Fogg v. Middlesex Mutual Fire Insurance

Shaw, C. J. Fire insurance has become so important in the business of the community, that it is much to be regretted that the practical management of the business is not conducted with more care and skill in its details, so as better to secure the rights of the parties, as they are intended to be established by the contract, when rightly made, and rightly understood. This action is brought by the assignees of a policy of insurance against fire, for f3,000, on a stock of goods in a store at Cambridgeport, originally made to Daniel Leland and James Luke, Jr. By the original act of incorporation, March, 1826, this company were authorized to make insurance on real estate only; but by an additional act, in March, 1828, they were empowered to insure all kinds of personal property, in the same way and manner they were empowered to insure the binds of property in said act mentioned. This act, we suppose, extends to all the provisions of the charter, by-laws, and regulations of the company, made in regard to insurance on — 345 — buildings and real estate, so far as applicable to insurance on personal property. The plaintiffs sue as assignees, and if they can recover at all, it must be in that capacity, and upon that title. As a policy of insurance is not a negotiable instrument, it cannot be legally transferred so as to enable the assignee to maintain a suit in his own name, without the consent of the other party. But in general, at the common law, where one party assigns all his right and interest in the contract, and the assignee gives notice to the other party to the contract, and he agrees to it, this constitutes.a new contract between one of the original parties and the assignee of the other, the terms of which are regulated and fixed by those of the original contract. This rule applies to policies as well as other contracts, and it is often convenient and desirable to apply it; and there are two cases where this application frequently happens. The first is, when the insured property is alienated or sold by the assured. After such sale, if nothing more is done,—no surrender or change of the policy,—and the goods should be burnt, nobody could recover on the policy; not the original assured, for he has sustained no loss; the property was not his, and the loss of it was not his loss; not the purchaser, because he has no contract with the company. And although in popular language, the goods are said to be insured against loss by fire, yet, in legal effect, the original assured obtains a guaranty by the contract that he shall sustain no damage by their destruction by fire. But in case of such sale or alienation of the insured property, the original assured having no longer any interest in the policy, except to claim a return of premium, if he will assign his policy, or his contract of insurance to such purchaser, and the company assent to it, here is a new and original contract, embracing all the elements of a contract of insurance between the assignee and the insurers. The property having become the purchaser’s, is at his risk, and if burnt, it is his loss, and he has a good original contract, upon a valid consideration, to guarantee him against such loss. Accordingly, provision is made — 346 — in the charter and by-laws, and also by the terms of the policy, for an assignment of the contract; the company returns no part of the premium, but the assignee has the benefit of it, upon such terms as he and his assignor may determine; the assignment is indorsed on the policy, and presented to the president of the company, who ordinarily is authorized to give the assent of the company to the assignment; the old deposit note is surrendered, and a new deposit note given by the assignee. In the regulations of this company in a circular of instruction to agents, a form is given for such transfer, notifying the sale of the property, naming the purchaser, and assigning to such purchaser, his executors, &c., the policy of insurance, and in ease of loss, directing the amount to be paid to the said purchaser, his heirs, &c. Upon each assignment perfected, there is an entire change in the contract, in the party contracted with, in the insurable interest in the property at risk, and it becomes an insurance on the property of the assignee, and ceases to be a contract of insurance of the property of the assignor. But there is another species of assignment, or transfer it may be called, in the nature of an assignment of a chose in action ; it is this: “ In case of loss, pay the amount to A. B.” It is a contingent order or assignment of the money, should the event happen upon which money will become due on the contract. If the insurer assents to it, and the event happens, such assignee may maintain an action in his own name, because, upon notice of the assignment, the insurer has agreed to pay the assignee instead of the assignor. Mowry v. Todd, 12 Mass. 281. But the original contract remains; the assignment and assent to it form a new and derivative contract out of the original. But the contract remains as a contract of guaranty to the original assured ; he must have an insurable interest in the property, and the property must be his at the time of the loss. The assignee has no insurable interest, primd facie, in the property burnt, and does not recover as the party insured, but as the assignee of a party who has an insurable interest and a right to recover, which right — 347 — he has transferred to the assignee, with the consent of the insurers. The plaintiffs, to recover in the present case, must prove themselves assignees of the contract, because they prove an alienation of the property, and a sale to themselves, long before the lire, so that all insurable interest in the original assured had ceased, and no loss was sustained by them by the fire, payable to anybody. The plaintiffs having acquired the property, so that it was at their risk, the question is, whether they have proved such an assignment of the contract as to bring themselves within the provisions of the charter and by-laws, as assignees, holding in all respects the rights of the original assured. In order to prove their title as assignees, the plaintiffs offered the original policy, made in 1845, to Leland and Luke, Jr., the subsequent transfer of Daniel Leland, Jr., who had become the assignee of the policy, and the sole owner of the stock; and a sale in March, 1847, of the whole stock to the plaintiffs There are several indorsements on the policy, but none affecting the present case, until the one said to have been made and indorsed April 1,1848, in the words following: “ For value received, pay the within, in case of loss, to Fogg and Hearsey.” By the twelfth section of the act of incorporation, the “ grantee or alienee of the property insured, having the policy assigned,” may have the same ratified, &c., to his own proper benefit, on application to the directors, and with their consent, within thirty days next after such alienation, on giving proper security, &c. Here, it is manifest, that no assignment to the plaintiffs of any kind was made till more than a year after the time of the sale of the stock. But if the directors had been notified of such sale and alienation of the stock insured, and had been informed that a full and complete transfer of the contract, and all interest in it, had been made, although at a time more than thirty days after the sale, and had then expressed their full assent to it, it might be a waiver of the mere point of time. Waiving that point, therefore, the question is, whether the indorsement in — 348 — question was an assignment of the policy, and was so understood and assented to by the company. It is in few and brief terms, and primé facie, we should be inclined to think that it was not an assignment of the contract, but only of a right to the money in case of loss. But it was strongly urged by the plaintiffs that it was intended, by one party as a transfer and assignment of the entire policy, and was so understood by the other, and that the circumstances which preceded, attended, and followed it, would be sufficient t'o show that it was so intended and understood. When words are doubtful, it is competent for parties to go into proof of the relation in which the parties stood to each other, the acts mutually done by them, and generally, the surrounding circumstances, in order the better to understand the meaning of the language used by them, and thus ascertain their intent; and under this rule, the evidence was admitted. But we think the ruling was sufficiently favorable to the plaintiffs, in permitting them thus to go into evidence aliimde, to explain the terms of the transfer. The plaintiffs, in order to satisfy the court and jury that their circumstances were such as usually attend a full assignment of the contract, were permitted to prove, if they could, 1. That there was an actual alienation of property by the assignee of the original assured to the plaintiffs; 2. That this fact was known to the president when he gave the assent of the directors to the transfer as it was actually made and presented to the company. 3. That the plaintiffs, as assignees, filed their own deposit note, in place of the deposit note originally given by the assured. 4. That this fact was known to the president and secretary of the company, when they gave the assent of the company in behalf of the directors. There was some evidence tending to show that a new deposit note was made by the assignees, and placed in the hands of Pond, now deceased, who had been the agent of the company for receiving proposals, through which this policy was originally made ; but the evidence failed to show that he had any authority to receive deposit notes, on the assignment of a — 349 — policy, and the evidence was very strong that no such note was deposited with the then treasurer, or any resident agent of the company, by Pond or otherwise. We think, therefore, that the jury were rightly instructed that if such a note had been left with Pond, but he never transmitted it to the company, or notified the proper officers of the company of his having it, it could not be considered proof that the plaintiffs had complied with that requisition of the law, which requires a new deposit note before the assignment is complete. Again; as to the knowledge of the president at the time he assented to the assignment as made, to pay to the assignees in case of loss. The extent of a simple assent to a statement or proposition, must depend on the terms of such proposition. If the most natural construction of the terms of this assignment was, that it was the assignment of a right to the assignees to recover the money in case of loss, which, but for such assignment, would be due to the original assured, then the conclusion would be, that they assented to that proposal. But if the plaintiffs would show that the assured had at the time sold their property to the assignees, and that the assignees had duly given a new deposit note, in order to draw the conclusion that the officers of the company knew and understood that this was an assignment of the contract, and assented to it with that understanding, the burden of proof was upon them to show that these officers had that knowledge. But Brooks and Shattuck both testified that they never knew or heard of the sale and transfer of the stock by Leland, Jr. to the plaintiffs, until the spring of 1849, which was long after their assent to the transfer ; and when they heard of it, they gave notice to the plaintiffs that there was no deposit note given by them, and that the policy was void unless such note was given. These were the principal points to which the instructions of the court referred, and we think they were correct and were adapted to the state of the evidence. Several exceptions were taken to the admission of evidence. It had been in evidence, that at the time when the policy in controversy was made on the stock, another policy, in favor of the same party, was made on the building in which the — 350 — stock was kept. The defendants offered to put in a copy of this policy, with the indorsements thereon, the original being lost; to this the plaintiffs objected, but it was admitted. This we think was correct; the copy was good secondary evidence; and we are of opinion that the original, made between the same parties, at the same time, one on the store and one on the stock, that if either had any bearing upon the other, it was competent evidence, and its weight was for the jury. The plaintiffs’ counsel objected to any evidence on the part of Brooks and Shattuck, as to whether they knew of the sale of the stock by Leland, Jr. to Fogg and Hearsey, at the time of their assent to the indorsement on the policy in suit, and as to when they first knew of such transfer and sale, but it was admitted. We are of opinion that the plaintiffs cannot object to the admission of this evidence; it tended to rebut the case on which the plaintiffs relied, which was, that these officers had such knowledge, in order to give effect to their acts in giving such assent. The court are of opinion that the instructions asked for by the plaintiffs would not have been correct in matter of law; that the instructions given were correct; and the questions of fact having been left to the jury, under instructions sufficiently favorable to the plaintiffs, and the jury having found a verdict for the defendants, they are entitled to judgment upon it. Judgment on the verdict for the defendants.