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Irving v. Excelsior Fire Insurance

14 N.Y. Super. Ct. 507 1 Bosw. 507 Court N.Y. Super. Ct. Decision date 1857-07-11 English

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p. 507
Charles Irving v. The Excelsior Fire Insurance Company.

Headnote

Under the conditions in a policy of insurance against fire, it is the duty of the assured to deliver to the Company, as a part of the preliminary proofs, a just and true account of his loss; and the delivery of this account is a condition precedent to his maintenance of an action for the recovery of the loss.
The assured is bound by the statement thus delivered, and cannot, upon the trial,
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impeach its truth, and recover upon testimony showing a different state of facts from that which it contains.
A witness, alleged to he a partner of the plaintiff, was examined on the trial to show the nature of the plaintiff’s interest in the property insured, and it was insisted on the part of the defendants that his testimony was inconsistent with the statement delivered by the plaintiff to the Company, and, therefore, ought not to have been received.
But the Court held that there was a substantial agreement between the statements and the testimony, and that the latter was rather explanatory than contradictory, and that the necessary result of both was that, the plaintiff, if not the legal, was the equitable owner of all the property insured.
Held, therefore, that the property, on which the loss was claimed, and which was a stock of goods, in a certain store, was properly described in the policy as “ his (i. e. the plaintiff’s) stock,” there being no other goods in the store fer which the description could be applied.
Held, that it could not be doubted that the plaintiff meant to cover by an insurance, and the defendants meant to insure the very property destroyed, and this intention the Court was bound to carry into effect, if this could be done without violating the rules of law.
The general rule is that the assured is not bound to disclose the nature of his interest, whether legal or equitable, a several or an undivided share, unless the disclosure is material to the risk; and in the case before the Court, whether the property insured was “ his ” (the plaintiff's) at law or in equity, was plainly immaterial. The nature of bis ownership could not possibly alter or affect the character of the risk.
Held, that this view of the plaintiff’s rights was not forbidden or varied by a condition in the policy, that “ if the interest in the property be a leasehold interest or other interest not absolute, it must be so represented to the Company, and expressed in the policy in writing, otherwise the insurance shall be void.”
The plaintiff’s interest in the property was not qualified or contingent, but in the fullest sense of the term was absolute. The property belonged to him in his own right, and not as a trustee for another; and if his interest was merely equitable, it was in its nature as absolute as a legal ownership, and hence the condition in the policy did not require it to be disclosed.
Held, that even if the interest of the plaintiff, in the property insured, was that of a partner, still his interest was properly described in the policy, and was insured to its actual extent.
That an insurance made by a partner on partnership property, although made in his own name, and expressed to be on his sole account, protects his undivided share, so as to entitle him in the event of a loss to recover to the extent of that interest, may be regarded as settled and undoubted law.
The conclusion, that the decisions fully justify, is that the plaintiff would be entitled to recover, to the extent of his own interest, even had it been proved that the witness Clark was interested as his partner in the stock of goods, which the policy describes as “ his (the plaintiff’s) stock,” for although the description would be literally untrue, yet in order to carry into effect the certain intention of the parties it would be construed as applying not to the whole stock, but to the plaintiffs undivided share.
lastly, in the opinion of the Court, the testimony tended to show that the co-
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partnership arrangement between the plaintiff & Clark, gave to the latter no interest in the capital stock as owner, but only secured to him a share of the net profits when realized.
If such was the arrangement Clark could assert no title in the property insured, and, consequently, the property was rightly described by the plaintiff in the policy as “ his stock." Hence in every possible aspect of the case the plaintiff was entitled to judgment.
Verdict sustained, and reference ordered to ascertain the amount of the loss.
(Before Boswobth & Woodeüff, J.J.)
Heard, June 19;
decided, July 11, 1857.
The questions, discussed and decided in this action, arise on a verdict taken, subject to the. opinion of the Court at General Term.
The action was brought to recover a loss under a policy of insurance against fire, and the following are the material facts, as proved upon the trial, before Oakley, Ch. Justice, and a iurv, in March, 1857.
