18 N.Y.S. 863 | The Superior Court of the City of New York and Buffalo | 1892
Many of the legal principles affecting the rights and liabilities of the parties under the contract of insurance have been settled adversely to the defendant in an action by the plaintiff on a similar policy on the same vessel, issued by the China Mutual Insurance Company. See 14 N. Y. Supp. 301, affirmed 29 N. E. Rep. 76. The new phase now presented is as to the effect of a cancellation of the policy after the loss of the vessel, and before either party knew of the fact. It is manifest that the parties intended to cancel the policy, not from the time of its original delivery, but on and after December 3, 1888, the day of the cancellation. The defendant retained the premium for the risk up to that time, and returned merely the unearned premium for the time unexpired. The vessel having been lost prior to the cancellation, the liability of the defendant had at that time become fixed and irrevocable. The plaintiff did not intend, nor did the defendant expect, to be released from any actual liability already incurred and then existing, but from any that might occur thereafter. The acts of the parties demonstrate this. If it had been intended to rescind the policy in toto, the entire premium would have been returned, for this was the consideration of the defendant’s agreement; for here, as in Baker v. Insurance Co., 51 Mich. 243, 16 N. W. Rep. 391, the policy was not canceled until after the loss and right of action accrued, and, as was held in that case, “there is nothing in the mere act of cancellation to operate retroactively so as to cut off the claim for damages already existing.” Perhaps the plaintiff required no equitable relief if the surrender of the policy was intended to operate as to future liability only, but the plaintiff acted on the assumption that equitable relief was necessary to reinstate the parties to their former position; and the defendant, not having raised the objection in its answrer that equitable relief was unnecessary, cannot raise that question now. Town of Merits v. Cook, 108 N. Y. 504, 15 N. E. Rep. 541; Ostrander v. Weber, 114 N. Y. 95, 21 N. E. Rep. 112. We will assume, therefore, that the plaintiff was properly in equity, and that that branch of the court obtained complete jurisdiction over the controversy. The plaintiff did not seek for reformation, so that the court was not called upon to make a new contract for the parties, but to rescind the cancellation, so as to reinstate the parties where the contract itself placed them. While equity will not reform a contract unless the mistake is proved to be the mistake of both parties, it may rescind and cancel a contract upon the ground of mistake of facts material to the contract of one party only. Diman v. Railroad Co., 5 R. I. 130. That is this case. Story lays down the general rule “that an act done or contract made under a mistake or
For the reasons stated the judgment must be modified as to the item of interest, and affirmed as to the residue, without costs. All concur.