Chamberlain v. N.H. Fire Ins. Co.

Decision Date12 March 1875
Citation55 N.H. 249
PartiesChamberlain v. The N.H. Fire Ins. Co.
CourtNew Hampshire Supreme Court

Insurance---Condition---Notice---Mistake---Construction of sec. 2, ch. 157, Gen. Stats.---Breach of contract---Who may sue.

The person to sue for the breach of a simple contract is the person from whom the consideration for the promise moves.

The municipal laws of a state are necessarily referred to in all contracts made within the state subsequent to the enactment of those laws, and must govern and control them in all matters affecting their validity, construction, or discharge.

The defendant corporation, a joint-stock insurance company issued a policy insuring W. against loss or damage by fire to the amount of one thousand dollars on his house, &c "in case of loss, insurance to be paid to" C., who held a mortgage upon the premises to secure the payment of six hundred dollars. The insurance was obtained by C. with the consent of W. C. paid the premium, and W. had no negotiations with the company. Held, that C. was the proper party to maintain an action upon the policy, to recover not only to the extent of his own but also the interest of W secured thereby.

The policy contained a condition that it should be void if the premises should become vacated by the removal of the owner or occupant, without immediate notice to the company and consent indorsed on the policy. The buildings were occupied by the owner at the date of the policy, and continued to be thus occupied nearly a year, when they were vacated, and remained unoccupied until their destruction by fire nine months later. They were not destroyed by reason of exposure to any risk which it was the object of the condition in the policy to guard against. W. gave no notice to the company of the vacating of the buildings, because, not having obtained the insurance nor received the policy, he was ignorant of the condition therein; and C. gave no notice, because (without fault or negligence) he was unaware that W. had removed. Held, the failure to give notice was a "mistake," within the intendment of the statute, which provides that "no policy shall be avoided by reason of any mistake or misrepresentation, unless it appears to have been intentionally and fraudulently made; but party insuring, in any action brought against them on such policy, may show the facts, and the jury shall reduce the amount for which such party would otherwise be liable as much in proportion as the premium ought to have been increased if no mistake or misrepresentation had occurred," LADD, J., dissenting.

Held also, that notwithstanding the mistake, and notwithstanding the fact that the buildings were not destroyed by reason of exposure to the risks of non-occupation, still, inasmuch as the company might have refused

to insure the property, or might lawfully have charged an increased price for the continuance of the insurance if they had known of the vacating of the buildings, the amount of its liability must be diminished, as indicated by the statute

ASSUMPSIT, on a policy of insurance issued by the defendants, insuring "John M. White against loss or damage by fire, to the amount of $1000, on his house, shed, and barn in High Bridge village, New Ipswich; in case of loss, insurance to be paid to James L. Chamberlain." Case tried by the court.

The defence was,---(1) that the action could not be maintained in the name of the plaintiff; (2) that the policy became void by reason of the following condition: "if the premises hereby insured become vacated by the removal of the owner or occupant, without immediate notice to the company and consent indorsed hereon, * * this policy shall be void." The policy was dated July 15, 1870. The plaintiff then owning a note and mortgage for $600 given by White, with White's consent obtained the insurance on buildings owned by White, who lived in and occupied them. June 1, 1871, White, by removal, not intending to return, vacated the premises, and they remained unoccupied till destroyed by fire, Feb. 26, 1872. No notice was given of the premises being vacated, and the plaintiff and the defendants were not aware, till after the fire, that they were vacated. The buildings were burned by a fire originating in a factory, and communicating through other occupied buildings, and were not destroyed by reason of exposure to any risk which it was the object of the conditions in the policy to guard against. The defendants, being informed, in September, 1872, that the buildings had been vacated before the fire, raised that objection. This objection was not raised in the communications between the parties soon after the fire, because the defendants were not then aware that the buildings had been vacated before the fire. White gave no notice, because he did not obtain the insurance, had no interest in it, and was ignorant of the condition in the policy; and the plaintiff gave no notice, because he did not know that White had moved. Upon these facts judgment is to be rendered.

Case reserved.

