Clinton v. . the Hope Insurance Company

[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 contract of fire insurance is one of indemnity, and no recovery can be had upon it, unless the assured had, at the time of the insurance and of the loss, an interest in the insured property.

It is claimed by the defendant that the contract upon which this action is brought was made by the company with the administratrix of Daniel Ross, and in respect to her interest in the insured property, and that no recovery can be had for the loss of the mill mentioned in the policy, for the reason that the administratrix, as such, had no insurable interest therein.

If the premises upon which this claim of exemption from liability is based are true, the recovery cannot be sustained. An administratrix takes the legal title to the personal property, but she has no estate in the real property of the intestate.

It was held in Herkimer v. Rice (27 N.Y., 163), that when the personal estate of an intestate was insufficient to pay his debts, the administrator had an insurable interest in the buildings upon the land of the deceased, on the ground that he is a trustee of a power to sell the land upon the order of the surrogate for the benefit of creditors, and that as the interest of creditors is the subject of insurance the administrator may insure for their benefit.

It is admitted in this case that the personal estate of the intestate was more than sufficient to pay his debts, and the administratrix had, therefore, no interest in the real estate to support a contract of insurance. The defendant, by the policy in question, undertook to insure "the estate of Daniel Ross" against loss or damage by fire, upon property described as a cotton mill building, and the fixed and movable machinery therein.

The person or persons to be insured are not named in the policy, nor is this essential to the validity of the contract of insurance.

If the name of the person for whose benefit the insurance is obtained does not appear upon the face of the policy, or if the designations used are applicable to several persons, or if the description of the assured is imperfect or ambiguous, so that it cannot be understood without explanation, extrinsic evidence may be resorted to, to ascertain the meaning of the contract; and 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 mind of the parties when the contract was made. (1 Phil. on Ins., 163;Colpoys v. Colpoys, Jacob., 451; Burrows v. Turner, 24 Wend., 277; Davis v. Boardman, 12 Mass., 30; Newson'sAdm'rs v. Douglass, 7 H. John., 417.)

The evidence leaves no doubt as to the persons intended by the designation "the estate of Daniel Ross."

The agent of the defendant, to whom the application was made, was informed that the insurance was desired for the benefit of the widow and heirs of Daniel Ross; the policy was subsequently issued by him, and the language used to designate the assured was inserted by him without instructions from them.

Under these circumstances, the rule of construction to which we have referred has a direct application.

It is insisted, however, that the words "estate of Daniel Ross" have a definite legal signification, meaning his administratrix, and that the policy is to be construed in the same manner as though she was named as the person assured thereby.

This position has some support in the remark of DENIO, Ch. J., in Herkimer v. Rice, to the effect that in common parlance and in legal language, when the estate of a deceased person is spoken of, the reference is to his effects in the hands of his executor or administrator. In that case the question was as to the right of the administrator and the creditors of the intestate on the one side, and the heirs upon the other, to certain money recovered upon policies of insurance upon the buildings on the land of the intestate, issued directly to the administrator or renewed upon her application. The renewal receipts stated the premium to have been received of the estate of the intestate. In fact the policies were renewed upon the application of and for the benefit of the administratrix and the creditors, and the court gave effect to the contract according to the intention of the parties.

This case is not, we think, an authority for the claim made by the defendant. The words used in this policy were intended to designate the persons holding the legal title, and to speak of the property left by a deceased person, including the real property, especially before final settlement of his affairs, as his estate, if not an accurate, is not an unusual designation.

We are of opinion that the interests, both of the administratrix and of the heirs, in the insured property were covered by this policy. (1 Phil. on Ins., 106; Higginson v.Dale, 12 Mass., 96.)

It is claimed on the part of the defendant that the policy in question was issued upon an application and survey made in 1863 by Daniel Ross to the Home Insurance Company, for an insurance upon the same property covered by this policy, and that that application and survey, by the terms of the policy, were referred to and made a part of it, so as to bind the assured by the statements contained therein as warranties, except as they were modified by the indorsement made by the agent of the defendant.

