Case Name: The Mutual Assurance Society &c. v. Stone and Another
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1831-11
Citations: 3 Leigh 218
Docket Number: 
Parties: *The Mutual Assurance Society &c. v. Stone and Another.
Judges: (Absent Brooke, J.)
Reporter: Virginia Reports
Volume: 30
Pages: 611–618

Head Matter:
*The Mutual Assurance Society &c. v. Stone and Another.
November, 1831.
(Absent Brooke, J.)
Mutual Assurance Societies — Lien of — Effect as to Bona Fide Purchasers. — By tile statutes relative to T h c Mutual Assurance Society a it all! st fire on building's, and the constitution and rules of the society, the society has a lien on property insured, for all quotas called for under the original act of incorporation of 1794, and for additional premiums upon revaluation and reassurance under the act of 1805, and for all contributions required under the act of 1809 or 1819; and this lien attaches to, and follows, the property in the hands of a subsequent bona fide purchaser without notice of the lien or of the insurance.
Same — Same-Purchaser -When Complete. — Upon, a plea of purchaser without notice, if the purchaser has paid the whole purchase money, though he has not got a conveyance of the legal estate, yet if he has acquired the preferable right to call for the legal estate, he is a complete purchaser entitled to avail himself of this defence; per Tucker, P.
The act of 'assembly, passed December 1794, for establishing The Mutual Assurance Society against fire on buildings in this state — after declaring the principles of the society to be, “that the citizens of this state may insure their buildings against losses and damages occasioned accidentally by fire, and that the insured pay the losses and expenses, each his share according to the sum insured;” and providing, that subscriptions should be opened in different parts of the state; that so soon as the subscriptions should amount to 3,000,000 dollars, there should be a meeting of the subscribers to make rules and regulations, which should be binding on all those who should insure their property in the society; that they should be incorporated, with the usual powers of bodies corporate, and, among the rest, with power to alter and amend their bye laws and regulations from time to time; and that certain premiums of insurance should be agreed upon to constitute a fund to pay losses — enacted further, 4, 6, That “if the funds should not be sufficient, a repartition among the whole of the persons insured, shall be *made, and each shall pay, on demand of the cashier, his, her or their share, according to the sum insured and the rate of hazard at which the building stands, agreeably to the rate of the premiums, for which purpose it is Hereby declared, that the subscribers, as soon as they shall insure their property in the assurance society aforesaid, do mutually for themselves, their heirs, executors, administrators and assigns, engage their property insured (but none other) as security, and subject the same to be sold, if necessary, for the payment of such quotas. — 4, 7. That these quotas shall always be so rated, as to raise and keep up a fund so that the interest thereof may be deemed by the president and directors (to be elected by the said society) sufficient to pay the annual losses and expenses. If such quotas are found necessary, the president is to publish in the public newspapers, how much the quota is of each rate of hazard per every hundred dollars; whereupon the insured shall pay the same on application to the cashier, in whose office the property is insured. Whensoever any person or persons shall neglect to pay such quotas, the assurance to him made shall cease and discontinue, from the day on which they became due until paid. — ’4 8. And to the end that purchasers and mortgagees of any property insured by virtue of this act, may not become losers thereby, the subscribers selling, mortgaging, or otherwise transferring such property, shall at the time apprise the purchaser or mortgagee of such assurance; and indorse to him or them, the policy thereof. And in every case of such change, the purchaser or mortgagee, shall be considered as a subscriber in the room of the original, and the property so sold, mortgaged, or otherwise transferred, shall still remain liable for the payment of the quotas, in the same manner, as if the right thereof had remained in the original owner.”-! 9. Provided a compensation to W. F. Ast, the author of the scheme of the society. — 4 10. “The subscribers, in default of paying the premiums at the time fixed therefor, shall, on request of the cashier, be compelled to pay the same with six per cent, interest *thereon to the day of payment; and their property shall be liable to be sold for the same as aforesaid.”
By an explanatory act, passed December 1795,- — after some regulations as to the manner of calling and holding general meetings — it was enacted and declared, “That the premiums for the non-payment of which, property, agreeable to the said first recited act, may be sold, shall be understood to be those premiums only, which under the regulations to be formed by the said society, shall become payable in consequence of any insurance to be hereafter made or subscribed for with the society.”
An act to amend the act of incorporation, passed January 1799, gave the society a summary remedy by motion, on ten days notice, to recover the whole or any part of such premiums or quotas, as were then or might afterwards become due, from any delinquent subscriber or member, under his subscription or declaration for insurance made to the society: but it was provided, that this act “should not have a retrospect to persons who had subscribed before the organization of the institution, and bad not sent in their declaration for insurance, unless they should afterwards send them in.”
