Reynolds v. Mutual Fire Ins. Co.

• Decision Date: 03 March 1871
• Citation: 34 Md. 280
• Parties: PETER S. REYNOLDS v. THE MUTUAL FIRE INSURANCE COMPANY OF CECIL COUNTY.
• Court: Maryland Court of Appeals

34 Md. 280

PETER S. REYNOLDS v. THE MUTUAL FIRE INSURANCE COMPANY OF CECIL COUNTY.

Court of Appeals of Maryland

March 3, 1871

APPEAL from the Circuit Court for Cecil County.

First Exception: The plaintiff, to support the issue on his part joined, offered in evidence and proved the execution and delivery by the defendant of the policy of insurance, dated the 5th of October, 1858, insuring certain property of the plaintiff, situate in the town of Hillsborough, and that he had regularly paid the interest on his premium note, and the taxes assessed by the company to August, 1862, inclusive; and that a part of the property insured, consisting of a new frame hotel-building, &c., was destroyed by fire on the night of the 3d of February, 1863 and that he was in possession of the property, claiming title thereto at the time the fire occurred. The defendant, to support the issue joined on its part, offered in evidence the record of proceedings on the application of the plaintiff for the benefit of the insolvent laws, from which it appeared that the application was made on the 25th of December, 1860 and the final discharge was obtained in October, 1862-- and that the property insured was sold by the trustee in insolvency to one Thomas Sparklin. The defendant also proved by the secretary of the company, that no written notice was received by him until after the fire, of the insolvency of the plaintiff, or conveyance to the trustee, or sale by the trustee to Sparklin, or the discharge of the plaintiff under the insolvent laws; and that so far as he knew, no notice of said facts, or any of them, came to the knowledge of the defendant until after the fire.

The plaintiff then proved that the property purchased in the name of Sparklin, was for the use and benefit of the plaintiff, by whom the purchase money was paid; and that previous to the sale, and from the time of the sale, until the fire, he was in possession of the property, claiming to be the owner thereof. The plaintiff further proved that his application for the benefit of the insolvent laws, was a matter of public notoriety in Caroline county, and that the sale made by the trustee was a public sale at the court-house door in said county, within sight of the place of business of Alexander Stewart, the agent of the defendant to receive payment of the interest on the premium notes.

The plaintiff thereupon prayed the Court to instruct the jury that if they find all the facts stated in this exception they may find a verdict for the plaintiff.

And the defendant offered the following prayer:

That if the jury shall believe from the evidence, that the defendant is a Mutual Insurance Company, and that the plaintiff insured the property destroyed by fire, in said company, on the fifth day of October, 1858, and made and delivered to said defendant the following premium note, offered in evidence in this cause, for the sum of $108.89:

$108.89. For and in consideration of a policy of insurance issued to me this day, upon property described in application and survey, No. 1,895, on file in the office of the "Mutual Fire Insurance Company of Cecil county," of the aggregate value of two thousand three hundred and eighty-three dollars; I, Peter S. Reynolds, of Caroline county, and State of Maryland, do hereby promise and oblige myself to pay to the said insurance company the sum of one hundred and eight dollars and eighty-nine cents, current money, in whole or in such sums and at such times as the managers of the said company shall or may call for the same according to the provisions of the Act of incorporation and by-laws of the said company, for the uses and purposes of said company, as recognized and authorized by the said Act of incorporation, and to pay an interest of six per cent. thereon annually, in advance, so long as the managers of the said company may find it necessary to call in and receive the same.

Witness my hand and seal, this 5th day of October, in the year 1858.

PETER S. REYNOLDS, (Seal.)

Witness: Thomas C. Nicols.

And that the said plaintiff, after making and delivering said premium note, on the 25th day of December, 1860, filed his petition in the Circuit Court for the Seventh Judicial Circuit of Maryland, held in and for Caroline county, praying the benefit of the insolvent laws of Maryland, and that afterwards, on the first Tuesday after the first Monday of October, in the year 1862, the said plaintiff was duly discharged, and shall further believe that the property insured was not destroyed by fire until the 3d day of February, 1863, then the plaintiff is not entitled to recover in this action.

The Court refused to grant the prayer offered by the plaintiff, but granted the prayer of the defendant. The plaintiff excepted.

