6 Paige Ch. 583 | New York Court of Chancery | 1837
The following is the opinion of the vice chancellor delivered in the case of the Howard Insurance Company, and which is applicable to both suits.
The first objection is to the sufficiency of the preliminary proofs. The object of offering such proof is to furnish reasonable information to the insurer, so that he may be able to form some estimate of his rights and duties, before he is obliged to pay. It has always been liberally expounded, and is construed to require only the best evidence of the fact that the party possesses at the time. Was there any such proof offered here ? Stow, as it appeas from the answer, on the 5th day of August, 1826, notified the defendants in writing, that he was entitled to one fourth of the loss, and desired the company to pay the same to him, and forbid them from paying it to Stratton and Winthrop. On the 12th day of September, 1826, he delivered to them his affidavit, stating that at the time of the loss, he was the owner of one fourth part of the boat, by virtue of a certain deed of mortgage executed by Duncan, and being the whole of his interest, which remained in full force ; that the debt for which it was given remained unpaid and unsatisfied. And he also delivered to them a copy of the assignment or mortgage. It is contended, however, that the mortgage itself should have been exhibited, and a satisfactoiy reason given why the note was not produced. If this position is correct, then the next inqury will be, has not the company waived the production of the technical preliminary proofs which they now set up as a bar to a recovery ? The law is now settled that if the underwriters make no objection to the preliminary proofs, but put their refusal to pay upon the ground that they are not liable to the person who exhibits his claim, it is a waiver of preliminary proof of interest. In the case of Francis v. The Ocean Insurance Company, (6 Cowen, 404,) the court
The next objection interposed to the complainant’s recovery is, that Duncan is interested and ought to have been made a party to this suit. On the 4th of January, 1826, he assigned to Stow one fourth of the steam-boat Alabama, to be held as collateral security for the payment of Daggett’s and Roberts’ note, endorsed by Duncan, in favor of Stow. The boat had been insured at the office of the defendants for ten thousand dollars, and Duncan’s interest therefore in the policy was two thousand five hundred dollars. During the continuance of the policy, the boat was entirely destroyed by fire. It is contended by the complainants that the debt for which the note was given is still unpaid, and that the assignment therefore became absolute. It is admitted that the instrument executed by Duncan is a mere mortgage ; and it is urged that as mortgagor he ought to -be made a party. (3 John. Cas. 322. 4 John. Chan. Rep. 149.) There is, however, a manifest difference between a mortgage of real and personal property. The former is merely a security for the debt; the mortgagee has only a
The insurance was procured by Stratton & Winthrop, who acted as agents and factors of John Duncan, jr. & Co. and it is contended that this, by operation of law, gave them a lien upon the policy for advances made for the. insured, or for any general balance that might be due to them upon account. This principle cannot be controverted; it is sanctioned by mercantile usage, and is now fully supported by authority. (Godin et al. v. London Insurance Company, 1 Burrow, 489. Liv. on Agency, 196. Foster v. Hoyt, 2 John. Cas. 327.) These cases are, however, clearly distinguishable from the one before the court. From an examination of them it does not appear that any person was to be interested or benefitted by the policy except the original owner of the goods insured ; which gave to the agent or factor a lien for advances made, or for a general balance that might be due to him from the insured. The policies in those cases did not contemplate an assignment or change of ownership, and the existence of the lien, therefore, could not operate to the injury or prejudice the rights of third persons. Who were to be benefitted by the terms of the present policy 1 Not John Duncan, jr. & Co. alone, which would have entitled Stratton & Winthrop to their lien ; but the insurance was made “ for account of whom it may concern, at the time of loss, as owner,” &c. Thus contemplating an assignment, and even permitting the insured to part
Did Duncan’s assignment to Stow transfer the policy, and if it did, has that interest been extinguished ? If the rule was not well established that the assignment of the boat draws after it the policy as incident thereto, still in this case I would be relieved from all difficulty, by the principle that I have already recognized that Stow, as mortgagee, was, for all legal purposes, to be considered as owner, and therefore as such, by the terms of the policy, the loss was to be paid to him.
