Washington Fire Ins. Co. of Baltimore v. Kelly

• Decision Date: 27 May 1870
• Citation: 32 Md. 421
• Parties: THE WASHINGTON FIRE INSURANCE COMPANY OF BALTIMORE, AND THE ATLANTIC FIRE AND MARINE INSURANCE COMPANY v. JAMES E. KELLY.
• Court: Maryland Court of Appeals

32 Md. 421

THE WASHINGTON FIRE INSURANCE COMPANY OF BALTIMORE, AND THE ATLANTIC FIRE AND MARINE INSURANCE COMPANY v. JAMES E. KELLY.

Court of Appeals of Maryland

May 27, 1870

APPEALS from the Superior Court of Baltimore City.

These actions were instituted by the appellee on two policies of insurance issued by the appellants respectively, to recover for a loss resulting from the destruction by fire of the well known buildings called "Barnum's Museum," on Broadway, New York. They were insured in the names of Benjamin F. Beekman and Gilbert T. Reeder, in the Washington office, on May 9th, 1867, to the amount of $2,500, for one year from the 14th of May, and in the Atlantic office, on the 7th of June, 1867, to the same amount, for a like period from the date of the policy. No description was made of the interest which the assured had in the property, and no representation as to it was given to the companies or expressed in either policy. At the time of the insurance Beekman and Reeder had only an equity of redemption in the property, subject to four mortgages, amounting to $350,000.

On the 11th of February, 1868, Beekman and Reeder contracted in writing to sell the premises to a certain Charles W. Budd for the sum of $462,000, which he agreed to pay--$10,000 in cash, $52,000 on the delivery of the deed; the amount of the four mortgages was assumed; and a mortgage for the residue $50,000 was to be given. The deed and necessary papers were to be delivered, and the money paid on or before the 1st of April, 1868. On the day of the contract, Budd assigned all his interest to the appellee, for the sum of $1.00, subject to the performance of the covenants. The $10,000 were paid but no possession was given under the contract, nor was anything else done before the fire, which occurred on the 2d of March, 1868. The loss was total. On the 5th of March, a deed was executed and delivered by Beekman and Reeder, to the appellee, as of the 11th of February, 1868. On the day of the execution of the deed, Beekman and Reeder agreed in writing with the appellee, to collect the amount of all their policies, or so much thereof as might be collectable, and make certain applications of it for his benefit. On the 1st of June, 1868, they made an absolute assignment of all the policies, including those issued by the appellants, to the appellee.

Mr Frank P. Clark, an insurance broker of Baltimore, testified on behalf of the appellants, that as the agent of the Baltimore underwriters, "he visited New York shortly after the destruction by fire of the premises insured, and before the 12th of March, 1868, when proof of loss was furnished, and called on Messrs. Beekman and Reeder, and having become acquainted with the disposition of the property, he said to them that the companies considered themselves entitled, if they paid under their policies, to be subrogated to that extent to the rights of the assured, as against the vendee of the premises, and that if they, Beekman and Reeder, would so subrogate them, the companies would at once pay the respective amounts which they had underwritten Mr. Reeder was disposed to assent to this proposition, but Mr. Beekman interposed, and said that it could not be done, for that it was agreed with the vendee, at the time of the agreement of purchase, which had been given in evidence by the plaintiff in this case, that the policies of insurance held by Beekman and Reeder should stand for the benefit of the purchaser, in the event of loss, whereupon the said Beekman and Reeder declined the proposition made by witness, stating, at the same time, that they had no interest in the insurance money, but were claiming the same only for the plaintiff."

To this the appellants filed the following counter-statement of Beekman, contained in a letter written by his counsel from New York, which was admitted, by consent, as if orally testified to by Beekman, viz:

"He (Beekman) says that the only verbal arrangement about insurance at the time of the contract, or before the fire, was, that when the contract should be carried out, and the deed delivered, Budd should, on the one hand, have the benefit of existing policies, and on the other hand should pay Beekman and Reeder a pro rata proportion of the premiums for the unexpired portion of the policies from the time of the delivery of the deed."

