Insurance Company v. Chase
| Decision Date | 01 December 1866 |
| Citation | 72 U.S. 509,5 Wall. 509,18 L.Ed. 524 |
| Parties | INSURANCE COMPANY v. CHASE |
| Court | U.S. Supreme Court |
ERROR to the Circuit Court for the District of Maine.
This controversy arose on a policy of insurance. The underwriter admitted the loss by fire, but denied the obligation to pay, chiefly because the party insured, had not an insurable interest in the property which was destroyed.
The case was this: William Chase, Sewall Chase, J. F. Day, John Yeaton, and J. W. Munger were the trustees of the Congregational Church on Congress Street, in Portland, and held the legal title to it, in trust for the society. Munger, one of the trustees, was also the agent at Portland of two insurance companies created by the laws of Massachusetts,—the Howard and the Springfield. On the 25th of November, 1859, he took fire risks for each company to the amount of $5000 on the church property—the party assured in the Springfield Company being described in the policy as 'The proprietors of the Union Church, Portland, Maine,' and in the Howard Company as 'William Chase, of Portland, Maine, payable, in case of loss, to Grenville M. Chase.' Each policy contained a statement of the several sums for which the property was insured in the different companies.
Prior to these contracts of insurance, the Continental Insurance Company of New York had insured the church for an equal amount, in the name of the proprietors; but the policy, although dated in 1857, recites the risks taken by the Springfield and Howard Companies in 1859. The reasonable explanation of this, being, that when the policy was afterwards renewed, these additional risks were incorporated into it.
William Chase, the assured in the Howard policy, was the treasurer of the parish for several years, and paid the premiums on the policies and the renewals of them. The premiums on the Springfield and Continental policies were charged to the parish; the Howard premiums were not, but were paid out of his private means, on account of the parish, which was done with the assent of the trustees. The society was indebted to William Chase in the sum of $15,000, but not to G. M. Chase. William Chase was, however, indebted to G. M. Chase, and obtained the Howard policy to secure him.
All this appeared by William Chase's own testimony, he having been called by the defendants in the case, and the only witness in it.
The church was badly damaged by fire on the 15th of March, 1862, and the Springfield and Continental Companies, recognizing their liability, paid to the trustees two-thirds of the loss sustained by the fire. The Howard Company declining to pay, were sued by G. M. Chase, the payee in the policy, for the remaining third.
The declaration set forth that 'William Chase was the owner and possessor in trust of the Union Congregational brick and slated Church,' &c., and that 'said Insurance Company in consideration of a premium in money then and there paid to them therefore by said William, made a policy of insurance, and thereby agreed to and with said William to insure upon said property,' &c.
Under instructions of the court a verdict and judgment were given for the plaintiffs, and the case was now brought here on error.
Messrs. Fessenden and Butler, for the plaintiff in error:
I. There is a fatal variance between the allegation of interest in the declaration and the proof.
The allegation is, that William Chase was 'the owner and possessor in trust.'
The proof offered was, that William Chase was one of five trustees.
An averment of an entire interest is not supported by proof of a joint interest.1
The legal title to the church was vested in five trustees, and to give validity to their acts, it was necessary that they should act jointly in what concerned the joint property.
II. Regarding the insurance as 'for the parish,' the plaintiff is limited by the proof of the interest of William Chase, as trustee—viz.: one-fifth, as he was only one of five trustees.
1. Because he had no other interest.
2. Because he does not aver that anything more than his individual interest was insured, and the policy contains no formal words—as 'for whom it may concern.'2
III. If the preceding point is sound, then, as there were two other policies on the same property to an equal amount each, for the benefit of the same parties, the plaintiff in this action can recover only one-fifth of one-third, on the same principle.
IV. The proof shows that William Chase, having no other interest than as trustee, in fact insured the property for his individual benefit, and not 'for the parish.'
Having had no other interest than as trustee, and having insured the property in terms for his individual benefit, he could not recover.
Such insurance is void, either with or without notice to insurers.
1. Because insurance is simply a contract of indemnity, and the insured had no personal interest for the loss of which he could be indemnified.
2. Because if without notice to insurers, it is a fraud upon them. One of the first elements, entering into the question of risk, is the interest of the assured to protect the property. If he has no pecuniary interest in the trust property, as in case of a mortgage, it is for his interest that a loss should occur, for he is thereby benefited. Had instructions to this effect been given, the jury would have found a different and proper verdict.
3. Whether with or without notice, such insurance is void, because against public policy, tending to create an interest in the destruction of the property, and adverse to the interest of the cestui que trust.
Mr. John Rand, contra.
A recovery in this case is strenuously resisted, because it is said the individual interest of William Chase was insured, and not his interest as a trustee; and, as his only interest was that of a trustee, it follows that the contract of insurance was a gaming one, and void from considerations of public policy.
A contract of insurance, is intended to indemnify one who is insured against an uncertain event, which, if it occurs, will cause him loss or damage. The assured must therefore have an interest in the property insured; otherwise, there is a temptation to destroy it, which sound policy condemns.
If, then, the Howard Company did not insure the interest of William Chase as a trustee (it is conceded he had no other), the policy is void, although he was a creditor of the church, paid a fair premium for the policy, and disclosed everything to the underwriter. But the recovery in this case, is based on the ground that William Chase had an insurable interest as trustee, and insured the property for the benefit of the society. The declaration expressly avers that William Chase, being the owner and possessor in trust of the Union Congregational Church, for a premium paid in money, effected an insurance on the property in the Howard Insurance Company. If this were true, and the proofs sustained it, the verdict and judgment of the Circuit Court cannot be disturbed. It is unnecessary in this case to discuss the general law of insurance with reference to what interests are, or are not insurable. The courts of this country, as well as England, are well disposed to maintain policies, where it is clear that the party assured had an interest which would be injured, in the event that the peril insured against should happen.
That a trustee having no personal interest in the property may procure an insurance on it, is a doctrine too well settled to need a citation of authorities to confirm it. As early as 1802, the judges of the Exchequer Chamber, in the case of Lucena v. Craufurd,3 held, that an agent, trustee, or consignee could insure, and that it was not necessary that the assured should have a beneficial interest in the property insured, and the rule established by this case, has ever since been followed by the courts of this country and England.4
A trustee, therefore, having the right, is justified in insuring the property, even to its full value, although there is no obligation on him, in the absence of express directions, to insure at all.5
But it is argued, that the legal title to the Congregational Church was vested in five trustees, and that to give validity to their acts, they must act jointly in whatever they do for the benefit of the property.
It is true, that in the administration of the trust, where there is more than one trustee, all must concur, but the entire body can direct one of their number to transact business, which it may be...
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