Folsom v. Belknap County Mutual Fire Insurance

30 N.H. 231 | Superior Court of New Hampshire | 1855

Eastman, J.

The policy on which this suit was instituted was issued to Ballard on the first day of July, 1852, insuring “his stock in trade ” to the amount of $1000. This stock in trade he mortgaged to the plaintiff, Folsom ; and on the 11th day of August, 1852, Ballard executed the anomalous instrument on the back of the policy, stating that “ having mortgaged the buildings within insured, and the land whereon they stand, &c., I hereby assign,” &c.

The action was brought in the name of Folsom, the mortgagee of the goods, and the alleged assignee of the policy. There is no suggestion that the land and buildings were mortgaged. Can the suit be maintained in the name of Folsom ?

We have frequently held that a mortgage of property insured is not an alienation of the same, unless there is something in the policy, charter or by-laws, which makes the mortgage work an alienation, and causes the mortgagee to become a member of the company. It was so decided in Rollins v. Columbian Ins. Co. 5 Foster’s Rep. 200. And such is the generally received doctrine of the courts. Conover v. Ins. Co. 3 Den. 254; Lazarus v. Ins. Co. 5 Pick. 81.

In Carpenter v. Providence & Washington Ins. Co., 16 Pet. 495, Mr. Justice Story, who delivered the opinion of the court, says: “ Policies of insurance against fire are not deemed in their nature incidents to the property insured; but they are mere special agreements with the persons insuring against such loss or damage as they may sustain, and not the loss or damage that any other person having an interest, as grantee, or mortgagee, or creditor, or otherwise, may sustain, by reason of the subsequent destruction thereof by fire.

The owner of property may mortgage the same immediately after it is insured, and if there is nothing in the charter or by-laws requiring notice of subsequent incumbrances, it does not affect the insurance. In Dutton v. New England Ins. Co. 9 Foster’s Rep. 153, we held that a mortgage made after the application for insurance, and before the issuing of the policy by the company, would not, in the absence of fraud, affect the policy.

Again : at common law a contract of insurance is not assignable, so as to give an action to the assignee in his own name. Conover v. Mutual Fire Ins. Co. 3 Den. 254; Nevins v. Rockingham, Mutual Fire Ins. Co., 5 Foster’s Rep. 22, 28; Granger v. Howard Ins. Co., 5 Wend. 200.

Like a chose in action, before a suit can be maintained in the name of the assignee, there must be a promise to him to pay the insurance; a new contract made with the assignee. Thompson v. Emery, 7 Foster’s Rep. 269, and authorities there cited.

Without special provision in the charter or by-laws, whereby the assignee becomes a member of the company, the action, in case of loss, must be in the name of the insured, with whom the contract is made.

But many charters and by-laws of mutual insurance companies contain provisions for the alienees of property to have an assignment of the policy made, and by giving security for the payment of future assessments, and otherwise complying with the rules of the company, to become members of the same, being entitled to all the privileges and incurring all the liabilities of the institution equally with other members.

In some companies there is also a provision, either in the charter or by-laws, that the mortgagee as well as a purchaser may become a member by having the assignment ratified, and giving security to pay assessments for the remaining term that the policy has to run. Such was the provision in the by-laws in the Columbian Insurance Company, as appears by the case of Rollins v. Ins. Co. 5 Foster’s Rep. 200.

The true test, then, by which it is to be determined in whose name the action shall be brought, is this: is the plaintiff a member of the company ? Is there any contract subsisting between him and the company, vihich makes him a member, entitled to all its privileges and subject to all its liabilities ? Has the contract with the orignal insured ceased and a new one been made with the assignee, by which he has become a member of the company ?

The provision in the policy by which the contract is made with the assured, his heirs and assigns, must be understood to be in force in accordance with the rules of law, and the charter and by-laws; and to require that the action, in case of assignment without the existence of membership by the assignee, shall be brought in the name of the assignor, does not destroy his rights under the assignment. As in the case of a chose in action, his equitable interest will be protected against all persons having notice of the assignment, although it be necessary to bring the action in the name of the assignor.

