Mutual Fire Insurance v. Deale

| Md. | Nov 4, 1861

Bartol, J.,

delivered the opinion of this court :

The defence to this action, relied upon by the appellant, rests upon the alleged misrepresentation or concealment by the appellee, when the contract of insurance was made, of the true nature and character of his title, or interest, in the property insured.

In the application for insurance the appellee described the property as “ins property,” whereas, the evidence discloses that the whole fee-simple title was vested in his wife, Janeada S. Dealc, by a deed of conveyance dated the eighteenth day of July 1850, and that it so remained at the time the insurance was effected. For the purpose of establishing that the beneficial title was in the appellee, in the nature of a resulting trust, the evidence of George W. Jones and of Alexander Randall, was offered, and permitted to go the jury, this evidence is contained in the appellant’s first and second bills of exceptions, which, as they present the same questions, may be considered together.

Implied or resulting trusts arise where a purchase is made by one person in the name of another. In Hill on Trustees, 91, the doctrine is thus succinctly stated, “Where, upon a purchase of property, the conveyance of the legal estate, taken in the name of one person, while the consideration is given or paid by another, the parties being strangers (in blood) to each other, a resulting or presumptive trust immediately arises by-virtue of the transaction; and the person named in the conveyance will be a trustee for the party from whom the consideration proceeds.” Such trusts arise by operation of law, are not within the statule^of frauds, and may be proved by parol. Hill on Trustees, 96. “If the person in whose name the conveyance of property is taken, be one for whom the party paying the purchase money is under a natural or moral obligation to provide, no equitable presumption of trust arises from fact of the payment of the money, but, on the contrary, the transaction will be regarded, prima facie, as an advancement for the benefit of the nominee. In that case, therefore, it will be for the party who seeks to establish a trust on behalf of the payer of the purchase money, to displace, by sufficient evidence, the presumption that exist in favor of the legal title,” (Ibid., 97.) In Story’s Eq., Vol. 2, sec. 1202, it is said, “If a parent should purchase in the name of a son, the purchase would be deemed, prima facie, as intended as an advancettient, so as to rebut the presumption of a resulting trust for the parent. But this presumption, that it is an advancement, may be rebutted by evidence manifesting a clear intention, that the son shall take as trustee.” In section 1203, the same author says, “This presumption in favor of the child, being thus founded in natural affection and moral obligation, ought not to be frittered away by nice refinements. It is, perhaps, rather to be lamented, that it has been suffered to be broken in upon by any sort of evidence of a merely circumstantial nature.” And in section 1204, “The like presumption exists in the case of a purchase of a husband in the name of his wife. Indeed, the presumption is stronger in the case of a wife than of a child; for she cannot at law be the trustee of her husband.” See Hill on Trustees, 98, 101, 103, and authorities there cited.

Having thus stated the principles upon which the doctrine of a resulting trust depends, we proceed to consider the evidence offered in this case for the purpose of rebutting the presumption of law in favor of Mrs. Deale’s title, and of establishing a resulting trust in favor of the appellee. In considering this evidence, we must throw out of view the testimony of Mr. Randall of the declarations made to him by Mr. Deale in 1854, four years after the deed; and also the conversation between Jones, the witness, and Mr. Deale, in 1852, which was two years after the deed was made to Mrs. Deale. These declarations were clearly inadmissible, for the purpose of affecting the title conveyed to Mrs. Deale by the deed of June 1850. In Hill on Trustees, 105, it is said, “Any evidence, however, which is used for the purpose of displacing the title of the nominee, unless it is founded on his own admission or declaration of trust, must be contemporaneous with the purchase.” “Subsequent acts or declarations of the purchaser, or any other matter arising ex post facto, cannot be admitted for the purpose; although they be of the most unequivocal and conclusive description.” Discarding the subsequent declarations of Mr. Deale, made to Jones and Randall, then nothing remains except the contract of the 28th clay of January 1850, made in California between Waters and Dealc, and the fact that the purchase money was paid by Deale. This contract was abandoned, and a new contract afterwards made with Waters by Jones, for the purchase of the land at a different price; and, in fulfillment of this last contract, the deed of conveyance was made to Mrs. Deale by the direction of Jones, who, as he testifies, had the aulhoVity of Mr. Doale for so doing. The simple fact that the appellee paid the purchase money, as we have already seen under the authorities cited, could not in this case raise any presumption of a resulting trust in the appellee. In the opinion of this court, the evidence we have been considering, offered for that, purpose, was insufficient in law, and ought not (o have been allowed to go to the jury. It follows from what we have said, that the Circuit court erred in its ruling upon the appellant’s first and second exceptions; and, for the same reasons, the first prayer of the appellee was erroneously granted.

