Ring v. Windsor County Mutual Insurance

The opinion of the court was delivered by Redfield, J. This was an action of assumpsit upon a policy of insurance. The premises insured had been consumed by fire, and the loss ascertained. The evidence disclosed that, at the time [436] of the contract of insurance, the premises were incumbered by-two mortgages ; and one of them of about $200 to one Ray, was not named in the application, nor disclosed to the party insuring. The plaintiffs claim that they supposed the Ray mortgage had been paid, as it was an incumbrance that their grantor assumed and agreed to pay, and, therefore, plaintiffs acted in good faith, and were not guilty of any fraudulent concealment, or suppression of facts, as to the true state of the title. But this assumption of the plaintiffs, if true, would not, necessarily, render the contract of insurance valid. The defendant’s charter provides, If the assured have a less estate therein, or if the premises be incumbered, the policy shall be void.” So it is a question of title, rather than of fraud, with which we have to deal in this case. Nash, in his conveyance to the plaintiffs, covenanted a good and perfect title ; and the prior mortgage to Ray, therefore, became the debt of Nash, which his covenants required him to pay. The plaintiffs had the right in equity to extinguish the Ray mortgage, by absorbing a sufficient portion of their mortgage to Nash to pay and cancel the Ray mortgage. “ What ought to have been done is considered in equity as done.” In this view, we think the plaintiff, in essence and in equity, though not in form, disclosed the true incumbrance upon the premises. The court will not permit the insurer to avoid a policy of insurance for mere technical and formal defects. The insured, as a class, are ignorant of technical forms, and rely, as a rule, upon the agent of the insurer that the application shall* be in accord with the requirements of the charter and by-laws of the company; and when the company have received the premiums, and issued a policy, the contract of indemnity after loss has occurred, should be enforced, unless there be substantial grounds for avoiding it. II. It seems that there was evidence in the case tending to show that the defendant was aware of the Ray mortgage in February, before the fire, and continued to treat the plaintiff as holding a subsisting policy, and bound by its terms and conditions ; if so it would be a waiver, on the part of the defendant, of the objections it now urges in defence. But the case was decided on other [437] grounds, and we have no occasion to discuss this point further at this time. The judgment of the County Court is reversed, and cause remanded.