Clay Fire and Marine Insurance Co. v. Huron Salt and Lumber Manufacturing Co.

• Decision Date: 26 February 1875
• Citation: 31 Mich. 346
• Court: Michigan Supreme Court
• Parties: The Clay Fire and Marine Insurance Company v. The Huron Salt and Lumber Manufacturing Company.[1]

31 Mich. 346

The Clay Fire and Marine Insurance Company v. The Huron Salt and Lumber Manufacturing Company.^[1]

Supreme Court of Michigan

February 26, 1875

Heard January 26, 1875

Error to Bay Circuit.

Judgment reversed, with costs, and a new trial awarded.

Holmes Haynes & Stoddard, for plaintiff in error.

McDonell & Cobb and Hoyt Post, for defendant in error.

Graves Ch. J. Campbell, and Cooley, JJ., concurred. Christiancy, J. did not sit in this case.

OPINION

Graves, Ch. J.:

The last named company sued the former to recover on a policy of insurance against loss bye fire, and having succeeded in the court below, the insurance company now seek a review by this court of several rulings at the trial. The trial was before a jury, and the re-examination is asked upon a bill of exceptions brought up on writ of error.

The suit was begun by declaration, which embraced the general counts in assumpsit, and one special count in which the defendant in error assumed to set forth the true main features of the contract of insurance. The commencement of the declaration was in these terms: "County of Bay, ss.: The Huron Salt & Lumber Manufacturing Company, a corporation formed and existing under the laws of the State of Michigan, plaintiff herein, for the use and benefit of George C. Smith, by McDonell & Cobb, its attorneys, complains of the Clay Fire and Marine Insurance Company, a corporation formed and existing under the laws of the state of Kentucky, defendant herein, of a plea of trespass on the case on promises, filing this declaration as commencement of suit."

This statement in the commencement, that the Salt and Lumber Company was plaintiff, was not departed from in setting out the cause of action. The general counts were in the usual form, and the special count set out a contract between the companies, and averred no transfer. The special count alleged that "on the second day of April, A. D. 1873, to wit: at Bay City, in said county of Bay, the defendant made a certain policy of insurance in writing, by and through its agent, H. Martin, whereby the said defendant, in consideration of the sum of thirty-seven dollars and fifty cents, to it paid by the plaintiff, did insure the said plaintiff against loss or damage by fire, to the amount of fifteen hundred dollars, on its one-story frame salt-block and on kettles, pumps, steam-pipes and such tools and implements as were used in the manufacture of salt, contained therein, situated about forty feet from its steam saw-mill at Salzburg, Bay county, Michigan (said plaintiff being the owner, and in possession of said property), and the said defendant, in consideration of the said sum of thirty-seven dollars and fifty cents, did in said policy of insurance, promise and agree with the said plaintiff, to make good to the said plaintiff all such immediate loss or damage by fire, not exceeding in amount the said sum of fifteen hundred dollars, nor the interest of the plaintiff in said property, as should happen to the said property from the second day of April, A. D. 1873, at 12 o'clock noon, to the second day of April, A. D. 1874, at 12 o'clock noon, the amount of such loss or damage to be paid sixty days after due notice and proof of the same, according to the terms and conditions of said policy." The count then proceeded to aver, that "on the 22d day of June, A. D. 1873, the said policy or contract of insurance being then in full force, and the plaintiff being then the owner and in possession of said property," the same was burned, whereby "the plaintiff" suffered loss and damage to wit,--thirty thousand dollars, of which the defendant had due notice and proof, etc., in accordance with the provisions of the policy; and that by reason of the premises, the defendant, to wit: on the first day of October, A. D. 1873, at Bay City, in said county of Bay, became and was indebted to the plaintiff, etc., according to the terms of said contract, and in consideration thereof then and there undertook and faithfully promised to pay to said plaintiff, etc.; that, nevertheless, the defendant neglects and refuses to pay said plaintiff, etc., to the great damage of the plaintiff, etc.

