Court Opinion

ID: 7893232
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:50:55.09589+00
Date Added: 2024-06-11T16:31:58.946094
License: Public Domain

Stewart, J.,
delivered the following dissenting opinion:
The plaintiff below brought his action against the insurance company, the defendant, to recover for the destruction of his premises by fire. ' There is no charge of fraud or misrepre*290senlation, on the part of the insured, alleged, in the case. Assuming that the evidence made out an insurable interest on the part of the plaintiff in the property, when the policy was issued, and when the fire occurred, the material questions involved are: First, whether the transfer of the property by the appellant, to his trustee in insolvency, vacated the policy; and, secondly, did” the discharge of the insured, as an insolvent debtor, operate to relieve the insurance company from liability, although the policy is not annulled by the alienation. The two questions are involved in the prayers, the one presented by the plaintiff, the other by the defendant, in the first bill of exceptions. The Court below refused the plaintiff's and granted the defendant's prayer.
In regard to the transcript of the record of insolvency offered in evidence by the company, it is observable that Peter S. Reynolds, on the 25th of December, 1860, applied for the benefit of the Act of 1854, chapter 193. This application was subsequent to the adoption of the Code, February 14th, 1860.
The deed to his trustee was executed on the 25th of December, 1860, and purported to be, according to the Act of Assembly in such case, made and provided. The Code repealed the Act of 1854, substituting therefor its 48th Article. No valid proceeding in insolvency, or transfer of property to a trustee, in pursuance of the Act of 1854, could take place after the adoption of the Code, but must be in accordance, with the provisions of the Code.
Whilst the company require a liberal construction in regard to their pleadings, they urge a very different theory of interpretation of the policy, to exclude the insured from recovery against them. But it is not material, from the view now taken, to consider the precise effect of these proceedings, or whether any distinction ought to be made between the alienation to a trustee in insolvency, from any other transfer. If the policy does not provide, by its terms, that the alienation of the property shall vacate it, yet, if the insured has divested *291himself of all interest therein at the time the fire has destroyed it, he has no insurable interest entitling him to indemnity.
The general principles controlling such a contract, prevent recovery under such circumstances, because, in fact, the insured has sustained no loss. It is well settled, that the contract of insurance is one of indemnity for loss to the insured, and if he has no interest in the property when the fire destroys it, lie requires no indemnity. Wash. F. Ins. Co. vs. Kelly, 32 Md., 436. But, notwithstanding, the insured cannot recover during his divestiture of interest in the property, yet if, at the occurrence of the fire, he has reacquired the property, he has an insurable interest therein, and is entitled to recover indemnity, because he must then suffer loss.
The failure to recover is not because the policy is void, but because he sustains no loss; but when he does sustain loss by the fire, the fact of proving alienation, suspending his right to recover, ought not to prevent recovery when his right to the property has been restored at the time of the fire. See 2 Amer. Leading Cases, 463; Angell on Ins., 234, 235.
According to the policy and principles governing contracts of insurance, they ought to be construed so as to give them effect according to the true intent of the parties, regardless of mere technical objections. In this case, the contract is to be interpreted and explained by the terms and conditions of the Act of incorporation, (1845, chapter 249,) for the purpose of ascertaining the obligations of the parties in cases not provided for in the policy.
Assuming that the transfer by the insured to his trustee, was an absolute alienation of the property which deprived him of all insurable interest therein, the terms of the policy do not declare the policy to be void on that account. The policy commences with a preamble, stating the desire of the appellant to become a member of this Mutual Eire Insurance Company, and to have certain property therein mentioned and valued, insured. It then recites that he has deposited with the company his premium obligation, and declares that *292he has become a member, and is insured, and that the “ insurance is to be considered perpetual, provided all interest, charges and assessments due from the insured shall be. regularly paid; subject, however, to termination upon the transfer or alienation, or removal of the property, or to adjustment, or withdrawal, when either party, upon the notice provided for by the by-laws in such case made and provided, shall require it.” To this extent, the policy is evidently a simple declaration, that the party is insured perpetually, if the interest, charges and assessment are regularly paid, with this qualification however, that it may be terminated, by a transfer of the property, or by adjustment or withdrawal, when either party, upon the notice provided for, shall require it. This statement is merely descriptive and explanatory of the first part of the sentence, declaratory of the perpetuity of the policy, and intended to modify its extent by the language employed, “subject, however, to termination.” It is not a stipulation for the forfeiture of the policy, by the alienation of the property.
