Weed v. Hamburg—Bremen Fire Insurance , 133 N.Y. 394 ( 1892 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The policy contained this provision: "If the exact interest of the insured in the property, whether as owner, trustee, consignee; factor, agent, mortgagee, lessee, or otherwise, be not truly stated in the policy, then, and in every such case, this policy shall be void;" and the principal contention of the defendant is that the policy was void, because the facts in reference to the trust deed were not truly stated therein.

The solution of the question raised by this contention depends upon the scope and meaning to be given to the words "Estate of O. Richards" contained in the policy.

The policy was valid, although no particular person was named therein as the assured. (Clinton v. Hope Insurance Co.,45 N.Y. 454; Weed v. L. L. Fire Ins. Co., 116 id. 106.)

What is the precise significance of the word "estate," when used as it is here, has not been determined in any case, and the law has not assigned to it any definite meaning. It is an indeterminate word, the precise meaning of which is to be ascertained from the circumstances under which it is used. It may be used to represent the interest of administrators in personal estate, or the interest of widow and heirs in real estate, or the interest of all these in both personal and real estate, and the scope to be given to it will depend largely upon the persons who procured the policy, and the purpose for which it was procured. Here the plaintiff knew of the trust deed. He needed an insurance covering all the interests in the property. He could have had no purpose to insure any particular or limited interest. It was difficult, if not impossible, to specify what particular interest the administrator or the heirs or the trustee had, and hence the comprehensive word "estate" was used to cover all the interests. The plaintiff procured this insurance through an insurance broker, and it does not appear that he had any negotiation in reference thereto with the defendant or its agent. He must, therefore, be presumed to have chosen the phrase inserted in the policy, and the defendant assented to it and must be held to have assented to its use in the most comprehensive sense that will give validity to the policy. In the absence of proof it cannot be assumed that the defendant used the phrase in any restricted sense and certainly not in a sense which would render the policy void ab initio. The estate of one who dies intestate may mean all the property which he leaves for his widow, heirs, next of kin and creditors — the whole body of his property as he leaves it at his death. His creditors have the primary lien and claim thereon — first upon the personal property, and if that be not sufficient, then upon his real estate, and by appropriate proceedings the creditors can enforce their claims against both the personal and real estate. The real estate conveyed by Richards to Sage remained a part of his estate. Sage had no personal interest in it. It was not conveyed to him for his benefit. During the life of Richards he was bound to administer it for his benefit in the payment of his debts as directed in the trust deed, and to return the balance to him, and after his death if there was any balance he was bound to return it to his heirs as a part of his estate. If this real estate was not a portion of the estate of Richards to whose estate did it belong? It did not belong to the estate of Sage. It was to go under the trust deed precisely where it would have gone if the trust deed had not been executed, to wit, to the creditors. It was a part of Richards' estate to be administered for the benefit of his creditors, just as it could have been by his administrator if the trust deed had not been executed. Therefore, the words, "Estate of O. Richards" were comprehensive enough to include all the interests in the property left by Richards, and among them those covered by the trust deed. All the property belonged to the "estate."

