Findlay v. Union Mutual Fire Insurance

Munson, J. The suit is upon a policy of insurance, which covered property on which there was a mortgage. The contract provided that an alienation of the property without - the consent of the company should avoid the policy, and that the commencement of foreclosure proceedings should be deemed an alienation. A petition to foreclose the mortgage, dated May 10, 1899, and made returnable to the September term of that year, was served upon the plaintiff May 12, 1899. The property burned August 17, 1899, without notice of the foreclosure having been given to the company. The plaintiff contends that the provision regarding foreclosure proceedings should be held void as against public policy, for the reason that it affords the company an opportunity to evade payment after all the substantial requirements of the contract have been complied with. But this claim fails at the outset, if the provision complained of is itself a mater jal requirement; and we think it must be so regarded. The moral risk is universally recognized as an important consideration in determining the business of a company, and it is clear that this [214] risk is increased when the default of the insured has resulted in proceedings to foreclose his equity. It is well understood that the temptation to realize upon the policy when contemplating a probable loss of the property through inability to redeem, has an appreciable effect upon the statistics of losses. McIntyre v. Norwich Fire Ins. Co., 102 Mass. 230, 3 Am. Rep. 458; Springfield Steam Laundry Co. v. Traders Ins. Co., 151 Mo. 90, 74 Am. St. 521, 52 S. W. 238. The plaintiff also claims that foreclosure proceedings are not commenced, within the meaning of this provision, until the suit is entered in court. The purpose of the provision to be construed is always regarded in determining what shall be considered the commencement of a suit. We think the service of the petition upon the insured must be regarded as the commencement under this provision. It is then that the insured has the knowledge that produces the increase of risk. From that time on he understands that he can avoid the consequences of his default only by the making of some payment or arrangement, and the moment when he will become convinced of his inability to do this, is entirely uncertain. The protection which the provision is designed to secure would not be obtained if the entry of the case were to be treated as the beginning of the suit. The consent required was to be given by the endorsement of the secretary upon the policy. The plaintiff offered to show that two weeks after the fire the secretary told him that the company would not rely upon this clause. The plaintiff insists that this statement constituted a waiver of the right to claim a forfeiture, and estopped the defendant from making that claim. This position is untenable. The policy was void at the time, and the statement could not revive it. The plaintiff was not thereby induced to omit anything to his [215] detriment. It was no longer in his power to do anything to establish a right of recovery. Judgment affirmed.