The defendants by their policy dated September 5th, 1855, insured “ Charles Irving, (the plaintiff) against loss or damage by fire to the amount of $1,750 on his stock as a cabinet manufacturer, finished and unfinished, and materials for making the same contained in the five-story brick building, with metal roof, situated in the rear of Eos. 110, 112 and 114, East 27th street, in the city of Eew York.”
Among the conditions of the insurance annexed to the policy and by express reference incorporated in it, was the following: “ If the interest in property to be insured be a leasehold interest or other interest not absolute, it must be so represented to the Company and expressed in the policy, in writing, otherwise the insurance shall be void.”
Another condition required the assured in case of loss to deliver to the Company, as soon as possible, as particular an account of his loss and damage as the nature of the case will admit, which account must be sworn to be true and just.
On the 19th of December, 1855, a fire occurred, which partially destroyed the three buildings, and the stock of cabinet furniture, and materials contained therein, and it is averred that the loss and damage sustained by the plaintiff, by the injury to such stock and materials, amounted to the sum of $8,500.
There were other insurances to the amount of $6,750, making
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the whole amount of insurance $8,500, whereupon the plaintiff claims for a total loss, the amount insured $1,750.
By the plaintiff’s statement of loss, sworn to by him, submitted to the defendants, and read as evidence in chief on the trial, it is stated that the stock contained in the buildings at the time of the fire, “ belonged to him, as herein-after stated.” That is to say, “ his ownership of the said property was as follows: He was then, and is now, the principal member of the firm of Irving and Clark, by which firm the said property was manufactured and possessed; that he furnished all the capital of the said firm, and was then, and is now almost its sole creditor, and his interest therein covers and would absorb as he believes not only all the said property, but all the assets of the said firm.” The defence interposed by the Company rests upon the ground that the subject of the insurance is described as the plaintiff’s sole property, and that property held under such ownership as is above described in the plaintiff’s statement of loss is not covered by the policy, and therefore the plaintiff has sustained no loss or damage by fire “ on the subject insured by said policy.”
On the trial, OlarTc, the person whose name is used in the firm name of “ Irving & Clark,” gave testimony tending to show that in December, 1854, he entered into a negotiation with the plaintiff in respect to forming a partnership. That he went with him upon the understanding that they were to become partners, and were to share equally in the profits—that he continued with the plaintiff upon that understanding until six weeks before he (Clark) left for California, which was November 20th, 1855, i. e. until early in October, 1855, when he says, that understanding was abandoned, and the plaintiff was to give him a proper remuneration for his services. As the witness expresses it, “ Our co-partnership here was not consummated, and in September or October, 1855, we agreed to abandon all thoughts of it, and plaintiff agreed to pay me for my services.” The witness farther says, “the capital in the business here all belonged to the plaintiff—-the property was all his, and the profits all his.” “ I suppose that he and I, are to the world, partners, but between ourselves, we are not, and have never been so.” And again— “At the time of the insurance, and at the time of the fire, there was no partnership existing between the plaintiff and
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myself. There was no sign np—There were bills headed ‘Irving and Clark,’ they were so from the beginning, and have continued up to the present time, and the business was, and is done in our names. I am now there in the same way; when I returned, he continued in the same manner; we are not co-partners now. I don’t participate at all in the profits. I had no interest in the property destroyed—nor have I any interest in the property now on the premises; all the property burned belonged to the plaintiff alone.
“I have no fixed compensation. I take so much money a week as I need to support myself with, at no given-rate.”
To the evidence of this witness, the defendants objected, but it was received and the defendants excepted. The ground of objection does not appear in the case—but on the argument it was insisted that the plaintiff was not at liberty to contradict his sworn statement contained in his proof of loss, and that this testimony of Clark was such contradiction. «
By consent, a verdict was entered for the nominal sum of $2,000, “ subject to the opinion of the Court at General Term, on a case to be made, and subject to a reference to determine the amount of the loss, with liberty to reduce the amount or turn the same into a dismissal of the complaint.”
D. D. Field., for the plaintiff,
