Wilson v. Hill

| Mass. | Oct 15, 1841

Shaw, C. J.

There are so many decisive objections to the plaintiff’s right to recover, that it appears difficult to select the most prominent. Even if the plaintiff had any interest in the loss under this policy, and any right to claim the amount of the "nsurance company, or of their assignees, Hill & Chapin, he would have no right to follow the money into the hands of the defendant. Dan Hill, the defendant, had been duly and legally appointed the assignee of Benson, Phelps & Capron, the original assured, and in this capacity, and in behalf of the creditors, he demanded the balance of the money in the hands of Hill & Chapin, as a sum due to the insolvent debtors, whom he legally represented ; brought an action for that balance, and recovered it, under a judgment. He cannot be considered as having received it to the use of the plaintiff; there was no privity, in fact or in law, between these parties. If Hill & Chapin were liable to the plaintiff, for the same money, they paid it to the defendant in their own wrong, and such payment would have been no defence against the action of the plaintiff, if he were legally entitled to it.

But it appears to us, that the claim of the plaintiff to recover in this action is- founded upon an entire misapprehension of the nature and legal effect of a contract of insurance. An insurance of buildings against loss by fire, although in popular language it may be called an insurance of the estate, is in effect a contract of indemnity, with an owner, or other person having an interest in the preservation of the buildings, as mortgagee, tenant, or otherwise, to indemnify him, against any loss, which hq may sustain, in case they are destroyed or damaged by fire. If, therefore, the assured has wholly parted with his interest, before they are burnt, and they are afterwards burnt, the underwriter incurs no obligation to pay any body. The contract was to mdamnify the assured ; if he has sustained no damage, the contract is not broken. If, indeed, on a transfer of the estate, the vendor assigns his policy to the purchaser, and this is made known to the insurer, and is assented to by him, it constitutes a new and original promise to the assignee, to indemnify him in like manner, whilst he retains an interest in the_ estate ; and the exemption of the insurer from further liability to the vendor, and the premium already paid for insurance for a term not yet expired, are a good consideration for such promise, and constitute a new and valid contract between the insurer and the assignee. But such undertaking will be binding, not because the policy is in any way incident to the estate, or runs with the land, but in consequence of the new contract. Even the assignment of a chose in action, with the consent of the debtor, and a promise on his part to pay the assignee, constitute a new contract, on which the assignee may sue in his own name. Mowry v. Todd, 12 Mass. 281.

For the general principles herein stated, we would refer to the authorities cited by Mr. Chapin. Lynch v. Dalzell, 3 Bro. P. C. (1st ed.) 497. The Sadlers' Company v. Badcock, 2 Atk. 554. Marshall on Ins. (3d ed.) 800 — 807. Carroll v Boston Marine Ins. Co. 8 Mass. 515" court="Mass." date_filed="1812-03-15" href="https://app.midpage.ai/document/carroll-v-boston-marine-insurance-6403837?utm_source=webapp" opinion_id="6403837">8 Mass. 515. Ætna Fire Ins. Co. v. Tyler, 16 Wend. 397.

These considerations, however, do not apply to a case, where the assured, after a loss, assigns his right to recover that loss ; it would stand on the same footing as the assignment of a debt or right to recover a sum of money actually due, which, like the assignment of any other chose in action, would give the assignee an equitable interest and a right to recover in the name of the assignor, subject to set-off and all other equities.

All the considerations, applicable to the assignment of a personal contract of indemnity, apply with still greater force to a case of mutual insurance, where each and all the members have an interest in knowing their associates and in deciding who shall become members. In the present case, even if the general principle were less clear, there is a provision in the by-laws, which are referred to as part of the contract, (art 12.) that “ any person selling his property, may surrender his policy and receive back his deposit note;” a clear implication, that the right to the benefit of the insurance does not pass with the estate to the purchaser. The principle of the contract is mutual indemnity. After such a sale and transfer of the estate, who is to stand responsible to other members for their losses, during the continuance of the unexpired policy ? Not the seller ; because the consideration, on which he became liable, has ceased, and his notes are cancelled and given up, and his obligation discharged. Not the purchaser ; because he has never given any note pursuant to the by-laws and terms of the contract, nor in any way bound himself to contribute to the losses of others of the company.

Besides; indorsed on the policy, or annexed to it, is a blank form, first of a formal written permission, to be executed by the officers of the company, authorizing an assignment of the policy, and the form of an actual assignment by the assured. This operates, at least by way of notice, that the policy was not to be assigned, without the expressed consent of the company.

But whatever might have been the effect of an assignment, either before or after the loss, and either at law or in equity, in fact no assignment was ever made by Benson, Phelps & Ca-pron, to the plaintiff; and. he can only claim, therefore, as assignee in law, in consequence of having been purchaser of the estate ; which has already been considered.

But then it is contended, that at the time when the company paid the amount of the loss to Hill & Chapin, for the original parties insured, in consequence of their transfer of the estate, before the loss, they could not legally recover, and therefore the money was voluntarily paid by the company, and must be deemed to have been paid, subject to the prior lien of Hill & Chapin, the agents, equitably for the use of the plaintiff, who had become the purchaser of the estate. I do not think we have the facts stated with sufficient fullness and accuracy to enable us to judge whether the assured had parted with all their nterest, at the time of the loss. It is stated, that the plaintiff had purchased the estate, subject to the mortgages. If the assured remained still liable to the payment of the debts for which those mortgages were given as collateral security, then they still had an interest in the estate ; because a fire would im pair or destroy the value of the property appropriated to the payment of their debt; and they therefore had an interest in its preservation, covered by the policy. One of the mortgages on the property was not assigned to the plaintiff till after the loss Nor does it appear that the assured had been exempted from the payment of any of the mortgage debts. We cannot therefore say with confidence that at the time of the payment by the company, they were not legally liable for such payment. At all events, they yielded to a claim of right, and paid to Hill & Chapin, pursuant to the provisions of the terms of the policy, to enure to them, to the extent of their lien ; and as to the balance, to the use of their principals. There are no facts on which to raise an implication that they voluntarily paid, upon considerations of policy, or intended to pay any thing to the use of the owner of the estate, or that they had any regard, in such pay ment, to any supposed equitable claim of the present plaintiff.

Plaintiff nonsuit.

Note. Since this case was decided, a similar question has been before the supreme court of the United States. Carpenter v. Providence Washington Ins. Co. 16 Pet. 495" court="SCOTUS" date_filed="1842-03-18" href="https://app.midpage.ai/document/carpenter-v-providence-washington-insurance-86226?utm_source=webapp" opinion_id="86226">16 Pet. 495. Mr. Justice Story, who delivered the opinion of the court in that case, 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 subseepet-t deati action thereof by fire.