Tyler vs. The Ætna Fire Insurance Company, 12 Wend. 507

By the Court, Nelson, J. When this case was first before the court, on a motion to set aside a non-suit and to grant a new trial, we decided that the preliminary proofs furnished were sufficient; that the plaintiff had an insurable interest in the property, and was not bound to disclose the nature or extent of his interest on the application, unless particularly inquired of by the company; and that he had a right to insure as general owner. It is again urged that he was bound to disclose the particular interest he held in the property, and could not insure as, general owner, and the case of Columbian Ins. Co. v.

Lawrence, 2 Peters, 55, is referred to, to sustain the position. The application in that case, so far as it is material to be considered here, was in these words : ‘ What premium will you ask to insure the following property, belonging to Lawrence and Poindexter, for one year, against loss or damage by fire, on their stone mill.” It appeared on the trial that Lawrence and Poindexter held one third of the property in fee, and the other two thirds as the assignees of a mortgagee, and a moiety of the whole of the title was held under a contract which had expired.

The court decided that the plaintiffs had an insurable interest, but that the description of their interest in the property was material to the risk, and not truly stated.

It has been deliberately settled in Massachusetts, as an established principle of the law of insurance, that a bona fide equitable interest in property of which the legal title is in another, may be insured under the general name of property, or by a description of the thing insured, unless there be a false affirmation or representation, or a concealment after inquiry of the true state of the property; and that the applicant need not represent the particular interest he has at the time, unless inquired of by the company. Locke v. North Am. Ins. Co., 13 Mass. R. 61. Bartlet et al. v. Walter, id. 267. Oliver v.

Green, 3 id. 4 id. 330. 8 Pick. 80. Phillips on Ins. 64, 94. Our own course of decisions has obviously been upon this understanding of the law, and in accordance with the above principle ; and such, I apprehend, is the doctrine of the courts in England. 1 Caines, 276. 2 id. 203, 19. 1 Johns. R. 385. 11 id. 302. 1 Hall’s R. 126, 130. 9 Wendell, 409. Marsh. on Ins. 589. Rising v. Bennett. id. 590. 3 Burr, 1390. 1 Bl. R. 423. Phillips on Ins. 64, 94, 41.

The nature and extent of the interest of the insured may in some instances be material facts in making up an estimate of the risk and rate of premium, and upon general principles, applicable to this action, a disclosure would seem to be required ; but generally they cannot be so material as to justify a conclusion that they would have varied the premium paid. The necessity of disclosing the title of the applicant would greatly embarrass the operation of insurance, without affording any essential benefit to the offices. Any error in the declaration or description of title might be fatal.

The rights of the insurer are sufficiently guarded, by having it in his power to exact, by inquiry a description of the interest of the applicant, and by the recovery being limited in case of loss to the value of the interest proved on the trial. The minuteness of the proposals and conditions, as to the description required of property to be insured, without specifying the nature or extent of the interest, affords a reasonable inference that this information is not deemed generally material and indispensable.

The insurer is only responsible to the extent of the interest of the applicant, and that must be shown upon the trial. The only object, therefore, in the previous disclosure of it, is, to enable the insurers to estimate the risk and premium. I have said that this cannot generally be material, in a degree that would deserve consideration. The present case may be taken as an illustration of the justice of the remark. Tyler holds a contract for a deed of the premises, upon which he has paid some $800, and is bound to pay $500 or $600 more.

Whether the house burnt down or not, he must pay the amount remaining due or to become due, and the only equivalent for the whole is the premises. We do not perceive how he could be more deeply interested in the preservation of the property by having the fee than he now is ; and the materiality of the disclosure is founded upon the idea that his interest in the preservation would be less in the present state of the title. He is interested to the full extent of the value of the premises.

The only qualification conceivable, and which is too sublimated and refined for consideration, is the chance of escaping from the payment of the balance on the contract, in case of loss. The judge charged the jury correctly, that the terms and conditions of this policy did not require the plaintiff to give notice to the defendants of the existence of the policy to Shafer or in default thereof, that the policy declared on would be void.

The terms of the policy are, that “ in case the insured shall have already any other insurance against loss by fire on the property hereby insured, not notified to this corporation and mentioned in or endorsed upon this policy, then this insurance shall be void“ and if the said insured or his assigns shall hereafter make any other insurance on the same property, and shall not, with all reasonable diligence, give notice thereof to this corporation, and have the same endorsed on this instrument, or otherwise acknowledged by them in writing, this policy shall cease.” The fifth condition is broader in its language in this respect; but, I apprehend, a sound construction of it, in connection with the policy, would not extend it so as to add any new obligation; and if so, the policy of which notice is required to be given, is one procured by the plaintiff or his assigns.