insisted that the property insured belonged to the plaintiff at the time of the insurance and of the loss. The arrangement between him and Clark, and their subsequent conduct, may have made them liable to third "persons as partners, but they were never partners as between themselves, and Clark had never any interest in the property. The question, therefore, does not arise how far a person who insures in his own name can recover for his interest as a partner.
If, however, the question had arisen, it would have presented no difficulty. A partner may insure the partnership property in his own name, and recover his entire interest, whatever it may be. Each partner is vested with the whole property. It is not a misdescription to describe the property as his. (3 Kent’s Com. 258; 2 Duer’s Ins. 19-20; Turner v. Burrows, 5 Wend. 541 ; Ib., 8 Wend. 144 ; Burgher v. The Columbian Ins. Co., 17 Barb. 274 .)
p. 512
J. M. Van dotty for the defendants,
argued as follows: We contend that the defendants’ liability is limited by the contract. By the terms of the policy, the plaintiff is insured “on his stock” against such loss “ as shall happen by fire to the property above specified.” These words describe and limit the subject of the insurance, and the policy covers no property of which the plaintiff was not the “ absolute” and exclusive owner.
The risk is estimated upon the knowledge of the person assured, in whose integrity, care and interest to preserve the property, a confidence is reposed; and it is varied by a variance of the interest, and by a participation in interest and custody by persons who may be less careful and honest. A company may be willing to insure A, but not to insure B, or A and B. (2 Peters, 47, Columbia Ins. Co. v. Lawrence.)
The policy industriously excludes every risk, except for property owned by the plaintiff, reposing confidence only in him, and obtaining guarantees only against his acts and omissions.
By the third condition, all interests not “ absolute,” are excluded, unless expressed in the policy.
By the fourth condition, a change of interest, by assignment, avoids the policy, unless the Company consents by endorsement to continue the risk as altered.
By the fifth condition, prior or subsequent insurance, not communicated or endorsed, avoids the policy. If parties having a joint interest, can each obtain a separate insurance, and in the policy describe the property as “ his,” this condition is no shield against fraud.
By the sixth condition, the assured is required to use his best endeavors to save the property. The criminal neglect of a'partner (the insurance being single) could not be availed of by the insurer.
By the ninth condition, fraud and false swearing work a forfeiture of the policy; but if the'assured have not the knowledge, that is an element of the fraud and perjury, the policy is not forfeited by the knowledge of the party in joint interest, who is not named in the policy.
These cautiously stipulated conditions are decisive of the construction of thé policy, and defeat this action.
Eire and marine policies vary materially in their terms,
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Tn a marine policy, the thing insured is determinate—as a ship named and registered—and the insurance is upon that subject, for account of the owners, or of whom it may concern, or, in terms, of the undefined and changing interest of part owner, mortgagee, or other party.
The plaintiff is estopped by his sworn proof of loss to allege that Clark was not a partner and jointly interested in the property. If he meant to, and could, revoke that statement, he was bound to do it explicitly, and to deliver a new proof of loss.
The variance is material. The right changes with the fact. A loss as sole owner, and a loss as joint owner with Clark, are fundamentally different things, involving substantially variant rights and liabilities; and the plaintiff was not at liberty to play fast and loose, and go upon one or the other ground, as opinions and circumstances might change.
But the evidence makes Clark a partner. The business was done, and is now done, in the firm name. Clark draws for his expenses like a partner, and plaintiff swears to the partnership. These decisive circumstances cannot be moulded to suit the legal opinion of Clark, or the legal necessities of the plaintiff.
By the ninth condition of the policy, the assured is required promptly to deliver to the Company, under oath, “ a particular account of his loss,” and also to show “ how the building was occupied at the time of the loss.” The policy is forfeited by nomcompliance with this condition; and the loss is in no case payable until sixty days after such proof of loss.
If Clark is not a partner and jointly interested in the property, or if the building was not occupied by Irving & Clark at the time of the fire, the proof of loss was both false and defective, and the action was at least prematurely brought.
If the plaintiff can recover at all in this action, it can be only his undivided interest in the property of Irving & Clark. He cannot recover in the character of a creditor of the firm, with an equitable lien upon the partnership assets.
The defendants are therefore entitled to judgment.