Stevens & Parker, for the plaintiff

I. Can this action be maintained by the plaintiff? As mortgagee, the plaintiff had an insurable interest in the property. Goodall v. New England Fire Ins. Co., 25 N.H. 187; Smith v. Packard, 19 N.H. 575; Sanders v. Hillsborough Ins. Co., 44 N.H. 238; Barnes v. Union M. F. Ins. Co., 45 N.H. 28, and cases there cited. The defendants are a "stock" company, not "mutual"---Laws of 1869, ch. 97; and many decisions found in the books are not applicable to a corporation of this character. This is especially true so far as membership is involved. Here the insured are not "members" of the company. The membership consists of the shareholders owning the stock. The policy in this

case is a simple contract, by which the corporation insures the property and agrees to pay the loss to the plaintiff. The plaintiff is then the original contracting party, or an assignee. In either case he can maintain his action. He is the original contracting party. The case shows this: "White did not obtain the insurance, had no interest in it, and was ignorant of the conditions in the policy." "The plaintiff, then owning a note and mortgage for $600 given by White, with White's consent obtained the insurance." The plaintiff applied for it; he paid the premium; at his request the company issued the policy, and in it agreed to pay the loss to him. This was a promise to pay to the person from whom the consideration moved. By this action the legal as well as equitable interest in the contract vested in the plaintiff. There were no other contracting parties. The legal interest in a simple contract is in him from whom the consideration moves. Warren v. Batchelder, 15 N.H. 129; Smith v. Mudgett, 20 N.H. 527, 528; French v. Rogers, 16 N.H. 177; 5 N.H. 244. A payment to the plaintiff would be a bar to a recovery by White, because by the terms the payment was to be so made, and White assented to it. Although the equitable interest of the assignee will be protected, yet ordinarily and at common law he cannot maintain a suit upon the original policy in his own name, but must sue in the name of the assignor. But if the insurer, upon notice of the assignment, promises the assignee to pay the insurance to him in case of loss, the assignee can, upon proper averments, maintain a suit upon the policy in his own name. Pierce v. Ins. Co., 50 N.H. 297; Foster v. Ins. Co., 2 Gray 216. There seems to be no difference in principle between the case cited and the case at bar, and the practical difference consists in this,---that in the former, the promise to pay was made upon a good consideration, subsequent to the issuing of the policy; and in the latter, it was made upon an equally valid consideration at the time of issuing the policy.

The case is also within the spirit of the act of 1869, ch. 30, sec. 1, which provides that the "party in interest may bring his action in the name of the assignor or assignee, as he may elect," though we contend that without this statute provision an action will lie on the express promise of the defendant to pay the amount in case of loss to the plaintiff. But the purpose of that statute being to abrogate the rule of the common law above stated, and thus obviate the objection often taken by mutual insurance companies to the maintenance of the action on the ground that such plaintiffs were not members of the company, a holding by the court which permits the plaintiff in this case to maintain his action would be in strict accord with the course of legislation in this state, and bears also upon the construction of the act of 1867, hereafter referred to. The undertaking in the policy to pay to Chamberlain was an equitable assignment of the prospective funds, and the action should be in the name of the assignee. Pierce v. Ins. Co., 50 N.H. 297; Morris v. Co., 25 N.H. 22; Rollins v. Co., 25 N.H. 200; Goodall v. Co., 25 N.H. 169; Sanders v. Co., 44 N.H. 243, and cases cited; Barnes v. Co., 45 N.H. 21.

II. The defendants have undertaken in their policy to make the existence of their liability dependent on a condition subsequent, a violation of which is to avoid the policy in their favor. It is drawn with some adroitness, and inserted in connection with other provisions almost as dangerous to the insured as the element from which the policy is ostensibly designed to protect his interests. "If the premises hereby insured become vacated by the removal of the owner or occupant without immediate notice to the company and consent indorsed hereon * * this policy shall be void." Such conditions are odious, and are not to be favored in law. Emerson v. Simpson, 43 N.H. 475; Page v. Palmer, 48 N.H. 385. This condition ought not to be construed to annul the contract or avoid the policy, because it...

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