Gilliat, Trustee v. Pawtucket Mutual Fire Insurance Co.

8 R.I. 282

Opinion

Brayton, J.

The ground for new trial, first assigned, is, that the dwelling house, insured as such and occupied as a dwelling at the time of insurance, had, for a long time before the fire, been entirely unoccupied. The defendants were not permitted to prove that the assured had given them no notice of that fact; and the defendants say that such neglect to give such notice was a breach of good faith on the part of the assured, which rendered the policy void, — that it was the concealment of a fact material to the risk.

It may be said that good faith forbids either party, by concealing what he probably knows, to draw the other into a bargain from his ignorance of that fact and his believing the contrary. The rule applies to the inception of contracts in all cases, and if the question were now, whether the policy was originally void, on the ground that a material fact had been concealed, the objection here might require more consideration. There is no pretence, however, that anything was concealed at the time of the application, or of the making of the policy. What is claimed here is, that the policy, originally valid, has become void by the fact, that the dwelling house has since been unoccupied, and that this fact was not made known to the insurer. The fact of non-occupation would avoid the policy equally, with or without notice, unless, upon such notice, the forfeiture was, by the insurer, waived; and it would be for the plaintiff to prove the waiver, and so to prove notice. The question, therefore, is not so much as to the notice as it is as to the effect of non-occupation.

The point is also made by the defendants, and they say, that the fact that the dwelling was not occupied by any person, for a long period, avoided the policy, and this by virtue of the eighth article of the by-laws of the company, which provides, that “ when the condition or .circumstances of the property insured shall.be, by tbe act of tbe assured, his agent' or tenant, (in any wise) so changed as materially to increase the risk, the policy shall become void.”

The original application asked for insurance upon the applicant’s dwelling house. This was the kind of property proposed to be insured. The policy would not cover a building of any other description, — a barn, store-house, workshop, mill or the like, — and were the dwelling house converted into either of these, the policy would become void. It must continue to answer that description of a dwelling house. It is not necessary to the description that it should, at the time, have a t that, at all times thereafter, it should have one. Rut it must not be usually occupied in any other mode. Had the house been unoccupied at the time of the policy, it is agreed that the policy would still be valid. Article fifteenth of the by-laws provides that “ the mere change of tenant, when no change of occupation takes place, shall not affect a policy.” This clause is referred to in the argument, to show that the non-occupation is such a change in the condition and circumstances of the property as is contemplated in the eighth by-law. The language does not seem to imply that. On the contrary, it implies that it is not every change of circumstances, though it may increase the risk, that is to be so regarded, — as a change from a cautious, careful tenant, to a negligent and careless one. It implies also that it is not every change affecting the occupation of the premises, — not a mere cessation of occupation, — but a change of occupancy, which can only be by an actual occupancy for another purpose.

In the application for insurance, this question was put by the company: “What are the facilities for extinguishing fires?” The answer of the applicant was : “ A force pump and an abundance of water.”

The policy recites, that Gilliat has made application for insurance, &c., upon “the property described in application No. 5,457, which forms a part of this policy warranty by the assured, reference being had thereto for description and for all other matters contained therein,” to wit: [here specifying the buildings insured.] It is claimed that the answer, “ A force pump and an abundance of water,” was a warranty, by the assured, that the pump should, at all times during the policy, be in good working order; and if not so at the time of the fire, the policy became void and the plaintiff has no right to recover. Treating this as a warranty, it must be strictly performed; and if it be held as a warranty, that the pump should, at all times thereafter, be in good order, a failure so to keep it, from whatever cause the failure might happen, would avoid the policy and prevent a recovery Jor any loss.

j’lile the warrantor is held to this strict performance'on his part of the thing stipulated to be performed, yet because it might work hardship where there was entire good faith and an honest purpose fully to perform, the warranty also must be strictly construed; and his engagement is not to be extended, by construction, to include what is not necessarily implied in the terms used. The question here is, what are (in the present) the facilities for extinguishing fire ? The answer truly states what they then were. Nothing is asked as to the future, at least, expressly.

The company had put other questions as to other subjects. The sixth question is: “ Are the stoves or other apparatus for heating, or using fire, properly secured ? ” That is, what is the present security against fire ? But the question does not stop here. The company desire an engagement as to the future security, and they ask further, “ will you engage to keep them so ? ”

The seventh interrogatory, which is upon the subject of ashes and matches, does not ask at all of the present, but seeks a stipulation for the future, and asks, “ Will you engage that the ashes and matches, in and around your building, shall be kept in a safe place? ” In these, the company insist on a promise for the future. It shows that when they wish information as to the present, they ask it; and when they require a promise for the future, they put the question to insure under it, and that they understood that a question as to the present was not to be asked as one directed to the future. To construe the answer, relied on by the defendants, to be a warranty to keep the -pump in the same good order in tbe future, is to extend it to a subject notin tbe contemplation of the parties.