No copy of the policy appears to have been given with the declaration, but it may be well, before alluding to the defense, to notice some of its provisions. After describing the property insured as "their one-story frame salt-block," etc., and stating that other insurance was permitted, it went on to say: "loss payable to George C. Smith, of Chicago, Illinois, as his interest may appear;" and further on, it contained the following clause: "if the assured is not the sole and unconditional owner of the property insured, or (if said property be a building or buildings) of the land on which such building or buildings stand, by a sole, unconditional and entire ownership and title, and is not so expressed in the written portion of the policy,--then, and in every such case, this policy shall be void."

The instrument concluded as follows: "This policy is made and accepted upon the above express conditions, but shall not be valid unless countersigned by the only authorized agent of the Clay Fire & Marine Insurance Company, at Chicago. In witness whereof, the said Clay Fire & Marine Insurance Company have caused these presents to be signed by their president, and attested by their secretary, in the city of Newport and state of Kentucky. Wm. Robson, President, D. Wolf, Secretary. Countersigned at Chicago, Ill., this 2d day of April, 1873. H. Martin, gen'l agent." The ownership of defendant in error, or its interest, was not otherwise expressed in the policy than by the pronoun "their," in the description.

The insurance company pleaded the general issue to the declaration, without any affidavit denying or questioning the execution of the policy, but added a notice that they would prove and insist that when the policy mentioned in the declaration was issued, the plaintiff corporation was not the entire, unconditional and sole owner of the property insured; also, that the interest of the plaintiff corporation in the property was not expressed in the written part of the policy, whereby the policy was void on delivery; that on or about the first of April, 1868, the plaintiff corporation, by Charles M. Smith, its president and agent, by writing in his or its name, sold the property described and intended to be insured by the policy in question, to John W. Babcock, who went into possession under the contract, and at the date of the policy, and when the loss happened, was equitable owner and entitled to conveyance and possession; that the plaintiff corporation was fully paid by Babcock for the property, and at the date of the policy, and at the time of the alleged loss, had no interest except that of trustee of the naked legal title; that none of said facts were described in the application, or expressed in the written part of the policy; that the contract of sale was made and executed in the individual name of said Charles M. Smith, but was made by him with the knowledge and assent of the plaintiff corporation, and for its benefit; that said Babcock paid for the property within the times as written, or as extended by said Charles M. Smith, on behalf of his corporation, and that said George C. Smith had full notice of all the facts; and further that said George C. Smith had no insurable interest at the date of the policy, or at the time of the loss, and that no proof or statement of any interest of his in the property, or in the policy, or in the money claimed on the policy, has been furnished to the insurance company.

The plaintiff corporation at the trial first produced Mr. Rogers as a witness, and he testified that he took charge of the plaintiff's business on the fifth of September, 1872, and at the same time took possession of the insured property, and so continued until it was destroyed by fire on the 21st of June, 1873; that he operated the property during that interval in the interest of the plaintiff corporation, and knew of the insurance, and he identified the policy.

This instrument was then offered in evidence, when the insurance company objected on three grounds: First, that the declaration counted on a policy made by a corporation formed and existing under the laws of Kentucky, and the execution of the policy had not been proved; second, because no proof had been given of authority of such company to do business in this state; and, third, that the policy did not appear to have been made in Bay county, but in Illinois.

The court admitted the policy against these objections, and an exception was taken. It is not important to pass upon these objections, but I shall briefly notice them. The law is distinctly settled against the ground first stated.-- The Peoria Marine & Fire Ins. Co. v. Perkins, 16 Mich. 380; The People v. Johr, 22 Mich. 461.

The second ground is not explicit, but we suppose the point intended was, that it was incumbent upon the plaintiff below as a preliminary to the introduction of the policy, to show that the defendant insurance company, when it assumed to insure the property in question, and took from the assured the money for so doing, was not acting in plain derogation of our laws, and at the same time committing a gross fraud. The statement of the proposition conveys its own refutation. It was not admissible for the insurance company to insist upon a preliminary express showing by its contractee that in insuring it acted honestly, and where it was lawful for it to act. It was to be presumed, and certainly as against itself, in the absence of contrary proof, that in making the insurance it acted at a place where it would be lawful rather than unlawful, and in good rather than...