In that application and survey, it was represented that there was but one building within one hundred feet of the mill. In fact, when the policy was issued, there was, and had been for some years, several buildings within that distance. There were other statements in the application and survey which were untrue as applied to the time when this policy was issued. If this survey was made a part of the contract, the policy never attached, as the truth of the statements in the application and survey was a condition precedent thereto. The court held that this application and survey was not a part of the policy, and excluded that question from the consideration of the jury.

In the printed part of the policy it is provided as follows:

"This policy is made and accepted in reference to the survey on file at this office and the conditions hereto annexed, which are to be used and resorted to in order to explain the rights and obligations of the parties hereto in all cases not herein otherwise especially provided for."

And one of the conditions referred to, after specifying what the application must contain, including among other things a specification of the situation of the property to be insured, with respect to contiguous buildings, declares "that if any survey, plan or description of the property herein insured is referred to in this policy, such survey, plan or description shall be deemed and taken to be a warranty on the part of the assured."

The attestation clause recites that the "Hope Insurance Company have caused these presents to be executed by their president and attested by their secretary, at their office in Providence, R.I."

It is apparent from these provisions, that it was the practice of the company to require a specific written application and survey, to be made by the applicant, to accompany his proposition for insurance, and that the survey referred to in the condition is the survey mentioned in the body of the policy as on file in the office of the company, and which was the basis of the contract of insurance.

The provision, however, requiring a written application by the person seeking insurance, was introduced for the benefit of the defendant, and if the company issued a policy without requiring it, the contract would take effect as though no reference thereto had been made.

In this case, no written application was made by the assured, nor was any application, relating to an insurance on this property, on file in the office of the defendant.

The application and survey made by Daniel Ross in 1863, which enumerated the articles of machinery in the mill, was, at the time of the insurance, in the possession of the agent of the defendant at Utica, where it had been from the time it was made.

In the part of the policy which describes the property insured, this survey is referred to as follows: "$2,165 on movable machinery therein, as per survey on file at office of M.H. Thomson, at Utica, N.Y."

This reference to the survey of 1863 cannot, we think, be regarded as the survey mentioned in the printed clauses of the policy.

It was a convenient method of identifying the articles of movable machinery covered by the policy, but it did not make the other statements therein a part of the contract.

This survey was not, and had not been, on file in the office of the defendant. Nor does the evidence in the case furnish any ground for the inference that the parties understood that the survey of 1863 was to stand as the application for this insurance. It does not appear that the assured had any knowledge of the statements it contained; nor are they chargeable with notice of them.

The parties could have made that survey, for all purposes, a part of the contract, but this intention is not apparent upon the face of the instrument, nor is it established by extrinsic proof.

The party to a contract who seeks to destroy its obligation by reason of an alleged breach of a condition precedent by the other party, cannot establish the existence of such a condition by inference or conjecture. The terms of the contract must be clear or explicit in his favor.

There was no error in the ruling of the court that the survey of 1863 was not a part of the contract between the parties.

It remains to consider the effect of the contract for the sale of the insured property, made by the assured after the policy was issued. When the insurance was effected the heirs of Daniel Ross were the absolute owners of the land, and had an insurable interest in the buildings thereon commensurate with their full value. They were insured as owners, and such premium was exacted by the defendants as was deemed equivalent to the risk assumed.

The contract of May 29, 1865, was an entire contract for the sale, for a gross sum, of the mill and the machinery therein. It was not obligatory upon the infant heirs, as no order for the sale of their estate had been procured, and their general guardian had no power to contract for the sale in their behalf. It did not become mutually obligatory until confirmed and approved by the court by the order of June 3.

The vendee took possession of the property immediately after the contract was executed under the provision therein giving him immediate possession, and declaring that he shall hold the land and personal property as tenant of the estate at a fixed rent, until the deed should be executed and delivered.

The vendee paid $1,500 when the contract was executed, and remained in possession without any new contract, until the fire which destroyed the property.

