Case ID: mass_27/html/0041-01.html
Source: Caselaw Access Project
Author: {"author": "Wilde J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Theodore F. Strong versus The Manufacturers’ Insurance Company.
    The mortgager of a house, whose right in equity to redeem has been seized on execution, has an insurable interest in the house.
    Nor is lus insurable interest divested by a sale on execution of his equity of redemption, so long as his right to redeem such equity continues.
    In case of loss, such assured is entitled to recover the whole sum insured, if the value of the property destroyed amounts to that sum.
    A policy of insurance on a house provided, that if the property should be sold or conveyed, in whole or in part, the policy should become void. It was held, that a sale of the property on execution did not avoid the policy ; and that the provision in the policy referred only to voluntary assignments.
    The assured, in his application for insurance on a house, stated it to be his own property ; but no inquiry was made by the insurers as to the state of his title. The house, in fact, had been mortgaged and the equity of redemption had been seized on execution. It was held, that these circumstances were not material to the risk, and that the statement in the application was not a misrepresentation.
    Assumpsit on a policy of insurance, dated December 29th, 1828, whereby the defendants insured for the plaintiff $ 1400 on his dwellinghouse in Northampton, against loss by fire.
    Upon a case stated it appeared that the house was destroyed by fire on April 23d, 1829, and the amount of the loss was $ 1300.
    The policy contained a provision, that if the property should be sold or conveyed, in whole or in part, the policy should become void. The plaintiff, upon his application for insurance, stated in writing, in reply to interrogatories on the part of the defendants, that the property was his own ; but no inquiry was made and no information communicated as to the state of the title.
    In 1825, the plaintiff mortgaged the estate to one Damon to secure the payment of a note for $ 300 ; this note has never been paid. In 1827, the plaintiff again mortgaged it to Damon, to secure him against a note for $ 1100, which he had signed jointly with the plaintiff and others. The plaintiff paid one half of this note in 1827, and a new note for the balance signed by the same persons was given by way of renewal. On July 31st, 1828, Damon had assigned both mortgages to one Stebbins. On December 4th, 1828, the equity of redemption was seized by virtue of three executions issued in pursuance of judgments recovered against the plaintiff; and on January 7th, 1829, it was sold by auction for $210. This sum was applied in payment of the executions, but was insufficient to discharge the whole amount of them. On January 6th, 1829, it was agreed between the plaintiff and Stebbins, that Stebbins should take possession of the mortgaged premises for condition broken, and that the plaintiff should continue to occupy then? until .May 1829. Stebbins accordingly took possession and leased the premises to the plaintiff until May 1st, 1829, the plaintiff agreeing to pay him $25 rent, and to give up the premises without further let or hindrance at the expiration of the term. On November 5th, 1829, the equity of redemption was reconveyed to the plaintiff by the purchaser.
    According as the opinion of the Court should be upon the foregoing statement of facts, a default or nonsuit was to be entered.
    
      Sept. 27Ik.
    
    
      Strong and Forbes, for the plaintiff.
    The plaintiff had an insurable interest at the time when the insurance was made. This interest was not affected by the existence of the mortgages, for the loss ultimately falls on the mortgager and not on the mortgagee. Williams v. Smith, 2 Caines’s R. 13 ; Smith v. Lascelles, 2 T. R. 188 ; Kenny v. Clarkson, 1 Johns. R. 385 ; Gordon v. Mass. F. & M. Ins. Co. 2 Pick. 249 ; Lazarus v. Commonwealth Ins. Co. 5 Pick. 76 ; Hibbert v. Carter, 1 T. R. 745 ; Higginson v. Dall, ibid. 96 ; Phillips on Ins. 41. An equitable or a contingent interest may be insured. Holbrook v. Brown, 2 Mass. R. 280 ; Oliver v. Green, 3 Mass. R. 133 ; Locke v. North American Ins. Co. 13 Mass. R. 61 ; M' Givney v. Phoenix F. Ins. Co. 1 Wendell, 85.
    Nor was the insurable interest of the plaintiff destroyed by the seizure on execution. Fontaine v. Phoenix Ins. Co. 11 Johns. R. 293 ; Lockyer v. Offley, 1 T. R. 261.
    The plaintiff’s interest was not devested at the time of the loss, by the sale of the equity. Carroll v. Boston Mar. Ins. Co. 8 Mass. R. 515 ; Stetson v. Mass. Mutual Fire Ins. Co. 4 Mass. R. 330 ; Alston v. Campbell, 4 Bro. P. C. (2d ed.) 476. The agreement with Stebbins is in the plaintiff’s favor, as the lease to the plaintiff was an enlargement of his interest.
    
      The provision in the policy, that if the propeity is sold or conveyed, in whole or in part, the policy shall become void, intends a voluntary sale or conveyance by the insured ; not a sale by act of law without his agency or against his consent, as was the case in the sale of the equity. Smith v. Putnam, 3 Pick. 221, [2d ed. 222, note 2; 3 Kent’s Comm. 3d ed. 374, 375;] Doe v. Carter, 8 T. R. 57 ; Jackson v. Corliss, 8 Johns. R. 531 ; Jackson v. Silvernail, 15 Johns. R. 278. By the words “ if the property is sold or conveyed in whole or in part,” is meant a sale or conveyance of the whole interest in the whole or a part of the property, not a part of the interest in the whole property. Jackson v. Silvernail, 15 Johns. R. 278 ; Stetson v. Mass. Mutual F. Ins. Co. 4 Mass. R. 330.
    The representation by the plaintiff, that the house was his own property, was warranted by the facts. It was not necessary for him to inform the insurers in regard to the state of his title, unless questioned concerning it. Russell v. Union Ins. Co. 4 Dallas, 421 ; Hodgson v. Mar. Ins. Co. 5 Cranch, 100; Locke v. North American Ins. Co. 13 Mass. R. 67 ; Lawrence v. Van Horne, 1 Caines’s R. 276 ; Glover v. Black, 3 Burr. 1394 ; Robertson v. United Ins. Co. 2 Johns. Cas. 256 ; Kenny v. Clarkson, 1 Johns. R. 385 ; Jennings v. Ins. Co. of Penn. 4 Binney, 251 ; Higginson v. Dall, 13 Mass. R. 101 ; Bartlett v. Walter, 13 Mass. R. 267 ; Phillips on Ins. 64.
    
