Cummings v. Insurance Co. , 55 N.H. 457 ( 1875 )

Insurance — Assignment of policy. What is the nature of the contract of insurance? In Lucena v. Craufurd, 2 Bos. Pul. (N. R.) 300, Mr. Justice LAWRENCE gives precedence to the definition of Grotius in his Introduction to the Jurisprudence of Holland, published in 1631, the English translation of which definition is, — "Insurance is a contract by which the one party, in consideration of a price paid to him adequate to the risk, becomes security to the other that he shall not suffer loss, prejudice, or damage by the happening of the perils specified to certain things which may by exposed to them."

This definition commends itself to the judgment of Mr. May, "alike by its brevity, its logic, and its comprehensiveness." May on Insurance, sec. 1. These commendable qualities, however, seem to me even more conspicuous in the language of Sir Wm. Blackstone: "A policy of insurance is a contract between A and B, that, upon A's paying a premium equivalent to the hazard run, B will indemnify or insure him against a particular event." 2 Bl. Com. 458.

Insurance, then, is a contract of indemnity, and it appertains to the person or party to the contract, and not to the thing which is subjected to the risk against which its owner is protected. It is not a contract running with the land, in the case of real estate, nor running with the personalty, so to speak, in the case of a chattel interest of the insured. Carpenter v. Ins. Co., 16 Pet. 495. "The principle of indemnity," says Mr. Angell, "is the general principle which runs through the whole contract of insurance. A contract of indemnity is given to a person against his sustaining loss or damage, and cannot properly be called one that insures the thing, it not being possible so to do; and, therefore, as Lord HARDWICKE has said, it must mean insuring the person from damage; that is, damage to the thing or to his property." Angell on Insurance, sec. 1; May on insurance, secs. 2, 6; 2 Bl. Com. 459; Lucena v. Craufurd, 2 Bos. Pul. (N. R.) 300; Sadlers Co. v. Badcock, 2 Atk. 554; Wilson v. Hill, 3 Met. 66; Ellis on Insurance 1; Williams on Pers. Prop. *179; 1 Phillips on Insurance 1; Lane v. Maine M. Fire Ins. Co., 12 Me. (3 Fairf.) 44, 49.

The original contract in this case was, that, in consideration of a sum of money advanced by Pettigrew, and his agreement to be assessed at a certain rate upon another sum, the defendants would indemnify him and his assigns against loss by fire, to the amount of $1,425, for the term of five years, — to wit, on his dwelling-house $500, on furniture and clothing therein $200, and on other property the remainder of the gross sum of $1,425. The defendants were paid for insuring the whole property during the entire period of five years; and they agreed, upon this consideration, to keep the whole property insured, whoever might during that time be its legal owner, by force of their expressed obligation to indemnify Pettigrew and his assigns.

An alienation of the property, with the consent of the defendants, was therefore contemplated and provided for by the parties to the original contract. Pettigrew sold his house, removed his furniture, and assigned the policy to Cummings (the defendants assenting thereto), who bought the house and placed therein other furniture of equal character and value. If he had sold his own furniture, or left it somewhere else, and bought the furniture of Pettigrew and retained it in the house, the defendants would unquestionably be liable for its loss. It makes no difference, in reason, equity, or common sense, whether the furniture which they were paid for insuring was bought of Stephen Pettigrew or anybody else; and I apprehend it makes no difference in law.

The contract of insurance, we have seen, does not, unless by extraordinary and express stipulation of the parties, run with the subject-matter of insurance. Satisfaction is to be made to the person insured for the loss he may have sustained. In fulfilment of the defendants' agreement with Pettigrew that they would insure his assigns, on the 12th of May, 1870, the defendants, in writing, signified their consent to the assignment by Pettigrew to the plaintiff of "the policy of insurance within written; to hold the same subject to all the liabilities and entitled to all the rights and privileges to which I am liable or entitled by virtue thereof." The liabilities referred to were, the obligation of the plaintiff to pay assessments; the rights referred to were, the rights of suit and recovery against the defendants, in case of a loss of the property covered by the policy during the period of its existence. The assignment was of the whole policy. The obligation of the assignee was, to pay assessments upon the whole valuation of all the property described in the policy.

The intention and contract of the defendants, in consenting to the assignment of the policy, were, to indemnify the owner for the time being, — that is, at the time of its destruction, — not for any specific furniture, but for any furniture which might be in the house during the time specified. As the plaintiff's counsel suggest, — "There can be no question but that Pettigrew might have brought in furniture and clothing not there when the policy was underwritten, and it would be covered by it. He might have replaced what he then had by this very furniture which was burned, and no question would have been made but that it was insured to him. After the premises were sold to the plaintiff and the policy assigned to him, why may he not have done the same thing and been entitled to the same benefit? The insurers are put in no worse condition; their risk was not made greater nor different."

There is, however, another aspect of this case in which the defendants' liability is very clearly apparent. The consent to Pettigrew's assignment may well be regarded as a new and independent contract made directly with the plaintiff, — an agreement to indemnify the plaintiff against loss upon his house and his furniture and clothing therein.

"If, 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 while 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 valued 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." SHAW, C.J., in Wilson v. Hill, 3 Met. 66, at page 69.

So, also, PERLEY, J., in Rollins v. Ins. Co., 25 N.H. 207: "The assignment and assent of the corporation make a new contract, upon which * * the assignee might maintain an action in his own name; and the action in this case would be founded on this new contract made with him." And, said EASTMAN, J., in Folsom v. Ins. Co., 30 N.H. 240, assent to the assignment is "a new contract made with the assignee."

We have therefore in the case before us a new contract, made between the parties to this suit, whereby the defendants, for a full and sufficient consideration, have undertaken to insure the plaintiff against loss by fire on the house which he bought of Pettigrew, and the furniture and clothing therein which he bought of — no matter whom.

The party insured, whether by an original policy or a supplemental contract, under the form of an assignment, must of course have an insurable interest in the property which is the subject of the contract; but it can be of no importance to the insurer whence or how the other party acquired his title.

If these views are correct, there must be judgment for the plaintiff according to the provisions of the case transferred.