But it is said that his interest has been extinguished by the payment by Daggett & Roberts of the note for which the mortgage was given. If this fact is established, then the complainants acquired no title from Stow; the com
As to the last point of the defendants, I have barely to observe, that I cannot conceive how the attachment procured by the complainants in eighteen hundred and twenty-six, against this fund, for their guarantee of drafts accepted by Stratton & Winthrop and which the latter were obliged and afterwards did pay and had the attachment withdrawn, could defeat. the complainants’ right acquired in eighteen hundred and twenty-eight from a person who had no notice of the attachment and whose interest was complete and perfect.
I shall therefore decree that the company pay to the complainants the sum of two thousand five hundred dollar» e 1 with interest, to be computed by a master, «fee.
The facts in these cases, though most of them are undisputed, are somewhat complicated ; and a brief statement thereof is necessary to a proper understanding of the questions to be considered on the appeals. In 1825, J. Duncan, jun., E. H. Roberts and H. Daggett were copartners in trade at Mobile, under the name or firm of John Duncan, jun. <fe Co. The defendants P. Stratton and T. C. Winthrop were merchants at New-York, doing business in the name of Stratton <fe Winthrop; and were also connected in business at Mobile with T. N. Niles, under the firm of T. N. Niles <& Co. The steam boat in question was built that year by Duncan & Co., who were to be owners of three fourths of the boat, and G. <fe J. Goff of one eighth and N. Heyden of the remaining eighth. To pay for the building of the boat, or for labor done on the same, Niles <fc Co. became the endorsers-upon notes of Duncan & Co. to the amount of $3300; which notes were afterwards paid with funds furnished by the endorsers. J. Duncan <fc Co. were also indebted to Stratton <& Winthrop and to T. N. Niles <fe Co. upon other accounts, for the security of which Daggett and Roberts, two of the copartners, promised to transfer their interests in the boat, which was subsequently done. The copartnership of Duncan & Co. was dissolved in November or December, 1825, and a new partnership was formed by and between Daggett & .Roberts. Previous to this time, however, the original firm, as the agents for all the owners of the boat, had directed Stratton & Winthrop to get her insured for the benefit of those who might be such owners. On the 12th of December, 1825, but whether before or after the dissolution of the firm of J. Duncan, jun, & Co. does not appear, Stratton «fe
The objection which was made before the vice chancellor on account of the supposed insufficiency of the preliminary proofs was not well taken, for the reasons stated by the vice chancellor in his opinion. That objection was, therefore, very properly abandoned by the counsel for the appellants, upon their argument here.
Niles was not a necessary party to the suit, although he was interested in sustaining the claim of Stratton & Winthrop to the whole amount of the insurance money; as the complainants’ claims were against the insurance companies alone. And it was probably not necessary to make Stratton & Winthrop parties for any other purpose than that of getting possession of the policies, which were supposed to be in their hands or subject to their control. The complainants had a right to make them parties, however, if they thought proper, for the purpose of charging them with the payment of the monies wrongfully received by them, if the insurance companies were unable to pay. For the reasons which are very fully stated by the vice chancellor in his opinion, I am also satisfied that Duncan was not a necessary party. And his interest being equally balanced in relation to the matters as to which he was called to testify, he was not an incompetent witness. If the complainants recovered, it discharged his liability to Stow pro tanto; and if Stratton & Winthrop succeeded in recovering the money, by reason of the alleged lien upon the policy for the supposed balance due them on their acceptances and liabilities on
The next objection to the complainants’ right to recover is that the taking up of the note at the bank by Dagget & Roberts, although with the funds furnished by Stow himself, was a dischai’ge of the mortgage upon the boat. In cases of this kind the court will always look to the real nature of the transaction, and will not consider a mortgage discharged by the mere change, or even the destruction of another security for the same debt, if it was not the intention of the parties to destroy the lien of the mortgage.
In this case the underwriters contemplated that a change of ownership of the boat might take place during the continuance of the risk, and intended to insure whoever might be the owners from time to time; so that those who should be interested as such owners at the time when any loss should occur should have the benefit of the policies. Stow, therefore, had an insurable interest' at the time of the loss, to the extent of $5000, which was actually covered by the policies. And there is no doubt as to his equitable right to claim that amount from the insurance companies unless Stratton & Winthrop had a preferable lien, in their character of agents for making the insurance.
