Cassidy v. Liberty Mut. Ins. Co.

• Citation: 154 N.E.2d 353,338 Mass. 139
• Parties: Henry J. CASSIDY, Jr. v. LIBERTY MUTUAL INSURANCE COMPANY.
• Decision Date: 02 December 1958
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 353

154 N.E.2d 353

338 Mass. 139

Henry J. CASSIDY, Jr. v. LIBERTY MUTUAL INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Oct. 10, 1958.

Decided Dec. 2, 1958.

William I. Schell, Boston, for plaintiff.

Bertram A. Sugarman, Boston (Edward J. Barshak, Boston, with him), for defendant.

Before WILKINS, C. J., and RONAN, SPALDING, COUNIHAN and CUTTER, JJ.

RONAN, Justice.

This is a bill in equity brought under G.L. c. 175, §§ 112 and 113, and c. 214, § 3(10), to reach and apply the proceeds of a liability insurance policy. The court below entered a decree dismissing the bill and the plaintiff appealed.

We have no report of the evidence but the judge made full findings of facts which may be summarized as follows The plaintiff was injured while riding as a guest in an automobile owned and operated by one Cornelius Sullivan. The automobile was registered in the name of one James H. Smith and there was a policy of liability insurance on it standing in the name of Smith as insured, which policy included the compulsory coverage under the provisions of G.L. c. 90 as well as noncompulsory guest coverage. It is the latter which is involved here. The policy also contained the usual coperation clause. The judge found that Smith at no time had an insurable interest or any proprietary interest in the vehicle, that Sullivan was the owner, and that the defendant issued no liability policy covering Sullivan. The plaintiff sued Smith, the registered owner, for injuries sustained in the accident and recovered judgment. Execution having been returned unsatisfied, he brought this bill against the defendant insurance company. Prior to the trial of the tort action, which was defended by the defendant's attorney, Smith orally, by written report, and by his answers to interrogatories, stated that he was the owner of the vehicle, when in fact he was not. When the case came to trial before an auditor, however, Smith admitted he did not own the automobile, whereupon the attorney for the insurance company agreed to continue to defend the action in consideration of the reservation of its rights under the policy to disclaim liability on the grounds of fraud in procuring the policy and noncoperation in the defence of the tort action. An express written agreement of nonwaiver was entered into by Smith and the company. When the plaintiff brought his present bill the defendant set up the defences of fraud and noncoperation. The judge found that it was justified under the policy contract in reserving its rights to disclaim liability because of the fraud practised upon it by Smith and because of Smith's breach of the coperation clause of the policy, and entered the decree dismissing the plaintiff's bill.

The decree was right.

The evidence has not been reported; nor is there a report of material facts under G.L. c. 214, § 23. Treating the document entitled 'Findings, Rulings and Order for Decree' as the report of the material facts, the decree must be affirmed if it is consistent with the specific facts found therein. Goldston v. Randolph, 293 Mass. 253, 255, 199 N.E. 896, 103 A.L.R. 1117.

On the issue of fraud, the judge found that Smith, or someone acting in his behalf, misrepresented that he (Smith), at the time of the execution of the insurance contract, was the owner of the vehicle when in fact he had no proprietary interest whatever in it. Where such a misrepresentation is made in the negotiation of a policy of insurance, it may be deemed material so as to enable the insurer to avoid the policy if it is made with actual intent to deceive. See G.L. c. 175, § 186. Here the judge found that Smith or one acting in his behalf made this misrepresentation knowing it to be false and with the intention that it should be acted upon by the company. The decree is consistent with this finding. Furthermore, if Smith had an insurable interest in the property covered by the policy and had fraudulently concealed his identity, this would have invalidated the contract of insurance at the insurer's option as against him. Leone's Case, 239 Mass. 1, 4, 131 N.E. 196, and cases cited. But here, where Smith had no insurable interest in the property covered by the policy, the policy was void as to him, and Smith's lack of an insurable interest constituted a valid defence by the company against him. O'Neill v. Queen Ins. Co., 230 Mass. 269, 270, 119 N.E. 678; Womble v. Dubuque Fire & Marine Ins. Co., 310 Mass. 142, 144, 37 N.E.2d 263.

The judge also found that Smith's further misrepresentations up to the time of trial that he was the owner of the vehicle constituted lack of coperation on his part. This finding was clearly correct. The intentional furnishing of false information...