An act was passed January 1805, for carrying into execution a constitution of the society then lately adopted at a general meeting, by which very1 important and even vital changes were made in the principles of the institution. An intire separation was made between the interests of town and country insurers; provision was made for the revaluation of houses insured in towns and in the country, respectively, and that where such revaluation should exceed the former valuation, an additional premium should be paid; and provision was also made for enabling any member to withdraw from the society, upon giving six weeks notice, and paying all arrearages dueL at the time of withdrawing. There was no provision in this act declaring in express terms, that the premiums or quotas should be or continue a lien on the property insured — but it was enacted ($ 16,) that the several *acts of assembly previously passed, relating to the society, and all rules and regulations of the society, should be thereby repealed, so far as the same or any part thereof might be repugnant to that act — and (jj 18,) ‘‘that all debts, demands, rights, interest and claims of the society, now due or existing, or hereafter due or existing, may be sued for, prosecuted and recovered, in the name of the society, after the commencement of this act, in the same manner, in the same courts, and upon the same principles, as they may be now sued for, prosecuted and recovered,” &c.
In February 1809, another act was passed, making material alterations in the principles of the institution; by which it was enacted (§ 6,) “That hereafter no quota or quotas shall be assessed upon the members of the said society; nor shall any member who may have paid his original premium, cease to be insured, notwithstanding he may have failed to pay any additional premium, quota or parts of a quota, heretofore required, and that the general meeting of the said society, or the committee aforesaid, be and they are hereby authorized to require the members of the said society, or such as may hereafter become members, to pay annually for the next succeeding ten years, such part of the original premium as they have or may deem proper, to be collected and accounted for in the mode herein after directed; Provided, that such annual sum do not exceed one fifth of the original premium in the towns, and one seventh in the country; and provided also, that no person or persons be required to pay such part of a premium^ until the first day of January next after he shall have paid such original premium.”
And by an act passed in March 1819, the society was again authorized to require from the members thereof, the payment of such part of the premium upon their property, as the general meeting or the standing committee should deem necessary, provided such annual requisitions should not exceed one fifth part of such premiums &c.
*The constitution, rules and regulations of the society, formed and adopted in general meeting on the 11th. January 1805 (the same which the act of assembly of January 1805, was enacted h> carry into execution) contained the following provisions: Art. 8, § 6. “Any person refusing or failing to have his building revalued agreeably to the rules and regulations of the society, shall forfeit his right to claim any benefit under his insurance, till a revaluation thereof be made; and any person failing, for the space of three months after revaluation of his building shall be made, to return thereupon to the general office a new declaration, or to pay the additional premium, if any, which may be due, shall forfeit every benefit he might otherwise claim under his insurance, till the declaration be filed, and the additional premium, if any, be paid. — § 7. The additional premiums, ' required by the new rates of hazard fixed by the president and directors, shall also be paid on buildings, which may Have been declared for insurance, and on which policies may not have been issued: Provided the materials of which they are erected, or their contiguity to other buildings, be such as to subject them, agreeably to the said rates of hazard, to the payment of additional premiums; to ascertain which fact, buildings so liable to the payment of an additional premium, shall be specially reported to the principal agent, by the special agent of the district, borough or town, in which they may be situated; and before policies shall be issued on such buildings, the principal agent must have like proof as is required in other cases, that the additional premiums, as well as those originally due on the declaration returned to this office, have been paid to the cashier general, or to some authorized collector of the society.”.
But, by the constitution, rules and regulations of the society, revised in May 1819, it was ..provided, art. 13, ? 13, that “The failure to revalue a building shall not produce a forfeiture of the insurance nor a suspension of the same; but any additional premium, arising on a subsequent revaluation *of such building, shall be paid, with interest from the time at which such revaluation should have been made; and in case of loss by fire, of any building not revalued according to the rules and regulations of this society, before any warrant shall issue for the payment of such loss, a regular estimate of the value and hazard shall be returned to the general office; and the additional premium, if any, with interest thereon, shall be deducted from the amount of such loss; and in all such cases, the premium shall be estimated upon four fifths of the smallest valuation ; according to which, the loss shall be paid.”
And by the constitution of the society, under all its modifications, and its rules and regulations from the beginning, every person insured became a member of the society, and bv his declaration for insurance, bound himself, in express terms, to abide by', observe and adhere to the constitution, rules and regulations, already es tablished, of afterwards to be established, in general meeting.