It was the duly of the plaintiff to deliver to the Company a just and true account of his loss, which should be as particular as the nature of the case would

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admit, and should be verified by his oath. This he attempted to do. This was a part of his preliminary proofs. Such delivery was a condition precedent to his right to recover. By express condition, the amount of loss is not payable until sixty days after such account (with other proofs) .is delivered. The defendants made no objection to the sufficiency of the account furnished, and by their answer have acquiesced in its truth. They rested upon the claim that if the facts so stated and sworn to are true, they are not liable. The plaintiff could not therefore, on the trial, change his ground, by impeaching the truth of his own statement. The defendants had a right to take the facts as he stated them. They have been furnished with no other. Had any other been delivered, they would have been entitled to sixty days for examination, and then might, in their defence, have relied upon showing that the plaintiff’s loss was not truly stated. We are therefore of opinion that in regard to the material facts stated by the plaintiff, in his affidavit of loss, &c., he is, certainly for the purposes of the trial of this action and its decision,- concluded by that affidavit.

Under that view of the plaintiff’s position before the Court, the testimony of the witness, Clark, is to be rejected unless it harmonizes with the plaintiff’s statement; but so far as such harmony exists it may properly be taken into view; and to that extent, at least, it was properly received in evidence. It is no valid objection to his testimony, that it more fully explains the relations existing between himself and the plaintiff, in that firm of “ Irving & Clark,” who are stated, by the plaintiff, to be the firm by which the property was manufactured and possessed, or that it tends to show in whgt sense the property insured by the plaintiff was his property, although manufactured and possessed by Irving & Clark.

Read together, the affidavit of the plaintiff and the testimony of Clark show that Irving, having capital and stock in trade, as a cabinet manufacturer, received Clark into connection with him, upon an understanding that he should have one half the profits, the whole capital being furnished by the plaintiff, and the whole property belonging to him, subject only to Clark’s claim to such half of the profits of the business; and under this arrangement, the business was done in their joint names as “ Irving & Clark.”

p. 515
Such were their relations when the insurance now in question was effected. They were ostensibly partners. The property had been manufactured under their firm name of Irving & Clark, and was in their joint possession. But the plaintiff owned the whole capital, and on a settlement with him for such capital and advances, the whole property and assets of the firm must necessarily be applied to his benefit, so that in a practical sense Clark had no interest in the property itself, though he. might be entitled to share the profits of its employment, and his testimony shows that he so understood it. His testimony, therefore, confirms the affidavit of the plaintiff. The only difference between the testimony of the witness, Clark, and the affidavit of the plaintiff, seems to be that, according to Clark’s understanding of the subject, although they entered into a verbal agreement to form a partnership, and actually carried on business under the name of Irving & Clark, and so became, as “ to the world,” co-partners, yet that in truth such agreement was never consummated by the actual formation of a copartnership, but “ all thoughts of it were abandoned before the witness went to California;” and therefore, inasmuch as the property was all put into the business by the plaintiff, and was due to him in reimbursement, the witness had no interest in it.—While the plaintiff, in his affidavit, regards the firm as an actually subsisting firm, the property of which was all due to him for his advances or contributions thereto, without, on his part, attempting to define the terms of his agreement with Clark, so as to say whether Clark was interested in the property, or in the profits only, If they differ, it is rather in their views of the legal effect of their arrangement, than in the facts themselves:

The plaintiff was then in fact the substantial owner of the property insured. He was in possession and had a legal title, and his equitable interest covered the whole property. This seems to us sufficient to answer the description, “ his stock,” &c., in the policy.

