Hinman v. Hartford Fire Insurance

Lyon, J.

In the contract under consideration, as in all, or nearly all, modern contracts of insurance, there are two classes of stipulations: first, those relating to matters and things prior to the loss, and which define and determine the limits of the risk; and second, those which relate to matters and things occurring after the loss, and haying for their object to determine the mode in which the loss is to be established, adjusted and recovered. The former pertain to the circumstances which affect the risk itself, the latter to those acts required of the assured after a loss in order to fix the liability .of the insurer. “ As to the former ” (says Mr. May in his excellent work on the Law of Insurance, § 217), “ relatively speaking there is more strictness in holding parties to the terms of the contract, and less readiness to find in the circumstances a waiver of their re.-spective rights. In other words, the courts will proceed with caution in determining the question of the liability of the insurer ; but when this liability is fixed by the capital fact of a loss within the range of their responsibility, they will be very reluctant to deprive the insured of the benefit of that liability, by any failure or neglect to comply with the mere formal requisitions of the contract, by which his right is to be made available for his indemnification.” p. 231. The stipulations in this contract of insurance upon which the action must be determined, relate to matters and conditions not only prior to the loss, but prior also to the making of the contract, and hence belong to the first class before mentioned. In this case, therefore, the parties must be held to the terms of the contract which they have entered into, and the most that either of them can justly claim, is, that their contract shall be governed by the general rules of law applicable to the interpretation and enforcement of all written agreements.

*165Formerly contracts of insurance did not usually contain the numerous conditions and stipulations which are found in later insurance contracts, or in most of them, and which are designed to operate as restrictions upon the liability of the insurer. These are, in a great measure, of modern growth, and are the natural results of the vast increase of tbe business of insurance. At the time when the assured was not usually required fully to disclose the nature and extent of his interest in the insured property, and when the policy contained.no conditions in respect to the title, the question frequently arose in the courts as to how far, and how specifically, he was bound to disclose his title and interest. It was then held in numerous cases (although the contrary doctrine was asserted by some of the courts, and particularly by the supreme court of the United States), that, in the absence of such requirement or conditions, if the. assured had not the absolute title to the property insured, but had an insurable interest therein, the insurer was liable on the policy for a loss of the property, although the assured had represented that he was the owner and had failed to disclose that his interest therein was only a partial or limited interest. Many of these cases are cited in the note to the case of Locke v. The N. Am. Ins. Co., 13 Mass., 61, in 2 Am. L. Cas., 476 (2d ed.).

In many of these cases (and so far as we have discovered, in all of them in which the subject is mentioned), and in numerous other cases, the principle is asserted, that if the assured is interrogated for the character and particulars of his title, or if he be required by the provisions of the policy to disclose the same, he must disclose his title fully and correctly, or the insurer will be relieved from liability on the policy.

The character and extent of the interest of the assured in the insured property is an important element in the risk. In Columbian Ins. Co. v. Lawrence, 2 Peters, 25, Chief Justice Marshall says: “ Generally speaking, insurances against fire are made in the confidence that the assured will use all the precautions to guard against the calamity insured against, which *166would be suggested by his interest. The extent of this interest must always influence the underwriter in taking or rejecting the risk and in estimating the premium. So far as it may influence him in these respects, it ought to be communicated to him. Underwriters do not rely so much upon the principles as on the interest of the assured ; and it would seem, therefore, to be always material that they should know how far this interest is engaged in guarding the property from loss.” p. 49.

If the contract requires the assured fully to disclose his-title, and he fails in any material particular to do so correctly, it is highly probable, in view of the importance of such information to the insurer, that the policy would thereby be invalidated and the insurer relieved from liability, although it contains no express provision to that effect. But this question is not in the present case. In the contract before us there are express conditions and stipulations, valid in the law, and amply sufficient to charge the plaintiff with the obligation fully to disclose to the insurer his title to the insured building and the ground on which it stood, at the peril of losing the benefit of the contract should he fail to do so.

As before observed, the cases which assert and apply the foregoing principles are very numerous. For the convenience of the profession, a few of them, taken almost at random, will be here cited. Franklin Fire Ins. Co. v. Coates, 14 Md., 285; Sussex County Mut. Ins. Co. v. Woodruff, 2 Dutcher (N. J.), (541), 553; Ætna Ins. Co. v. Tyler, 12 Wend., 507; Same case in court of errors, 16 id., 385; Strong v. Manufacturers' Ins. Co., 10 Pick., 40; Curry v. Commonwealth Ins. Co., id., 535 ; Smith v. Bowditch Ins. Co., 6 Cush., 448; Hayward v. N. E. Mut. Ins. Co., 10 id., 444; Brown v. Williams, 28 Me., 252; Birmingham v. Empire Ins. Co., 42 Barb., 457; Marshall v. Columbian Ins. Co., 7 Foster (N. H.), 157; Jenkins v. Quincy Ins. Co., 7 Gray, 370; Kibbe v. Hamilton Ins. Co., 11 id., 163; Falis v. Conway Ins. Co., 7 Allen, 46; Reynolds v. State Mut. Ins. Co., 2 Grant’s Cases (Pa.), 326; Phillips v. Knox Ins. Co., 20 Ohio, 174