Waiving for the present the informality of the instrument of transfer in this ease, and treating it as having been a regular and formal assignment made by Ballard to Folsom, we find it to be an assignment of the policy as collateral security for the payment of the mortgage on the stock in trade. It is simply an assignment by the mortgager to the mortgagee, to secure, collaterally, the payment of the debt; “to hold as collateral security for the performance of the condition of said mortgage.” That is the most that can be made of the transfer; and even then, we have to regard the statement that he had mortgaged the buildings, as intended to have been stated the stock of goods. But whatever the transfer conveyed, there can be no pretence that the goods, or the store, or land, had been sold, but only a mortgage executed on the goods. And the assent of the directors to the assignment was not to an absolute transfer of the policy, as provided by the charter upon a sale of property, but only to the assignment of the policy, as the transfer itself states, to be held as collateral security for the performance of the condition of the mortgage.

The ground upon which it was held in Rollins v. Columbian Fire Ins. Co. 5 Foster’s Rep. 200, before referred to, that an action could be maintained by the assignee of a mortgager was, that by an express provision of a by-law of the defendants’ company, the mortgagee could become a member of the company by complying with certain requisitions, as well as a purchaser. And it was said in that case that under the provisions of a charter providing for an alienation, (there being no provision in the charter in regard to mortgagees,) no action could be maintained by a mortgagee who takes an assignment of the policy, though the corporation assent to the assignment.

A company may well enough assent to the assignment of a policy as collateral security to secure the payment of a debt, without making, or choosing to make, the assignee a member. There is no inconsistency in such a proceeding. In case of loss, before the mortgage is satisfied, the money may be paid to the assignee; but on the satisfaction of the mortgage the assignment becomes null. The assignment does not change the original contract of the parties ; and a suit to recover the loss must be brought in the name of the assured, with whom the contract was made, and with whom it still exists. The company do not give up the original premium note upon such an assignment, for it is not like the transfer of a policy upon the sale of the property under the provisions of the charter, but only an assignment conditional upon the payment of the mortgage, and the original contract with the assured stands good..

Now, in this case, there is no provision whatever, either in the charter or by-laws, by which a mortgagee who has had assigned to him a policy as collateral security, becomes a member of the company. The charter and by-laws provide for no contract being made between the company and an assignee under such circumstances, and the authorities cited, particularly that of our own court, must settle the question.

But aside from this view of the case, we hardly think an action could be maintained on this policy in the name of Folsom. Supposing that the charter and by-laws would permit the assignee of a mortgager to become a member in the same manner as a purchaser, has this policy been assigned ?

The difficulty as to the assignment is, that Ballard, probably meaning to assign his interest in the policy as collateral security, made an assignment by which he does not purport to assign his own interest, but uses words which represent him as the agent of Folsom. It stands on similar ground with the deed of a person who, wishing to convey his land, makes a defective conveyance. When there is a defect in the execution of a deed, the court cannot remedy it by regarding what they may suppose to have been the intention of the grantor. What does the instrument say ? This is the question, and it must be answered by its language. If parol evidence were offered of the intent of the person executing an instrument, it certainly would be rejected. In this case, we must reject the words “ for Levi Folsom,” before we can say that the intent of Ballard was to assign his own interest. If we reject them we make a new contract. The fact that it is necessary to reject them, shows how material the alteration would be.

The rules for the construction of deeds and other instruments, requiring them to be construed according to the meaning of the parties, do not, we think, go to the extent to which it would be necessary in order to make this a good assignment.

We might observe, further, that there is no provision in the defendants’ charter or by-laws, by which a policy of insurance on a stock of goods can be assigned. Even admitting, then, that this assignment had been duly and formally drawn and executed, and the directors had legally assented to the assignment, there would seem still to remain the question whether the charter and by-laws recognize the assignment of such a policy.

We should be quite willing to sustain this action in the name of Folsom, instead of making it necessary by our decision to have another suit instituted; but we are all of opinion that it cannot be done ; that the ruling of the court below was correct, and that there must be,

Judgment on the verdict.