Sleeper v. N. H. F. Insurance

FROM MERRIMACK CIRCUIT COURT. By the written contract of insurance made between these parties, of which the policy is the evidence, it was agreed as follows: "If the premises hereby insured become vacated by the removal of the owner or occupant, without immediate notice to the company and consent endorsed hereon, * * this policy shall be void."

These buildings were occupied by a tenant of the insured, and the rent had been settled for up to May, 1872. The tenant left in July 1871, and went to Laconia, his family having left a short time previous. The wearing apparel of the tenant and his family had all been taken away, and a portion of what little furniture they possessed. He intended to return the next spring, or earlier, if business should be dull at Laconia. No person lived in the buildings after he left. The buildings were totally destroyed by fire October 30, 1871, up to which time he had not decided to return at any definite period. Neither the plaintiff nor the defendants had any notice that the tenant had vacated the premises till after the fire.

The point is raised, whether, upon these facts, it is a question of law or a question of fact whether the premises had become vacant. If it is a question of fact, then the referee finds that the premises were vacated within the meaning of the policy, if it is a question of law, I am of opinion that the premises were vacant. The contract is to have a reasonable interpretation, according to the ordinary acceptation of the language used. It is apparent the insured intended to guard against the increased risk which inevitably affects buildings where no one is living or carrying on any business. An unoccupied building invites a shelter to wanderers and evil disposed persons. No one interested is present to watch or care for the property, or seasonably to extinguish the flames in case of fire; and for various reasons that might be enumerated, an unoccupied building is more exposed to destruction, to say nothing of the inducement a dishonest owner would have to turn it, if unprofitable, into money, when insured, by becoming a party to its destruction by fire. If, then, the motive is to have some one present, occupying and dwelling in the buildings, and interested to preserve the roof that shelters his family or holds his household goods, that object would plainly be defeated by holding that he and his family may depart with all their possessions, save perhaps a few articles not needed for present use, and still the premises be considered occupied. It is true, that often a person may vacate his home with his family and a portion or all his possessions, for a temporary purpose, and yet his residence or home be considered, for the purpose of voting or being taxed, to be in the place thus temporarily abandoned. But whether in law a person has temporarily or permanently abandoned his home, is altogether a different question from the one whether buildings are vacant when abandoned even for a temporary purpose. I cannot say that I have any doubt that these buildings were vacant at the time they were burned, in the sense in which that term was used in the policy.

The question then arises, whether the neglect of the plaintiff, for the period of three months and upwards, to give notice to the defendants, and procure their consent to continue the policy, notwithstanding the buildings were unoccupied, is such a mistake as is covered by sec. 2 ch. 157, Gen. Stats. It was decided by a majority of the judges who sat in the case of Chamberlain v. Insurance Co., 55 N.H. 249, that it was such a mistake as the statute would, under the limitation therein expressed, relieve the insured from the total forfeiture of the policy. To this view of the statute I am unable to assent. Its provisions seem to me clearly to relate to mistakes or misrepresentations that occurred in the making of the contract, and not in its performance. The history of legislation on this subject clearly authorizes this construction.

In 1853, the legislature enacted (ch. 1414 P. L.) that no insurance company should employ travelling agents to solicit or obtain applications for insurance, except in the town where the agent might resides and then only unless he had been appointed by the directors of the company. In 1854 (ch. 1549 P. L.), the act of 1853 was amended, so that three directors might appoint an agent. In 1855 (Ch. 1662 P. L.), the act of 1853 was amended, so as to allow the directors to appoint such agents as they should deem expedient, and should prescribe in what towns they might take applications, and should fix and limit the fees to be paid to them, with some other provisions not material to be mentioned; and then, by sec. 6, enacted as follows: "No policy issued by any insurance company, upon any application taken by any such agent, shall be void by reason of any error, mistake, or misrepresentation, unless it shall appear to have been intentionally and fraudulently made; but said company may, in any action brought against them on said policy, file in offset any claim for damages which they shall have actually suffered thereby, and the jury may deduct from the claims of the plaintiff the amount of said damage as they shall find it."

In 1867, the legislature reported the substance of this section into sec. 2 of ch. 157 of the Gen. Stats., which is in the following terms: "No policy of insurance shall be avoided by reason of any mistake or misrepresentation, unless it appears to have been intentionally and fraudulently made; but the party insuring, in an action brought against them on such policy, may show the facts, and the jury shall reduce the amount for which such party would otherwise be liable as much in proportion as the premium ought to have been increased if no mistake or misrepresentation had occurred."

The marginal reference shows that this section is a reenactment of sec. 6 of the act of 1855; and in the report of the commissioners to revise the statutes, made to the legislature, the section is marked "§" in the margin, showing that they intended to preserve the substance or sense of the corresponding section in the act of 1855.