      Dewey, for the defendants.
    The plaintiff had not an insurable interest at the time when the insurance was effected. If he had any interest then, it was devested by the sale of the equity. After the sale there only remained to him a mere right of preemption ; Kelly v. Beers, 12 Mass. R. 387 ; and as the equity was sold for what it was worth, this right is of no value in money.
    It is said that the provision in the policy, as to a sale or conveyance of the property, does not refer to a sale or conveyance which is without the agency of the plaintiff, such as the sale of the equity ; but if he suffers the levy to be perfected, he does cooperate. The property is in the hands of the law ; and if he does not discharge it of the incumbrance, it is equivalent t0 a sale b7 bim-
    The interest of the plaintiff, if he had "any, was not correcuy described by him. Columbian Ins. Co. v. Lawrence, 2 Peters, 25 ; Marshall on Ins. (1st ed.) 335, 339.
    The case was continued nisi, and the opinion of the Court was afterward drawn up by
   Wilde J.

Upon the facts stated we think there can be no

question that the plaintiff had an insurable interest in the house assured, at the time the policy was effected ; for although a policy of insurance is a contract of indemnity, and wager policies are not to be countenanced, yet a legal title to the property insured is not necessary to give validity to such a contract. A mere equitable title, or any qualified property in the thing insured, may be legally protected by insurance ; Columbian Ins. Co. v. Lawrence, 2 Peters, 25 ; Marshall on Ins. (1st ed.) 91 ; and it is very clear that the plaintiff not only had an insurable interest, but that his interest was substantially the same as it would have been, had the property insured been free from any incumbrance ; for he was liable to the mortgagee and the attaching creditor for the whole amount of the debts for which they had obtained liens, and it is well settled that a mortgager may protect bis equitable interest at any time until actual foreclosure of the mortgage.

Nor did any of the events subsequent to the insurance wholly devest the plaintiff of his interest, for after the sale of the equity still he had a right to redeem, and this right might constitute a valuable interest. No evidence was offered to show that it was not. The presumption is that it was of some value, for the plaintiff did afterwards actually redeem or purchase the equity ; and independently of any circumstance tending to show that a right of redemption is a valuable interest, the law would presume that it was, the contrary not appearing. The plaintiff too might, from local attachment and other circumstances, estimate the property higher than others would, and as the value of property is not to be ascertained by the market price, or by the opinion of witnesses, in a case like this, we think the underwriters have not shown any defence on the ground that the plaintiff had no interest at the time of the loss. The value of the plaintiff’s interest in the property insured is not material. If he had an insurable interest at the time the policy was effected, and an interest also at the time of the loss, he is entitled to recover the whole amount of damage to the property, not exceeding the sum insured.

But the principal objection on which the defendants’ counsel rely is, that the plaintiff did not make a full and fair representation of his interest, and that there was such a concealment as vitiated the policy. Undoubtedly the plaintiff was bound to make a full and true exposition of all the facts and circumstances relating to the condition, situation, and value of the property insured, and to disclose his interest therein, so far as was material to the risk. But we do not perceive how the incumbrances on the plaintiff’s property could be considered as material to the risk. The destruction of the house did not extinguish the mortgage debts, so that he was interested to the full amount of the value of the property insured. It was not necessary to specify in the policy, that the property was under mortgage. The owner of a vessel subject to a respondentia or bottomry bond may insure without designating the incumbrance, although the loss of the vessel would extinguish the debt or loan. The lender on bottomry or respondentia must specify his interest. Glover v. Black, 3 Burr. 1394. But this depends on usage and practice and is not applicable to the interest of a mortgagee, which may be insured generally ; and a fortiori may the interest of the mortgager be so insured. We are therefore of opinion, that here was a fair and full representation of every circumstance material to the risk. There is no pretence for charging the plaintiff with any fraudulent concealment. He answered all the interrogatories which the underwriters deemed essential, to indicate the kind of information they required. If in the opinion of the underwriters it was important and material to the risk, to ascertain the nature of the interest intended to be protected by the policy, it must be presumed that they would have inserted in the form of the application an interrogatory so as to' elicit the proper information. There being no such interrogatory, and no such information being required in any case as to similar risks, the plaintiff had every reason to infer that the state of his title was not deemed material to the risk, and was not required by the underwriters to be ascertained. So that if such a representation of title were necesary in a marine risk, it would be deemed as dispensed with, by the underwriters, under the circumstances stated.

Judgment for plaintiff on default. 
      
       The mortgager and mortgagee each has a separate insurable interest in the property mortgaged. Traders' Ins. Co. v. Robert, 9 Wendell, 404.
     
      
       See Hancox v. Fishing Ins. Co. 3 Sumner, 142
     
      
       See Curry v. Commonwealth Ins. Co., post, 535; Traders' Ins. Co. v Robert, 9 Wendell, 404; 3 Kent’s Comm. (3d ed.) 371, 372