In January 1821, the society exhibited a bill against James Vaughan, executor of William Vaughan deceased, and Daniel Stone, in the superiour court of chancery of Williamsburg, setting forth, That William Vaughan, on the 15th October 1802, made a declaration for insurance of buildings in the borough of Norfolk; and afterwards, on the 2nd January 1806, made another declaration for insurance on the same buildings, which had been revalued pursuant to law (meaning the act of January 1805). That by deed executed in May 1808, Vaughan conveyed the buildings so revalued and reassured, to the defendant Stone. That, according to the rules and regulations of the society, there was, upon the revaluation and reassurance of these buildings, duly assessed, and due to the society, for additional premiums, 76 dollars 76 cents, bearing interest from the 1st December 1806, and the further sum of 437 dollars 88 cents, the aggregate of the annual quotas of 36 dollars 49 cents, due on the said buildings so reassured, Commencing in 1809 and ending in 1820, with interest on each quota from 1st April in each year, the date when it fell due, That Vaughan died in 1811, and the defendant James Vaughan was his executor. And that application had been made by the agents of the society, to both defendants, for payment, which they both had refused. Therefore, the bill prayed that the premises insured should be declared subject, in Stone’s hands, to the debt due the society for premium and quotas, and sold for satisfaction thereof; and that, if necessary, the defendant James Vaughan should be required to render an account of his administration of his testator’s estate, and the assets in his hands, if any he had, should be applied to the payment of the debt.
The executor of Vaughan answered, that his testator gave notice of withdrawal from the society in October 1806, and therefore, was exempt from the duty of paying any quotas subsequently called for; and that he had fully administered the assets of his testator’s estate.
The defendant Stone in his answer said he purchased the premises in 1808, without notice that the vendor had ever insured the buildings or made any declaration for insurance in the Mutual Assurance Society; and he himself had effected an insurance with the Eagle Eire Company of New York, and continued his assurance there till 1818, when, for the first time, he was apprised of the demand now set up by the society; and as it was a rule of that company, as of this society, that insurance effected with any other company avoids the policy effected with it, the consequence to him was, that he had been insured in neither. That his vendor Vaughan’s estate was certainly liable for the debt, in the first instance; yet the society had so long neglected to assert Its claim, that the assets of Vaughan’s estate, which he believed would have been sufficient to have paid the debt, and applicable thereto, if it had been timely claimed, had been probably fully administered, without notice of the claim; and this laches of the society alone, *ought, under the circumstances to exonerate his property from the lien asserted, if indeed any such lien ever existed. But he denied, that the society ever had the lien it claimed. And if it had such lien on the property in the hands of his vendor Vaughan, he insisted that it was only an equitable lien, and pleaded that he was a purchaser without notice.
There was no proof, that Vaughan withdrew, or took any measures to withdraw, from the society, in October 1806.
It appeared, that Vaughan, first, by deed dated the 14th March 1806, conveyed the insured premises to James Wallace, in trust, to secure a debt of 600 dollars due to Thomas Newton as guardian of George Kelly, and to indemnify James Taylor, who was indorser at bank for Vaughan’s accommodation to the amount of 2500 dollars, against loss in consequence thereof; and in this deed, Taylor and Newton covenanted, that upon tender of the money, at any time before a sale of the trust subject, they would receive the same, “and upon receipt thereof, that, they would grant good and sufficient discharges for the same, thereby releasing and waiving all power to demand of the trustee the execution of the trust therein before declared.” That Vaughan’s deed to the defendant Stone, dated the 23d May 1808, recited the deed of trust of the 14th March 1806, and that Stone had undertaken to pay the debts thereby secured to Taylor and Newton the guardian of Kelly; and in consideration thereof, conveyed the property to Stone, with general warranty. That, in January 1816, Taylor, by deed, acknowledged the receipt in full, from Stone of the money which he had paid as Vaughan’s indorser, and released all claim under the deed of trust; and Kelly also, by deed, in consideration of satisfactory arrangements made with him by Stone, for the payment of the debt due to him, released all his claim under the deed of trust. But that Wallace, the trustee to whom the legal estate was conveyed by the deed of trust, had never conveyed or released to Stone. This was the state of Stone’s title at the hearing of the cause in the court of chancery.
*'The chancellor was of opinion, that, according to the 6th and 7th sections of the 8th article of the constitution, rules and regulations of the society, formed and adopted in January 1805 (above quoted verbatim) no policy could issue on a declaration of revaluation, unless the additional premium was paid, and the society was not responsible for any loss, unless a revaluation was made and the additional premium paid, so that no insurance was effected, and therefore no quotas could arise in such case ; and that no pledge of property was ever, at any time, made by the assured to secure the payment of premiums or additional premiums: therefore, he dismissed the bill with costs. The society appealed to this court.
The cause was argued here, by Daniel for the appellants, and by Leigh for the appel-lee Stone.
