Court Opinion

ID: 6581254
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:28.358482+00
Date Added: 2024-06-11T15:57:17.486394
License: Public Domain

Pardee, J., (dissenting.)
The statute, sections 90 and 91, page 334 of the Revision of 1875, provides that “when any railroad is in the possession of an assignee or trustee * * all expenses and damages incurred by such persons so in possession, in good faith, to improve the lines of the railroads so in their charge, shall be reimbursed to them from the earnings of such railroad while they have the possession thereof. The expenses of operating such railroad * * including repairs and all other reasonable expenses of the trustee * * and also a reasonable compensation to be allowed to the trustee by the Superior Court, shall be deducted from the earnings of the road before any part of such earnings shall be paid to the creditors.” The petitioners, being such trustees in possession of the Boston & New York Air Line Railroad, advanced their own money to repair, improve and preserve the railroad property. These advances being unpaid, it is found that on December 17th, 1874, they applied to the respon*176dent “ to insure their individual interests (the same being a lien claimed by them for individual advances,) in said depot building;” that they then informed the respondent that they “ had made large personal advances for said railroad to an amount largely exceeding $2,000 and desired to insure their individual interest in said depot building,” and that the respondent “ assented to this proposal and issued the policy in question.”
This is a finding that the minds of the parties met in an agreement for insurance by the respondent for the benefit of Camp' and Bishop upon their individual interest in or lien upon the building, growing out of personal advances for the protection thereof made by them while they were trustees for the second mortgagees in possession; that the agent of the respondent intended so to write the policy as to express this mutual understanding; that through inadvertence and mistake he failed to give expression to such agreement; and that through like inadvertence and mistake Camp and Bishop accepted it as truly expressing the real agreement. And it makes clear the correction necessary to make the policy speak the minds of both parties as they were when it was written. And in the absence of any motion for a new trial we are to assume that the finding is based upon proper and sufficient testimony; therefore this court is barred from any discussion of the question of fact.
It is well settled that it is an office of a court of equity to afford relief when by mutual mistake a contract fails to express the mutual understanding of the parties. In Henkle v. Royal Exchange, 1 Ves. Sen., 318, the bill sought to reform a policy after a loss, for the reason that it did not express the intent of the contracting parties. Lord Hakd"wicke said: “No doubt but this court has jurisdiction to relieve in respect of a plain mistake in contracts in writing as well as against frauds in contracts, so that, if reduced to writing contrary to the intent of the parties, on proper proof they would be rectified.” In Gillespie v. Morse, 2 Johns. Ch., 585, Chancellor 'Kent said: “I have looked into most if not all of the cases in this branch of equity juris*177diction, and it appears to me established, and on great and essential grounds of justice, that relief can be had against any deed or contract in writing founded in mistake or fraud. The mistake may be shown by parol proof, and the relief granted to the injured party, whether he sets up the mistake affirmatively by bill or. as a defence. * * It appears to be the steady language of the English chancery for the last seventy years, and of all the compilers of the doctrines of that court, that a party may be admitted 'to show, by parol ' proof, a mistake as well as fraud in the execution of a deed or other writing.” In Stedwell v. Anderson, 21 Conn., 139, this court said: “When property has been conveyed through mistake by deed which the parties never intended should be conveyed, which the grantor was under no legal or moral obligation to convey, and which the grantee in good conscience has no right to retain, a court of chancery will interfere and correct that mistake, whether it arose from a misapprehension of the facts, or of the legal operation of the deed.” See also Snell v. Insurance Co., 98 U. S. Reps., 85; Hearne v. Marine Insurance Co., 20 Wall., 488; Woodbury Savings Bank v. Charter Oak Insurance Co., 31 Conn., 517.
In the case before us the petitioners expended their own money in repairing and preserving the property which was the subject matter of the contract for insurance. We are to assume that they did this relying solely for a re-payment upon their statutory right to detain for their own benefit the first earnings of the property; that their advances were equal in amount to the entire value of it; that the policy covered the whole of it; and that if it should be destroyed by fire it would not be replaced, and their advances would be irretrievably lost.
It may be said generally, that while the earlier cases show a disposition to restrict an insurable interest to a clear, substantial, vested pecuniary interest, and to deny its applicability to a mere expectancy without any vested right, the tendency of modern decisions is to relax the stringency of the earlier cases and to admit to the protection of the con*178tract whatever act, event @r property bears such a relation to the person seeking insurance that it can be said with a reasonable degree of probability to have a bearing upon his prospective pecuniary condition. An insurable interest is tsui generis and peculiar in its texture and operation. It. sometimes exists where there is not any present property— any jus in re or jus ad rem. Yet such a connection must be established between the subject matter insured and the party in whose behalf the insurance has been effected as may be sufficient for the purpose of deducing the existence • of a loss to him from the occurrence of an injury to it. May on Insurance, § 76.
