Traders' Insurance v. Robert

Headnote

Whoie a policy of insurance is effectedby a mortgagor and the policy with the assent of the assurers, is assigned to the mortgagee, and a loss occurs, iis an action on the policy by the mortgagee, in the name of the mortgagor, it is no bar to a recovery that subsequent to the assignment the mortgagor effected a second assurance, and neglected to give notice to the first assurers, although there be an express condition that the policy shall be void in ease of second assurance and neglect of notice by the insured or his assigns.

In such action it is not necessary to. aver that the suit is prosecuted by the direction of and for the benefit of the assignee of the policy.

A mortgagor and mortgagee may each insure the same building; their particular interest in the subject insured need not be described, but may be described generally as the property of the insured.

Error from the superior court of the city of New-York. A suit was brought in the name of Thomas Robert against the insurance company on three policies against fire, bearing date 5th June, 1827,whereby certain buildings were insured for the

term of five years. The policies contained the usual clause that if the assured or his assigns effected any other insurance on the same property, and should not with all reasonable diligence give notice, &c. the policies should cease; and that in case of loss the assured should declare on oath whether any, and what other insurance had been made on the property. Two of the buildings insured together at $2,200, were consumed by fire in 1829. It was averred in the declaration that from the time of the making of the policy, until and at the time of the loss, the plaintiff was interested in the premises to the amount by the policies insured; that the plaintiff had not, after the making of the policies, made any other insurance on the premises, and that he made oath that no other insurance had been made on the property. The preliminary proofs were made by the plaintiff, and in his affidavit of the loss, &c. he stated that besides the insurance in the company of the defendants, he had, on the 3d June, 1828, insured the same property in the Phenix Fire Ins. Co. at a certain specified sum. It appeared that on the day of the date of the policies declared on, the assured, with the written consent of the Traders’ Ins. Co., assigned all his right, title and interest in the policies to Francis Bolton. On closing the preliminary proofs the defendants moved for a nonsuit, on the following, among other grounds: 1. That the declaration averred that the interest in the subject matter insured was in the plaintiff, and the proof shewed that he had absolutely parted with his whole interest previous to the loss ; 2. That the declaration averred that the plaintiff had not made any other insurance, and the proof shewed the contrary; and 3. That the declaration averred that the plaintiff, in the affidavit by him made, did state that no other insurance had been made on the same property, whereas the affidavit produced on the trial did set forth another insurance effected by the plaintiff. The motion for a nonsuit was denied, and evidence in chief was given. It was also proved that on the 1st June, 1827, Thomas Robert executed a mortgage to Francis Bolton, upon the houses mentioned in the policies and the lots upon which the same were erected, for securing the payment of $5,500, in one year from the date of the mortgage, which was duly recorded on the 5th June,

1827. The presiding judge charged the jury that the plaintiff was entitled to recover, and a verdict was accordingly rendered for @2567,56. The defendants excepted to the decisions and charge of the judge, and the exceptions on being subsequently argued, were overruled, and a new trial denied by the superior court. The defendants sued out a writ of error.

The only effect of the assignment was to give Bolton an equitable interest in the policies, entitling him, in case of loss, to demand the sum insured, provided that the assurers, according to the terms and conditions of the original contract, would be liable for its payment. The interest of the assignee in the policies is like that of a mortgagee of a leasehold estate, the security for whose debt is subject to the covenants and conditions in the lease by which the mortgagor holds the estate, and liable as in that case to be defeated by a forfeiture of the estate of the mortgagor by the committing of waste, or doing some other act prohibited by the lease, or which, by the terms of the lease, put an end to the estate. The assurrers by assenting to the assignment did not release or discharge the conditions contained in the policies ; all required by the policies to be done, and to be forborne to be done, to render the assurers liable in case of a loss, must still be shewn to have been done, or to have been refrained from, notwithstanding the assignment. It was expressly stipulated that if any other assurance upon the property than that made by the defendants should be effected, and notice thereof was not forthwith given, the policies should cease and bé of no force; and it is undeniable that such other assurance was made, and it is not even pretended that notice was ever given. Another condition of the policies was that extra hazardous goods, should not be kept in the buildings insured. Suppose that Robert, after the assignment, should have kept extra hazardous goods in the buildings, can it be pretended that the assurers in such case would have been liable ? and if by the breach of one condition subsequent to the assignment, the assurers would be discharged, why should they not be discharged by the breach of another? Again; if Bolton, by the assignment, was entitled to be considered