It is now claimed on the part of the defendant, that by the contract of sale the vendee became the equitable owner of the land, and trustee for the vendors of the purchase-money, and that the contract of insurance became from that time an indemnity for the payment of the unpaid purchase-money, and a mere insurance of the debt owing to the vendors to the extent of the policy. It is then insisted that this relation between the parties to the contract of insurance, entitled the defendant, on payment of the loss, to be subrogated to the extent of such payment to the claim of the vendors for the purchase-money on the contract, and that the transaction in short was a complete execution of the contract of purchase, and extinguished the liability of the defendant on the policy. The general rule is, that the vendee in a contract for the sale of land, is entitled to any benefits or improvements happening to the land after the date of the contract, and must bear any losses by fire or otherwise, which occur without the fault of the vendor. (Dart on Vendors, 116; 1 Sug. on Vendors, 468; Paine v. Miller, 6 Ves., 349.) Nor, it seems, is he entitled to the benefit of an insurance obtained by the vendor on his own account, and held for his own benefit. (Shotwell v.The Jefferson Ins. Co., 5 Bosw., 261; and see Ins. Co. v.Updegraff, 21 Pa. St., 513.)

And in case of loss by fire, when such an insurance exists, it was said by the chancellor, in Tyler v. Ætna Ins. Co. (16 Wend., 385), in analogy to the rule in case of insurance upon the interest of a mortgagee, that the insurer, on payment of the loss, is entitled to be subrogated pro tanto to the rights of the insured in the unpaid purchase-money.

Without conceding the correctness of this doctrine, we think that this case is not within it. The contract of sale was entire. The value of the machinery and personal property formed the principal part of the purchase-money. The mill was useless, as such, without machinery; and it may be assumed that neither the real nor personal property would have been purchased separately.

The title to the personal property did not pass by the contract. By the agreement of the parties, the vendee, at the time of the fire, held it as tenant. When it was destroyed by the fire, it was the property of vendors in the contract, and the loss was theirs. (Herring v. Hoppock, 15 N.Y., 409;Hasbrouck v. Lounsbury, 26 N.Y., 599.)

They were disabled to perform the contract in respect to the personal property, nor could they, under the circumstances, compel the vendee to accept a partial performance on their part, and require him to take the land. (Bacon v. Simpson, 3 Mees. W., 78.)

The same event, therefore, which fixed the liability of the defendant to pay the insurance, discharged the vendee from the obligation to pay the debt, to which the defendant claims to be subrogated. Manifestly there was then no right of subrogation. Nor can the transaction, in November, when the deed was delivered and the payment made, be regarded as an election by the vendee to perform the contract of May 29.

The payment was made, not alone in consideration of the delivery of the deed, but also of the assignment of the claims against the insurance companies. If, however, the contract of sale was in full force after the fire, the defendant was not entitled to subrogation to the claim of the vendors.

The original undertaking by the defendant was an insurance of the owner's interest in the property.

By the contract of sale, the vendee agreed to repay the vendor the unearned portion of the premium on the policy in question, and to keep the premises insured for the protection of any mortgage he should give on the consummation of the sale.

The undertaking, by the vendee, to pay the cost of the insurance, was, under the circumstances, equivalent to an agreement on the part of the vendor, to hold the insurance for the protection of the joint interests of the parties, and created a privity between them in respect to the contracts of insurance. There can be no other reasonable construction of the transaction.

In substance, this insurance was furnished by the vendor as an additional security for his debt.

If, as between the parties to the contract of sale, the vendee was entitled to the benefit of the insurance moneys in case of loss, the defendant can assert no equity in hostility to that arrangement.

The equity of the defendant is the equity of the vendors; and an arrangement between the vendors and vendee, in respect to the application of the proceeds of the insurance, did not violate any contract between the insurer and insured.

The defendant, upon payment of the indemnity promised, simply performs his contract. (Kernochan v. The N.Y. Bowery Fire Ins.Co., 17 N.Y., 428; Insurance Co., v. Updegraff, 21 Pa. St., 513.)

The judgment should be affirmed.

All concurring, judgment affirmed.