I. One question was, Whether Stone’s purchase was so completed, as to sustain his plea of purchaser without notice? Upon which Daniel remarked, that Stone had even now only an equitable title, the legal title being yet outstanding in Wallace, the trustee, to whom it was conveyed by the deed of trust of March 1806 — • he cited -Tourville v. Naish, 3 P. Wms. 307; Wigg v, Wigg, 1 Atk. 382, 4; Hoover v. ' Donally, 1 Hen. & Munf. 316; Blair v. Owles, 1 Munf. 38. Heigh, adverting to the peculiar covenant of Taylor and Newton, the - cestuis que trust, in the deed of trust of March 1806, and to the deeds of release executed by Taylor and Kelly to Stone in January 1816, said, that these were tantamount, in effect, to a defeasance of the deed of trust; and, if they did not amount quite to a defeasance, they. certainly gave Stone a right to call for the legal title, in preference to all the world, which was equivalent with actually getting it in. Williamson v. Gordon’s ex’ors, 5 Munf. 257.
II. Then there arose several points peculiar to the case of policies or declarations for assurance in this society. 1. Whether there was any lien provided by the 6th section of *the act of December 1794, on the property insured or declared for assurance, for original or additional premiums, or whether the lien was provided to secure the quotas to be after-wards called for, only? 2. Whether the act of January 1805, making so vital a change as it did, in the constitution of the society, and by separating the town from the country assurance, altering the obligation, duties and rights of assurers and assured, was not an abolition of the lien for quotas given by the original act of incorporation? If not, 3. Whether the 6th section of the act of February 1809, providing that no quota or quotas should afterwards be assessed, but authorizing the society to exact from the members, annually, for ten years, portions of the premium, these requisitions were quotas to which the 6th section of the original act of December 1794 applied, and gave a lien for, on the buildings insured? 4. Whether, in case the additional premiums or quotas were not paid, on any property declared for insurance, before the act of February 1809, the declarant was to be regarded as insured, by force of the 6th section of that act, or of the 13th section of the 13th article of the revised constitution, rules and regulations, of May 1819? If such declarant was not insured, 5. Whether, nevertheless, the effect of the 6th section of the original act of December 1794, was to give a lien on the property declared for insurance, for premiums or quotas? 6. Whether, if the lien was given, to any extent, on the subject in the hands of the declarant for insurance, such lien did or could follow it into the hands of his assignee, without notice, and though he be not insured? Lastly, Whether the society had not lost its claim against Stone, if any it ever had, by its laches in not earlier giving notice of or asserting it? In the discussion of these questions, the counsel vyent into a minute examination of the provisions of the several acts of assembly above quoted, and the general principles of law which, they supposed, might influence the construction and effect of them: the | general course of the argument will be' collected from the opinions of the judges. *The following authorities were cited : Currie’s adm’rs v. Mut. Ass. Society, 4 Hen. & Munf. 315; Greenhow &c. v. Barton, 4 Munf. 590; Korn & al. v. Mut. Ass. Society, 6 Cranch, 192; Mut. Ass. Society v. Watts’s ex’of, 1 Wheat. 279; Stratton v. Mut. Ass. Society, 6 Rand. 22.
Mutual Assurance Societies — Lien of — Bona Fide Purchasers. — In Shirley v. Mutual Assurance Society, 2 Hob. 709, in reference to the lien given by the legislature in favor of mutual assurance societies, it is said; “There can be no doubt of the intent of the legislature to give a valid an cl effectual lien, not only against the original member, but against all persons deriving any ownership of the property from him. And this lien was held by this court, in the case of hint. . i.s.v. Soc. v. Stone, etc., 3 Leigh 218, to attach to and follow the property in the hands of a sa bsequent bonu Jále purchaser without notice of the lien or of the insurance.’' The principal case is cited in note to same case on this question. See monographic note on “Insurance, Fire and Marine" appended to Mutual, etc., Soc. y. Holt, 29 Uratt. 612.
tBon-i Fide Purchasers -When Coanpietc. — In the principal case it is said by tucker, P., upon a plea of purchase 'without notice, if the purchaser has paid the whole purchase money, though he has not yet a conveyance of the lentil estate, yet if he has acquired the v reff rabie. right to call Cor the legal estate he is a complete purchaser entitled to avail himself of this defence. On this question as to what constitutes a complete purchaser the principal case is cited in the following: Preston v. Nash, 75 Va 954, 956; Preston v. Nash, 76 Va. 6, 8; Lamar v. Hale.79Va. 156; McCormack v. James, 86Fed. Rep. 18. See also, citing the principal case, foot-note to Coxv. Romine, 9 Gratt. 27; Briscoe v. Ashby, 24 Gratt. 475, and note; Camden v. Harris, 15 W. Va. 563; Iloult v. Donahue, 21 W. Va. 300.

Opinion:
CARR, J.
