Hadley v. N.H. Fire Ins. Co.

• Decision Date: 11 March 1875
• Citation: 55 N.H. 110
• Parties: Hadley v. N.H. Fire Insurance Co.
• Court: New Hampshire Supreme Court

55 N.H. 110

Hadley v. N.H. Fire Insurance Co.

Supreme Court of New Hampshire

March 11, 1875

The plaintiff, interested as mortgagee, obtained the policy in suit in the name of the general owner, with his consent paying the premium himself; and the policy being made payable to him in case of loss to the extent of his mortgage interest, the whole amount of insurance being less than his mortgage debt, it was held tha the might maintain an action in his own name to recover the full amount.

Just before obtaining this policy, the plaintiff had two policies,---one in the Market Company, which company had stopped payment, and one in the North American Company. On receiving notice from the agent that the Market Company had stopped, he surrendered his policy to him to be cancelled and received back the unexpired premium. The policy was returned by the agent to the company to be cancelled, and nothing more was heard from it. Held, that this policy must be considered to have been cancelled at the time it was so surrendered.

When the policy in suit was obtained, the agent of the defendant company knew all about the circumstances, undertook to procure the insurance, and do everything which was right. He afterward delivered the policy to the plaintiff, who, relying on the agent, accepted it and paid the premium. In an action on the policy, held, that the company was estopped to deny that the fact of the existence of the insurance in the North American Company had been endorsed upon the policy agreeably to the terms of one of the conditions in the same.

The N A. Co. having shortly afterward failed, the plaintiff procured from the defendants' agent another policy,---in the Germania Co., of which he was also agent,---and placed the policy in suit in his hands. The agent knew all the circumstances of the various insurances, but did not cause the company's consent to the second insurance to be endorsed. Held, that these facts were evidence from which the jury might find that the defendants had waived the condition in the policy requiring their assent to such further insurance, and this, notwithstanding the defendant company had no other knowledge of these circumstances than the knowledge of the agent, which was held to be the knowledge of the company.

The defendants contending that the property was misdescribed in the application, but it appearing that the agent knew all the circumstances on which the description depended---Held, that the knowledge of the agent was the knowledge of the defendants, and that in the absence of collusion the company were bound by the agent's representation.

The plaintiff, having purchased a mortgage of the furniture and personal property in the house without the general owner's consent, took possession of the same, made preparations for selling it in the house, and

exhibited it to persons desirous of purchasing. The court instructed the jury that if this were done in good faith and by an innocent mistake, the plaintiff would be protected by the provisions of Gen. Stats., ch. 157, sec. 2; but the court having also instructed them that the amount insured ought to have been diminished as much as the premium ought to have been increased on account of such increased risk, instead of in the same proportion---Held, that, whether the statute were rightly applied or not, this was erroneous.

The foreclosure of the plaintiff's mortgage having been effected after the fire and before the commencement of the action---Held, that this did not prevent the plaintiff from maintaining his action for the amount remaining due on his mortgage

ASSUMPSIT by William S. Hadley against the New Hampshire Fire Insurance Company, upon a policy of insurance. It appeared that the plaintiff procured the insurance and paid the premium. He testified that he procured the policy with the consent of Mr. Philbrick, the owner of the property insured, but the defendants claimed that the policy was procured without the knowledge or consent of said Philbrick.

