Cumings v. Sawyer

Wells, J. The defendant purchased the property insured, the policy was transferred to and accepted by him, and the transfer was assented to by the insurance company. The defendant thereby became a member of the corporation, liable to assessment as such. The only question presented upon this agreed statement is whether he had ceased to be so liable as a member when this assessment was laid; or rather, as we suppose must be intended, when the losses occurred for which this assessment was laid. The extent of the right to assess was fully considered when this assessment was before us, upon the report of the auditor, for confirmation. Commonwealth v. Massachusetts Ins. Co. 112 Mass. 116. The question has been again discussed by the defendant in this case. If it is open under the terms in which the case is submitted to us, we are not led to doubt the correctness of our former conclusion. It was held, upon the hearing before referred to, that dealings with the property by the assured, which might defeat his right of recovery upon the policy as a contract of indemnity, would not necessarily terminate his relation of membership and consequent liability to assessment. The obligation of each party depends upon its own conditions. Upon alienation of the property, provision is made for the substitution of the purchaser in place of the original assured as a member of the company, entitled to all his rights and subject to the same liabilities; or the policy may be surrendered and cancelled. In either case the original assured will cease to be a member. If he neither transfers nor surrenders, there can be no recovery by any one in case of loss. He cannot recover, because he has suffered no loss. The purchaser [34] cannot, because he has acquired no rights in the policy. But the holder of the policy has not thereby discharged himself from the obligations which he assumed to the company as a part of the consideration upon which the policy was issued to him. Without the assent of the company, this can be done only in compliance with the terms of the policy; and that requires a surrender. The provision that if the policy is not surrendered or transferred, upon alienation, it “ shall become void,” applies to it as a contract of insurance or indemnity. It defeats that contract and furnishes a bar to recovery upon it; or rather declares what would result by legal effect, without those words. But the obligations of the assured are set forth in the policy only by way of recital; and they are regulated in. part by provisions of statute. It is not to be supposed that the words above quoted were inserted for the purpose of enabling the assured to release himself from his obligations to the company otherwise than by substitution or surrender; and such is not their necessary effect. Taking into view the nature of the contract of mutual insurance, and the relations which spring from it and upon which its obligations rest, we are satisfied that the reasonable interpretation of the proviso in question is that it declares void the agreement of indemnity contained in the policy, but not the promise of the assured upon which that agreement was originally founded. His alienation of the property, therefore, by which he defeated his own right to recover upon the policy, does not furnish him a legal defence to the action upon the liability which he assumed when he became a member of the corporation. Judgment for the plaintiffs affirmed.