Gilliat, tbe original insured, conveyed tbe property insured to Alexander Duncan, on tbe 10th of November, 1860, and it is claimed that tbe policy became, from thenceforth, void. Tbe effect of this alienation would have been what tbe defendants claim, bad there been no provision in tbe by-laws of the company upon tbe subject; and but for this provision, no other person than tbe original assured could recover upon tbe policy after such alienation. Tbe by-law (art. 11) is, “ Tbe interest of tbe insured in this policy, or in the property insured, is not assignable, unless by consent of tbe company, expressed in writing ; and in case of any transfer or termination of such interest of tbe insured, either by sale or otherwise, without such consent, this policy shall from thenceforth be void.” This article, by implication, continues tbe policy in full force, upon tbe condition therein imposed, viz., that notice of tbe alienation shall be given to tbe company, and that tbe assent of tbe company shall be given in writing. The policy in force after this assent is no other than tbe original policy made to Gilliat, and tbe premium note is tbe consideration for it. Tbe lien, whatever it was before alienation, still continues upon the property insured. Because it is not a policy newly made to tbe assignee, for whose benefit the assent is obtained, it is necessary to bring suit in the name of tbe assignor.

Now it is said, that tbe directors of tbe company never gave their assent to tbe conveyance of this property from Gilliat to Duncan, though they did express their consent, in writing, to tbe subsequent conveyances from Duncan to Bradley, and from Bradley to Greene, for whose benefit this suit is brought. The assent of tbe directors was given August 1st, 1862. Two papers were then presented to the directors, — one dated August 1st, 1862, reciting that Duncan bad conveyed to Bradley the bouse and farm formerly owned by John H. Gilliat; tbe other, dated August 1st, 1863, reciting that Bradley had sold tbe same premises to Greene. On these tbe directors endorsed their assent in writing. Since it is not stated in terms that Gilliat had con veyed to Dunean, it is claimed that no notice was given of that transfer, and so no assent to that was ever given.

Upon applying to them for their assent, under the by-law, the applicant had but one purpose: that was to procure the assent of the company to the conveyance to him, and to issue a living policy for his benefit, upon the property so conveyed. That purpose could not be unknown to the directors. If he had not the title of Gilliat, his application was useless, and the assent worthless. The directors were now informed that the estate of Gilliat had passed to Greene, and they consent that the policy shall be good, notwithstanding. It is hardly conceivable that they could have understood that the estate was in Greene, and yet had never passed from Gilliat; and if they did not, their, in effect, consented to all the transfers from Gilliat to Greene. They at least waived any forfeiture for want of prior notice of the first conveyance, and agreed that it was then a subsisting policy. The cases cited show that want of notice may be waived by acts less stringent. Frost v. Saratoga Mutual Insurance Co. 5 Denio. 154; Hale v. Union Mutual Fire Insurance Co. 32 N. H. 295.

There is no time limited in the by-laws within which the notice shall be given, or beyond which the assent shall not be given. It is to be presumed that the notice will be prompt and within a reasonable time for their assent. When notice given shall be deemed by the directors unreasonable, they can refuse compliance and withhold their consent. But it is too late to object to the notice after the consent is actually given. It is a waiver of all objection as to time.

It is made a point of defence to this action, that the policy has not been assigned. A policy of insurance is not, by law, assignable, so as to enable, an assignee to sue in his own name. The legal interest remains in the original assured, notwithstanding the assignment. He is the party to the policy. It is only the equitable interest which the assignee acquires; but this interest will be nevertheless protected.

The assignment, all that the law allows, from Gilliat to Duncan, was effected by the insertion, in the policy itself, of the clause making the loss payable to Duncan. Brown v. Hartford Insu rance Co. 5 R. I. 394. From Duncan to Bradley, and from Bradley to Greene, the policy is expressly assigned, and expressly assented to by the directors.

Though we think the value of the property destroyed, as found by the jury, is large, and goes to the full extent of the evidence, as it impresses us, we do not see sufficient reason to disturb the verdict. The jury could not fail to notice that the directors, by the policy, insured the sum of $4,750 on the building, being prohibited from insuring more than three-fourths of the value.

We could hardly set aside a verdict because the jury, upon all the evidence, came to the conclusion, that the directors were nearly right in their estimate of the value.

New trial denied.