*167Ve are now to apply these principles to the facts of this case as established on the trial. It satisfactorily appears that the hop house, which is the chief subject matter of the policy, was part and parcel of the realty, and Pickard had no greater interest in the building than he had in the soil upon which it stood. It conclusively appears that he was not “ the sole, unconditional owner by a sole, unconditional and entire ownership and title,” either of the building or soil. The words of the policy here quoted import absolute ownership and title. When the contract was made, Pickard was in possession of the property under a contract with the owner for the purchase thereof, and, doubtless, had an insurable interest in the building. But he had failed to pay the purchase money, and it was all past due. Besides being in default as to the purchase money, he had neglected for the three preceding years to pay the taxes assessed on’ the property, and there were three outstanding certificates of the sale thereof for such unpaid taxes. It requires no argument to show that the sole, unconditional and entire ownership of and title to the premises were not in Pickard. And it seems equally clear that it was very material to the insurer to be informed of the limited and precarious character of Pickard’s interest in the property. Under the express terms and conditions of the contract, we should be greatly at a loss for sound reasons for holding the policy valid and the defendant liable for the loss, even though Pickard had been silent as to the character and extent of his interest. But he was not silent.’ He made a declaration in that behalf, and he expessly stipulated that such declaration should be a warranty. He declared and warranted that he was then the sole and undisputed owner of the insured property; that the same was not mortgaged ; and that he held the ground upon which the insured building stood, by contract. His answers to the questions put to him, taken together, are equivalent to a statement that, although he held the land (and consequently the building) under a contract of purchase, yet no person, other than himself, *168bad any substantial interest in tbe property. They are equivalent to a statement, that he bad fully paid for tbe -land and was the sole owner thereof by an equitable title in fee, with the right to enforce the transfer to himself of the naked legal title outstanding in Grates, the former owner, or in his heirs or pei’sonal representatives. (See Winslow v. Crowell, 32 Wis., 648.) Such statement was untrue. Grates, or his heirs or representatives, had an interest in the premises to the amount of the unpaid purchase money, and was or were then entitled to a strict foreclosure of the contract under which Pickard held. This alone is fatal to the validity of the policy. We purposely avoid passing upon the effect of the outstanding tax sale certificates ; but it is deemed proper to say, that when real estate, proposed to be insured, is incumbered by unpaid taxes or tax certificates, if the terms of the contract require the assured to disclose the particulars of his title, the safer course will be for him to state in his application all of the facts relating thereto.

It is readily conceded that there are adjudged cases which seem to controvert some of the views above expressed. We shall not stop to comment upon, or even to cite them. We are well satisfied, after most careful examination, that our conclusions are sustained by the great weight of judicial authority, and that we have interpreted this contract of insurance in strict accordance with those general rules of construction applicable thereto, of which mention was made in the opening paragraph of this opinion.

It is claimed on behalf of the plaintiff, that the proofs in the case are, that the agent of the defendant who received Pick-ard’s application for insurance, knew the state of the title and misled Pickard as to his obligation to make any further or other statement of his title and ownership than that which he did make. And it is argued therefrom, that the insurer is estopped to question the sufficiency of the title, or of the statement of Pickard in relation thereto. Were this proposition of *169fact true, a very important question might be presented as to bow far tbe principal is concluded by tbe knowledge and acts of the agent. But tbe proposition is not sustained by the proofs. Tbe only testimony on tbe subject is that of Pickard, to tbe effect that tbe agent asked him who built the bop house, and, on being told that the witness built it, replied, “ Then you own the property, and have the right to get it insured; ” and the testimony of the agent (which is undisputed) that he had no knowledge whatever that there was any incumbrance on the property. This testimony is entirely insufficient to prove that the agent knew that Pickard had not paid for the land. The fair inference to be drawn from it is, that the agent supposed he had paid for it. Otherwise he would have known that it was incumbered to the extent of the unpaid purchase money. Certainly, there is no testimony tending to prove, that, with knowledge that Pickard had not paid the purchase money, the agent advised him that he could safely declare and warrant that he was the sole and undisputed owner of the building insured. It must be held that Pickard made such statement and declaration on his own responsibility.

Certain • personal property in the building, and which was covered by the policy, was also burned. Pickard was the sole and absolute owner of such property. But the contract of insurance is entire, and, failing in part, it fails wholly. This is well settled. Hence the plaintiff cannot recover for the loss of any of the property. May on Insurance, § 189, and cases cited.

At the conclusion of the plaintiff’s testimony, a motion for a nonsuit was made on behalf of the defendant, and denied by the court. All of the material facts in the case had then been proved. It follows from the views above expressed, that the motion should have been granted. But, that motion having been denied, the court should have granted a new trial for the reason that the verdict and judgment are against all of the evidence in the case. We find it unnecessary to review the *170instructions given to the jury by the learned circuit judge who presided at the trial.

By the Court. —The judgment is reversed, and a new trial ordered.