shall also leave undecided.

The sole question that remains is, whether there was such a want of reasonable diligence on the part of the assured, in giving the notice which the policy requires, as rendered the insurance void at the time of the fire; for if it was then in force, the defendants are certainly liable, and the notice given by the preliminary proofs may well be deemed sufficient. As the facts are undisputed, this question was treated by the counsel, and is regarded by us, as purely a question of law; and its proper determination as such, it seems to us, is not, at all, difficult or doubtful. If the only purpose for which notice of a subsequent insurance is required, were that of enabling the prior insurers to ascertain for what proportion of a loss they might eventually be liable, then, until the actual occurrence of a loss, no such notice would seem to be necessary ; since, if given then, it would fully answer the purpose for which alone it was intended, and a delay, working no prejudice to the insurers, could not justly be qualified as unreasonable. But this is not the only, or, as we apprehend, the principal reason for requiring that express notice of every further insurance upon the same property shall be given. By one of the conditions annexed to the policy, the company may elect at any time, and for any cause, to terminate the insurance by giving notice to the assured, and returning a due proportion of the premium; and to enable an insurance company to exercise properly this discretionary power, it is important, that it should have a timely knowledge of the facts upon which its exercise will usually depend. Of these facts, there is probably none more important to be known, than than that of the total amount of- the sums insured upon the same property, since it is by a comparison of this amount with the value of the property, that prudent insurers, in making the election which the policy gives to them, are certain to be governed. Hence it is, that the fact of a further insurance is required to be made known to them with “ all reasonable diligence,” instead of deferring its communication until the happening of a loss. We think, therefore, that the words “ reasonable diligence,” looking to the purpose for which they are inserted, demand promptitude of action, and ex-

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elude unnecessary delay; and, consequently, that an unexplained delay of nineteen days is conclusive proof of a want of that “reasonable diligence” which was necessary to be shown to continue the policy in force. We think that it was not in force when the fire happened, and that the loss claimed is, therefore, not recoverable.

The verdict must be set aside, and the complaint be dismissed with costs.

Cases cited

Lightbody v. North American Insurance 23 Wend. 18 N.Y. Sup. Ct. p. 102