as substituted in the place of Robert, then he should hax'e made the preliminary proofs, and done all that is required in the policies on the part of the insured to be done as conditions precedent to the right to demand payment of the assurers, and for that purpose all necessary averments should have been made in the declaration and proved on the trial; whereas in the declaration there is a total absence of such averments, and on the trial no proof to establish the facts was offered to be given. If it was competent for Bolton to prosecute this suit in the name of Robert, it at least should have been averred that it xvas prosecuted for his benefit; and at all events, the proof given on the trial should have supported the material averments, and not contradicted them. It was averred in the declaration that the plaintiff, from the making of the policy until and at the time of the loss, xvas interested in the premises ; that he had not made any other assurance, and that he made oath that no other assurance had teen made, and yet in each particular the proof was directly the reverse. In support of these several positions the counsel cited 3 Brown’s Parl. Cas. 497; 2 Atk. 554; 1 Hall’s R. 45 , 53, 128; Marshall on Ins. 787, 789, 800, 801; 1 H. Black. 254; 6 T. R. 710, 714; 2 H. Black. 574; 6 Wendell, 494; 18 Johns. R. 451; 8 id. 306; 6 Cowen, 627; 13 Mass. R. 61 ; 2 Peters, 48 ; 20 Johns. R. 144.

Bolton was the owner of the policies from the time of their execution, they being assigned to him on the day of their date, with the consent of the assurers ; and no subsequent act of Robert, the party originally insured, can impair his rights. Bolton had an insurable interest in the premises at the time of the assignment, and such interest continued down to the time of the loss, which is all that can be required to give validity to the assignment. Marshall on Ins. 787, 8, 9, 800. 1 Wendell, 85. 1 Hall, 100 . The assignment of the policies was the assignment of choses in action ; and when the right to demand the sum insured accrued, the action was necessarily brought in the name of the party originally insured, as in such cases an action will not lie

in the name of the assignee ; so too the averments were unavoidably in the name of the nominal plaintiff. 11 Johns. R. 47, 488. The proceeding is incongruous, but the incongruity results from the enforcing of equitable rights in a court of law. The party in interest being considered in law the real plaintiff, the averment that the plaintiff on the record was interested at the making of the policies, and at the time of the loss, is sustained by proof that the real plaintiff was so interested ; so, also, as to the averment that the plaintiff on the record had not caused any other assurance to be effected ; proof that the nominal plaintiff had procured such second insurance did not establish the fact that the real plaintiff, the party in interest, had done so. There was in fact no further assurance procured by the assignee. His rights could not be affected by the subsequent acts of the assignor, who having a remaining interest in the premises as mortgagor, had a right to effect a further assurance ; although, to enable him to enforce these policies against the under writers, he would have been bound to give notice of the second assurance, but such notice cannot be required of the assignee, who may have been in utter ignorance of the fact. The assignee took the policies subject to the covenants and conditions contained in them, and must suffer the consequences of any violation of them by himself; but he cannot be affected by the acts of the assignor or of any other person. If these principles be correct, the judge in the court below was right in instructing the jury to find a .verdict for the plaintiff for the whole amount of the loss, the defendants not being entitled to claim that it should be apportioned between them and the Phcenix Fire Insurance Company, who underwrote the second policy, that policy being procurd by Robert, and not by Bolton. It is well known that many loans are secured by assignment of policies, and unless the judgment in this case be affirmed, such securities will be absolute nullities.