New England Fire & Marine Insurance v. Wetmore

Mr. Justice Breese delivered the opinion of the Court: It-appears by the record in this case, that one Marvel, on the fifth of November, 1856, executed his notes to one Biggin, and a mortgage to secure their payment on a certain lot in the city of Galesburg, two of which notes and mortgage were, on the 19th of March, 1859, assigned by Biggin to M. A. Wet-more and Charles Long; that George H. Wetmore was the husband of M. A. Wetmore, and, on March 25, 1859, he, with Long,‘effected a policy of insurance with the appellants on the premises, as" “a boarding house,” for one year, against loss by fire, to the amount of nine hundred dollars, their mortgage interest therein. On the 31st of March, 1859, the Wetmores, husband and wife, assigned their interest in the policy to Long, with the assent of the company’s agent, having previously, on the 25th of March, assigned and delivered to Long their interest in the notes and mortgage, G. H. Wetmore guaranteeing the payment thereof. In January or February, 1860, Long, with the assent of the company’s agent, assigned the policy to Stewart and Scroggs, and delivered the same to them. At the same time, Long assigned and delivered to Stewart and Scroggs the notes and -mortgage. It further appears, that on the 17th March, 1860, Stewart and Scroggs paid the agent of appellants a premium on six hundred dollars, for one year, to end oh the 17th of March, 1861, for which the agent delivered a receipt , called “ a renewal receipt,” executed in the usual manner. It further appears that on the night between the ninth and tenth of March, 1861, about midnight, the building on the lot, without any fault of the insured, or of Stewart and Scroggs, was accidentally burnt and entirely consumed. The agent of the appellant was present at the fire, and, on the 18th of March Stewart and Scroggs gave the agent notice, in writing, of the loss, and on the 29th delivered to him a particular account of the loss, value of the property insured, by whom owned, duly signed and sworn to, and a certificate of the notary public most contiguous to the place of the fire, as required by the conditions of the policy, all which were satisfactory to the appellants. At the time of the fire and for some time previous, the house was vacant. On the 15th July thereafter, Stewart and Scroggs executed and offered to deliver to appellants’ agent an assignment of six hundred dollars of the notes, and mortgage, and decree, with power to collect, which he refused to accept. On the 16th of January, 1862, they executed and delivered to the agent a full and absolute assignment of the notes, mortgage and decree, with all their right to the same. The arbitrators agreed upon, awarded and determined, before, suit was commenced, the amount of loss to be one thousand dollars. The appellants refused to pay, and this action was brought against them, and a judgment recovered for six hundred and thirty-three dollars. Several objections are made to the recovery in this case; some of which, and the most material, we propose to notice. It is urged by appellants, that the plaintiffs below had no interest in the property insured, in the policy, or in the renewal receipt, at the time of the fire, and therefore cannot recover in this action. It is a general principle, that, in a fire policy, the insured must have an interest at the time of the loss. The action was brought on the policy by the Wetmores and Long, to whom the policy was executed, and having assigned it with the assent of the insurers, or their authorized agent, the action is properly brought in their name, there being no provision in the policy, or in the charter or by-laws of the company, authorizing an action in the name of the assignee. This seems to be the form in which such actions are usually brought, that is, in the name of the assured. It is not true to the extent contended for, that the assured must, in every case, have an interest in the property at the time of the loss, for he may have assigned his interest, with the consent of the insurers, to another party, for whose use the suit is brought in the name of the assured.. By no act of the assured can his assignee be deprived of his right to the insurance money, which he would be if the assured was bound to show an interest at the time of the loss. We do not understand that an assignee of an insurance policy can maintain a suit in his own name, unless it is so authorized by the act incorporating the insurance company, or by thfe general law. At common law, he could not maintain' the action in his own name. Granger v. Howard Ins. Co., 5 Wend. 202. There are numerous authorities to this point, referred to by appellees’ counsel. But had not the plaintiff an interest in the insurance at the time of the loss ? The amount' of interest or kind is not material, so that it was a subsisting interest. This the plaintiff had, at the time of the loss/ as they had indorsed the notes when they assigned their interest in the mortgage, and were responsible on their indorsement, and interested that the insurance money should go to the satisfaction of the notes. To that extent their ultimate liability as assignors of the notes and mortgage was lessened. But on principle, it would seem the fact of the assured having no ■interest in the insurance at the time of the loss, cannot affect the right of the plaintiffs to sue and recover for the benefit of their assignee, hfo act of theirs, after an assignment of the policy with the assent of the insurer, can impair the rights of the assignee. Tillon v. The Kingston Mutual Ins. Co., 1 Seld., 407. It is also urged that the renewal receipt executed to Stewart & Scroggs was a new and independent contract with them, and if they had an interest in the property at the time it was executed, they must recover, if at all, in their own names. What is the nature of a renewal receipt like this % It does not contain on its face, any agreement, it merely revives an expiring contract and continues it in force another year." The parties to the original contract are not changed by it, nor any substitution of parties, and is only valid and binding, as to rights and obligations, by