Emery v. Piscataqua F. & M. Ins.

The opinion of a majority of the Court was drawn by Appleton, C. J. The plaintiff’s title to the property insured, was acquired by a mortgage from Ira Winn to him, bearing date Dec. 1, 1860. The policy in suit was issued Oct. 5, 1861. Whether we regard the proof adduced on the trial, or that upon which the motion to set aside the verdict on the ground of newly discovered evidence, rests, it is obvious that the mortgage of the plaintiff was not foreclosed and that the finding of the jury that the plaintiffs title had become absolute, was clearly against evidence. A mortgagee has an insurable interest. But the fact that the plaintiff was mortgagee, and that his interest as such was to be insured, does not appear in the policy. The third of the conditions of insurance, which by the terms of the policy is made part thereof, is in these words : "If the property to be insured, be held in trust, or on commission, or other interest not absolute, it must be represented to the company and expressed in the policy in writing; otherwise the insurance, as to such property, shall be void.” It is insisted, as the plaintiff was insured as the absolute owner of the property at risk, when he was only the mortgagee of the same, that therefore the policy is void. [324] A misrepresentation by the applicant for insurance, as to his interest in the property to be insured, as when, being mortgagee, he is insured as the owner of the fee, has been held to avoid the policy. Battles v. York County M. F. Ins. Co., 41 Maine, 208. So, a policy issued under the condition that it shall be null in case of subsequent insurance, without the written consent of the insurers, has been held void, when a subsequent insurance has been obtained without such consent in writing. Hale v. Mechanics’ M. F. Ins. Co., 6 Gray, 169. These, and many similar decisions, are made to depend upon the peculiar language of the polices then under consideration. To avoid their effect, the Act of 1861, c. 34, entitled " an Act in relation to Eire and Marine Insurance Companies and actions on contracts of insurance,” was passed. The present policy is subsequent to the passage of the Act referred to, and is subject to its provisions. By the Act of March 15, 1861, c. 34, § 2, "an agent authorized by an insurance company to receive applications for insurance, or payments of premium, or whose name shall be borne on the policy, shall be deemed the agent of the company in all matters of insurance; any notice required to be given to said company or any of its officers, by the insured, may be given to such agent; any application for insurance or valuation, or description of the property, or of the interest of the insured therein, if drawn by said agent shall be conclusive upon the company, but not upon the insured, although signed by him,” &c. The policy in suit bears upon its face the name of John E. Dow, as agent. It was issued by him as such agent. No interrogatories were proposed and no written application for an insurance was made. The defendants’ agent, according to the uncontradicted testimony of the plaintiff, was fully cognizant of the state of his title, and, if there is error in the description of his interest in the policy, it would seem to be justly imputable to such agent, all whose acts, it is provided, "shall be as binding upon the company as if done [325] and performed by the person specially empowered and designated therefor by the contract.” A mistake, such as occurred in the present case, if the misdescription of the plaintiff’s interest arose from the neglect of the defendants’ agent, would be corrected by a court of chancery, and the insurers would be held responsible. Where a mortgagee applied for insurance, through an agent of the insurance company, intending to effect an insurance of his interest as mortgagee, and so stated to the agent, but the agent drew the application as for an insurance on the property itself, in the name of the mortgager, and as his property, the amount to be payable in case of loss to the mortgagee, and so made the application and had the policy so made, in the belief that this was the proper legal mode of effecting insurance on the mortgagee’s interest, it was held that such mistake could be corrected by a court of chancery. Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn., 517. And this notwithstanding the insured had failed in a suit at law upon the same policy. S. C., 29 Conn., 374. In equity, the Court held there was a mutual mistake as to the proper mode of filling out the insurance, and decreed the correction of such mistake. By § 3, "all statements of description or valuation in any contract for insurance or application therefor, shall be deemed representations and not warranties. * * Any misrepresentation of the title or interest of the insured, unless the same is fraudulent, shall not prevent his recovering on the policy the amount of his insurable interest.” In this case, there is no proof of any misrepresentation of the plaintiff’s interest, but, if he is to be believed, it was fully disclosed to the agent of the defendants. Had there been a misrepresentation as to the interest of the insured, it is specially provided that it shall not prevent a recovery to the full amóunt of the interest insurable, unless such misrepresentation is fraudulent. Warranties on these points — the valuation and interest of the insured — are to be treated as representations and nothing more. [326] By § 4, "no insurance company shall avoid payment of a loss, by reason of incorrect statements of value or erroneous description by the insured, in the contract of insurance, if the jury shall find the difierencs between the property as described and as really existing, did not contribute to the loss or materially increase the risk,” &c. The policy bears date since the passage of the Act referred to. By § 5, of the same, it is provided that, "all provisions contained in any policy or a contract of insurance, in conflict with the provisions of this Act, are hereby declared null and void, and all contracts of insurance hereafter made, renewed or extended, in this State, shall be subject to the provisions of this Act.” The policy in suit, if enforced according to its terms, is directly in conflict with the statute to which we have referred. But the statute is imperative and must control. The contract is and must be subject to its provisions. " Jus publicum privatorum pactis mutari non potest,” says Papinian. The contracts of private persons cannot alter a rule established on grounds of public policy. The Legislature have deemed .it wise to impose restrictions upon the general liberty of contracting which the law accords to parties. Parties cannot by their contracts avoid the obligations of a statute, or be bound by agreements contrary to its mandates. The statute, it is to be observed, does not annul a policy having provisions at variance with its requirements. It simply annuls and renders void those provisions. It leaves the policy in all other respects in full force. The Act is to be regarded as included in, and a part of policies, issued since its passage. Nor is this any hardship upon parties, for all are deemed to have contracted with a knowledge of its existence and subject to its provisions. ( ^Similar or analogous legislation is to be found in other statutes. In the usury law, all interest is illegal beyond the statute rate, yet, subject to that modification, the contract is enforced. [327] Both parties intended a contract of insurance. They intended or should have intended that it should be a valid one and in accordance with the statutes of the State. To such a contract we give force and effect, eliminating therefrom any provisions at variance with the will of the Legislature as expressed in its enactments. Upon any other construction, the statute becomes inoperative. It follows, therefore, that the defendants cannot escape the performance of their contracts by reason of a misdescription of the plaintiff’s interest, unless the same was material and fraudulent on his part. Assuredly they should not, if it arose from the fault of their agent. The point that this misdescription was material and fraudulent within the statute, was not taken. The jury were not asked to pass upon it, nor was the Court requested to give any instructions in relation thereto, nor does the evidence as reported afford any indications that the result would have been changed, had instruction relating thereto been given. The exception, that the question as to what claims the plaintiff had against Winn, was not permitted to be answered, is not well taken. If the inquiry had been what claims he had which were secured by the mortgage, it might have been material. But the question was not thus limited, and was therefore properly excluded. Exceptions overruled. Cutting, Kent, Dickerson, Barrows and Daneorth, JJ., concurred.