Reed v. Windsor Co. Mutual Fire Insurance

The opinion of the court was delivered by Royce, J. On the 18th day of June, 1875, the defendant company issued a policy of insurance to one Robert A. Reed, insur [416] ing the property described in the declaration for the period of six years from the date of said policy. On the 27th day of April, 1877, said policy was assigned by Robert A. Reed to the plaintiff; and on the 27th day of June, 1877, said assignment was approved and the policy confirmed unto the plaintiff by the defendant company. The property so insured was afterwards burned, and this suit was brought to recover for the value of the same for the benefit of the plaintiff. His right to recover is resisted upon several and independent grounds ; but before considering them it is necessary to define the legal relations that subsisted between the plaintiff, as the assignee of said policy, and the defendant company. The plaintiff claims that by virtue of the approval of the assignment and confirmation of the policy to him, the defendant is es-topped from denying its liability on account of anything that transpired between the insured and insurer at the time the contract was entered into, or from setting up any act done by the insured after the policy was issued, and before said assignment, as a defense. The defendant claims that said approval and confirmation by it, in legal effect was merely the substitution of the assignee for the party insured by the policy, and that the assignee only took the interest that his assignor had in the contract, subject to any defenses that might be made to it in the hands of the assignor. The policy was a chose in action ; and all the interest that the assignor could convey by an assignment of it was the right to demand compensation from the defendant in case the property insured by the policy should be burned during its continuance, so that, independently of the approval of the assignment and confirmation of the policy to the plaintiff, the rules of law that determine and fix the rights of assignee and payor would be applicable here. By the approval of the assignment the company simply signified consent to its being made; and by the confirmation of the policy agreed that it would accept and become liable to the assignee in place of the party to whom the policy was issued. By such approval and confirmation the defendant did not waive any right that it then had, or might thereafter have to make any defense to any claim that might be made against it under the con [417] tract entered into with Robert A. Reed, and evidenced by the policy assigned. The approval and confirmation was not evidence tending to show that the defendant entered into any new contract by which any new liability was incurred to the plaintiff. The approval of said 'assignment and the confirmation of the policy, then, being in legal effect the substitution of the assignee for the assignor, any defense existing at the time the assignment was' approved and policy confirmed that would have been available jff suit had been brought in the name and for the benefit of the party to whom the policy was issued, is equally available against the assignee. In Shearman v. Niagara Fire Ins. Co., 46 N. Y. 526, it was held that the consent to the assignment of a policy was equivalent to an agreement to be liable to the assignee upon the policy as a subsisting, operative contract; and in Tillou v. The Kingston Mutual Ins. Co., that no act of the insured after an assignment of the policy with the assent of the insurer shall impair the rights of the assignee. The new contract relations that are created by the approval of an assignment of a policy are for the protection of the assignee, and to secure to him all the rights acquired by the assignment at the time of its approval. The 2d, 8d, 4th and 5th special pleas allege that the contract of insurance was made subject to the provisions of the act incorporating the defendant company; that said act was made a part of said contract of insurance ; that by sec. 10 of said act it was provided that when the assured had a' less estate than a title in fee simple to the building or buildings insured, and to the land covered by the same, or if the premises be incumbered, the policy shall be void unless the true title of the assured and the incumbrances of the estate be expressed therein and in the application therefor ; that at the time the application was made and the policy issued, the said Robert A. Reed did not have a title in fee simple to the land upon which the buildings insured were situate, but the same was incumbered by the mortgages described in said pleas ; that the said Robert A. did not mention said mortgages in his application, or notify the defendant of their existence, but fraudulently withheld all knowledge of their existence from the defend [418] ant, and that the policy was issued in ignorance of the existence of said mortgages ; that the mortgages which were described in the application for the policy were not truly described, but were much larger in amount than they were represented ; that the existence of said mortgages was material to the risk, and that if the defendant had known of their existence it would not have issued said policy. The demurrer admits said facts as pleaded ; but it is claimed that they are not so pleaded as in law to be available as a defense. The insufficiencies claimed by the special demurrer are: 1. That it does not appear that the plaintiff executed the application. The only application made for insurance upon the property in question is alleged in the declaration to have been made by Robert A. Reed, and the plaintiff does not predicate his right upon any policy issued to him upon his application. Hence, there was no necessity for the defendant to either admit or deny that any application had been made by the plaintiff. 2. That it does not appear except by argument or inference what the application contained or did not contain. The defense is not made dependent upon what is stated in the application, so that there was no necessity for reciting what was contained in it. The defense made by the pleas is based upon the neglect' of the applicant to state certain. facts in his application which should have been stated, and what those facts were is stated by positive averments in the pleas. 3. That the application should have been set out in full. It was not required that it should be set out. No issue was made as to what did in fact appear in the application; but, as has been remarked, the issue tendered was as to the existence of certain facts that did not appear. > 4. That it does not appear, except by way of argument or inference, that the title of the assured and the incumbrances were not expressed in the application. It is not required that the estate of the applicant in the premises insured should be correctly and accurately stated in a plea. It is sufficient if it appears by positive averments that he had a [419] less estate than an estate in fee simple, and what the kind and character of the incumbrances were that rested upon the property. It will be seen, upon examination of the pleas, that they do contain such averments. 5. That the pleas are redundant, because amounting only to the general issue. The matters of defense stated in the pleas are not denials of what the plaintiff would on the general issue be bound in the first instance to prove; but are matters in avoidance of the action, which the defendant in the first instance would be bound to prove. Such matters the defendant is permitted (if not required) to plead specially. Chit. PI. 366 ; Gould’s PL 346 ; Elkin v. Janson, 13 M. & W. 655. The matters of defense set up in said pleas being well pleaded, and having been admitted by the demurrer, it is elementary in the law pertaining to insurance that they are sufficient to avoid the policy and defeat the plaintiff’s right of action. There is no occasion for considering the other pleas which set up a defense resulting from the procurement of other insurance upon the property insured without the consent of the defendant company. The judgment overruling the demurrer as to the 2d, 3d and 4th pleas, and rendering judgment for the defendant, is affirmed. On motion of the plaintiff, the judgment is pro forma reversed, and cause remanded, with leave to the plaintiff to replead on the usual terms.