reference to the policy first issued. That is the only contract of insurance, and a recovery must be had upon that, if a recovery is to be had at all. In the case of Henon v. The Peoria Marine and Fire Ins. Co., 28 Ill. 235, which was an action of covenant on a sealed policy of insurance, which had been renewed by a parol receipt, this court held that, under condition thirteen of the policy, which is identical with condition eleven of this policy, the policy continued itself by its own terms, on the payment of the premium and taking a receipt therefor. This is the mode agreed upon by the parties for continuing the policy, and not by executing a new one. The company has received the premium and given the renewal receipt, the effect of which, as they well understood, was to continue the original policy. These receipts are no new contracts, but merely evidence that the condition of the policy has been complied with by the assured. This disposes of'that point. Another objection made is, that the conditions annexed to the policy, and the application, are a part of the policy, and the stipulations in it are express warranties, and if the risk is changed the policy is void, and it is not material that the fact complained of did not exist at the time of the fire. This objection is raised on the fact proved, that for some time previous to the fire, but not when the fire happened, a room attached to the main building had been used as a stable for a horse, and the main.building for a saloon in which beer had been sold, and in which a bottle of whiskey was seen. In the application for the insurance, the premises are described as a dwelling house with some boarders. Row, it is insisted that this description of the premises was an express warranty that the house and premises should not be used, during the existence of the policy, for any other purpose than a dwelling house or boarding house. We do not so understand the application. In the case cited from 28 III., it was held that the application is a mere representation by the assured, and he is not bound, to set it out and prove its truth, but if successfully attacked by the defense, if they can show the representation was false, the assured cannot recover on the policy. What is there, in this contract of insurance, constituting any of the conditions an express warranty ? The first condition provides, if after insurance is effected, either by the original policy or by the1 renewal thereof, such buildings or premises shall be occupied in any way so as to render the risk more hazardous than at the time of insuring, or if the risk be increased by any means whatever, within the control of the assured, such insurance shall be void and of no effect. Stables are special hazards, for the insuring of which a higher premium is demanded, than for a dwelling or boarding house, but the proof shows that the fire did not occur whilst the small room was so used. The premises had been vacant some months before the fire, and there is no proof going to show that this use of the room increased the risk, or contributed in the remotest degree to the loss. Had the fire occurred whilst it was used as a stable, then doubtless the policy would have been avoided. The meaning of the condition is, if the house or premises shall be appropriated to any prohibited use, then so long as it is so appropriated the policy shall cease to bind the insurers. The Hew York cases are, we know, all the other way, but we think not with good reason. Mead v. N. W. Ins. Co., 3 Seld. 530; Murdock v. Chenango Mutual Ins. Co., 2 Comst. 210; Hanings v. Same, 2 Den. 75. These cases hold that the statements in the application, where that is made part of the policy, of the purpose for which the property insured is to be occupied, if untrue, avoids the policy though a different use be not material to the risk. But what is the contract in the policy on this point ? It is in substance as follows: It is agreed and declared to be the true intent and meaning of the parties hereto, that in case the above mentioned premises shall, at any time after the making of and during the time this policy would otherwise continue in force, be appropriated, applied or used to or for the purpose of carrying on or exercising therein any trade, business or vocation denominated hazardous or extra hazardous, or specified in the memorandum of special hazards, in the terms and conditions annexed to this policy, or for the purposes of storing therein any of the articles, goods or merchandise, in the same terms and conditions denominated hazardous, extra hazardous, or included in the memorandum of special hazards, except herein specially provided for, or hereafter agreed to by this company, in "writing, to be added to or indorsed on this policy, then and from thenceforth, so long as the sa/me shall be so a/pjorojoriated, a/pgMed or used, these presents shall cease and be of no force or effect. And it further provides, “ that the policy is made and accepted in reference to the terms and conditions hereto annexed, which are to be used and resorted to in order to explain the rights and obligations of the parties hereto, in all eases not herein otherwise especially provided for.” The import of this language, it seems to us, is most clear, not that this policy shall be absolutely void to all' intents and purposes, if the premises are misappropriated, but only while they are so improperly used, the insurance shall have no effect. This is apparent from the words we have italicized. Admit the use was in violation of the first condition annexed to the policy, then the rights and obligations of the respective parties are to be determined by direct reference to all the terms and conditions of the policy, and we see by the express language of the condition we have quoted, that the policy was to be void and of no effect, only so long as an improper use of the premises shall exist; when it ceases to exist, then the policy is in full force. This is the view we take of it, and it is in accordance with that of other courts. Lounsberry v. Protection Ins. Co., 9 Conn. 456; Joyce v. Maine Ins. Co., 45 Maine, 168. The same may be said of the whiskey seen in the house, a long time before the fire