It was admitted by the counsel who argued this cause for Stone (as well as it could be argued), that by the 6th section of the original act of 1794, a lien for quotas attached to the property insured, in the hands of the insurer. But, though it was admitted as a point too plain to be argued, that this lien bound the property in the hands of the first, owner, it as strongly denied, that such lien existed when the land had passed into other hands, and the broad position seemed to be taken, that the legislature could not raise a lien which should thus follow the subject into all hands. That the act meant to create such a lien, is clear from the use of the word assigns, which could have been introduced for no other purpose; nor can I doubt the power of the legislature to do this, since the law violated no right, but merely settled the terms of the contract, between the society and the insured, and left every one at liberty to become a member or not. Every man has a right to bind his property by a lien, a mortgage, for instance, which when perfected according to law, follows it into all hands. This was nothing more. The party insuring, for himself, his heirs and assigns, engaged his property as a security for all moneys due or to become due on it.
But it was insisted, that the 8th section of the same act made the insured property liable in the hands of vendees, only where they received a notice of the insurance from the vendor. That section enacts, that to the end, that purchasers, and mortgagees of property insured by virtue of this act, may not become losers thereby, the subscribers selling, mortgaging or otherwise transferring such property, shall at the time apprise the purchaser or mortgagee of such assurance, and indorse to him the policy thereof; and in *every case of such change, the purchaser or mortgagee shall be considered as a subscriber in place of the original &c. It was contended, that such change meant a sale or mortgage accompanied by notice and assignment of the policy. I cannot think, that the language used renders this construction necessary; and it is most clear to me, that, so far from being the intention of the law, it would mar and prostrate the whole scheme on which the institution was founded. The law was speaking of changes of property by sale, mortgage or other transfer; and the following phrase "in every case of such change," means of a change by sale, mortgage or other transfer. If the act, meant to hold the property bound, onljr where the sale was attended by notice, why did it say, that notice should be given to save purchasers or mortgagees from loss? They could incur no. loss, where there was no notice, if the sale to them without notice discharged the lien. There are many other considerations, which I need not state, that convince me, that such a construction would go far to destroy, at a blow, the whole institution.
But it was insisted, that the act of 1805 was a new constitution, abolishing all preexisting laws, liens &c. I think clearly not. It was an amendment, and only abolished former laws, rules and regulations, so far as they were repugnant to that act. Such are its words. The former act creating a lien on the property insured, was so far from being repugnant, that it was the very foundation on which this amendment rested. This is apparent; for take away that act, and there is no lien on the property insured, even in the hands of the original subscribers. It was also insisted, that the company has been guilty of laches. I do not think that doctrine attaches, farther than it would to a mortgagee. The lien of the societ3' is by an instrument under seal, which the l<aw says binds the property, as a security for all charges growing due under the laws, rules &c. of the society; and this is the exact definition of a mortgage. *There has been no such laches here as would affect the claim of a mortgagee,
There were several other objections made, but none of any weight. I think the decree should be reversed.
CABELL, J., concurred.
TUCKER, P.
The merits of this controversy mainly depend, upon the true construction of the laws, constitution, rules and regulations of The Mutual Assurance Society.
The scheme of this society, however simple in its principles, has, unfortunately, not been carried into effect, with an ability proportioned to the benevolence of the design. We have the authority of the act of 1794 for saying, that the plan upon which the simple idea of an association of individuals for their mutual insurance against fire, was to be carried into effect, was formed, suggested and published, by Mr. Ast; and though he may have had the aid of some professional gentleman to throw it into the form of a law, its clumsy and in-artificial execution can leave little doubt of its real parentage. Drawn without system, and expressed, in many instances, in terms wholly inappropriate, it is not wonderful, that it has been a fruitful source of litigation ; and so deeply imbued was the first act with these defects, that all the subsequent legislation seems to have been marked by the original vice of its constitution. Such an instrument therefore requires to be construed with a liberality which will attain the real objects of the contracting parties, instead of a critical rigour which would defeat their most obvious intentions; and this, indeed,'is the more proper, as the parties stand in the double relation of insurers and insured, and their contract cannot properly be interpreted, more strongly against them in one character than in the other.
Awkward as is the draft of the original constitution, it is not difficult to penetrate its real design. Contemplating an association, which might embrace every owner of a building in the commonwealth, and which should engage to insure *all its members against losses from fire, it was intended, that each member of the association should contribute, to the common fund out of which losses were to be repaired, a certain per centage, called a premium, upon the value of the property he should himself seek to have insured. And as the original sum thus subscribed or contributed, would in the ordinary course of things be exhausted, unless provision was made for replenishing the fund, it was provided, in substance, that whenever the reduced state of the funds should require a farther contribution, there should bo a call upon the members for such contribution, and each should be bound to jjay an equal per centage upon his original premium. These subsequent contributions were called quotas; and thus, if the wants of the society required that it should call for a sum equal to half the original capital, each member was called upon to pay a sum equal to one half his original premium, which was called a half quota; et sic de similibus. Having ascertained the sums to be paid by each, as contrioutors to the common stock in which they were interested as insurers, or (which is the same thing) the sum to be paid by each as insured, it next became necessary to provide for the enforcing of these contributions from the refractory or thfe backward. To effect this object, the project (whether wise or unwise) was to render the property, thus insured from destruction, and supported and upheld by the society, responsible for the payment; doubtless, upon the idea of some supposed relation between the advantage it derived, and the duty to be imposed. So it is, it was declared in the original act of 1794, that the subscribers mutually for themselves, their heirs and assigns, engaged the property insured (but none other) as security, and subjected the same, if necessary, to be sold for the payment of such quotas; that is to say, for such future contributions as might be necessary from time to time to maintain the integrity of the fund.
