Court Opinion

ID: 6582533
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:26.746769+00
Date Added: 2024-06-11T15:56:55.778619
License: Public Domain

Carpenter, J.,
(dissenting). I cannot concur. The insured paid the premium on his policy, and the defendant received the full benefit of the contract. In the absence of fraud by the insured the equities are wholly with him; and so I think is the law, if at the time the policy issued, and afterward until the fire, he had an insurable interest in the property covered by the policy. It is immaterial that after the loss, Stannard, the holder of the policy, assigned his claim to the plaintiff. The plaintiff by that assignment, which was bond fide and for a valuable consideration, took the claim with all the equities and rights, and subject to all the defenses, which attached to it in the hands of the original holder.
The main question is—had Stannard an insurable interest in the property?
The policy covers both real and personal property. It was issued by a stock and not a mutual corporation. Therefore those whose property it insures do not become members of the corporation or interested in it, or in the pecuniary responsibility or condition of others who have property insured by it. Neither the form nor condition of its policies requires an applicant for insurance to state the particulars of his title or the incumbrances upon it, and the law does not require it unless called for by the "terms of the policy, or of a written application, which in this case did not exist. The property insured was properly described by Stannard in his verbal application as his. So are the authorities. If the insured has only an equitable interest in the property under *343a contract for its purchase, even though the time for payment by him has expired, he still has an insurable interest, as was recently held by the Supreme Court of Maine in Gilman v. Dwelling-House Ins. Co., 17 Atlantic Reporter, 544, (81 Maine); and that decision I think is in accord with the general current of modern authorities. That a mortgagor may insure his mortgaged estate in such a corporation as the defendant, and in his application call the property his, without any statement of or reference to the incumbrance, unless called for by the terms of the policy or of the application, seems to be conceded. Therefore in this case the fact that the real estate was mortgaged when the policy was issued, and when the loss took place, is entirely immaterial, provided the right to redeem existed at the time of the loss.
It is true that foreclosure proceedings had been instituted, a judgment obtained, and the time fixed for redemption had expired, before the property was destroyed; but the mortgagee had by a valid contract extended the limitation, and the extended period had not expired. The right of redemption by virtue of the contract for extension continued an existing equity enforceable against the mortgagee-; and therefore the right to redeem was in as full force as if the limitation fixed by the court was unexpired. I feel warranted in saying this, for although the vote of the directors of the plaintiff corporation was not passed until the day after the limitation fixed by the court had expired, yet I think it is quite apparent that the vote was passed pursuant to, and to carry into effect, a previous agreement between the parties. If, as is quite probable, such an agreement was made several days before, and Stannard in consequence thereof omitted to make arrangements for redemption, it will not be denied that there was a sufficient consideration. The agreed statement of facts does not say that there was no consideration, and I do not feel justified in saying so. There certainly may have been, and it may do great injustice to assume otherwise. Besides, it is assuming what I think we have no right to assume, that the plaintiffs would have repudiated their agreement with Stannard upon a mere technicality. *344Evidently they wished him to redeem, and were desirous of extending to him every facility. Moreover, this is a matter purely between the plaintiffs and Stannard, and I am unable to see how it concerns this defendant. I do not fully appreciate the logic that will excuse the defendant from performing its contract for the reason given.
I think it more reasonable to interpret this transaction as continuing an existing equity, rather than as a distinct, independent contract of sale entered into after such equity had ceased to exist. That such was the intention of both parties is conclusively shown by the terms of the vote:—“ Voted, that the time for the redemption by Ely Stannard of his property mortgaged to the bank and foreclosed, be extended three months from the 6th day of July, 1886.” The effect of a redemption may be similar to the effects of a sale; nevertheless it remains true that a redemption is one thing, and a purchase is something legally different. I am suspicious of a cause that requires us to call a plain transaction by a different name. But even if it is in legal effect a contract of sale, yet it is in substance a continuation of a previously existing equity. That is the specific purpose which both parties had in view.
But, aside from the question about the real estate, Stannard was the absolute owner of the personal property, which composed nearly two thirds in value of all the estate covered by the policy. On that there was no mortgage or other lien of any kind, and his insurable interest in it was unquestioned. That the contract was so far severable as to preserve the insurance on the personalty ought to admit of no doubt. The policy holder had a clear insurable interest in all the property covered by it when it was issued. The personalty and realty were separately valued. There was no clause in the policy making it void if, when loss occurred, there was not an insurable interest remaining in the whole.
A forfeiture by failure of the continuance of an insurable interest without the fault'and by the misfortune of the party insured, is simply a forfeiture under the provisions of the common law, and does not arise from the breach of any of *345the terms of the contract of insurance, and therefore should be limited to the extent of the interest so forfeited. The cases in which the contract of insurance has been held to be entire, were not cases of this description, and this should not be confounded with them. And, in the other class, the Court of Appeals of New York has, on the most careful and well considered examination of the subject, deliberately held that the contract was severable; and in my judgment that is the better law. A forfeiture is never to be extended by construction or implication, and when the rights of innocent parties are prejudiced, should be restricted to the very letter of its terms.
Laying out of this case every consideration of equity and justice, all of which are clearly on the side of the insured, should the law be liable to the reproach of aiding an insurance corporation to retain the premium paid by the insured on such property as he had an unquestioned insurable interest in, and to withhold from him payment for such property when consumed, when by pecuniary embarrassment and necessity he has been compelled to mortgage another portion, and lose it by foreclosure before the fire occurred, and lose the insurance on that portion also? That is precisely this case, and I cannot give my assent to a doctrine which appears to me so full of injustice and wrong.
To their credit be it said that our insurance companies generally take pride in conducting their business on fair and honorable principles; but the establishment of the doctrine contended for by the defendant is calculated to encourage such as are so disposed to take an unconscientious advantage of those who, for the purpose of protecting themselves against loss by the destruction of their property by fire, obtain and pay for insurance on it, and find after it has been destroyed that the policy on which they relied was but an empty promise.
The case of Stannard v. Meriden Fire Ins. Co. was argued at the same time with the foregoing case, and involved the same facts with regard to the title to the building insured, with the following special facts:—After the vote of the savings bank was passed extending the time of redemption for three *346months from July 6th, 1886, (the day following that upon which the title became absolute in the savings bank by the failure to redeem,) Stannard, the insured, upon the 31st day of July, upon a written application, in which he represented the property as his, asked for and obtained a policy of insurance upon a granary and its contents, the building being upon and a part of the foreclosed property. The court held that at the date of the policy Stannard had no interest in the building and that the policy was void as to it and as to the personal property in it.