occurred. Selling that liquor in small quantities to the boarders in the house, or others, will not vitiate the policy, as it is not prohibited by it. Even if it was an unauthorized use of the premises, it had ceased long before the fire. But the question of increase of risk by such use of the premises was submitted to the jury, and they have by their finding ignored the claim and pretenses of the appellants, and believing they have found correctly on this point, we are not disposed to disturb their verdict. Another point made is, that Scroggs was an incompetent witness on account of interest. He was sworn and examined on his voir dwe, and stated he had no present interest in the result of the suit, but could not say when he parted with his interest; had at one time an interest in the insurance and in the property insured; assigned his interest to the insurance company; thinks he assigned his interest to McFarland; had an interest in the property at the time of the fire; also in the notes and mortgage; thinks he assigned the notes and mortgage to McFarland; had an interest at the time of the fire, and when proof of loss was made; never assigned his interest in the policy to any one; never assigned his interest to any one else except to the insurance company. He made the proof of loss; never assigned to any one else except the insurance company, and don’t remember he ever told Farmer he was interested. The true test of the interest of a witness, is said, by law writers, to consist in the fact that he will either gain or lose by the direct legal operation and effect of the judgment, or that the record will be legal evidence for or against him, in some other action. 1 Greenleaf on Ev., § 390. He must have some certain, legal and immediate interest in the result 'of the cause, or in the record. Curtenius v. Wheeler, 5 Gilm. 469. And this interest must exist at the time when the witness is offered for examination, or when his deposition is taken. Frink v. McClung, 4 id. 576. The plaintiff’s counsel has failed to show the nature of the interest Scroggs had after he had assigned the notes, mortgage and decree, and the policy of insurance. We cannot perceive any interest existing in him after these several assignments. He does not appear to have had any direct interest that a particular verdict should be rendered in the cause, that he could profit by in any way. He was a competent witness, so far as we can understand,. from the record, his real position. He seems indifferent between the parties. It is also urged that Stewart and Scroggs had no interest in the notes and mortgage at the time of issuing the renewal receipt, and therefore the policy was void. The proof shows that in January or February, 1860, the assignment was made to them by Long, of the policy, with the assent of the agent of the company, and of the notes and mortgage. This made them owners of all those securities, and whilst such owners, on the 17th of March following, the renewal receipt was issued to them, and the premium paid. It is true the assignment in evidence bears date July 7, 1860. The evidence of the notary, J. B. Boggs, establishes a prior agreement between Long and Stewart and Scroggs, about the sale to them, which he thinks was destroyed when this assignment of July 7 was made. Scroggs swore that the assignment and delivery to them of the notes and mortgage, was in February, 1860, though the purchase was made in January preceding. But the appellants have acknowledged, by their own acts and conduct, the interest of Stewart and Scroggs, and cannot now allege against it. They received from them their sworn statement of interest and loss, and acknowledged them throughout all the proceedings, as the real parties in interest, never at any time previous, questioning their right to pay the premium and receive the renewal receipt. They are recognized as the only parties in interest, by the letters of the president of the company, of June 19 and July 17, 1861. The objection that Stewart and Scroggs refused to assign their interest as mortgagees, we think is removed by the evidence. It is proved a tender of an assignment was made July 15th, 1861, another offer January 16, 1862, and the defendants on the trial showed that one was in their hands, dated Hovember, 25, 1861. Ho objection was made at the time to the form or substance of the assignment. Having noticed the principal objections made, we will now consider the instructions. The plaintiff asked but one instruction, which was given and exception taken. It is as follows: The jury is instructed that the hitching of ahorse in a building would not make the building more hazardous under the conditions of insurance, unless in addition, it was used as a common stable, and thereby brought within the condition of the policy. Stables are denominated, in the memorandum annexed to the conditions of the policy, as special hazards, and subject to a higher premium on insurance. The proof was, that a horse was kept in a small room attached to the main building, during the winter of 1860 and 1861, about six months, and there was hay and grain in the room where he was kept, for feed. It was also proved that there was no occupancy of the building of any kind, for three or four months before the fire. In the view we have taken of the rights and obligations of these parties, this instruction is objectionable. The jury should have been instructed that the policy was of no effect whilst the room was used as a stable, but the premises being vacant for months previous to the fire, and no misuse of them shown as existing at the time of the fire, the policy was not avoided, and the plaintiffs were entitled to recover. The defendants’ fifth instruction was properly refused, for, notwithstanding the assignment by the plaintiffs, they still had an interest, as we have endeavored to show, in the subject matter of the insurance at the time of the fire. Their sixth instruction was properly refused, because there was no evidence on which to base it. The instruction is as follows: “ If the jury believe, from the evidence, that the plaintiffs, Long and Wetmore, were the owners of the mortgage interest insured in said premises at the time of the