Alexander Fuller vs. The Boston Mutual Fire Insurance Company, 4 Met. 206

Shaw, C. J. Assumpsit on a policy of insurance against fire, in which the plaintiff relies upon the original cause of action, and also on an award. The plaintiff sues, in effect, as assignee ; but as the assignment was made with the consent of the defendants, and as a part of the original contract, and as it is found that the plaintiff was interested, as mortgagee, to the amount of the whole sum insured, we see no reason why he cannot maintain the action in his own name ; and his right so to do has not been contested on that ground.

Several questions have been argued ; one of them, and a principal one, is, whether the valuation of the property, as stated in the policy, under the circumstances, is to be deemed conclusive evidence of the actual value, for the purpose of adjusting the loss. It is not contended that there was any designed or fraudulent over-valuation, or any collusive valuation, or any wilful mis representation of the value. The case arises upon a policy made by a mutual insurance company, that had no authority to insure over three fourths of the value of the buildings.

In regard to all property lying out of the city of Boston, the mode taken to ascertain the value was this ; the assured made a statement in writing — in answer to certain standing questions, in compliance with the by-laws of the company — of the situation, circumstances, and value of the buildings proposed to be insured, which was filed and remained with the company. By the 7th

article of the by-laws, it would be the duty of the president to visit and examine the buildings, alone or jointly with a direc tor, and fix the sum to be taken thereon, and the rates of insurance. As this company was established at Boston, it was to be expected that the greater proportion of risks would be taken in Boston ; and the by-laws were adapted to meet that expected state of things ; but they made no special provision for examining buildings out of the city.

But this indicates the general policy of the company ; and in point of fact, it appears, in the present case, that a like examination was made by a committee of the directors, and for the like purpose. In determining what amount shall be insured, the company necessarily determine the value of the building, or rather they fix a valuation, over which it shall not be rated, for the purpose of insurance.

Being limited to insure not exceeding three fourths of the value, in determining the sum to be insured, they by necessary consequence fix a valuation at such a sum, that the sum insured shall not exceed three fourths of it. The result is, that as the valuation is thus proposed on the one side, and after the proposition is considered and modified, it is acceded to on the other, and the amount insured, and the rate of premium, assessment and liability, established on the same basis, it is, in the highest sense, a valuation by mutual agreement.

Then the question is, whether a valuation thus deliberately and carefully made by mutual agreement, as a part of the original negotiation — when each party is independent of the other, and at liberty to contract or not, as they are or are not respectively satisfied with the terms — shall, in the absence of all fraud, collusion and misrepresentation, be taken as the best evidence of the actual value of the premises insured. [See Borden v. Hingham Mutual Fire Ins.

Co. 18 Pick. 523.] The same reason, which applies to other cases of contract, applies to this ; and the general rule is, that parties capable of contracting, and who enter into a contract, without fraud or imposition, are bound by law to abide by it.

One of the principal objections is, that the defendants are a corporation, and that a corporation can only act within the scope of the authority conferred upon them.; and that by their act of incorporation, this company can only insure three fourths of the value of the property ; and if they can show that a contract, in its terms proposes to bind them to a responsibility for a greater amount, they may show it in defence, and reduce the amount to that, for which alone they can make themselves liable. This, as I understand it, is the strength of the argument.

But admitting its full force, we think it does not shake the position, that a valuation, fairly and deliberately made, is binding on them. The defendants were incorporated for the express and indeed for the sole purpose of insuring each other against loss by fire. Like all other trading or negotiating corporations, being invested with power to make a particular class of contracts, they are invested with all the incidental powers necessary to carry into effect the objects and purposes for which the corporation was created.

In giving them power to insure a certain proportion of the value of buildings, the legislature necessarily clothed them with the power, at some time and in some mode, to determine such value, or to enter into suitable and proper arrangements for fixing it. Whether this shall be done by their own officers, or by referees mutually agreed on ; whether before or after the contract entered into ; is a question of expediency, not of power.

If they had not power, in some mode, to fix the value, they never could make an adjustment which might not be overreached by a suit, in which the question of value must be submitted to a jury. Such valuation by the appraisement of indifferent men, or such adjustment after a loss, would always be open to the same objection as this valuation ; which is, that though the officers of the corporation have assented to the valuation, yet if it is an over-valuation, or if, in other words, it can be shown, to the satisfaction of a jury, to be an over-valuation, it is void as against the corporation.

But we think the true answer is this ; that a valuation deliberately and honestly fixed by agreement, a valuation by which the premium and assessments to be paid by the assured are fixed, as well as the amount to be paid by the company in case of loss, is the best evidence of the actual value.

Suppose a claim on a policy for a loss, and that the company might perhaps have successfully defended, on the ground that the loss was one for which they were not liable — as by fire caused by civil war, or insurrection — and the parties should agree to an adjustment by compromise or arbitration : Such adjustment would, we think", be binding ; and yet its binding force would be derived wholly from the agreement.

It being once admitted that they are a body having the faculty to contract, we think it follows, that they have power, by their regular agents and officers, to make all such subsidiary and incidental contracts and agreements, both in making the principal contract, and afterwards in adjusting and executing it, as are necessary to accomplish the main purpose and object of their incorporation. Being of opinion, that the valuation, under the circumstances, was conclusive, it becomes unnecessary to consider the other branch of the case, or the effect of the award.

The fact, that the present plaintiff was no party to the submis sion, would seem to be a formidable objection t. his recovering upon it; but for the reason stated, we give no opinion on that point, and only make this remark, to show that we place no reliance on that award, in rendering Judgment for the plaintiff.