Having disposed of the appellee’s claim, so far as it rested upon a supposed resulting trust,, the case stands simply upon the title under the deed of the 18th of July 1850. By the Act of 1842, chapter 293, section I, any married woman was enabled to become “seized of land by direct gift or purchase in her own name and as of her own property.” Under the deed, therefore, to Mrs. Deale, she was vested with the estate in fee: not, however, to her sole and separate use. In construing the Act of 1842, this court has said that, in such property, the husband retained his marital rights. 12 Md. Rep., 108, 121, 294, 312. In this case, the appellee’s rights were to a life estate, in right of his wife, with a right to the pernancy of the product and profits of the land during the coverture—-and a contingent curtesy right in the event of his surviving his wife. See 2 Md. Rep., 453, 454. The question, then, presented for our decision is, whether such an interest in the property is sufficient to entitle the appellee to recover, upon the contract of insurance sued on in this case? Beyond all question the appellee had an insurable interest. 14 Md. Rep., 297. Angell on Fire and Life Ins., sec. 64. 2 B. Munroe, 50. The defence here is, that the appellee did not truly represent his title to the company. If this were an ordinary contract of insurance, made by a company insuring at its own risk, such an interest as the appellee’s would be covered by an insurance of the property as his; and his omission to state the nature and extent of his interest, where no inquiry has been made on the subject, would not avoid the policy. See 14 Md. Rep., 298. Angell on Fire & Life Ins., ch. 8, secs. 182, 183, 184, 185, 186, and note 9. 1 Smith's Lead. Cases, 633, 638, and cases there cited. But this contract was made with a mutual insurance company, and is obviously governed by very different principles and rules of construction. The contract of insurance constituted the appellee a member of the association, and bound him by its charter, constitution and by-laws; his assent to them was expressed in his application; they were incorporated in the policy, and became a material part of the contract.

By the fourth section of the charter, (Act of 1849, ch. 213, sec. 4,) all premium notes are declared to be liens on the real estate insured, which is held liable for the payment of the same, to meet losses that may be incurred bjr the company. In such case the title of the insured becomes a most important consideration of the contract, and a material misrepresentation or concealment in regard to it, will render the contract void. We do not entertain the opinion that this company might not, under its charier, insure such an interest as the appellee held in the property of his wife. On this question we think the case of Allen vs. Mutual Fire Ins. Co., 2 Md. Rep., 111, is strictly applicable. In'this respect the two charters are identical. This company has “full power and authority to make insurance on any kind of property;” Act of 1849, ch. 213, sec. 1. “This language” the court said, in 2 Md. Rep., 118, “is abundantly comprehensive, to include both real and personal estate, and all such interests in either, as the well settled principles of law recognise to be insurable interests;” and again, on page 123, “this company have the authority to insure whatever interest are insurable, in ordinary fire insurance companies.” To that extent the decision in Allen’s case governs this, and, adhering to what was there decided, we are of opinion that the appellee had an insurable interest, which this company had the power to insure under its charter. We come now to consider the terms and conditions of the particular contract sued on, and also the effect of the representation by the appellee as to title. These questions did not arise in Allen’s case; there was nothing in it to show any representation whatever as to title; or that the company was not fully informed of the nature and extent of the interest of the assured, (see 2 Md. Rep., 124.) Here, however, we have before us the written application for insurance, in which the appellee calls the property “his property.” This application is referred to in the policy, and upon it the company acted in making the contract, without any notice of the tille of Mrs. Dcale or of the limited nature of the appellee’s interest.

We do not adopt the view contended for by the appellant, that the application for insurance, and the reference thereto in the policy, constituted a warranty, on the part of Deale, that he held the fee-simple title to the property unincumbered, the breach of which, by the existence of the legal title in Mrs. Deale, would render the contract void. Nor is there any express provision in the charter, constitution or by-laws, that in terms declares a policy to be void, where the title of the assured is not truly stated, or is of a limited nature, less than the fee, or incumbered. In this last respect this case differs from those in 7 B. Monroe, 470; 4 Foster, 259; 7 Foster, 157; and other cases of the same class, many of which have been cited in argument.

in our opinion, the representation made by the appellee as to title, was not, as we have before stated, a part of the contract, in the nature of a warranty, that he held the whole fee-simple title unincumbered, the breach of which would render the policy void. The whole defence therefore rests upon the alleged misrepresentation or concealment of the true nature and extent of his interest, and of the title of Mrs. Deale. Whether such alleged misrepresentation or concealment will avoid the policy depends upon its materiality to the risk undertaken, and, in our opinion, the question of materiality is a question of fact to be submitted to the jury. 2 Duer on Ins., 689, sec. 31. 14 Md. Rep., 299. There is some conflict of authority on this question, but the ordinary rule is as we have stated; and we cannot, in this respect, distinguish this case from those in which that rule has been established and recognised. Having said that the appellee had an insurable interest, which this company had power to insure under its charter, the policy would attach unless the company had been induced to make it by reason of some misrepresentation or concealment of material facts with regard to the title, which, if they had been truly known by the company, would probably have influenced it in making the contract or estimating the risk. In the case of a mutual insurance company, where a lien is created on the property insured, a representation or concealment, as to title, may be material to the risk, which would not be so in an ordinary case. But its materiality is a question for the jury, and the court cannot assume it as matter of law.