After this preamble, recital and declaration, it then stipulates, that in consideration of the premises, the company promises to pay to the insured the sum specified therein, in case of loss by fire during the time the policy shall remain in force, “provided, always, and it is mutually understood between the parties, that there can be no abandonment of the subject insured, but that the insured, in case of fire, shall use his utmost exertions to prevent destruction or loss thereby; and provided, also, that if any unleached ashes be kept in any wooden vessel, in any building insured, this policy shall be void; and provided, further, that if the insured shall keep, use, or suffer to be kept, any gunpowder, or other explosive article in any building insured, and loss by fire shall occur in consequence, the company shall not be liable for such loss.”
These last provisions are the mutual stipulations of the parties, and expressly define what avoids the policy, or renders the company not liable, and unmistakably so declare. In *293no one of them is it made a forfeiture to transfer the property. Construing the instrument, with its various parts, it is obvious that the statement that the policy was subject to termination by a transfer of the property, was inserted for the purpose stated. If it had been the design to make the policy void on that account, such a stipulation would have been inserted with the other mutual covenants, and been so distinctly declared.
The law inclines to the support of contracts rather than to their abrogation, and a construction will not be put upon them to destroy them, or work a forfeiture, unless such be the manifest intent and purpose of the parties. The particular section of the Act of incorporation applicable to the interpretation of the terms of the policy, “subject to termination upon the transfer or removal of the property, or to adjustment or withdrawal, when either party shall require it,” shows that, they had no reference to a forfeiture of the policy, but to its perpetuation in the hands of an assignee, or to a mutual adjustment in ease of the withdrawal of a member insured, in keeping with the character of the company as a mutual association.
The sixth section declares, “upon the withdrawal of a member, or the cancelling of a policy from any cause, the deposit note, with all unappropriated interest paid thereon, or clear profits, shall be given up to the retiring member; and in ease any person insured shall convey the property, it shall be lawful for him to deliver to the purchaser the policy of insurance in such form as shall be prescribed by the bylaws, and such assignee shall have all the benefit of such policy; provided, that before auy loss happens, the consent of the president or secretary shall be obtained; and provided, also, that upon the withdrawal of the promissory note originally given, the assignee shall execute a note for a like suru of money, subject to all the incidents of the original note.”
So far from alienation of the property being intended to forfeit the policy, this section of the law provides for the continuance of the policy in such case, and its operation in the *294hands of the party to .whom assigned, if ho complies with the terms prescribed under such circumstances. If this is not done, and he may be debarred from recovery, it is not because the policy has become void, but owing to his omission to take the steps provided to give him a right of action. The construction that annuls the policy, ipso facto, upon the alienation of the property, is in direct conflict with this section of the law.
The seventh section is of like tenor. “Policies so long as the property insured, or the character of the risk remains unchanged, and no adjustment is required by either party, shall be in full force, provided the annual payment of interest on the deposit note of the parly insured is regularly paid.”-
This shews that the right of adjustment in case of alienation is optional with either party.
The eleventh section also provides, that neglect to pay the interest on the note deposited by the insured, or any sum assessed foi\his proportion of any loss, suspends his right to recover for any loss, and continued for thirty days, operates ipso facto to expel him as a member of the corporation.
It would be a harsh construction in the face of these provisions of the charter, and the corresponding stipulations of the policy, to attach such meaning to the language referred to, as to destroy the policy, when its continued integrity ds a contract may be maintained by another reasonable interpretation.
The provisions of the policy and the law of its charter appear to regard, rather the perpetuation of the policy, than its abrogation. The regular payments of the premiums of insurance seem to be the material and indispensable requisites to its continuance. There is no evidence in the record to shew that any steps were ever taken by the company to terminate the policy by reason of the alienation of the property, and it is not a fair presumption that they did so when they regularly received the premium for insurance.
The fact of the alienation only rendering the policy liable to termination, or to adjustment as indicated, if the property was re-purchased by the insured, and was paid for, in whole or *295in part, thus giving him but the equitable title thereto when the fire occurred, the plaintiff had an insurable interest therein; and if the payment of the premium was not discontinued, but regularly made and received by the company, all of which facts, were to be found by the jury, no element of a binding contract of insurance is wanting, aud according to the principles of equitable construction, governing contracts of insurance, the insured is entitled to demand indemnity for his loss, and the company cannot escape from responsibility upon the ground assumed that the policy had become void, by reason of the alienation of the property. But the company insists it is relieved from the payment of the indemnity, because of the discharge of the insured under the law of insolvency, destroying mutuality of the contract. This objection is just as unsubstantial and technical as the other.