I lay entirely out of view the allegations in the answers that there was an agreement on the part of Duncan that Stratton & Winthrop, or T. N. Niles & Co. should have a specific lien upon the insurance money for the purpose of paying acceptances or securing any general indebtedness of John Duncan, jun. & Co. to either of those houses. Even if Niles and Duncan were both competent witnesses and equally disinterested, these allegations in the answers must be considered as unsustained by the proofs ; as the testimony of Niles on that subject is most positively and unequivocally contradicted by that of Duncan himself with whom the agreement is alleged to have been made. And where the testimony in a cause is equally balanced, the party who holds the affirmative as to the disputed fact must fail. Besides, if this allegation in the answers was proved, I am inclined to think Stow had the preferable equity, to the extent of the $5000 which he advanced to meet the draft which was accepted by Stratton & Winthrop.
The debts, if any, which were due to Stratton & Winthrop, and to T. N. Niles & Co. were the joint debts of Duncan and his former copartners; and at the time of the
The terms of the policies having provided for the case of the sale or transfer of an interest in the boat subsequent to the commencement of the risk, by creating insurances which would attach upon the interests of whoever it might concern at the time of the loss, and it being the evident intention of the parties to cover the interests of the assignees of those who were the owners at the date of the policies, if any transfers of interest should be made, no assignment of the policy was necessary; and the printed clause requiring notice to the underwriters in case of an assignment of the
By the terms of these policies the loss, if any occurred, was payable to the agents for the insurance; but this gave them no greater rights in equity than they would have had as such agents if that clause had not been inserted in the policies. And as the appellants paid Stow’s share of the insurance money over to Stratton & Winthrop, after they had failed in business, with full knowledge of his right to the same, and when the appellants had been expressly notified not to pay it to Stratton & Winthrop, they paid it in their own wrong and must look to their indemnity. The appellants must, therefore, pay it to the complainants as the subsequent assignees of the rights of Stow. If the appellants had doubts as to whom the money actually belonged, upon receiving the notice of Stow’s claim they should have retained the money in their hands and called upon the different claimants to interplead and settle their rights between themselves.
The claim'which the complainants once made to the money, under the attachment which was subsequently abandoned long before they had acquired the interest of Stow under the assignment from him, cannot possibly affect then-rights under that assignment. At the time Stow made the assignment to them he had a perfect right to this "part of the insurance money; and being assigned in good faith to secure an antecedent debt of long standing, it was wholly unobjectionable. An assignment of the right of action against an insurance company, upon a policy, after the loss has happened, is not an assignment of the policy of which notice
The decrees of the vice chancellor are correct and must be affirmed with costs; and the interest upon the insurance monies from the time when they became payable must be computed and inserted in the decrees of affirmance, according to the agreement of the parties upon the argument. In relation to the question of costs in the suits generally, which by the stipulation is also to be disposed of here, I think as between the complainants and the insurance companies the latter should be charged with the costs to which the complainants have been subjected in order to obtain their equitable rights. The decrees, however, must be without prejudice to the rights of the appellants to claim a repayment of those costs, as well as their own costs before the vice chancellor, from Stratton & Winthrop. And they are also to be at liberty to apply to the vice chancellor for such further directions as may be just as against Stratton & Winthrop, upon the equity reserved in the original decrees.
For the purpose of giving to the respondents the damages which they have sustained by these appeals, the interest upon the insurance monies is to be computed up to the time of the decrees of the vice chancellor; and the decrees of affirmance must direct the payment of the amount of principal and interest which was then due together with the interest upon the amount from that time, in addition to the costs in the court below and upon the appeals. As the eights of some of the parties have probably changed since ahe argument here, the decrees of affirmance are to be entered nunc pro tunc as of that time.
See Ætna Fire Insurance Company v. Tyler, 16 Wend. Rep. 401.
See Pomeroy v. Rice, 16 Pickering's Rep. 22.