Union Mutual Marine Insurance v. Howes

Endicott, J. This policy contains the provision 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 president and directors, they discounting interest for anticipating payment.” This clause, which is common in policies of this description, has been frequently considered in the decisions of this court. In Livermore v. Newburyport Ins. Co. 2 Mass. 282, it was held that the premium note could be deducted from the amount due on a partial loss, that being in accordance with the agreement in the policy; and, the note being larger than the loss, the judgment was, the plaintiff took nothing by his writ. In Columbian Ins. Co. v. Bean, 113 Mass. 541, the court was of opinion that this clause was for the benefit of the insured, as well as the insurer, and was equivalent to an agreement that the mutual claims of the parties should be thus adjusted; that the insured, when sued on his note, could prove that there had been a total loss under the policy; and, as the amount of the loss in that case was larger than the sum due on the note, it was held that the company could not refuse to pay the loss and maintain an action on the note, and judgment was entered for the defendant. That case was decided on an agreed statement of facts, and the form of the pleadings was immaterial. It is to be observed that in neither of those cases did the court intimate that the defendant was entitled to adjudgment for the balance due from the plaintiff; which would have been the right of the defendant in each case, if the provisions of the statute of set-off were applicable. [472] In Warren v. Franklin Ins. Co. 104 Mass. 518, an action waa brought to recover the amount of a loss; the note was not due, and being payable in currency, while the loss was payable in gold, its value had not been ascertained; but, when ascertained, the amount of the note was allowed to be deducted from the amount of the loss. The defendant had set up in its answer that it was entitled to deduct the notes, and also filed a declaration in set-off on the notes; but it is stated in the opinion to have been admitted that the notes could not be the subject of a technical set-off. See also Dodge v. Union Ins. Co. 17 Mass. 471; Wiggin v. Suffolk Ins. Co. 18 Pick. 145. The construction given this clause in these cases is, that it provides for the mutual allowance of loss and premium by way of recoupment or deduction, and not by way of set-off under the statute. The demand here stated in the declaration in set-off is for a partial loss, the amount due is not liquidated and cannot be ascertained by calculation, and the demand falls clearly within the prohibition of the statute. Gen. Sts. c. 130, § 3. See St. Louis Ins. Co. v. Homer, 9 Met. 39. While it is admitted that the defendant might avail himself of this defence by answer, yet he has not done so in his answer, and is precluded from so doing by the terms of the report, which provide that if the claim cannot be declared on in set-off, he is to be defaulted on his premium note, and judgment entered thereon. Judgment for the plaintiff.