fire, and that upon this trial they have not proved they made the proofs to the defendant, as stated in instruction Lfo. 4, they will find for the defendant.” The evidence shows most conclusively that, as early as January or February, 1860, all the interest of plaintiffs had been duly assigned to Stewart and Scroggs, with the assent of defendants, and they thereafter treated them as the owners of the insured interest in the premises. There was nothing before the jury in the shape of testimony to raise such a belief. The defendants also asked an instruction, marked 3, as follows : If the jury believe, from the evidence, that on the 23d of July, 1841, Stewart and Seroggs, through their attorney, -Lanphere, refused to assign to defendant all their interest, without imposing conditions upon the defendant in the assignment, then the jury will find for the defendant, unless they believe, from the evidence, that the defendant afterwards and before the commencement of this trial, accepted an assignment of the mortgage interest in said property. This instruction was refused in the terms asked, but the court modified it, and gave it as follows: If the jury believe, from the evidence, that, on the 23d of July, 1861, or at any other time after the fire, Stewart and Seroggs, by themselves, or through their attorney, refused to assign to defendant all their interest, without imposing unreasonable conditions upon the defendant, in the assignment to defendant, then the jury will find for the defendant, unless they believe, from the evidence, that the defendant afterwards and before the commencement of this suit, accepted an assignment of the mortgage interest in the property. But the fact that Stewart and Seroggs insisted that they were not to be called on to pay any of the court costs in obtaining a decree on the mortgage, was not an unreasonable condition within the meaning of the first part of the instruction. By condition fourteen of the policy, the party insured as a mortgagee is required to assign to the company the mortgage upon the premises insured, together with the debt secured thereby, or so much thereof as will be sufficient to pay the loss; and a refusal to execute such assignment shall operate to discharge the company from all liability under the contract. The instruction, as asked, required an assignment of all the interest of the assured in the mortgage, whereas they were only bound to assign as much of the mortgage debt as wordd cover the amount of the insurance. The modification was proper, and presented truly the rights of the parties; and if the claim was assigned to the defendant, it was not an unreasonable condition that they should prosecute it at their costs, as they would become the real parties in interest. But, apart from these rulings of the court, the case, on the part of the defendants, was placed in the most favorable aspect by the following instructions given in their behalf: 1. If the jury believe, from the evidence, that a part of the building insured as a boarding house, was used and occupied as a stable since the execution of said policy, and before the fire, without the written consent of said defendant, the jury will find for the defendant. 2. If the jury believe, from the evidence, that spirituous liquors were kept in a shop for sale in said insured building, without the consent of the company in writing, after the execution of said policy, and before the fire occurred, they will find for defendant. 4. Unless the jury believe, from the evidence or from the admissions made by defendant and read to the jury, that the persons sustaining loss in the said building on said premises insured, gave notice in writing to said company, or their agent, as soon after as possible, and delivered as particular an account of their loss or damage as the nature of the case would admit, signed with their own hands, and accompanying the same with their oath or affirmation, declaring the said account to be just and true, and showing what other, if any, insurance had been made on said property, and what was the whole cash value of the subject insured, and what was their interest therein, and in what general manner as to trade, merchandise or otherwise, the building insured, and the several parts thereof were occupied, if occupied at the time of th'e loss, and who were the occupants of such building, if occupied, and where, and how the fire originated, so far as they know or believed, and also produce a certificate, under the hand and seal of a magistrate, notary public or commissioner of deeds, most contiguous to the place of the fire, and not concerned in the loss as a creditor or otherwise, or related to the insured or sufferers, stating that he had examined the circumstances attending the fire, loss or damage alleged, and that he was acquainted with the character and circumstances of the insured, or claimants, and that he verily believed that they had by misfortune and without fraud or evil practice, sustained loss or damage on the interest insured in said property to the amount in such certificate stated, which shall have been certified to by the said officer, the jury will find for the' defendant. We cannot perceive any error unfavorable to the defendants in any of the instructions, and although the instruction given for the plaintiffs is objectionable, as we. view the case, it is not sufficiently so to reverse the judgment; when, upon the whole record, it appears that the right is with the plaintiffs, and that justice has been done. There remains one other point to be considered. It is this: That the court refused to permit the defendants to withdraw their pleas. This, according to the decision in the case of Ayres v. Kelly, 11 Ill. 17, would be error; but it is not on this record assigned as error. We are, however, as it is a question of practice, not inclined to follow that decision, but to hold that it is discretionary with the court to allow it or to refuse it. From the best consideration we have been able to give this case, we are fully satisfied there is no error assigned on the record sufficient to reverse the judgment, and that justice has been done the parties. We accordingly affirm the judgment. Judgment affirmed.