Eastman v. Carrol County M. F. Insurance

The opinion of the Court was drawn up by May. J. The defendants are a Mutual Eire Insurance Company, a corporation created by the Legislature of the State of New Hampshire, and this action is brought upon a policy of insurance originally given, to one Ira Ramsell, a resident of this State, and by him assigned to the plaintiff. It appears from the application of said Ramsell, which forms a part of the policy, that when the insurance was procured he represented that the property insured was not incumbered by mortgage, or otherwise, and a lien was given to the company thereon, for the payment of all assessments. It turns out, however, that said Ramsell had no title or interest in the property; and that the title then was, and continued to remain in one John Jameson until he conveyed to the' plaintiff, Eeb. 8, 1851. It is conceded, in .the argument for the plaintiff, that the policy, by reason of the fact before stated, was void while it remained in the hands of said Ramsell; but, it is contended, that it became valid and binding upon the company by virtue of an assignment from said Ramsell to the plaintiff, bearing date, March 27, 1851, the same having been consented to in writing by the defendants, or their agents, when made. The plaintiff claims to recover as assignee of the policy, the property insured having been consumed by fire on the ninth day of June, 1852, at which time he was the owner. The policy was issued subject to the by-laws of said company. By article 15 of these, it is provided that, “in case of the alienation of any house or building by sale or otherwise, or in case of removal, where furniture or goods only were insured, the policy shall thereupon be void, and shall be surrendered to the directors to be canceled; and, on such surrender, the insured shall be entitled to recover his deposit notes on payment of such proportion of all losses and ex [313] penses prior to such surrender, provided that the grantee or alienee above named, having the policy assigned to him, may have the same ratified and confirmed for his benefit on application to the directors within thirty days, and giving security to their satisfaction for the remaining term of the policy; and, in such case, he shall be entitled to all the privileges, and incur all the liabilities of the institution equally with other members.” It was, undoubtedly, the intention of the parties to said assignment, and of the defendants’ agents in consenting thereto, that it should have effect under and by virtue of said by-law. No other clause is found, either in the charter or by-laws of the defendants, which confers upon their directors any authority to bind the company by reason of any assignment of a policy not made in pursuance of said by-law. The directors, therefore, can bind the company only when acting in accordance with its provisions, and in the cases therein provided. In the case under consideration, were the acts of the directors authorized by the by-laws ? or, in other words, was the assignment relied on, as a ratification or confirmation of the original policy, made in pursuance of its provisions ? Was there an alienation of the property insured such as the bylaw contemplates, and, if so, was the application for consent to the assignment of the policy seasonably made ? The policy was issued upon the understanding that the assured was the owner of the property insured. It is so in all cases. When, therefore, the by-law speaks of an alienation by sale, or otherwise, it manifestly means an alienation by the party insured. The conveyance, therefore, from John Jameson to the plaintiff, was not an alienation within its meaning. Ho had no interest in the policy, and the defendants were in no way responsible to him. The alienation by him could not render the policy void, because, while Ramsell held the policy, the rights of the defendants would not be affected by the sale. It was a matter of indifference to them whether Jameson or his grantee were the owners of the property insured. If the party insured, at the time of the issuing of the policy, had no interest [314] in the property- covered by it, then the policy was void. He must, therefore, have had an insurable interest in the property when insured, to make the policy valid; and it is an alienation of that interest which alone can render the policy void; and the authority of the directors, under the by-law, to ratify and confirm assignments in cases of the sale or alienation of the property insured, applies only to policies which are made void by such an alienation, and not to such as were originally void. The alienation, therefore, referred to in the by-law, must of necessity be made by the party who is insured. If, however, the contingency upon which the directors are empowered to act had occurred, as no application was made to them within thirty days after the conveyance from Jameson to the plaintiff, the power conferred by the by-law had, by express limitation, ceased to exist long before the action on their part upon which the plaintiff relies. Eor the reasons before stated, the assignment of the policy was inoperative, and no new force was imparted by it to the policy in suit. If, however, the difficulties which have been suggested could be avoided, there is still an obstacle in the way of the plaintiff’s recovery. The assignment itself recites that the plaintiff, is to hold the policy “ subject to all the liabilities and entitled to all the benefits to which he, the said Ramsell, was entitled by virtue thereof.” It does not profess to create any new rights, but simply to transfer subsisting ones. The defendants, when they consented to its transfer, do not appear to have been aware that Ramsell was not the owner of the property to which the policy was designed to attach. They must have supposed from the language of the assignment, (in which he speaks of having sold and conveyed the buildings to the plaintiff,) that he was the owner, and that it was therefore subject to the lien which was referred to in his application for insurance. From this application, and from the recitals in the assignment, the directors, at the time they consented to the transfer, had good reason to believe that the policy was then valid, and that the title to the property insured was in Ram-sell, and that it remained in him until his conveyance to the [315] plaintiff. They might, therefore, well conclude that the lien provided for in the policy, inasmuch as the plaintiff took the policy subject to all the liabilities of Rarnsell, would continue upon the property insured, notwithstanding its conveyance, and be sufficient security for all assessments then and subsequently to be made. Hence the defendants neither took nor required any new note or security therefor, and the plaintiff gave no lien upon the property after it was conveyed to him. The lien, therefore, which was contemplated by the parties to the policy, and which was then understood to exist, never did, in fact, attach. In this, the defendants or their agents were deceived, being led into error by the misrepresentations of Rarnsell, in regard to his title, as contained in his application to be, insured, and repeated in the assignment with the knowledge and assent of the plaintiff. Under such circumstances, we think, it cannot properly bo said that the defendants, by the written consent of their directors to the assignment upon the policy in suit, have either ratified or confirmed the same, so as to make the policy, which is conceded to have been originally void, a valid contract in the hands of the plaintiff; and, for this reason, this action cannot be maintained. Plaintiff nonsuit. [This case was submitted to the full Court upon an agreed statement of facts; and Tenney, C. J., Hathaway, Cutting, Goodenow, and Davis, J. J., concurred in the opinion that the action could not be maintained.]