There was thus no defect in or qualification to the title of the estate, and the exact interest in the property insured was truly stated in the policy when it was represented as belonging to the estate. At least we think this was a possible view of the evidence which the trial judge could take, and that, therefore, it is sufficient, so far as concerns this point, to uphold the judgment. In Clinton v. Hope Insurance Company (supra) the policy was procured by an administratrix upon real and personal property on her behalf and for the benefit of the widow and heirs of the intestate, and the premium was paid out of the estate, and it insured "The Estate of Daniel Ross." Evidence was given showing that the intention of the parties was to effect an insurance upon both real and personal property for the benefit of the widow and children of the intestate, and it was held that the policy covered the interests of the administratrix, widow and children in the property insured and destroyed by fire; that they were sufficiently described under the words "Estate of Daniel Ross;" that where the designation of the assured may be applicable to several persons, or if the description of the assured is insufficient or ambiguous, so that it cannot be understood without explanation, extrinsic evidence may be resorted to to ascertain the meaning of the contract, and that when thus ascertained it will be held to apply to the interests intended to be covered by it, and they will be deemed to be comprehended within it who were in the minds of the contracting parties. Nothing decided in the case of Weed v. L. L. FireIns. Co. (supra) is adverse to the views we have expressed. The action in that case was by this plaintiff to recover upon another policy taken by him upon the same property, and one of the conditions in that policy was that "if the interest of the insured in the property be any other than the entire unconditional and sole ownership of the property for the use and benefit of the insured, * * * it must be so represented to the company and so expressed in the written part of this policy, otherwise the policy shall be void." There the trust deed to Sage was not communicated to the insurance company, and was in no way referred to or mentioned in the policy, and the policy was on that account held void. There the evidence upon the trial was different from that given upon the trial of this action and the case came before the General Term upon appeal from a judgment in favor of the plaintiff, entered upon the report of a referee, who, among other facts, found that at the time of the issuing of the policy the interest of the "estate of O. Richards" in the property insured was not "the entire unconditional and sole ownership thereof for the use and benefit of the assured." That finding was regarded as binding upon the plaintiff, and in the end it defeated his action. Here there was no finding adverse to the plaintiff, and he is entitled to every inference which can be drawn from the evidence in his favor. It was well said in that case that such a construction should be adopted as will uphold the whole contract and give effect to all its provisions in preference to one that will render some of its provisions nugatory; and that the court should, therefore, endeavor to give to the phrase "estate of O. Richards" such meaning as will harmonise it with the condition of the policy, if it can do so without doing violence to the words used; and the learned judge writing the opinion, said: "Applying these rules of construction to the evidence in this case, it leaves no reasonable doubt as to the persons intended by the expression ``estate of O. Richards.' No doubt the phrase might include the administrator. So it might, without doing violence to language, include the trustee under the Sage deed. But the question here is who did the defendant intend to designate? It could not have been the trustee, as the agent had no knowledge of the Sage deed; nor do I think it was intended to include the administrator." And he came to the conclusion, upon the evidence in that case that the intention of the parties to that policy was to insure the heirs of Richards, who succeeded upon his death to his title, and that in consequence of the trust deed they had no title. It is sufficient to say that in this action the evidence is different, and that it is a possible and allowable inference that the intention was to insure all the interests which comprehended and represented the estate of Richards.

We have thus far proceeded upon the assumption that the trust deed was valid and sufficient to pass the title of the property to the trustee. But we do not determine whether it was valid or not, as it is wholly immaterial. If it was not valid then the title remained in Richards at the time of his death and passed as his unqualified estate to his widow and heirs.

But other objections are made to this recovery which must be noticed.

The plaintiff commenced an action for the foreclosure of his mortgage in 1877 and judgment of foreclosure was entered in that action. No sale took place under the judgment, and at the time of the insurance the plaintiff held both the mortgage and the judgment. The judgment was not mentioned in the policy, and the plaintiff was simply named as mortgagee, and hence it is claimed that there was a misrepresentation and omission to mention a material fact. We think the plaintiff remained mortgagee in every real sense, notwithstanding the judgment. That was simply one of the steps in a proceeding to foreclose and realize upon the mortgage. It gave the plaintiff no new right except the right to sell the mortgaged property for the satisfaction of the mortgage. It did not satisfy or destroy the mortgage and it gave the plaintiff no new or increased interest in the property. There was, therefore, no material misrepresentations as to the mortgage.

