Van Buren v. St. Joseph County Village Fire Ins. Co.
| Decision Date | 07 January 1874 |
| Citation | 28 Mich. 398 |
| Court | Michigan Supreme Court |
| Parties | George W. Van Buren v. The St. Joseph County Village Fire Insurance Company |
Heard October 8, 1873; October 9, 1873
Error to St. Joseph Circuit.
Assumpsit. Plaintiff brings error. Affirmed.
Judgment affirmed, with costs.
O. J Fast and H. H. Riley, for plaintiff in error.
John B Shipman, for defendant in error.
Plaintiff in error brought his action against the insurance company in the circuit court for the county of St. Joseph upon a policy of insurance issued to him January 3d, 1870, insuring him against loss by fire to the amount of four thousand dollars upon his wooden hotel building, known as "The Western Hotel," in the Village of Mendon, in said county, and to the amount of one thousand dollars on the furniture therein.
The company was a mutual insurance company, authorized to insure property only of its members, and this only when situate in the county of St. Joseph.
The facts admitted in the case on the trial are these: The building and furniture were lost by fire, and proof of loss made in due form. The one thousand dollars insurance on the furniture was paid under a stipulation that it should in no way affect this suit, as to insurance on the building, and it is the latter only which is in controversy.
The policy was issued upon a written application, signed by plaintiff, containing the charter and by-laws of the company, which were also contained in the policy. The policy commences: "Be it hereby known that George W. Van Buren, resident of the village of Mendon, St. Joseph county, State of Michigan, has, this 3d day of January, A. D. 1870, become a member of the St. Joseph county village Fire Insurance Company, according to the provisions of its charter and by-laws, and insured in said company against loss by fire on the following described village property, situate" (describing its locality):
"On wood hotel building known as Western Hotel
$ 4,000
On furniture therein
"Four thousand dollars of the above insurance is for the benefit of A. Wakeman, as security for payment of a certain mortgage held by him on said building for said amount." Then after describing situation of the building with reference to others, it proceeds: "And the said company hereby agrees that it shall be held responsible to make good to the insured, his heirs, etc., all such loss or damage by fire, from the date hereof, as specified in the charter and by-laws herein given; provided that the said party herein insured shall pay his or her proportion of all assessments to which this company are liable." Then, after a clause against liability for loss by riot, insurrection, or war, the policy is signed by the president and secretary, with a memorandum at the foot referring to the application on file.
The charter and by-laws, so far as material to be noticed here, are as follows:
Charter: By section 3 the officers are required to be a president, secretary, treasurer, and six directors, who should be resident citizens of the county.
Section 4 prescribes certain duties of the officers, among which, it is provided:
Section 5 gives the directors full power to make by-laws, to make all assessments in case of fire or other indebtedness, etc., and the president, secretary, and treasurer, to be ex officio members of the board.
Section 17 provides that the company will pay three-fourths of the value of the property insured at the time of the burning, if insured to that amount, but not more than such three-fourths of the value, though insured for more; the value to be determined by the board of directors.
Section 27: "The insurance of any member shall cease upon the sale of his or her property insured; but they shall be holden for all assessments, until his or her policy shall have been withdrawn."
Section 29: "This charter may be amended or altered at any meeting of the members by a two-thirds vote of all members present, filing such amendment or alteration in the office of the secretary of State, and obtaining the approval of the attorney general."
By-laws:--No. 12: "The application for insurance shall be signed by the applicant, which shall make a part of the contract of insurance, and is a warranty of the truth of all facts stated therein, and shall be filed in the office of the secretary."
No. 13 relates to making statement and proof of loss.
No. 16: "Property mortgaged to an amount equal to, or exceeding one-half its cash value, will not be insured; and any policy issued or existing on property thus mortgaged shall be null and void; and property mortgaged at all, will not be insured to an amount so that the amount of the insurance and the amount of the mortgage together shall exceed three-fourths of its cash value."
The application in this case is declared upon its face to be made "according to the terms of the charter and by-laws of said company;" and these being contained in the application, it is admitted the signature to the application was a subscription to the charter and to the agreement required by the 12th section of the charter. This application, after describing the property to be insured, consists of answers to printed questions, and so far as it relates to the question of incumbrances, is as follows:
The application closes with the following declaration: "I hereby declare that the above questions are correctly answered, and that I have not withheld any circumstance, or information or rumor in any manner concerning the above enumerated property affecting the risk on the same."
In fact, the real estate, including the building, was at the time incumbered by two mortgages executed by the plaintiff and his wife to said Wakeman in the aggregate sum of six thousand fifty-three dollars and ninety-seven cents, with interest, and at the time of the loss amounted to six thousand eight hundred and sixty-two dollars.
The value of the real estate mortgaged, it is admitted, did not, at the time of the insurance, exceed nine thousand four hundred dollars.
The property was therefore mortgaged in excess of half its value by one thousand three hundred and fifty-three dollars and ninety-seven cents; and as the sum insured, four thousand dollars, together with the mortgages, which were six thousand fifty-three dollars and ninety-seven cents, amounted together to more than the whole value of the property, when by the by-law it could not exceed three-fourths the value, the company insist that there was a clear violation by the plaintiff of both branches of the by-law, and that the insurance was utterly void.
It is admitted that none of the directors had any actual knowledge of the amount of the incumbrances except what appears upon the application; but the plaintiff had paid two assessments for losses, and he claims that Reed, who is admitted to have been "an agent of the secretary of said company," and who made out and forwarded the application to the secretary, and is claimed to have been an agent of the company, had notice of the amount of the incumbrances. The evidence upon this point, which was the only matter of fact not agreed upon, will be noticed in its proper place.
But in answer to the objection that the insurance is void by reason of its violating the by-law, the plaintiff's counsel insisted in the court below (as he insists here), and asked the court to charge, that as the insurance was for the benefit of Wakeman, the mortgagee, and so mentioned in the application and policy, by-law number 16 had no application to it, and the suit being brought for the benefit of Wakeman, there was no violation of this by-law, and that the plaintiff is entitled to recover. This request was refused, the court holding the policy void.
Now, if this policy constituted a contract between the mortgagee and the insurance company, and the insurance was of his interest as mortgagee, and not that of the plaintiff as owner, there might be good ground for holding that it did not come within the mischief intended to be guarded against by the by-law in question. At least there might be good ground for contending in such a case that no benefit could legally have accrued to the plaintiff from any payment to be made for any loss which might accrue, unless there was some agreement between the plaintiff and his mortgagee that such payment should operate in reduction of his mortgage.--See Ellis on Ins., 162, and cases cited; White v. Brown, 2 Cush. 412; King v. State Mutual Ins. Co., 7 Cush. 1.
But this policy creates no contract relation between the insurance company and the mortgagee. It is a...
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