A question has been much discussed heretofore, whether the property insured was or was not bound for the original '*premium, if the subscriber failed to pay it; and, in Greenhow v. Barton, judges Fleming and Roane, though differing in the judgment they gave, seem to have agreed in the opinion, that until the payment of the premium the insurance was incomplete, and the property was not bound in the hands of the purchaser. It seems, however, to be a question of no importance in relation to the original insurance in this case, as the original premium was jaid, and the assurance was of course complete; but we shall have occasion to examine it, as it respects the new declaration. Nor can it admit of doubt, that Vaughan himself was personally responsible for quotas anteriour to the act of 1805, and that the property was in like manner responsible while it continued in his hands.
By that act, considerable changes were effected in the constitution of the society: some of them so vital, as to have been arraigned as unconstitutional and void. The separation of the town from the country insurance, in other words, the absolving a large portion of the society from the burdens of the contract, and thus depriving the rest of that aid in sustaining them, for which they had in effect contracted, was deemed by many, high-handed, unjust and unconstitutional. The small towns, particularly, complained of being left to encounter the hazard of the sweeping losses of the cities, without the aid of the countrj' contributions. But this question was put at rest by this court, in Currie's adm'r v. The Mut. Ass. Society. One very salutary and acceptable provision, however, was introduced ; I mean the clause which permitted any dissatisfied party to dissolve the contract as to himself, by withdrawing from the society. After the enactment of this provision, no party who did not avail himself of it, could fairly be understood to wish to give up its benefits, or get rid of the burdens it imposed.
This act has been called a new constitution, out and out; but I think it must be regarded rather as an innovation ingrafted on "the original stock. It did not repeal the old constitution and laws in toto, but only in such matters as *were repugnant to the act itself. What was its effect upon some of the most material provisions of the first aqt will be presently examined. At the time it passed, Vaughan was living, and still owner of the property, and the act having authorized, and indeed required, a revaluation, he acquiesced in the measure. A revaluation was made, and he signed a new declaration, binding himself to abide by the constitution &c. of the society. A further premium was however required of him, as the revaluation proved the property to be worth more than before, which premium, it seems, never was paid by him, and constitutes in fact a part of the society's demand. It was the opinion of the chancellor, that no pledge of the property was at any time to be made to secure the payment of the original premiums, or of the additional premiums; and it appearing that part of the demand was for additional premiums, the bill was yet dismissed in omnibus. This would seem to have been an error, even if the premises were true; for, though the property was not bound, it does not follow, that Vaughan's estate, if there was any (which ought to have been ascertained), was not-responsible for the additional premium which accrued in his time. For judge Roane and judge Fleming concurred in the case of Greenhow v. Barton, in thinking the subscriber personally bound for the unpaid premium, though the former thought the property was not so liable in the hands of a purchaser, and the latter supposed it not so liable even in the hands of the insurer. Moreover, unless the failure to pay the additional premium, not only left the new contract incomplete, but also abrogated the old one, which cannot be pretended, it is not easjr to conceive why the bill should have been dismissed-as to the whole demand, merely because a part of the demand could not be sustained.
Bet us, however, pursue this subject of the non-pa3'ment of the premiums somewhat farther. The personal liability of the de-clarant, for the premium, has been already shewn to have been established by the concurrent opinions of judges Roane and Fleming, which opinion is sustained by the*10th section of the act of 1794. The liability of the property of the declarant, for the premium, seems equally to be provided for by the same section; which declares, that, in default of payment of the premiums, the subscribers may be compelled to pay them, and their property shall be liable to be sold for the payment of the same. The meaning of this section, is further explained by the act of December 1795, which may be considered, indeed, as part of the res gesta. From this act also it is clear, that the property was to be held liable for the original premiums, as a general principle; but, it was declared to apply only to subsequent insurances, obviously with a view to favor those who had contributed to carry the scheme into execution by becoming subscribers, but who seem, from the preamble of the act, to have been inclined to withdraw before they were irrevocably bound, unless such a provision was enacted. With these views, I intirely concur with judge Roane,' that the property was bound for the premiums, while it remained in the hands of the declarant; nor can I perceive how judge Fleming, who expresses a different opinion, -could avoid the force of the enactment in the 10th section. The fact, that by the law the society was not bound, while the premium was unpaid, cannot sustain this opinion; for it was not bound while a quota was unpaid, and yet it is agreed on all hands, that the property was subject to quotas. The truth is, the legislature obviously discarded (in relation to this institution) the ordinary principle of contracts, that both parties shall be bound, or neither; for it expressly'provided, that the responsibility of the society for losses, should be suspended the instant a quota was in arrear, and yet left the insurer liable to the recovery of the quota with interest thereupon. .