The policies were offered in evidence. The policy of the Washington Company contained, in its fourth paragraph, the following language:

"If the said property shall be sold or conveyed, or if this policy shall be assigned, without the consent of the company obtained in writing hereon * * * then, and in every such case, this policy shall be null and void."

Its third condition was also as follows:

"3. Policies of insurance subscribed by this company, shall not be assignable without the consent of the company, expressed by endorsement made thereon; in case of assignment without such consent, whether of the whole policy or of any interest in it, the liability of the company in virtue of such policy, shall thenceforth cease; and the company reserves to itself the right to elect, either to consent to the transfer or to return a ratable proportion of the premium and cancel the policy."

A portion of its second condition, was in the following words:

"If the interest in property to be insured be a leasehold interest, or other interest not absolute, it must be so represented to the company and expressed in the policy in writing, otherwise the insurance shall be void."

The policy of the Atlantic Company contained no special provision against sale or conveyance of the insured premises, and no clause precisely analagous to the second condition of the Washington policy. The fourth of its conditions, however, was in these words, viz:

"4. Every policy of insurance made by this company shall be sealed with its seal, signed by the President and attested by the Secretary; and the person for whose interest the insurance is made, must be declared and named therein, nor can any policy or interest therein be assigned, but by consent of the company, expressed by an endorsement made thereon."

Exception: The plaintiff presented two prayers, both of which were granted: The first, to the effect that Beekman and Reeder, on the facts and exhibits admitted in the agreement of counsel, had an insurable interest in the premises insured, at the time of the fire, and the second that, on the said facts and exhibits, there was no such sale or conveyance as would forfeit the rights of the assured, under the Washington Company's policy. The first prayer applied to both cases, the second to that against the Washington alone.

The defendants offered the following prayers:

1. In the case of the Washington Fire Insurance Company. That as it is admitted that Beekman and Reeder, at the time of application for the insurance in controversy, and the execution of the policy in suit, had only an equity of redemption in the premises insured, subject to the incumbrances set forth in the deed of 5th of March, and referred to in the contract of 11th of February, if the jury find that Beekman and Reeder made no representation or statement that such was the character of their estate or interest in the premises, to the said defendant, at or before the execution and delivery of said policy, or at any other time, and that no such statement and representation of interest is expressed in the policy, then under the terms and conditions of the policy, and the facts admitted in the agreed statement of facts, the plaintiff is not entitled to recover.

2. In both cases. Even if the said policies attached, notwithstanding the facts referred to in the first prayer, that the assured, Beekman and Reeder, had no interest in the premises insured at the time of the fire, (under the facts admitted,) except such as the vendee of said premises had not paid for, and in estimating that, the jury must take into consideration not only the $10,000 paid in cash, but the mortgages for the assumption of which such contract of sale provides, and the plaintiff can only recover such proportion of the amount underwritten, as the amount of the purchase money thus left unpaid shall bear to the whole.

3. In both cases. Should the Court decline to grant the defendants' first prayer, then they (the defendants) were entitled, on payment of the loss under their policies respectively, to be substituted or subrogated pro tanto to the rights of Beekman and Reeder, under the contract of sale given in evidence against the vendees and their assigns at the time of the loss, upon the admitted facts and the evidence of the witness, Clark, (if the jury believe the same,) and the plaintiff is not entitled to recover.

4. In both cases. Should the Court decline to grant the defendants' first prayer, then that under the facts admitted, they (the defendants) were entitled, on payment of the loss under their policies, respectively to be subrogated pro tanto to the rights of Beekman and Reeder, at the time of the loss, against the vendee, under the contract of February 11th, or his assigns, and that under the said facts admitted, if the jury believe that the said Beekman and Reeder, before suit brought, and before the assignment of the policies to the plaintiff, refused so to subrogate the defendants to their said rights, and declared to the agent of the defendant that they would not do so, then the plaintiff is not entitled to recover.

5. In the case of the Washington Insurance Company. That by reason of the facts admitted, the right of Beekman and Reeder to recover under the policy of the defendants, had been divested, and was so divested under the terms and conditions of said policy, when the loss took place, and the...