Shaw v. Ætna Insurance

Adams, Judge, delivered the opinion of the court. This was an action on a policy of insurance issued by defendant'. The plaintiffs filed a second amended petition, to which the defendant demurred; the demurrer was sustained and judgment given thereon against the plaintiffs, from which they appealed to the general term, where the judgment of the special term was affirmed, and the plaintiffs have appealed to this court. The petition substantially sets forth that the plaintiffs being the owners of five barges of ice, on the upper Mississippi river, consigned the same to Scherholtz & Klinesmitli, of the city of St. Louis, to 'be sold by them on commission; that the plaintiffs ordered the consignees to have the ice insured, and that the consignees undertook the agency and agreed to have the ice insured for plaintiffs. Instead of insuring the ice in the names of the plaintiffs, they made the insurance in their own names, to indemnify themselves in case of loss, as they would be liable for such loss, having disobeyed the instructions of their principals in not procuring insurance in their names. One of the barges of ice was lost by a peril provided against, and the consignees assigned the policy to plaintiffs, and this suit was brought by them as assignees for the value of the lost cargo. The alleged ground of demurrer was that the consignees had no insurable interest in the ice. A consignee, as such, has no insurable interest in goods consigned to him for sale on commission, unless it be to the extent of the commissions or profits he expects- to derive from such sales. This he' has a right to insure regardless of any instructions from the consignor. But if he accepts a consignment with instructions from "his principals to insure for their benefit, it becomes his duty to insure; and if he neglects to do so and a loss occurs, he is liable to them for the amount. The consignees, in the case under consideration, instead of taking out a new policy in the names of their principals, had the risk entered on their own policy in their own names’, as a convenient mode of indemnifying themselves against such damage as they might suffer in not insuring in the names of their principals. I think they had the right [581] to thus protect themselves, and to this end they ought to be considered as interested to the full value of the ice. (See Bartlett et al. v. Walter, 13 Mass. 297; Oliver v. Green, 3 Mass. 133; Herkimer v. Keil, 27 N. Y. 163.) After being ordered to insure, the consignees might have considered themselves trustees for the consignors and insured in their own names for them. My impression is that in such case the “positive stipulation of the underwriter to pay the loss to the agent would never be rendered void by the inability of the party really assured to sustain an action on the policy in his own name.” (See 2 Duer Ins. 7, § 6.) In such case the policy ought to inure , to the benefit of the principal, and the agent or consignee be treated as a trustee of an express trust, and the amount of recovery would go to his principal. But whether he is a trustee of an express trust or not, he is nevertheless a trustee for the consignor; and in a suit upon the policy, in the name of the consignee, this may be shown in order to show that he had an insurable interest as trustee for his consignor. The demurrer in this case ought to have been overruled. f, Judgment reversed and cause remanded./ The other judges concur.