I admit, upon this view, it is difficult to discover the use of this condition ; but if a distinction was intended between the two clauses, it would have been easy and certainly natural to have marked it more distinctly. The fifth condition requires that notice of all previous insurances, upon property insured by this company, shall be given, &c. or the policy shall be void.' If this provision is to be literally construed, it would include an insurance by any person, but it could not contemplate that strangers would insure the property ; and if they did, the policy would be void, as they would have no interest.

The rational

interpretation, I think, is, to confine the condition to previous insurances by the party insuring. This view is strengthened by the clause in the policy referring to the conditions, to wit, that “ this policy is made and accepted in reference to the proposals and conditions hereto annexed, which are to bp used, &c. to explain the rights and obligations of the parties, in all cases not herein otherwise specially provided for. I am confirmed also in the propriety of this construction, from the fact thus the corresponding condition in the policy of the Merchants’ Ins.

Co., given in the case, is, in terms, in conformity to the stipulation on the same subject in the body of the policy, and is also confin. ed to the assured. There is another ground upon which this direction of the judge at the circuit may be sustained. The policy by the Merchants’ Insurance Company, if subsisting at all, was not an insurance of the same interest; it could be operative only upon and to the extent of the interest of Shafer in the premises, which was distinct from that of the plaintiff.

It is well settled, that persons holding separate and distinct interests in the same subject matter, such as mortgagor and mortgagee, trustee and cestui que trust, &c. may each insure their own interests. Phillips on Ins. 41, and cases there cited. The policy, therefore, of Shafer was not upon theprop-erty of the plaintiff that was insured within the meaning of the clause, which required notice of it to be given, or in default, to become void. Traders’ Ins. Co. v. Roberts, 9 Wendell, 404.

The judge charged the jury, that if from the evidence they should be satisfied that the plaintiff, at the time of his application to the defendants for insurance, knew of the policy of Shafer from the Merchants’ Insurance Company, and neglected to disclose the fact, it was such a concealment of afact material to the risk as would avoid the policy, and the jury should find for the defendants. This is undoubtedly a misdirection, for which a new trial must be granted.

What facts within the knowledge of the assured are material to the risk, and necessary to be communicated to the assurers at the time of the application, is matter for the jury exclusively to determine, as was decided after the fullest consideration, and by the highest authority in the state. New-York Fire Ins. Co. v. Walden, 12 Johns. R. 513. The judge, instead of directing that the fact of the existence of the policy to Shafer was material to the risk and should have been disclosed, ought to have submitted the point to the jury, after advising them of its bearing upon the case.

Admitting the policy of Shafer to be subsisting, it covered only his interest, to wit, the balance of the consideration money. The insured is only entitled to indemnity, and that not to exceed the amount of the policy ; and hence Shafer would be entitled only to compensation equivalent to the deprecation of his security for that ba]ance¡ arising from the destruction of the building.

The value of the land, which still remained, and the ability of Ty-^er to PaY on ^e contract where he was personally holden, ' must be taken into considertion, in order to ascertain the real claim of Shafer, and to estimate the amount the insurance company would be liable to pay him; or if the company paid to the amount of the policy, they would undoubtedly be enti-tied in equity to Shafer’s security which he held for that sum against Tyler, which would be the same thing, and would afford the means of a more accurate adjustment upon the principle stated.

Upon this view of the relative position of the parties, it is not difficult to ascertain the materiality of the fact under consideration. It could influence the conduct of the plaintiff in no possible way upon the score of interest or otherwise, assuming that the insurer trusts more to the interest than the principles of the assured ; he would gain nothing in case of loss, from the existence of this policy. As to Shafer, what interest or inducements had he adverse to the ordinary security of the interest of the company in these cases ?

As he was not in possession, the idea of a relaxation of care and attention in the preservation of the building does not enter into the view of this branch of the case. The existence of an interest, and hence the temptation to be the incendiary to destroy the property, is all that can be said in respect to him— and that interest arising exclusively and to be measured by the difference between the value of the security he already held, and that of the policy for the balance of the consideration money; and it does not appear but that the security was ample for the purpose.

I do not intend to say whether the fact of the existence of Shafer’s policy was or was not material ; all I mean to say is, that it is not a question of law, and that many considerations exist, and should be submitted to the jury, to enable them ■ to form an enlightened opinion on the point. I have referred to some of them, which seem to me to tend to confirm the propriety of the rule, that the question is one of fact, and exclusively within the province of a jury. There were other questions presented upon the argument, but the conclusion to which I have arrived renders it unimportant to examine them.

New trial granted; costs to abide event.