There was no other property on the premises; there was, therefore, nothing else which could be described by the terms, “ his stock.” It was not denied on the argument, that had the language of the policy been “the stock, &c.,” the plaintiff’s interest in the stock would have been protected by the policy. We

p. 516
think it would be too rigid a construction to say, when there is no other stock to which the policy can apply, that “ his stock ” may not mean the stock in which he is interested to the whole amount and value thereof, because another may be or is entitled to see that it is rightly appropriated to satisfy the plaintiff’s interest.

The stock lost was the stock of goods in the store, or ware-room, described in the policy. It is to be assumed that the Company knew what goods they were insuring. There can be no possible doubt that the plaintiff intended to effect insurance, and the defendants intended to insure the very property which was destroyed. We deem it most conducive to justice to give effect to that intention, if we can do so without violating the rules of law.

If there was no misrepresentation and no concealment which should vitiate the policy, no rule of law forbids our construing the words, “his stock,” according to the substantial interest of the plaintiff in the property.

The general rule on this subject is, that the assured is not bound to disclose the nature of his interest—whether legal or, equitable, whether a distinct or an undivided share—unless such disclosure is material to the risk.—2 Duer on Ins., p. 448; L. 13, § 44; Lawrence v. Van Horn, 1 Caines, 284. How, whether the property was “ his,” (the plaintiff’s) at law, or in equity, was quite immaterial. The plaintiff had the same motive to its preservation. Ho effectual double, or over-insurance could be had to their prejudice.

This subject is discussed in Niblo v. The North Am. Fire Ins. Co., 1 Sandford S. 0. Rep. 551, and it is there held, that a tenant who insures “ his buildings,” may recover to the extent of his interest therein, though he have but a term for one year, subject to the payment of.rent—that the description in the policy “his buildings,” is not equivalent to a warranty on the part of the assured that he is the owner, nor does it constitute a material misrepresentation—that where no inquiry is made, he will in such case recover according to his real interest, whether it is absolute or qualified.

That case and others cited in the opinion have a very important if not conclusive bearing upon the case before us; they show

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that the word “Ms,” is not necessarily to be construed as importing absolute legal title, and may not be satisfied in any other manner.

It must, we think, be conceded that when there is an insurance of a person upon “ his stock of goods,” in a specified store, and it appears not only that he is carrying on business there as a sole trader, but that other business is carried on in the same store by himself, and another as co-partners, the insurance must be confined to the goods pertaimng to Ms sole and separate business; but that concession, we tMnk, does not conflict with the conclusion, that where the only property answering the description in the policy, i. e. the only goods upon the premises, are his in the sense disclosed by the proof in this cause, the policy shall be held to relate to them. The Court should give effect to the contract, rather than that it should fail. The Court can do tMs, as we think, and effectuate the actual design of the parties without contradicting the terms of the policy, or doing violence to its language.

It was suggested that this view of the plaintiff’s right is forbidden by the condition in the policy, that “ if the interest in the property be a leasehold interest, or other interest, not absolute, it must be so represented to the Company, and expressed in the policy in writing, or otherwise the insurance shall be void.” We tMnk not. The plaintiff’s interest, whether legal or equitable, is an absolute interest; it is not contingent. He had a clear right to have the whole property, applied to his use at the time the insurance was effected. It was his, in Ms own right—not in trust for any other. The condition is not, that if his interest is equitable, it must be disclosed; an equitable interest may be in its nature as absolute as a legal title.

Upon tMs view of the construction of the policy, and the rights of the plaintiff under the facts proved, we think the plaintiffs interest was protected by the policy, and that he should have a reference to determine the amount of loss pursuant to the stipulation at the trial.