It appeared that the house was insured for the benefit of the plaintiff in the Market Insurance Company for $4,000, and in the North American Insurance Company for $1,000, at the time of the great Chicago fire, in October, 1871. A. F. Craig was the agent at Portsmouth of both of said companies. Just before the date of the policy in suit, Mr. Craig, by the direction of the Market Company, notified the plaintiff that they had suspended, and if he wished to be protected he must get insured elsewhere. The plaintiff immediately negotiated with J. M. Davis, agent of the defendant company at Portsmouth, and procured from him the policy in suit as a substitute for the Market policy, which, it was understood by the plaintiff and Davis, was to be cancelled. At the time Davis issued the policy in suit, he had full knowledge of the facts as they existed in regard to the Market policy and the North American policy. The Market policy was, on October 14,1871, delivered by the plaintiff, Mr. Craig, for cancellation, who, about the last of October, 1871, returned it to the Market Company to be cancelled. Whether this policy was ever actually cancelled at the office of the Market Company did not appear. The unexpired premium was allowed by Mr. Craig to Mr. Philbrick, upon a claim he had against Philbrick. At some time during the latter part of October, 1871, Mr. Craig, by direction of the North American Company, notified the plaintiff that that company also had suspended, and recommended him to get insured elsewhere; and he immediately applied to Mr. Davis, informed him of this, at the same time leaving the policy in suit in Davis's hands, and procured from him a policy in the Germania Insurance Company for $1,000, as a substitute for the North American policy, which it was understood by the plaintiff and Davis was to be cancelled; but the plaintiff kept the North American policy in his

possession until after the property insured was destroyed by fire on January 10, 1872. He testified that at the time of procuring the Germania policy he intended to have the North American policy cancelled, but by accident neglected to attend to it, and that at the time of the fire he supposed it had been returned and cancelled. Mr. Craig also testified that at the time of the fire he supposed it had been returned to the North American Company and cancelled. The plaintiff testified that he had made no claim on the Market Company or the North American Company on account of the fire. It did not appear that Mr. Davis had any notice, at any time before the fire, that there had been any neglect to return the North American policy for cancellation, nor that the defendant company had any notice of the Market, the North American, or the Germania policy, except by reason of the knowledge which Mr. Davis had, as hereinbefore stated. No indorsement of either prior or subsequent insurance was ever made on the policy in suit. The plaintiff testified that he did not read the conditions in the policy in suit at any time previous to the fire, nor know that it contained such conditions. There was no evidence that Mr. Davis had any express authority from the company to waive any of the conditions or stipulations in the policy. The house insured was a large house, built for and occupied as a seaside hotel and boarding-house for summer business, with accommodations for from seventy-five to one hundred guests. The testimony of the defendants tended strongly to show that the risk would have been rejected as soon as it reached the office of the company if the property had been truly described, but it was not disputed that Mr. Davis had full knowledge of all the circumstances relating to its situation and occupancy. The property was in fact not occupied as a hotel or boarding-house during the continuance of the policy in suit. The defendants' secretary testified that he had the management of the company as to the character of the risks to be taken, and that he, a short time previous to said October 14, directed Davis not to insure any seaside hotels. The testimony of the secretary tended to show that the officers of the company, at the time this insurance was effected, understood the profits of seaside hotels and boarding-houses to be dependent on various contingencies, and that when unprofitable they were quite liable to burn after the season for boarding had passed, and while only occupied as dwelling-houses, and that the company for that reason considered the risk as great, and intended to require as high rates during the remainder of the year, as during the boarding season, and, as a general rule, did not intend to insure seaside hotels at any rate whatever.

The defendants claimed that Mr. Davis informed the plaintiff at the time the insurance was effected that he had no authority to insure seaside hotels in the defendant company, and that in fact there was a collusion between Davis and Hadley to misdescribe the house as a dwelling-house, in order to mislead the company and avoid a rejection of the risk, or procure it to be taken at a low rate. It appeared that the premium paid by the plaintiff upon the policy in suit was much

more than the ordinary rate of the defendant company for insuring dwelling-houses, though much less than the ordinary rate for insuring seaside hotels. It appeared that the interest of the plaintiff was by virtue of two mortgages of the insured property from Thomas H. Philbrick to him, one for $5,800, dated January 23, 1871, and the other for $235, dated January 28, 1871, and that the plaintiff took peaceable possession, for the purpose of foreclosure, on January 30, 1871, and immediately leased the property to Philbrick, who remained in possession as tenant of the plaintiff until the fire.

At the close of the...