Hunt v. N.H. Fire Underwriters' Ass'n

• Decision Date: 26 July 1895
• Parties: HUNT v. NEW HAMPSHIRE FIRE UNDERWRITERS' ASS'N (GRANITE STATE INS. CO., Intervener).
• Court: New Hampshire Supreme Court

38 A. 145

68 N.H. 305

HUNT

v. NEW HAMPSHIRE FIRE UNDERWRITERS' ASS'N (GRANITE STATE INS. CO., Intervener).

Supreme Court of New Hampshire. Merrimack.

July 26, 1895.

Assumpsit by Nathan P. Hunt, receiver of the People's Fire Insurance Company, against the New Hampshire Fire Underwriters' Association, Granite State Insurance Company, intervener. Judgment for the intervener.

April 1, 1893, the Granite State Insurance Company insured for one year property of the Boston & Maine Railroad for $25,000. August 10, 1893, the property was destroyed by fire to the extent in value of $2,300, which sum the Granite State paid in October following. April 1, 1893, the People's Fire Insurance Company reinsured the Granite State Company for one-third part of the risk, and on the same day the defendants reinsured the People's Company for one-half their risk. The defendants' contract contained the following clause, namely: "Loss, if any, to be settled and paid pro rata with the reinsured, and at the same time and place, and upon the same terms and conditions." In October, 1803, the plaintiff, Hunt, was appointed by the court receiver of the People's Company, and is now acting as such under the direction of the court. The People's Company is in process of liquidation and settlement of its affairs by the receiver, and it is not now known whether the assets are sufficient to satisfy the liabilities. The plaintiff claims that the defendants are bound to pay to the People's Company one-sixth of the total loss, without waiting for the settlement of the People's Company affairs, and without regard to the dividend that may be ultimately paid to their creditors. The defendants claim that they are liable to pay to the plaintiff one-half only of the sum which the People's Company may ultimately pay. Upon notice given them of the action, the Granite State Company appeared, and claimed to be entitled to whatever sum the defendants are bound to pay.

D. Cross, for plaintiff. Leach & Stevens, for defendants.

Granite State Ins. Co., pro se.

CARPENTER, J. There is no suggestion that the action is brought for the benefit of the Granite State. The question presented is whether the defendants are bound to pay to the People's Company the entire amount of the loss against which they agreed to indemnify the People's, or only such a part thereof as the insolvent People's may ultimately pay. The defendants received a full consideration for the risk against which they insured, and there is no reason why they should not be required to pay the full amount of the loss. Blackstone v. Insurance Co., 50 N. Y. 106. The premiums received by them, and the sum to be paid by them in case of loss, were intended to be, and in theory of law are, precisely equivalent. King v. Insurance Co., 7 Cush. 1, 9. Their position is, in legal effect, the same as it would be if the People's, for the purpose of paying the loss, had deposited with them the full amount of it in money. But the further question whether the money due on the contract equitably belongs and should be paid to the People's or to the Granite State arises on the face of the case. For convenience of consideration, a simpler parallel case may be taken. The People's insure A.'s house for $10,000, and immediately reinsure for the same amount with the defendants. The house is burned, and shortly after the People's become insolvent, and, as may be supposed, unable to pay any part of their indebtedness. The defendants, willing to perform their just obligations, file a bill of interpleader against A. and the People's, and pay the $10,000 into court. To which party—A. who has lost that amount, or the People's, who have lost nothing—does the money, in equity, belong? The particular terms of the policy issued by the defendants are not material. It must be assumed that by it the defendants merely stipulate to indemnify the People's to the extent of the sum named, against loss by reason of the destruction of A.'s house by fire, because they have no power to make any contract of insurance except contracts of indemnity. In Bank v. Herrick, 62 N. H. 174, Jarib Herrick, as principal, and John W. Herrick, as surety, were indebted to the plaintiffs upon a promissory note. January 27, 1877, Jarib gave John W. a mortgage of real estate conditioned to indemnify him against loss by reason of his having signed the note. In 1878, Jarib obtained his discharge in bankruptcy. His assignee sold the land, subject to the mortgage, to the defendant S. In 1879, John W. died, insolvent. No part of the note being paid, the plaintiffs brought their bill in equity against Jarib, the administrator of John W., and S., praying that the mortgage be assigned to them, and prevailed. The condition of the mortgage was not that Jarib should pay the note, but that he should save his surety harmless. The surety paid, and could pay, nothing. The condition, according to its literal terms, was not, and apparently never could be, broken. The court said that equity disregards mere form, and held that the transaction was, in substance, an appropriation of the mortgaged property for the payment of the debt in case it was not otherwise satisfied by the mortgagor. The purchaser at the assignee's sale took the property with notice. In equity it belonged to the plaintiffs for the purpose of satisfying their debt, and to the extent necessary for that purpose. Their right did not depend upon privity of contract. In fact, there was none. It did not appear that the plaintiffs had any knowledge of the mortgage until they filed their bill. It was immaterial that the relation of principal and surety existed between the mortgagor and mortgagee. The result would have been the same had they been joint principals, or if the mortgage had been given by the surety to the principal. It was equally immaterial that the mortgagee was bound to pay the debt, except that his liability was essential to the form of the security given. The result would have been the same if Jarib had...