Hot only the absolute owner, but any one having a qualified interest in the property insured, or even any reasonable expectation of profit or advantage to be derived from it, may be the subject of insurance, and especially if it be. ■ founded in some legal or equitable title. Angell on Fire & Life Insurance, § 56. Any interest which would, be recognized by a court of law or equity is an insurable interest. In Lucerna v. Crawford, 3 Bos. & Pul. (Day’s ed.), 75, Lawrence, J., says that contracts of insurance are “ applicable to protect men against uncertain events which may in any wise be of disadvantage to them; not only those persons to whom positive loss may arise by such events occasioning the deprivation of that which they may possess, but those also who, in consequence of such events, may have . intercepted from them the advantage or profit which, but for such events, they would acquire according to the ordinary and probable course of things. * * That a man must somehow or other be interested in the preservation of the subject matter exposed to perils, follows from the nature of the contract, * * but to confine it to the protection of the interest which arises out of property is adding a restriction to the contract which does not arise out of its nature. * * A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it.”
A commission merchant to whom the cargo- of a vessel is *179consigned for sale has an insurable interest in his expected commissions, and may insure the same while the vessel is on her voyage. Putnam v. Mercantile Insurance Co., 5 Met., 386. In Warren v. Davenport, 31 Iowa, 464, it is held that shareholders may insure their interest as such in the property of the corporation. Rent reserved in the lease of a house is insurable. Leonarda v. Phoenix Assurance Co., 2 Rob. (La.,) 131. In Wilson v. Jones, L. R., 2 Exchequer, 139, it is held that a shareholder in the Atlantic Telegraph Company had an insurable interest in the profits resulting from a successful attempt to lay an ocean cable.
When the respondent contracted with the petitioners, for money paid to it by them, to pay them a fixed sum if fire should destroy the property, it was not simply a wager that an event would or would not happen, which event could not possibly affect the pecuniary condition of the petitioners; it must certainly and directly inflict loss upon them. I think that the petitioners had an insurable interest, and that their contract offends no rule of public policy.
Again, it is claimed that the petitioners, by bringing an action at law upon the policy, elected to treat it as embodying the real contract, and are estopped from claiming the contrary. The respondent, knowing what the contract was, made and delivered to the petitioners an inaccurate statement of it in writing, knowing that they received and accepted it in the belief that it had the meaning of the oral contract. The petitioners therefore had the right to assume that the respondents would not under such circumstances interpose their mistake between themselves and payment, and are not for error in this assumption to be barred from the reformation of the instrument. Woodbury Savings Bank v. Charter Oak Insurance Co., 31 Conn., 517. "
Subsequent to the destruction of the insured building in August, 1875, the bondholders secured by the first mortgage of the New Haven, Middletown & Willimantic Railroad Company foreclosed and were incorporated under the name of the Boston & New York Air Line Railroad Company. This corporation paid to the petitioners the amount of their *180individual advancements for the preservation of the property formerly in their keeping as trustees, and thereupon in October, 1876, they released and quit-claimed to that corporation all right, title and interest which they had in or to the railroad formerly owned by the New Haven, Middletown & Willimantic Railroad Company, and all things appurtenant thereto; and assigned therewith their claim under the policy in question.
The respondent insists that the petitioners have forfeited all right, either to a reformation of the contract or to be indemnified for any loss under it, for the reason that if the respondent had issued the policy as the petitioners mow claim that it should have been issued, and if they had at the date thereof such interest in the building as they now claim they then had, the respondent upon payment of a loss under such policy would have had the right to be subrogated to the claims, rights and securities held by the petitioners; an,d they say that the petitioners have cut off such right of subrogation by their release and assignment.
The petitioners had a direct pecuniary interest in preserving the building; from their,own funds they purchased from the respondent its agreement to pay them money not exceeding a specified amount, if within a specified time the property in which they had such interest should be destroyed or injured by fire. This contract was not and was not intended to be one of liability for the destruction of or injury to the property to .any one who might be the owner thereof; but it was personally with the petitioners upon their named interest in it.
It is true that after the policy issued both the owners of the property and the respondent owed a duty to the petitioners^; the former could not regain possession until payment of advances; the latter must pay them money if fire occurred; but they came thereby into no privity; these were wholly independent obligations; each is as if the other did not exist; no loss could be inflicted upon either by failure of the other to perform; no advantage could accrue from performance. The advances not having been repaid *181to the petitioners at the time of the fire, they then held the precise interest which originally supported the policy; the liability of the respondent became fixed and absolute at that moment; nothing which the .owners thereafter did in the matter of re-payment of advances could affect its obligation ; and if it should so result that the owners should repay to the petitioners their advances and the respondent should pay the sum expressed in the policy it will only have performed a contract into which it voluntarily entered,upon adequate consideration; no rights accrued to it except such as are specified; no rule of law or equity gives to it, in addition to the premium, the right to receive back from any person the sum paid under it.
I think the prayer of the petition should be granted.
In this opinion Gbangeb, J., concurred.