Freeman v. Fulton Fire Insurance

By the Court.—Emott, J. If the case of Fowler a. N. Y. Indemnity Ins. Co. (23 Barb., 143); decided that an averment of interest in the insured is unnecessary in declaring on a fire policy, it cannot be sustained. The cases to which Judge Strong refers to sustain his remark to that effect will be found, all of them, to be cases of marine insurance. In such cases, an averment of interest was unnecessary, for such policies were valid as wager policies, although the plaintiff had, in fact, no interest in the subj ect insured. Of course, therefore, neither an averment nor proof of interest could be required to sustain a recovery on such a policy. (Buchanan a. Ocean Ins. Co., 6 Cow., 318.) If the doctrine stated by Judge Strong, in the case to which I refer, could be sustained, it could only be on the ground that no interest in the property insured was requisite to sustain a policy of insurance against fire, which certainly is not the case under the statute against wager policies, or else, because a policy of that description would be valid at common law, and is only defeated by the statute. This latter view was urged with ability by the plaintiff’s counsel on the present argument. If it were true that wager policies of fire insurance, or policies of insurance against fire, where the insured had no interest, in the property insured, would be valid were it not for the statute, there would be force in his argument, that no interest need be averred in the plaintiff in declaring on them. Where a contract is valid at common law, but is forbidden by a positive statute only, it may not be necessary for a plaintiff in declaring [405] upon it to negative an exception made by the statute, or to aver that it is not within its prohibition. It is unnecessary, however, to consider how far this is the rule of pleading, or how far the present case would be controlled by such a rule, since the premise upon which the whole argument rests—to wit, that a contract of insurance against fire would be valid at common law, although the insured had no interest in the premises—cannot be sustained. In Buse a. Mutual Benefit Life Ins. Co. (23 N. Y, 516), it was held by the Court of Appeals, that a policy of insurance upon the life of another, obtained by one who has no interest in the life, is void at common law. The same rule must apply to fire policies, and indeed, in the case I have just referred to, Judge Selden shows that such is the rule recognized by authority, and that the contrary statements in some cases, which have misled even judges, as well as text-writers and makers of digests (see, for instance, 3 Abbotts’ Dig., 414), are all made in reference to marine policies. The cases recognize ah exception in the case of policies of marine insurance, although the reason for the exception is not apparent, and its extent is confined to this class of insurances. It must be considered well settled at present, that at the common law, as well as under the Statute of Betting and Gaming (1 Rev. Stat., 662, § 8), a policy of fire insurance is void, unless the party insured has at the time an insurable interest in the property insured. It follows that a complaint in an action on the policy must contain an averment of such an interest, in order to state a cause of action. The present complaint states no such interest in the plaintiffs, but it is further contended that the action may be supported by them upon the averment which it contains of the interest of Charles Stetson, under the provisions of sections 111 and 113 of the Code. In the case of Considerant a. Brisbane (22 N. Y., 389), the Court of Appeals held that where a contract was made, ¿ontaining a promise to pay A. B. as “ executive agent” of C. D., A. B. might maintain an action upon the promise, although the consideration moved wholly from C. D., and A. B. had no interest in the contract. A person who is described, or who describes himself, as the agent of another, in making a contract for the benefit of such other person, and in which the latter alone is interested, according to the reasoning in the case [406] of Considerant a. Brisbane, falls within that class of persons who, by the 113th section of the Code, shall be construed to be trustees of an express trust. He is a person with whom, or in whose name, a contract is made for the benefit of another. We are now to see whether this rule will include such a case as is stated by this complaint. We have seen that the plaintiffs cannot maintain an action upon this policy of insurance, if made for their own benefit, for the want of interest in the subject-matter insured. It follows as a corollary from this conclusion, applied to the facts which appear in the complaint, that the only person by whom, or for whose benefit a valid policy of insurance upon this steamboat could have been effected, was Charles A. Stetson. The question, therefore, is, does this complaint show a valid contract, made with the plaintiffs, or in their name, for the benefit of Charles A. Stetson. The policy of insurance is alleged to have been delivered to the plaintiffs for the account of whom it may concern, and the defendants are stated by their contract, to have insured the plaintiffs, or whom it may concern. It is also averred that Charles A. Stetson was at the time of the issue of said policy, and up to the time of the fire continued to be, the person or party for whom said insurance was effected, and whom it concerned. It will be observed that the policy was not made to the plaintiffs for, or on behalf of, or as the agents or trustees for whom it might concern. The contract is in the alternative—to insure either the plaintiff, or whom it might concern. Taking the other allegations that Charles A. Stetson was the person or party whom it concerned, it might follow that this was a contract with, or insurance of, Charles A. Stetson. Then the question would arise, whether Stetson himself could sue upon such a contract. But in so far as this policy or contract was with the plaintiffs, it is not stated, and does not appear, that they were or acted as the agents of Charles A. Stetson. The loss, if any, was made payable by the policy to the plaintiffs,—not as agents or trustees of Stetson, or whom it should concern,—but in their individual character. The premium was paid by the plaintiffs who are alleged thereto, that is in respect to such payment, to have been employed by, and therein to have acted as the agents of, the said Stetson. But there is no allegation that the plaintiffs made the contract [407] as agents of Stetson, or that the money was payable to them in that character. The allegation of agency is confined to the single act of paying the premium. Under the case of Considerant a. Brisbane, if the plaintiffs procured the insurance as the agents or for the benefit of Stetson, that fact should have been stated, and the further question would then have arisen, whether parol proof of such a trust or agency could be given, when it was not declared, or stated, in the written contract. But the present complaint is, in my opinion, defective for the want of any positive and issuable averment of such a trust or agency. It does not appear whether the insurance was made or is to be enforced for the benefit of the plaintiffs individually, or by them as trustees for Stetson. Assuming that the latter state of facts may be true, that it is not inconsistent with the facts stated, yet it does not positively appear to be the truth. Where the person with whom the contract was made, and who brings an action upon it, has no interest in the property which would authorize or enable him to make such a contract himself, he is bound to state affirmatively that he acted as the agent of another, whose interest was sufficient to sustain the contract. The allegations of this complaint leave it, to say the least, in uncertainty whether this contract was made by the plaintiffs for themselves or for the benefit of another. If it was made on their own account, they should have had and should have averred an insurable interest in themselves; if for Stetson, that should have been positively stated. They should have alleged that the policy was made to and with them for the benefit of Stetson, and as his agents or trustees. I am of opinion that the present complaint is defective, that it does not state a cause of action, either in the plaintiffs individually, or as trustees of an express trust, and that the demurrer should have been allowed. The judgment should therefore be reversed. All the judges concurred in this opinion. Judgment reversed, and demurrer allowed.