Columbian Insurance v. Bean

Morton, J. Though this suit is brought for the benefit of Taylor, yet it is to be regarded in the same light as if the Columbian Insurance Company were the real as well as the nominal plaintiff. The note, having been passed to him after its maturity, is subject to the same equities and defences as it would be in the [543] hands of the payees. It is a premium note given for insurance on the steamer General Hooker. It is agreed that the steamer was lost, and due notice and proof of the loss given to the plaintiff, who refused to pay it. The policy provides that “ in case of loss, such loss shall be paid in sixty days after proof and adjustment thereof; the amount of the premium note, if unpaid, and all sums due to the company from the insured, when such loss becomes due, being first deducted, and all sums coming due being first paid, or secured to the satisfaction of the said company, they discounting interest for anticipating payment.” This is a stipulation between the parties which enures to the benefit of the insured as well as of the insurer. It contemplates that, if there is a loss, the premium note is to be applied to the partial payment of it when due; that the one is to satisfy the other pro tanto. The debt which the insured can enforce against the company, or against its receivers for the purposes of a dividend, is not the whole loss, but the amount of the loss after the premium note is deducted. The stipulation establishes a rule for settling the amount of the loss, and the insured has the right to assume that in case of loss his premium note will be deducted from the loss, and thus paid. It is not merely a privilege granted to the insurer, but an agreement that the mutual claims of the parties shall be thus adjusted. We are of opinion that the company cannot under this policy, it being admitted that there was a loss greater than the amount of the note, refuse to pay the loss and maintain a suit upon the note. It is opposed to the spirit and fair interpretation of the contract. The court of appeals of New York took a similar view of this clause in Osgood v. De Groot, 36 N. Y. 348. That was a suit by the receivers of this insurance company upon a premium note given by the defendant upon a policy containing this same clause. A general average loss occurred of an amount less than the note, and it was held that, it should be set off against .the note as a "mutual credit,” under the statute provisions as to insolvent corporations, and that the action could be maintained only for the balance. See also Commonwealth v. Shoe & Leather Dealers' [544] Ins. Co. 112 Mass. 131. This view renders it unnecessary to decide the more general question raised as to the right to set off a loss under the general statutes of set-off. The fact that the defendant procured insurance in other companies, with the agreement that “ any claim for same risk on the Columbian Insurance Company to be considered as salvage for the benefit of this company,” is immaterial. Subsequent insurance is permitted by the terms of the plaintiff’s policy, and there was no assignment of the policy by the defendant. His claim against the plaintiff remains unaltered, and must be sued in his name, and it would be no defence that the amount recovered would enure to the benefit of the other insurance companies. The agreement with the other companies does not affect the plaintiff’s rights or liabilities. Judgment for the defendant.