It is well settled that a change of phraseology in the reenactment of a statute will not be construed to change its settled and obvious meaning, unless such intention appears. Jewell v. Holderness, 41 N.H. 161. What is there in the terms of the present statute that indicates any intention to change the construction of the act of 1855? Clearly nothing appears that expresses any such intention, and there is no such change in the terms of the present statute that authorizes such an inference.

It is a significant fact, that from 1855 to 1875, a period of twenty years, in no case that came before the court, so far as I am aware, where the insurer set up as a defence a material change in the risk occurring during the life of the policy, was it ever intimated by the court, or claimed by counsel, that the statute of 1855, or that of 1867, could afford the relief sought for.

Shepherd v. Insurance Co., 38 N.H. 232, decided in 1859, was an action upon a policy of insurance to recover for loss by fire. It was claimed that after the execution of the contract, a barn, within six feet of the building insured, was occupied as a bowling-alley, and so continued up to the time of the fire, thereby increasing the risk. BELL, J., who delivered the opinion of the court, said (p. 240), — "The parties have a right to frame their contracts as they please in this respect, and they cannot complain if they find the stipulations to be inconvenient. Having contracted subject to this express condition, the company are not bound if the condition is shown to be broken. It is not admitted that the risk is increased, and the question of fact must be settled by the jury." There was no suggestion here that there had been a mistake, such as the statute would relieve against, although that would have been the most obvious way to the relief sought, if the construction of the statute now claimed had been suggested.

Pierce v. Insurance Co., 50 N.H. 297, decided in 1870, was a case where the statute would certainly apply, if it could to any act of the insured after the contract was made; but the decision is based upon a waiver of notice of an assignment.

If the construction here contended for obtains, can any one suggest a case to which it may not be applied? What contract could be made between the parties that could not be violated under the guise of correcting a mistake? If an insurer expressly stipulates that he shall not be liable for the loss of buildings covered by his policy if they become vacant, where is the power to substitute a new contract to which he never assented? True, he is held to contract with reference to statutes in force at the time, and it is not denied that such statutes enter into and become a part of the contract. But if he declines to insure a vacant building, is there any statute that will compel him to do so? or, if there were such statute, is there any one bold enough to assert it could have any binding force? If, then, he contracts to insure his neighbor's building, at the same time stipulating that in case the building shall become vacant, unless notice is immediately given and his consent indorsed on the contract, it shall be void, where does the power come from to change this contract against his consent? From this statute, if from any source, — which is, that his contract shall not be avoided by reason of any mistake or misrepresentation, unless it appears to have been intentionally and fraudulently made — admitting for the moment that this may refer to mistakes or misrepresentations made after as well as before the execution of the contract, — how, using language in its ordinary and usual signification, can the act of the insured, in permitting the building to become vacant and his omission to notify the insurer thereof, be called a mistake? It is an act which he does or suffers to be done in direct and plain violation of his contract with the insurer. There is no element of a mistake about it. It does not alter the case that he did not know that his building had become vacant: it was his business to know it: it was his duty to see that the terms of the contract on his part were carried out. It is manifestly unjust to hold that he can, by his negligence, suffer the conditions of the contract, which were to be performed on his part, to be broken, and still claim to hold the other party to the performance of the contract, upon the ground that he has made a mistake in neglecting to fulfil the requirements of the contract on his part to be observed. As well might he claim that his books of account, securities, money, notes, bonds, deeds, jewelry, and numerous other articles which the policy stipulates are not insured, unless particularly mentioned, are covered by the policy, upon the ground that he made a mistake, and forgot to mention them at the time; and if the contract can be thus invaded under the guise of a mistake, there is no property, of however hazardous a nature it may be, which an insurer, however reluctant, may not, under the cloak of mistakes, be compelled to shoulder.

By cutting loose from the obvious intent of the legislature, we are at once launched upon a sea of difficulties in the adjudication of the great variety of questions that must inevitably arise under the guise of "mistakes" to be adjusted, and where the departure would end it would be difficult to predict. But confine the statute to mistakes and misrepresentations made at and before the time of the execution of the contract, as I have endeavored to show its framers intended, and its provisions can be enforced without impairing the obligations of contracts.

The referee further finds that the plaintiff, at the time he furnished the proofs of his loss, in which he made oath that the value of the property at the time of its destruction was $1,000, understood that the value was materially less than that sum, although as much as $600, the sum insured; and that his purpose probably was, to induce the company to make a speedy settlement, and to present controversy in regard to his being entitled to the full amount of his insurance. I agree with my brethren that this is such fraud on the part of the plaintiff as vitiates his policy by virtue of the provision that all fraud or attempt at fraud on the part of the assured shall cause a forfeiture of all claim under it. It was an attempt on his part to deceive the insurers by a statement which he knew to be false, and done with the purpose of securing some advantage to himself at the expense of the defendants.