In what has been said, we are not tobe understood as deciding that even if the property destroyed belonged in a more enlarged sense to the firm of “Irving & Clark,” and the interest of the plaintiff therein was not explained any further than is stated in

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the plaintiff’s affidavit, he could not recover to the extent of his interest.

That one of two parties may insure his interest in the joint stock was not, and cannot he denied. And if one partner insures in his own name only, it will protect his undivided interest in the partnership, and that only. (Graves v. Bost. Mu. In. Co., 2 Cranch, 419 ; Dumas v. Jones, 4 Mass. 647 .) Where there are general words which will admit of application to an alleged intent to insure the joint interest, though the policy he in the name of one only, extrinsic proof may be given to show whether the insurance was intended by the assured party to cover his interest solely, or that of his partners also. (Lawrence and Whitney v. Van Horne et al, 1 Caines, 284; Lawrence v. Sebor, 2 Caines, 203.)

The case of The Pacific Ins. Co. v. Catlett, 4 Wend. 75 , (S. C. 1 Wend. 561 ,) appears to us to apply with great significance to this case. There was an insurance in terms “on account of the owners” on vessel and on cargo; and the plaintiffs were held entitled to recover the full sum insured, although it appeared that the plaintiffs (by whose orders the insurance was effected) owned only five-sixths, (see S. C., 1 Paine, U. S. Dist. Ct. R.)

The subject is elaborately discussed in 2 Duer on Ins. p. 24, &c., Lee. 9, § 20, § 31, and notes HI. and IV"., p. 74 and 83, and cases reviewed. It is shown that it is not necessary that the nature of the interest of the assured be set forth in the policy, and that an undivided interest in joint property, may be insured without a specific description of it in the policy as joint or undivided. To the latter effect, is the case cited from 1st and 4th Wendell supra.

Chancellor Kent refers to Valin and Boulay Paty as authority on the Continent of Europe, that where a partner insures partnership property as his goods, the insurance covers the whole interest of the firm, while in this country it is deemed that where the insurance is expressed to be on his sole account, it protects his individual share only. (See 3 Kent, 258, 2 Duer on Ins. 22-4, § 19, &c.;) and see Turner v. Burrows, 5 Wend. 541 , 8 id. 144; Burgher et al. v. The Columbian Ins. Co., 17 Barb. 274 .) The case last cited, was considered in the Court of Appeals, and the views expressed in the Supreme Court, so far as they bear on the pre

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sent case, are reiterated in the opinion pronounced in that Court. So far as applicable they tend to sustain the right of the plaintiff herein to recover upon the policy as a protection to his interest in the subject insured. (See opinion of Mr. Justice Hand, MSS.)

The principles thus stated, and especially the cases of Niblo v. The North Am. Ins. Co. and Pacific Ins. Co. v. Catlett, we think, warrant the conclusion, that where the insurance is effected in good faith, without fraud or misrepresentation, with intent to protect the assured, upon goods described as his goods in a particular store, there being no other goods on the premises, the interest of the assured will be protected thereby, notwithstanding another person has also an interest in the same goods as co-partner. And this view ought more clearly to prevail, when, as in the present case, the interest of such co-partner is only nominal, the assured being in truth, the substantial and beneficial owner.

We add, in conclusion, that there is one other aspect of the interest of Clark in the business of the firm of Irving & Clark, which relieves the plaintiff’s title from embarrassment or doubt. His testimony tends in some degree to the conclusion, that the terms of the co-partnership arrangement did not contemplate the acquisition by him of any interest in the capital stock as owner, but only secured to him a share of the net profits when realized. Such an arrangement is not inconsistent with the affidavit of the plaintiff. Although such an arrangement would entitle Clark to require the appropriation of the property to the joint use, so far as to realize the profits he was to share, still, we think, that under such an arrangement, Clark could not assert title in the property itself, and if not, then of course, the property was rightly described by the plaintiff in the policy as “ his stock.”

The verdict must be sustained, anda reference must be ordered to determine the amount of the loss in accordance with the consent given at the trial.-

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