The policy with the references as before stated, constitutes the contract between the parties, and there is no provision in it, avoiding it on that account; and the principles of law applicable to the circumstances of the ease do not warrant such conclusion. The effect of the law of insolvency is to discharge the applicant, for its benefit, from the payment of his debts and contracts, but not to exempt his debtors, or those liable to him, from the payment of their just obligations either to the trustee or the party himself. The insured, although insolvent, accord!ug to his obligation, it appears, paid the premium growing out of the policy, and there is no evidence that ho ever interposed his discharge to shelter him from liability on that account. His application for the benefit of the law, and the proceedings thereunder, including the deed to the trustee, were matters of public record, and parties affected thereby must be considered as having knowledge thereof. Manahan & Gorman vs. Sammon & Thurston, 3 Md., 473.
If the company had no actual notice in such a contract as this, the fact of its receiving the premium from the insured, subsequent to his application, although before his final discharge, operated as a renewal of it, and the company from *296the receipt of the consideration incurred the consequent obligation to pay the indemnity in case of loss. Under such circumstances it is estopped from making such defence.
The discharge of the applicant, although subsequent to this, related back to the time of the application and''only affected debts or contracts then existing. Upon the same principle, the insured by the payment of the premium, after his application, renewed the contract and recognized his obligation thereunder, and is estopped from setting up his discharge, to exonerate him from liability under it. If this were a contract affected by the proceedings in insolvency, the equitable doctrine of estoppel in pais, applied to the mutual and reciprocal acts of the parties, done in good faith and untinctured with fraud, in pursuance of the contract, would preserve the integrity of the contract and compel its performance by the company and the insured. Otherwise, the bona fide contract between the parties, with mutual and dependent considerations would be defeated ; and the company, in this ease, would be absolved from its obligation, after the occurrence of the fire to indemnify the insured, although it had received the premium from the insured as the consideration therefor.
Whilst it is the policy of the law to give to these insurance companies, as useful and beneficial institutions, ample protection, against inequitable claims, they must at the same time be held amenable, for the payment of all just demands. Their own interests, as well as that of parties dealing with them, require the exclusion of all mere technical considerations on either side, and the utmost good faith in maintaining the rights of both parties. See Frost vs. Saratoga M. F. Ins. Co., 5 Denio, 154.; Viall vs. Genessee M. Ins. Co., 19 Barbour, 440; Leathers vs. The Farmers’ M. Ins. Co., 4 Foster, 259; Burbank vs. Rockingham M. F. Ins. Co., 4 Foster, 550; Bouvier vs. Connecticut Life Ins. Co., 23 Conn., 244.
The contract of insurance to bind both parties whilst it binds the one must be obligatory on the other. Whilst the company is bound to indemnify the insured in case of loss, the payment of the premium by the insured is indispensable. *297One is the consideration of tlie other, and quid pro quo — they are mutual and dependent one upon the other, and if one is invalid so is the other — if the one is obligatory so is the other. If the company had the right to and did receive the premium as stated from the insured, it necessarily incurred the resulting obligation to indemnify the insured in case of loss.
The company took no steps to abandon the policy, but received the required premium, and it must be presumed was satisfied to continue the policy so long as this was the case; and made its election to do so. There is no evidence that it ever offered to return the premium received after actual notice of the transfer of the property and the discharge of the insured in insolvency. Under these circumstances, creating a fair and bona fide contract with reciprocal considerations, the principles of construction applicable to contracts, and the acts of parties thereunder, require its performance; and in addition to this, it is but sheer justice to hold the company estopped, from making such defence and as waiving such objection. I take it, the policy was not made void by the alienation, nor necessarily destroyed, or rendered ineffectual by the discharge of the insured under the insolvent law. If the appellant held an insurable interest in the property, at the issue of the policy and at the time of the fire, as before stated, and had paid the premium, according to the terms of the policy — if the appellee received the premium for the insurance, it was not competent for the company under the circumstances disclosed by the testimony to avoid its responsibility, by reason of the discharge of the insured in insolvency.
If the jury found the facts in the first bill of exceptions, the appellant was entitled to recover, and Iris prayer should have been granted and the appellee’s refused.
The second bill of exceptions becomes immaterial.
According to my judgment, with great deference to the different views of the majority of my brethren, who sat in this case, the judgment below ought to be reversed, and a new trial ordered.