Having thus shewn, that the contract of insurance, however incomplete as to the responsibility of the society, was nevertheless complete as to the liability of the de-clarant, and of the property insured, while it continued his, it may next be asked, how the propert3' can be considered as absolved in the hands of an assignee, who purchases with notice. *If the property be bound in ' the declarant's hands, can he by his act remove that liabilit3r? .If the contract was complete before the sale of the premises, so far as to render both person and property liable, is it rendered incomplete by the sale? I cannot think so; and cannot therefore concur in the opinion expressed by judge Roane that "the 8th section -of the act of 1794, relating to the liability of purchasers and mortgagees, is confined to cases of property, the insurance of which has been perfected by the payment of the premiums." For, according to this opinion, if one declares for insurance, and then sells to another before he pays the premium, though the vendee have full notice of the assurance, the propert3r, which in the hands of the vendor was bound, is in the vendee's hands absolved, because, as it is said, the insurance was not perfected, when the assignment was made. This does not seem reasonable; and I am, therefore, clear^ of opinion, that the property continues bound, for payment of premiums, as well as quotas, in the hands of an assignee with notice.
How is it as to an assignee without notice? This question becomes important to be decided in the present case, because the defendant has not only pleaded, but has shewn, I think, that he is a purchaser without notice. As this matter was much discussed at the bar, it is my duty to shew the reasons of this' opinion. The rule is unquestionable, that he who would protect himself as a purchaser without notice, must shew himself to be a, complete purchaser. If, therefore, either his purchase money remains unpaid, or he has not completed his title by obtaining a conveyance before he receives notice, the notice will affect him; for, if he receive that notice before both of those acts are perfected, he ought to stop until the equity is inquired into, or he will be bound by it. Sugd, Haw Vend. S30. Thus, although he has paid every cent of his purchase money, and the hopeless insolvency of his vendor would prevent his ever recovering it back, yet if he has not completed his title by having a conveyance prior to his notice of the prior equity, he must stop, *'and will not be permitted to go on to secure himself by obtaining the legal title, from the common vendor. And this is in strict consonance with justice, and in strict analog}' with equitable principles. It rests upon the maxim which prevails in equity, as well as at law, Qui prior est in tempore, potior est injure, where two equities are equal, the prior equity shall prevail. If then A. has made the first purchase of an estate, he has prior equity to B. who purchases after-wards ; and, in a mere contest of equities, A. must prevail; for if the vendor refused to make title to either, and a suit were brought in equity for a title, the court would obviously decree a conveyance to A. Such then being the case, as soon as B. receives notice of the prior equity of A. he becomes at once apprised of the fact, that he has the best right to the land, and that a court would so decree. It is then, obviously, a fraud in B. to proceed to get a title to that property which he knows to belong to another, though the formality of a conveyance has not been complied with. But if he has paid his money and obtained his conveyance before notice, his conduct has been fair, and having equal though posterior equity, he will be protected, because he has the legal title also, fairly acquired. He must, however, have obtained the legal title, or must shew, that, though posterior in time, he has the best right to call for the legal title. In this case, Stone most certainly has not the legal title: that legal title is in the trustee Wallace: the releases of the cestuis que trust never can pass it. But, though he has not the legal title, he has the best right to call for it. He stands, in relation to the purchase, in the shoes of the creditors whom he has paid. He bought from Vaughan with the knowledge of the creditor's claims, and upon engagement to pay them; and his case comes clearly, I think, within the principle of Williamson v. Gordon's ex'or; and he has proved, very clearly, that he had paid the purchase money.
I recur then to the question, whether an assignee without notice, will be protected in equity against the claim of this *assurance society? On this subject, we have the express decision of the supreme court of the U. States in The Mat. Ass. Society v. Watts's ex'or, and also the opinion of judge Fleming in Greenhow v. Barton, that the clause of the act, which requires the seller to give notice to the purchaser, is a matter merely between themselves, with which the society has no concern, and that the property is bound in the assignee's hands without notice. Let us examine this matter for ourselves.
