Lazarus v. Commonwealth Insurance, 22 Mass. 76

Lazarus v. Commonwealth Insurance

22 Mass. 76 | Mass. | 1827

Parker C. J.

drew up the opinion of the Court. The first question made in this case is, whether the policy is not void, according to the terms of the contract, on account of an assignment of it by the insured. The words of the policy relied'upon by the defendants are, “ It is also agreed that this policy shall be void, in case of its being assigned, transferred or pledged, without the previous consent in writing of the assurers.” It is contended by (he plaintiffs, that this agreement itself is void, because it is an unlawful restriction upon the right of disposing of property ; but we do not think the objection need be carried so far.as this. Certainly such an agreement should be construed strictly, and nothing but an effectual assignment, transfer, or pledge will come within the terms of it. Now in this sense this policy has not been assigned, transferred, or pledged. Ht has no writing upon it signifying any manner of conveyance, nor any instrument attached to it, nor has it been delivered over to -any person, but remains in the hands of the agents whn procured it for the plaintiff, and has never been out of their possession. The general words contained in the instrument of assignment of all the plaintiff’s effects, viz. “and all policies of insurance,” we do not think import an assignment of this particular policy, for at that time it was in the hands of Smith & Stewardson, who had a lien upon it to secure a debt to them, and it may be considered as pledged to them with the consent of the insurers, for they stipulate, in case of loss, to pay the proceeds to Smith & Stewardson ; and that obligation still remains in force, if Smith & Stewardson should claim to have it executed, or unless the plaintiff should make it appear that their lien was removed. The general words in the assignment must be held to affect all such policies as the plaintiff had a legal control over, and cannot be construed to extend to one which at the time was by agreement in the possession and under the control of other persons.1

But it is a point of more importance, that the vessel, the subject matter of the insurance, was sold and transferred before the loss happened. Now if this were an absolute tians*81fer, so that no property or interest remained in the plaintiff at ^e time of the loss, then, according to decided cases, the contract is avoided. The plaintiff could not recover, because he had suffered no loss, and the assignee could not recover, because he was no party to the contract: for wlr.ch see Carroll v. Boston Mar. Ins. Co. 8 Mass. R. 515; Locke v. North Amer. Ins. Co. 13 Mass. R. 61 ; Gordon v. Mass. F. M. Ins. Co. 2 Pick. 249. But in these cases it is decided, that notwithstanding a conveyance, if it be in the nature of a mortgage, or in trust with a resulting trust to the insured, so that he has in truth an insurable interest in the property, he may nevertheless recover to the extent of ms actual loss. Now the transfer of this vessel, with other prop erty, was in trust to pay over the proceeds to certain creditors of the plaintiff. Had he remained indebted after the making of this assignment, and personally liable in case the property so transferred should be destroyed or lost, then the case would be like that of Gordon v. Mass. F. M. Ins. Co., for he would be interested in the same degree as before the assignment.2 But the assignment was upon the condition, that the creditors, for whose use it should be made, should release and discharge the debts, and they were so released and discharged. This changes the nature of the transaction, and takes away from the plaintiff all interest in the property ; for whether the vessel insured were lost or not, he was equally discharged, and therefore could not be said to suffer by the loss of the vessel; on the contrary, the whole loss would be to the credi tors. But still there was a possibility of interest remaining in the plaintiff, because, by the assignment, the surplus, if any should remain after paying the debts, is to be paid to the plaintiff, and it is contended that this possibility is an insurable interest, and so saves the present action. But we do not think such a bare contingency is an insurable interest, nor indeed can it appear that there is even a possibility, unless it be shown that the property conveyed is of greater value than the debts, and that a discreet appropriation of it will leave a surplus. It may be likened to an insurance on profits, m *82which, to entitle the insured to recover, he must, according to the English doctrine, show, that had the property arrived safe, profits would have accrued. Hodgson v. Glover, 6 East, 316 ; Eyre v. Glover, 16 East, 218. Certainly nothing can clearer, than that the insured on this policy bad no interest in the vessel insured, after his assignment of her, unless there was property enough assigned to pay the debts and leave a surplus. Now this does not appear in the present case, and therefore, according to legal reasoning, there was no insurable interest. In short, it does not appear from the evidence reported, that there was even an expectation of any residuum after paying the debts. The case cited from 5 Bos. & Pul. 269, (Lucena v. Crawford & al) proceeds upon the principle, that an interest in the insured at the time of the loss is essential to the plaintiff’s case, and the question was only whether the facts there shown proved such an interest.

The verdict having been returned for the plaintiff, without evidence of a probable surplus after paying the debts for which the property was assigned, must be set aside and a new trial granted. There being an absolute transfer of the property assured in actual payment of debts, and not a mere mortgage or pledge, which would stand upon a different footing, the plaintiff, to recover, must give prima facie evidence of an amount of property conveyed sufficient to raise a reasonable presumption, that but for the loss of the vessel there would be a surplus ; otherwise he fails to show any interest in tha property.

See 2 Phil. Ins. 17, 18.

See Strong v. Manuf. Ins. Co. 10 Pick. 40.