In the mortgage, the complaint and the proofs of loss, the plaintiff appears as the mortgagee in his own right. He alleges in his complaint that he advanced upon the security of the mortgage upwards of $15,000. The defendant, in its answer, denied that the plaintiff advanced any money upon the mortgage, or that he ever owned it, and alleged that it was made and executed to secure the Manufacturers' National Bank of Troy for such loans and advances as might be made by it to or for the benefit of, or at the request of Richards, and that the plaintiff had no interest in the mortgage; that if the mortgage was executed to and in the name of the plaintiff as mortgagee, it was so made and held by the plaintiff in trust, secret or otherwise, for the benefit of the bank, and not otherwise, and that this action is not prosecuted in the name of the real party in interest. Upon the trial, the plaintiff proved the mortgage, and testified that he advanced to Richards upon the mortgage upwards of $15,000. Upon his cross-examination, he testified that he was formerly president of the bank for many years. The defendant's counsel asked him this question: "Can you tell me when you were president?" This was objected to on the part of the plaintiff as immaterial and as not the subject of cross-examination, and the trial judge sustained the objection. Defendant's counsel then offered to prove that the mortgage "was not at the time of the commencement of the action, and never had been in fact owned by the plaintiff; that the mortgage was made and executed to secure the Manufacturers' National Bank of Troy for such loans and advances as might be made by the bank at the request of, or to or for, the benefit of said Richards; and that said Henry E. Weed, the plaintiff in this action, had no interest in said mortgage, and that the same was made to and held by the plaintiff in trust for the benefit of the bank, and not otherwise." The plaintiff's counsel objected to this evidence as immaterial, and the judge sustained the objection, and it is claimed that in excluding this evidence, he committed error. There was no offer to prove that the plaintiff did not, as he testified, in fact advance the money upon the mortgage. We have thus these facts: The plaintiff took the mortgage in his own name. He advanced the money upon the mortgage and took the policy, making it payable to himself as mortgagee, and he paid the premium of insurance. There was no offer to show that the bank had advanced any money upon the mortgage. Under such circumstances it is difficult to perceive what the defendant meant to prove or could prove to show that the plaintiff was not the real party in interest in the mortgage and the policy. But if we assume that the offer was to show that the plaintiff advanced the money upon the mortgage in some way as the representative and trustee of the bank, doing the business in his own name, and possibly (there being no proof upon the subject) not disclosing his representative capacity to Richards, then as between him and Richards the liability of Richards was to him, and the contracts with Richards were his contracts. The source from which the money came did not concern Richards. He received the money under a contract with the plaintiff and agreed to pay the plaintiff, and gave him the mortgage to secure payment to him. The transactions were between these two persons, and the right of action to enforce payment and the mortgage were in the plaintiff. He could at least sue as the trustee of an express trust, under section 499 of the Code, and this he could do without alleging the trust, as his representative capacity did not any where appear in the transactions. It is a general rule of law that in the case of written contracts the right of action follows the legal title, and the party entitled to maintain an action upon a written contract is the one to whom, by its terms, it is to be performed. (Considerant v. Brisbane, 22 N.Y. 389;Noe v. Christee, 51 id. 270; Pitney v. Glens Falls Ins.Co., 65 id. 6.)

The fire took place on the 4th day of February, 1882. It does not appear that any notice of the loss was given to the defendant. But proofs of the loss were served upon it about the twenty-third day of February, and it claims that the plaintiff cannot recover upon the policy because he did not forthwith give notice of the loss as required by the policy. There can be no doubt that the proofs of loss served upon an insurance company are a sufficient notice of the loss if served in time. In the absence of special circumstances justifying delay it cannot be said that a notice of loss served nineteen days after a fire is "forthwith." But the word "forthwith" in such cases must have a reasonable construction. The assured must have a fair opportunity to serve his notice and a delay of a few days, depending as to the length of time upon all the circumstances of the case, ought not to defeat a recovery upon the policy. So, too, if the insurance company intends to claim that the notice of loss was not served in time it should take its position promptly and not put the assured to the expense of complying with other conditions in the policy upon the assumption that adequate notice had been given. Here the proofs of loss were received and retained without any objection that the proper notice of loss had not been given. Not only this, but the defendant requested the plaintiff to amend his proofs from time to time without any suggestion that the proper notice had not been given. The defendant had undoubtedly obtained through its agent early notice of the loss and was satisfied with that. Under all the circumstances the defendant may properly be held by its conduct to have waived the preliminary notice of loss.

The defendant makes the further objection that the proofs of loss were not sufficient in that they were not made by any person authorized to make them. They were made by the plaintiff and by the administrator and one of the heirs of Richards, and it does not appear that the defendant objected to them on the ground that any other person should join in making them. If the defendant claimed that the trustee Sage, or any other person should join in making them, it should have specified the objection so that the plaintiff could obviate it.

We, therefore, reach the conclusion that the judgment should be affirmed.

All concur.

Judgment affirmed.