Dix v. Mercantile Insurance

Breese, J. We do not well see, how this action can be maintained and at the same time preserve an important principle which lies at the very foundation of suits at law. That principle is, that an action on a contract must be brought in the name of. the party in whom the legal interest in the contract is vested. 1 Ch. Pl. 3. A party suing, who, by his own showing, by the averments in his declaration, has no interest whatever in the cause of action, never can be permitted to recover in an action at law. We think a case cannot be found decided in a court of law, where a person having no legal interest in the subject matter of the action, has been allowed to maintain an action at law alone or with others. It is impossible that he can, since, by his own showing he has nothing for which to sue. All the interest of one of the parties had passed out of him. 16 Peters, 501. But it is insisted, that by another rule of law equally fundamental, a suit on a contract must be brought in the names of the parties contracting, and therefore this action is properly brought, the contract of insurance having been made with the plaintiffs. This is all very well, very true, and would be decisive, did not the declaration disclose the fact of want of interest. Had the declaration been silent on the fact of assignment, and it might well have been—it would be good without such an allegation, there can be no question of a proper case being stated, against which the defendant by plea should defend. But the declaration itself showing the nakedness of the case—being in fact a felo de se, the defendant could do nothing but demur, for by so doing—by admitting the facts as the plaintiffs have stated them, the case for the defendants could not be better made out. Why disclose in the declaration, the fact of the assignment by one of the plaintiffs to the others ? What was expected by the pleader to be gained by it ? Would it not have been better, to let that matter of assignment, and the question growing out of it, come from defendant by plea ? Could not the rights of the two partners be fully protected, in the usual mode of declaring in the name of those with whom the contract was made but for the use of the parties really entitled ? or why say anything about it in the declaration ? As it is stated, the case made by the declaration destroys itself. It is felo de se. The declaration showing that one of the plaintiffs had parted with his interest in the property insured, before the loss accrued, puts an end to the case, on another principle well established and universally recognized, and that is, upon a policy against loss by fire, no recovery can be had unless the insured has an interest in the property insured at the time of the loss. Now without insisting upon the first objection, this must be fatal and must dispose of the case. Who were the parties insured ? The policy shows they were Sinclair, Dix and Harris. Who had the interest at the time of the loss ? Dix and Harris. Sinclair then, had no ground of recovery when suit was brought —having no interest in the property he could not be damaged by its loss. But independent of all this, this condition was annexed to the policy: “ And in case of any transfer or change of title in the property insured by this company, or of any undivided interest therein, such insurance shall be void and cease.” Here was a transfer by one of the insured to the others, of his undivided interest in the property insured. There is a change of title to an undivided interest in the property. At the date of the policy it belonged to Sinclair, at the time of the loss it was the property of Dix and Harris, so that there was a complete transfer and change of title to this undivided interest. It is however, replied to this, that the reason on which this condition is based, is to prevent parties insured from transferring the property to strangers and thus introducing into its care and management, parties not known to the insurers. Much argument, in support of this position, has been advanced, and cases cited, supposed to sustain it, which are by no means satisfactory. A contract, as well of insurance, as in regard to any other matter, must be interpreted according to the intention of the parties making it, and that to be gathered from the language and terms employed, and the objects contemplated by it. The intention of the' company was manifestly, as urged, that no strangers should come into the management and care of this property without their consent. Knowing the parties with whom they were contracting, relying upon the fidelity and circumspection of each and every one of them, they were willing to take the risk at the premium stipulated. It was an object of the first importance with them, to secure for the property, the guardianship and care of faithful and trust-worthy men, and for this they were willing, for the premium, to entrust the property to the care of Sinclair, Dix and Harris, but not to the care and watchfulness of Dix and Harris alone. Is it not plain that the assurers may be as greatly prejudiced by removing one, to whom with others, they had entrusted the guardianship of valuable property, as by the introduction of a stranger ? The one removing from the concern may have been the very one, on whose vigilance, fidelity and care the greatest share of confidence was reposed, and by so removing, the hazard is increased to the assurer without any corresponding increase of premium. This is neither just nor equitable. The plaintiffs therefore, have no right to say, that it was against “ the coming in of strangers,” this condition was aimed. The assurers have bargained and paid, for the care and watchfulness of each and every person whose property they have insured, and they have an undoubted right to hold them to a strict observance of the contract, and we have no right to say, when it is agreed between them and the assured, that a transfer or change of title to the property or to an undivided part of it shall make the policy void, that they were stipulating against a transfer to strangers only. The terms used are too broad for that, and the object of the condition would be defeated by so restricting them, as we have endeavored to show. There is a vast difference between the sale by one partner of his entire interest in a partnership concern, and a change simply in the relative shares in the concern, for in the latter case, the watchfulness and care of the partner which was bargained for, still continues, whilst in the former it is forever gone. We have no doubt upon any of the positions we have here assumed, and consider any reference to adjudged cases on the point, or comments on them, wholly unnecessary. Howard v. The Albany Insurance Co., 3 Denio, 301, and Murdock v. The Chenango County Mutual Insurance Co., 2 Comstock, are to the point. 1. The plaintiffs have by their own showing defeated their case. 2. One of the plaintiffs by the showing of the declaration, had no insurable interest at the time of the loss. 3. The transfer and change of title by one partner to the others, avoided the policy. The judgment of the Circuit Court is affirmed. Judgment affirmed.