Royal Indem. Co. v. Granite Trucking Co.

• Decision Date: 08 October 1936
• Citation: 296 Mass. 149,4 N.E.2d 809
• Parties: ROYAL INDEMNITY CO. v. GRANITE TRUCKING CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

296 Mass. 149

4 N.E.2d 809

ROYAL INDEMNITY CO. v. GRANITE TRUCKING CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

October 8, 1936

Suit in equity by the Royal Indemnity Company against the Granite Trucking Company and others. From a final decree dismissing the bill, the plaintiff appeals.

Decree modified and, as modified, affirmed.

Appeal from Superior Court, Suffolk County; T. J. Hammond, Judge.

E. J Sullivan, of Boston, for appellant.

D. H Fulton, of Boston, and L. Rubin, of Quincy, for appellees.

LUMMUS, Justice.

The findings and reported evidence show the following facts. The defendant Perry did business under the name Granite Trucking Company, erroneously alleged in the bill to be the name of a defendant corporated. On January 1, 1933, Perry obtained a motor vehicle liability insurance policy from the Employers Liability Assurance Corporation, which enabled him to register his trucks under G.L.(Ter.Ed.) c. 90, §§ 34A to 34J and to obtain number plates therefor. That policy was duly cancelled by the insurer, by virtue of G.L.(Ter.Ed.) c. 175, § 113A, and provisions in the policy, on April 10, 1933. On April 14, 1933, Perry gave to the Roydon Burke Insurance agency in Quincy $100 with which to reinstate the policy if possible, or else to procure a similar policy from some other company. The Employers Liability Assurance Corporation refused to reinstate the policy. On April 18, 1933, the agency obtained an oral promise from the plaintiff to issue such a policy to Perry, and asked Perry to call at the agency to sign the application for registration. Perry did not come in until April 25, 1933, at half past ten in the forenoon, when he signed the application, and did not disclose the fact that earlier in the forenoon one of his trucks had been involved in a collision. Thereupon the agency, having authority from the plaintiff to do so, gave a certificate in the name of the plaintiff under G.L.(Ter.Ed.) c. 90, §§ 34A to 34C, that the plaintiff had issued to Perry a motor vehicle liability insurance policy effective April 25, 1933, at 12.01 A. M., which certificate was filed promptly with the registrar of motor vehicles, accompanying the application for registration. Registration followed on May 6, 1933.

In the meantime, at half past eight in the forenoon of April 25, 1933, while driving without right on a public way in Quincy one of his trucks bearing the old number plates issued to him in January, 1933 (G.L. [Ter.Ed.] c. 90, § 34J), and before obtaining any new registration, Perry had injured with his truck the defendants Salame, Haddad an Ramo. These three persons in 1934 recovered judgment against Perry in actions of tort for bodily injury. They will be hereinafter called the judgment creditors.

The plaintiff, on July 28, 1933, cancelled its policy by virtue of G.L. (Ter.Ed.) c. 175, § 113A, and provisions in the policy. It retained the earned premium from the beginning of the term on April 25, 1933, to the date of cancellation, returning the balance to Perry. It never rescinded the policy for alleged fraud. But on October 23, 1934, anticipating suits by the judgment creditors to apply the insurance in satisfaction of their judgments, under G.L. (Ter.Ed.) c. 175, § 113; c. 214, § 3(10), the plaintiff brought this bill to reform the policy by changing the time when the policy became effective to a time subsequent to the time when the judgment creditors received their injuries. We may ignore the sustaining of a demurrer, for the case was heard on the merits and the final decree dismissing the bill with costs to the judgment creditors was based on the merits. The plaintiff appealed.

If this were a controversy between the plaintiff and Perry alone, his fraud in procuring, at a time when a probable loss had already occurred to his knowledge, insurance dated back so as to cover the time of the probable loss, would justify rescission or perhaps reformation of the policy. Strangio v. Consolidated Indemnity & Ins. Co. (C.C.A.) 66 F.(2d) 330. The situation resembles the taking of marine insurance upon a ship known to be lost (Hoyt v. Gilman, 8 Mass. 336; Green v. Merchants' Ins. Co., 10 Pick. 402; General Interest Ins. Co. v. Ruggles, 12 Wheat. 408, 6 L.Ed. 674; McLanahan v. Universal Ins. Co., 1 Pet. 170, 7 L.Ed. 98; Merchants' Mutual Ins. Co. v. Lyman, 15 Wall. 664, 21 L.Ed. 246; Pendergast v. Globe & Rutgers Fire Ins. Co., 246 N.Y. 396,159 S.E. 183; Blackburn, Low, & Co. v. Vigors, 12 App.Cas. 531, 13 Eng.Rul.Cas. 514), or fire insurance upon a building known to be burned, burning, or in immediate danger. Bufe v. Turner, 6 Taunt. 338; Wales v. New York Bowery Fire Ins. Co., 37 Minn. 106, 33 N.W. 322; Springfield Fire & Marine Ins. Co. v. National Fire Ins. Co. (C.C.A.) 51 F.(2d) 714, 76 A.L.R. 1287. Compare Mead v. Phenix Ins. Co., 158 Mass. 124, 126, 32 N.E. 945; Lamson Consolidated Store-Service Co. v. Prudential Fire Ins. Co., 171 Mass. 433, 434, 50 N.E. 943. See, also, Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 48 S.Ct. 512, 72 L.Ed. 895.

But this is not a controversy between the plaintiff and Perry alone. The judgment creditors are made parties, and the reformation sought would, if granted, destroy their rights. The reformation has no importance and no purpose except to defeat the judgment creditors. The only substantial controversy is between the plaintiff and the judgment creditors.

The policy in question is not one voluntarily taken, under no compulsion of law, as to which the rights of a person injured are derived from the insured and can rise no higher than his. Blair v. Travelers Ins. Co. (Mass.) 197 N.E. 60. The injuries received by the judgment creditors were within the protection of that part of the policy which complied with the Massachusetts compulsory motor vehicle liability insurance law, and which covered liability for ‘ bodily injuries * * * sustained during the term of said policy * * * and arising out of the ownership, operation, maintenance, control or use upon the ways of the commonwealth of such motor vehicle.’ G.L.(Ter.Ed.) c. 90, § 34A. When the plaintiff gave the certificate that it had issued such a policy, effective at 12:01 A. M. on April 25, 1933, and the certificate was filed with the registrar of motor vehicles the...