Holmes v. Charlestown Mutual Fire Insurance

Hubbard, J. Several questions of some importance have been raised and argued in this case, which it is unnecessary to decide. The question on which the case turns is, What sum was actually insured ? the defendants having paid all which they acknowledge to be due, before the trial of the action. The policy itself is explicit. It assumes the risk as follows : Under the conditions and limitations expressed in the statute regulating mutual insurance companies, and the rules and regulations of the company, “ the sum of thirty five hundred dollars on their meeting-house and fixtures in the same, situated in Worcester aforesaid, on Columbia Street, being not more than three fourths the actual value of said property as appears by the application for this insurance, lodged with the secretary of this company.” The rules and regulations referred to are to be taken as part of the contract, in the same manner as if they had been introduced into the body of the policy; and are to be construed either as representations or stipulations and agreements, according to their nature and intent. They differ from the representations relating to marine risks, which representations are the statements or basis upon which the contract is founded, and are not treated as a part of the contract itself. As the owner of a vessel and cargo is generally in a position to know the character, value and situation of the property to be insured, much better than the underwriter, his representations are received and acted upon as true; and if afterwards they turn out to be false in some matter or thing material to the risk, then, in consequence of such misrepresentation, the contract is avoided, although the statement was made in ignorance or through mistake, and not from a fraudulent design. But in fire policies a different practice prevails, and the representations, so far as they are distinctly referred to in the policy, become parts of the contract, and are to be construed with it. Houghton v. Manufacturers Mutual Fire Ins. Co. 8 Met, 114. As to these defendants, it is one of their regulations, (Art. 14,) that “not more than three fourths of the value of any [215] building shall be insured by this company.” This is agreeable to the provision of the Rev. Sts. c. 37, <§> 28, on the subject of mutual fire insurance companies, which is, that 1 they may insure, for a term not exceeding seven years, upon any building within this State, any amount not exceeding three fourths of the value thereof.” This is a wise and salutary provision, and serves alike for the protection of the stockholders and the individual insured. The design is to prevent frauds and negligence, by making it an object with the owner to guard his property from exposure to fire and to preserve it from destruction when the calamity comes; and by this increased security to induce honest persons, who are men of property, to become members of such companies, and who will be able and willing to contribute in the event of loss. In the contract now under consideration, the value of the building insured is not stated in the policy, and we are to resort to the application, for the purpose of ascertaining that value. It will not answer to take the sum insured as furnishing the evidence of the value of the property by adding one third to it; because, if this would be sufficient, the valuation would become a matter of form only, and the contract would in fact be regulated, not by the value of the property, but by the sum insured; a species of insurance which it was not the intent of the legislature to coimtenance, when granting such acts of incorporation. On referring to the application, the value of the building is agreed to be four thousand dollars; and the plaintiffs now ask liberty to show that it was, in fact, worth a much larger sum, at the time of the insurance. But such evidence is inadmissible, and the valuation, if made in good faith, is binding on both parties. The converse of this proposition has arisen in two cases upon fire policies, and in them it is distinctly settled that the companies were concluded on the question of overvaluation, the same not being fraudulent. Borden v. Hingham Mutual Fire Ins. Co. 18 Pick. 523. Fuller v. Boston Mutual Fire Ins. Co. 4 Met. 206. If then underwriters are precluded from going into evidence to [216] show an overvaluation, when no fraud is alleged, owners must in like manner be concluded, when the property is undervalued. The value being fixed at four thousand dollars, the contract does not, by law, cover more than three fourths of that sum; for it is admitted, and very properly, that the words “ and the fixtures in the same ” do not constitute the subject of a separate insurance. The fixtures are a part of -the building itself, and are included in the estimates of its value. They are like the term “ appurtenances ” when applied to the insurance on a vessel. In looking at the application, we are strongly inclined to the opinion that the plaintiffs intended to insure three thousand dollars on the building, and five hundred dollars on the furniture and other moveables ; but the policy is express as to the subject of the insurance, and we cannot change the contract and make one for the parties, and apply the insurance to chattels not insured, because the plaintiffs intended to insure them. Higginson v. Dall, 13 Mass. 96. Wiggin v. Boardman, 14 Mass. 12. Ewer v. Washington Ins. Co. 16 Pick. 502. Miller v. Travers, 8 Bing. 244. It is said that the proposals were filled out by the agent of the defendants, and so the company are bound either to admit parol evidence of the alleged mistake, or to alter the policy in conformity to the application. The person who made out the proposals was at least as much the agent of the plaintiffs as of the company, in doing this act; but however viewed, it cannot affect the contract as it exists, nor open the door for the admission of parol evidence to alter its provisions. In what manner a court of equity would treat an application to amend a policy, we are not called upon here to decide. Besides; the policy was delivered to the plaintiffs, and they must he presumed to have examined it at the time they received it, to have known what it contained, and to have understood its import. But they slept over it nearly four years, without requesting any alteration therein, until [217] the loss happened, when the rights and liabilities of the respective parties were fixed, and the directors might not feel authorized to alter the terms of the policy. The plaintiffs, having received three fourth parts in value of the building, as insured and valued by the terms of the contract, the nonsuit must stand.