Having thus stated the opinion of this court upon the several questions involved in this case, we proceed to pass upon the several prayers presented in the last bill of exceptions.

The first prayer of the plainliíf, as has been already said, was erroneously granted, it is based upon a supposed title in the appellee in the nature of a resulting trust, of which there was no evidence sufficient, in law, to go to the jury.

The plaintiff’s second prayer was properly granted; it asserts, simply, that the title of Deale to the property in right of his wife was an insurabLe interest, sufficient to sustain the contract or policy, and taken in connection with the defendant’s eleventh prayer, which was granted by consent, is free from objection..

The third prayer of the plaintiff was properly rejected; the company was not chargeable with notice of the.state of the. title disclosed by the land records.

For the reasons already stated in this opinion, we affirm the: 'ruling of the Circuit court upon the defendant’s first, second, third and fourth prayers. We also affirm its action in granting the deiendant’s fifth, seventh, eighth and ninth prayers.

We think the defendant was entitled to the instruction asked for in the sixth prayer. We should not, however, jeverse the judgment on account of its refusal, as the defendant had the benefit of the same instruction, in effect, by the granting of the ninth prayer. Still, as the case must be sent back, we deem it, proper to say, that the defendant was entitled to ask for a specific instruction, directing the attention of the jury to the particular fact in which the alleged misrepresentation or concealment consisted.

The only remaining question presented by the exceptions, involves the competency of the witness Cannan:—on this question we affirm the decision below. In the matter of filling up the application, and presenting it to the company, the witness was the agent of the appellee, and as such a competent witness.

Judgment reversed and procedendo ordered.

In the two other cases between the same parties, argued at the same time by the same counsel and before the same judges, actions of assumpsit were brought upon the contracts for additional insurance endorsed upon the policy, and non-assumpsit was pleaded in each case. These endorsements were not under seal, but simply signed by the secretary of the company, and state that the applications for additional insurance had been granted, subject to the terms and conditions set forth in the within policy. The same evidence was given, and the same exceptions, modified so as to apply to these cases, taken, as in the preceding case, with the additional exception, that in each of these cases the defendant objected to the plaintiff’s right of recovery in the present form of action, but these objections the court overruled, and the defendant excepted, and the verdicts and judgments being against it, appealed.

On the part of the appellant it was argued, that these actions should have been in covenant instead of assumpsit, upon the authority of McGowan's case, 16 Md. Rep., 47; and 33 Penn. State Rep., 221, Franklin Fire Ins. Co., vs. Massey. It was also argued, that as the appellee in the applications for these additional insurances, represented himself as holding “the legal title" to the property, all question as to a resulting trust is thrown out of view; that the appellee could not stand upon his interest as tenant by curtesy, because these insurances were effected after the Act of 1853, ch. 245, which protects the property of the wife from the debts of the husband, (12 Md.. Rep., 121, 312, Schinael’s cases,) and the premium notes would not bind her interest in it; and again, that by these insurances personal as well as real estate was insured, and but one premium note given, which is in conflict with the fourth clause of the charter of the appellant.

(Decided November 4th, 1861.)

On the part of the appellee it was insisted, that these cases differ from McGowan's case, inasmuch as there is no provision in this policy continuing it in force as a sealed obligation, as to and upon endorsements of additional insurances; that as to the other questions, these cases are the same as, and must abide the result of, the preceding case.

Bartol, .1.,

delivered the opinion of this court:

These appeals present the same questions as have been decided in the preceding case, between the same parties, and for the reasons assigned in the opinion filed in that, the judgments in these will be reversed and procedendos ordered. Upon the question growing out of the form of action, which did not arise in the preceding case, we are of opinion that the action of assumpsit, and not covenant, is the proper remedy on the contracts endorsed on the policy. These cases differ from McGowan’s case, in 16 Md. Rep., 47.

Here there is nothing in the original covenant, which continues it in force, as a specialty, binding the company by subsequent endorsements of additional insurance. They are new distinct contracts by parol. See 2 Wharton, 167.

Judgments reversed and procedendos awarded.