Court Opinion

ID: 6408415
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:45.260646+00
Date Added: 2024-06-11T15:51:17.410180
License: Public Domain

Hubbard, J.
The principal question in the present case is, whether the defendants are discharged from their contract, by reason of a false description given to them of the prior policy urocured by the plaintiffs at Worcester.
By the 16th article of the defendants’ by-laws, it is provided that “ all policies, which may issue from this company, *210to cover property previously insured, shall he void, unless such previous insurance be expressed in the policy at the time it issues.” The entry on the margin of the contract now in suit, which we consider of the like effect as if written in the body of the policy, is in these words; “ five thousand dollars insured by the Worcester Mutual Insurance Company.” And by the evidence it appears that the sum of $4700 was insured on the building, and $300 on a barn on the premises; and that the policy on the building included also a wooden end which was not covered by the defendants’ policy.
It is contended that a compliance with the by-law above mentioned is a condition precedent to a recovery, in cases where it applies; and we incline to that opinion. By the terms of the by-law, the contract is void if the previous insurance is not expressed in the policy at the time it issues. This is not like a representation, on the effecting of a marine policy, which is not required to be made a part of the executed contract ; but it is a condition upon which the contract rests, and consequently its insertion in the contract is necessary to give it validity. The great object of the provision is to guard against fraud by preventing insurances on property greatly above its value. The legislature were sensible of this exposure, on the part of insurers, to suffer by means of fraudulent losses, and they therefore prescribed, among other regulations for the government of Mutual Fire Insurance Companies, Rev. Sts. c. 37, § 28, that they might insure upon any building within the State, any amount not exceeding three fourths of the value thereof. The object of the by-law above recited is to give efficiency to this provision of the statute, by securing a timely notice of the existence of a previous insurance, if any, and thus to prevent the assuming of risks on the property, beyond three fourths of its value.
The defendants contend that the provision of this by-law has not been complied with, and that the present policy is therefore not binding on the defendants, by reason of the false description of the' prior policy. This objection we have carefully considered. The by-law does not prescribe the terms of such notice, nor how much of the previous con*211tract shall be inserted. A literal recital of the terms of the prior contract is not required, but such a notice of the nature and amount of the insurance, as will give the necessary information to the party from whom a subsequent insurance is sought.
In this case the plaintiffs named a larger sum than was actually underwritten on the main or brick building; but the defendants were not deceived by the representation, nor induced to assume a greater risk than they otherwise would have done. This is obvious from the fact of their not insuring more than three fourths of the value of the building, upon the estimate of the plaintiffs, acted upon by them after the building had been examined by their own agent, in reference to the taking of this risk.
If the insurance had been represented as less than the fact, the defendants might have been induced to underwrite a larger sum than they otherwise would have done, and thus might have been injured by the misstatement; but not so where it was overstated.
The notice expressed in the policy, we think, was a substantial compliance with the requirements of the 16th article of the defendants’ by-laws and a sufficient exposition of the fact of the former insurance, so as to give the defendants all the information material to be known in relation to the risk which they were requested to assume.
A question was also raised by the plaintiffs in regard to the direction given to the jury as to the amount of the loss ; and in this respect we think the direction was erroneous. The law of marine insurance respecting salvage does not apply to the fire policies of mutual insurance companies. They assume the risk of only a certain part of the property, not usually, if ever, exceeding two thirds or three fourths of its value. In the event of loss, therefore, the contract being one of indemnity, the party is entitled to recover to the amount of that loss, if less than the sum insured; and if there is a total destruction of the property, then to the amount of the policy.
According to the agreement of the parties, the verdict is to be amended, and judgment rendered for a total loss.