Second Exception: The defendant offered to prove by F. A. Ellis, the secretary and treasurer of the defendant, that Alexander Stewart, was a special agent to receive the payment of the annual interest upon the premium or deposit notes of members of the company upon receipts previously prepared and signed by himself, the said Ellis, as treasurer of the company, and sent to said Stewart before the day of the annual meeting of the company, (being the first Saturday in August, annually,) when all payments of the premium interest fell due; and that his only authority was to receive the money and deliver the receipts to the parties named therein; that it was no part of his duty to look after and report to the company the alienation or change of title to property insured in the company; and that he had no authority to make surveys and receive the money on them.

To the admissibility of so much of said evidence as states "that it was no part of the duty of Alexander Stewart to look after and report to the company the alienation or change of title to property insured in said company," and "that he had no authority to make surveys and receive money on them," the plaintiff objected, but the Court overruled the objection and permitted the evidence to go to the jury. The plaintiff excepted, and the verdict and judgment being against him he appealed.

The cause was argued before BARTOL, C.J., STEWART, BRENT, GRASON, MILLER and ALVEY, J.

Henry W. Archer, for the appellant.

The defendant's prayer was erroneously granted; the policy was not rendered void, but only voidable or "subject to termination" by the transfer of title, and the re-purchase from the trustee before the loss occurred, restored the policy to its original force and effect. Carrol vs. The Boston Marine Ins. Co., 8 Mass., 515; Angell on Insurance, ch. 9, secs. 193-203; 2 Am. Leading Cases, 621.

There was evidence in the cause from which the jury might find that the defendant had notice of the transfer of title, and its subsequent receipt of interest on the premium note was a waiver of forfeiture, and evidence of the defendant's election to continue the insurance. Coursin vs. The Penna. Ins. Co., 46 Penna., 323; Buckley vs. Garrett, 47 Penna., 204; Ripley vs. Ætna Ins. Co., 29 Barbour, 552.

It was immaterial whether the plaintiff was or was not released from liability upon the premium note; but if it were material--the payment by him of the interest thereon after his application for the benefit of the insolvent laws, was evidence of a new promise and renewal of liability on the note.

The Court below erred in refusing the plaintiff's prayer; there was proof before the jury of the execution of the policy, the loss by fire and due notice thereof, the regular payment of all interest, charges and assessments, and the plaintiff was the owner of the property when the fire occurred. If the jury found those facts to be true, the plaintiff was entitled to a verdict, notwithstanding the jury may have found all the facts offered in evidence by the defendant. Goldsborough vs. Orr, 8 Wheaton, 217, 224; 1 Salkeld's Rep., 171; 1 Saunder's Rep., 319, h. 320; 2 Parsons on Contracts, 4, and note, ( c); Platt on Covenants, 71, 78.

The plaintiff's application for the benefit of the insolvent laws, his deed to the trustee, and the sale by the trustee to Sparklin for the plaintiff's use, did not separately or collectively constitute such an alienation as deprived him of an insurable interest in the property. He was at no time without an insurable interest. Angell on Insurance, secs. 57, 58, 59, 68, 70, 71, 72; Strong vs. Ins. Co., 10 Pick., 40, 44; Lagorus vs. Ins. Co., 19 Pick., 94; 2 American Leading Cases, 550, 551.

William J. Jones and Alexander Evans, for the appellee.

The appellant had no insurable interest in the property after his application for the benefit of the insolvent laws, the execution of the deed to the trustee, and the filing of the trustee's bond. All the appellant's interest in the property vested in his trustee. Code, Art. 48, sec. 2; Adams vs. Rockingham Mutual Ins. Co., 16 Shep., 292; Alexander vs. Ghiselin, 5 Gill, 138; Waters vs. Dashiel, 1 Md., 472; Manahan, et al. vs. Gorman, et al., 3 Md., 463; Jamison vs. Chestnut, 8 Md., 34.

And the insured party cannot set up any defect in the assignment to the trustee, to avoid the effect of the assignment on his insurable interest. Dadmun Manuf. Co. vs. Worcester Fire Ins. Co., 11 Metcalf, 429; Adams vs. Rockingham Mutual Ins. Co., 16 Shep., 292.

Having no insurable interest, the continuance of the appellant to pay the interest on his premium note, was a mere gambling venture on his part, and as such, wholly contrary to the policy of the law, and void. Adams vs. Pennsylvania Fire Ins. Co., 1 Rawle, 108; Duer on Insurance, 95; 3 Kent's Comm., 276, 277; Atwell, et al. vs. Millar, 11 Md., 361; Lee vs. Bareda, 16 Md., 190.

By the Act of 1845, chapter 249, section 6, the appellee's charter of incorporation expressly made...