The contract of assurance is a covenant real, entered into by the insured with the insurer. It is a covenant entered into by the fee simple holder, whose jus disponendi is absolute. His charges upon the property by way of covenant, cannot be gainsaid by a subsequent purchaser. That purchaser, in making his purchase, takes the property cum onere, and he can only look to his vendor's covenants to protect him against the incumbrance. Like the grant of a right of way, or of a right to divert a watercourse, this covenant is binding upon a subsequent purchaser, who has notice of its existence, and even if he has no notice, provided the rights arising under the covenant are legal and not merely equitable. For the covenant is one of those which runs with the land. It is indissolubly connected with a covenant on the part of the society to insure against fire; a covenant which goes to sustain, support and uphold, the property which is charged. It is emphatically, then, one of those contracts, which being for the benefit of the estate, and annexed to it, passes with the title to all who purchase with a knowledge of its existence. And having taken with such knowledge, they are personally bound in respect of the estate which they hold, so long as the property continues theirs. A fortiori, the lien upon the property remains; and neither can be removed but by notice of withdrawal, as provided by law. But, not only is the assignee with notice bound both in person, and as to the property purchased; but the property is bound even without notice, whether he is bound personally »or not; a question, which I do 'not mean to touch. *For, the liability of the property is not only imposed by the party himself, in adopting and consenting to abide by the constitution, laws &c. of the society; but the act of the legislature itself declares, that the subscribers, as soon as they shall insure, "do mutually for themselves, their heirs, executors, administrators and assigns, engage their property insured, as security, and subject the same to be sold, if necessary, for the payment of quotas." This charge declared and imposed by the law itself, cannot be regarded as a mere equitable claim. The jurisdiction exerted by a court of equity for carrying it into effect, does not change its nature from a legal lien into a mere equity. Like other cases, in which parties are before a court of equity, where,the claim of one is supe-riour to the other in the estimation of the law, equity will respect the legal preference. Thus, if various creditors are before the court, seeking the distribution of legal assets, the legal superiority of a claimant is duly respected. If various creditors have judgment liens, which are obstructed by a fraudulent conveyance; upon setting aside that conveyance, the eldest judgment creditor will have his priority of right duly preserved. So in this case; though equity lends its aid to the enforcement of this lien, yet it is emphatically a legal and not an equitable lien. It is declared by the law itself, as strongly as the lien on the debtor's land created by judgment in behalf of private individuals, or the lien on the lands of public defaulters in behalf of the commonwealth. It must, therefore, be treated as a -legal lien, and as such it cannot be successfully repelled by the plea of purchaser without notice; a plea which can avail only against a merely equitable title.
In the argument of this case, it has been contended, that whatever may be the effect of the act of 1794, the act of 1805 contains no provision giving to the society a lien on the insured premises, for the additional premium, and the annual instalments required, by that act, or for those which have been subsequently autHorized by the act of 1809. It is true, there is no such express provision in either of those *acts, but the first of them repeals only such parts of antecedent laws as are repugnant to' itself. It left untouched the sections of the act of 1794, which declare the liability of,the property insured, for the payment of the quotas. But it was said there are no longer any quotas, but instead of them, an annual contribution, first by the act of 1809 for ten years, and now continued by that of 1819, at the discretion of the society. These are, however, the same thing in effect.' For, as I have already said, the quota was itself but such contribution as might be necessary from time to time, to maintain the integrity of the fund. And what else are the annual assessments made, first under the act of 1809, and afterwards under that of 1819? The terms, indeed, are changed, but the substance is the same; and so, for more than twenty jrears, the law has been universally understood.
With respect to some other topics, I must content myself with very succinct remarks. No fault is attributable to the society, for not giving notice to the purchaser, for it is not presumable the agent in this city is conusant of the sales made in remote parts of the state. Nor am I aware, that the legal rights of the society can be affected by their omission to demand payment at an earlier day; by which failure, as it is said, the defendant Stone will be a sufferer. Whether it would have forfeited its lien by failure to give notice of it, if a notice of Stone's purchase and of Vaughan's situation could have been brought home to it, is a question which the facts in the-case do not require me to examine; but without any evidence of fraudulent concealment on the part of the society or its agents, or of knowledge of the interest of Stone in the transaction, it is impossible, I think, that it can justly be deprived of its lien. I cannot but observe, that common prudence would naturally dictate an inquiry on the part of a purchaser, whether his vendor is or is not an insurer; an inquiry so easily satisfied, by an application to the public office established by the society according to law. Yet, on the other hand, I will remark, that it *is singular the society have-not made an effort to prevent, as far as possible, disputes as to notice, by affixing, as is usual with insurance companies, some emblem of the insurance on some conspicuous part of the tenement insured. For, although I am of opinion, that, notice or no notice, the lien is preserved, yet this opinion, it is well known, has not alwaj-s nor universally prevailed.
The decree entered by this court, declared, that the appellants were entitled to have a sale of the premises for the amount of their demand, unless the appellees or one of them should pay and satisfy the same within a reasonable time to be fixed by the court of chancery: therefore, the chancellor's decree was reversed with costs, and the cause remanded, to be proceeded in, according to the principles here declared.