Morrison v. Boston Insurance , 234 Mass. 453 ( 1920 )

Braley, J.

The defendant issued to the plaintiff a policy of insurance on a frame dwelling house, which having been partially destroyed by fire, the loss was adjusted by a draft payable at sight to the plaintiff’s order, who thereupon delivered to the company a receipt which purported not only to be in full of all claims and demands for loss and damage by fire, but also stated that the policy “is hereby cancelled and surrendered to the company.” The defendant having refused upon presentation to honor the draft, the present action is brought to enforce payment according to its tenor. The answer sets up want of consideration, and that the defendant issued the policy upon the representations of the plaintiff that he was the owner of the property which was unincumbered, when in fact he had no insurable interest, and it was subject to an outstanding mortgage. It is further averred that, relying upon the plaintiff’s statements in the proof of loss made under oath that, when the policy issued as well as at the time of the fire, he was the owner and that the property was free from incumbrance, it issued the draft, but, having subsequently ascertained that the statements were false, it refused payment, and, the policy being void, the draft is without consideration.

It is settled that, if the plaintiff had no insurable interest, the policy never attached and the plaintiff cannot recover. Amory v. Gilman, 2 Mass. 1. And even if the draft had been honored, the defendant upon discovery of the fraud could have sued to recover the money back. Merchants’ Ins. Co. v. Abbott, 131 Mass. 397, 399. Moors v. Bird, 190 Mass. 400, 410. It was undisputed that the record title stood in the name of the plaintiff’s mother, subject to a mortgage to one Anderson. The question, however, whether the plaintiff had an insurable interest, was a question of fact. The jury would have been warranted in finding that on April 1, 1909, the plaintiff’s mother acquired title to the premises on which shortly thereafter he began the erection of a house, the cost being borne partly by him and partly by her. It was occupied upon completion by them, and on September 22, 1909, he acquired the title from his mother and gave a first mortgage for $3,500 to a trust company and a second mortgage to his mother for a further sum of $5,000. On November 29, 1911, the second mortgage was foreclosed, and she became vested with the title. At. the date of foreclosure “there was an agreement between his mother and himself with regard to the title to the property; ... he stated to his mother that if she foreclosed it would be with the understanding that if he . . . could pay her back her interest in the property covered by that mortgage she would transfer title back to the plaintiff again upon payment and satisfaction of the debt—his indebtedness to her . . .” The first mortgage was paid by her and discharged on July 12, 1912, and a mortgage was then placed running to Anderson, by whom no money was advanced and to whom no interest ever has been paid. The plaintiff paid “all expenses in connection with the property, taxes, water bills, street assessments, repairs and all expenses incidental to the taking care of a piece of property” until the fall of 1916 when “he had completed his agreement with his mother of paying the indebtedness, . . . and in 1917 he entered into occupation of the property” where he resided until the fire occurred.

While the legal title does not appear to have been in the plaintiff on May 8, 1917, when the policy was obtained, or on September 12, 1917, the date of the fire, he had an equitable interest which was insurable to the full value of the policy, although the contract of purchase was not in writing. Rider v. Ocean Ins. Co. 20 Pick. 259. Wainer v. Milford Mutual Fire Ins. Co. 153 Mass. 335. Fowle v. Springfield Fire & Marine Ins. Co. 122 Mass. 191. Hinckley v. Germania Fire Ins. Co. 140 Mass. 38,48. The mortgage, to Anderson also, could be found to be a nullity, and, not being a valid incumbrance, it was not as matter of law a material fact or circumstance, the non-disclosure of which in the application avoided the policy or rendered the proof of loss, where it is not mentioned, a fraudulent misrepresentation. Taylor v. Aetna Ins. Co. 120 Mass. 254. Jenks v. Liverpool & London & Globe Ins. Co. 206 Mass. 591. Koeski v. Springfield Fire & Marine Ins. Co. ante, 23.

The defendant’s first request, that, upon all the evidence, the plaintiff could not recover, could not have been given. The fourth request, that the plaintiff had no insurable interest in the premises, and the policy was void ab initia, and the sixth request that the policy was void and therefore there was no consideration for the draft in so far as not covered by the instructions, also were denied rightly.

The seventh request, “If you find that the policy issued . . . was void there was no consideration for the draft . . . and you must find for the defendant” should have been granted. The jury, notwithstanding it was uncontradicted, could disregard the entire evidence of the plaintiff relating to his title and interest in the property as untrustworthy, and, if they did so, there was no proof of an insurable interest, and, the plaintiff, on whom rested the burden of proof, having failed on all the evidence to show any valuable consideration, the action on the draft could not be maintained. R. L. c. 73, § 41. Lindenbaum v. New York, New Haven, & Hartford Railroad, 197 Mass. 314, 323. Simpson v. Davis, 119 Mass. 269, 271.

It is argued in the plaintiff’s behalf that he was under no obligation to receive the draft in payment of his loss, which was for the amount awarded by the referee, but having accepted it in satisfaction of all demands and claims, coupled with the surrender and cancellation of the policy, the transaction of itself furnishes a sufficient consideration to support the defendant’s promise. But the instrument is not under seal, which imports a consideration. Graham v. Middleby, 185 Mass. 349, 355. It also would be sufficient if it appeared that the draft and receipt were exchanged in compromise of the plaintiff’s claim. Kennedy v. Welch, 196 Mass. 592. Kerr v. Lucas, 1 Allen, 279. The plaintiff moreover yielded nothing, but received the full amount of the award, the sufficiency of which appears to have been unquestioned, while the defendant was not relieved from any detriment. It liquidated its obligation without diminutipn. In the absence of such conditions the receipt, draft, and surrender were only the ordinary incidents of a settlement between the insurer and the policy holder where the validity of the policy and the right of the assured to the award is at the time not disputed by either party. Batchelder v. Sturgis, 3 Cush. 201, 203. Barlow v. Ocean Ins. Co. 4 Met. 270. •

The exceptions to the admission of evidence not having been argued must be treated as waived, leaving only the exceptions relating to portions of the instructions concerning the effect of the alleged misrepresentations in the proof of loss which, if established, the defendant contended avoided the policy. We do not however deem it necessary to discuss them as the questions raised may assume a different aspect and be presented in a different iorm at the new trial.

Exceptions sustained.