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Hyatt r. Wait.
assured, in case of a sale of the property, the right to surrender and cancel the policy and to receive back his premium or deposit note, upon payment of his proportion of all losses and expenses previously accrued. And when this is all that is desired and these conditions are complied with, no doubt the policy ceases,
any attempt to impose upon the party assessments for future losses would be of no avail. The contract has been terminated, and the party originally insured is no longer a member of the company.
The charter and the aforesaid conditions also provide that the purchaser or alienee may, on certain conditions, take an assignment of the policy and have the same ratified and confirmed to him. As to what these conditions are, I do not think the conditions annexed to the policy and the charter entirely agree. By the former, as I understand them, the purchaser is entitled to come in, take an assignment of the policy, and have the same ratified and confirmed to him upon his signing the premium note. By the latter, the purchaser is entitled to the same rights and privileges on application to the directors, on obtaining their consent, and on giving proper security for the unpaid portion of the premium or deposit note. In this apparent want of harmony between these different instruments, it is well enough to turn to the body of the policy and examine its provisions. We there find that no sale or assignment of the interest of the assured in the property insured can be inade without the consent of the company in writing. For a proper understanding of the rights and obligations of the parties we must, I think, read these three several instruments together, and as throwing light upon each other. And, thus read, I think we may arrive at these conclusions :
1. That a sale cannot take place without the consent of the company.
2. That the assured cannot terminate his membership in the company, nor be released from the obligations of the pre
Hyatt r. Wait.
mium note, without paying up all arrears of assessments for losses previously incurred.
3. That the purchaser must be one whose purchase of the subject of insurance has been made with the consent of the company, or has been ratified and approved by them.
Such are the express provisions of the charter and of the body of the policy. And although the condition (No.8) annexed to the policy leaves this matter somewhat in confusion, I think the phrase, “the purchaser of any property so sold and conveyed,”. implies this; for “so sold and conveyed” must either mean sold and conveyed bona fide, or else sold and conveyed under circumstances where the vendor has paid up all arrears of assessments. And the words in the same connection, "may take an assignment of the policy,” must refer to the policy mentioned in the previous part of the same condition, to wit, one upon which the alienor has paid up all arrears of assessment for loss. When this is done, it may well be said or inferred that it is an assignment with the consent of the company. Again, it is very questionable whether the company ever intended or can be compelled to recognize any purchaser, except one who purchased with their consent. Assuredly they never intended that any person should become a purchaser and thus a member of their company, in whose integrity and responsibility they could not confide. They had this right of choice-one indispensable to their own safety and reputation as an insurance company - in granting or refusing the original application for insurance. And I do not think they ever meant to surrender it in case of an alienation of the property, or to have a dishonest, fraudulent or knavish member foisted upon them without their consent.
4. I think, further, that the fair construction of the contract is, that the purchaser must be a different person from the parties insured or either of them ; in other words, that the sale must be to a third person, and not to one of the assured. It can scarcely be said that the insured assigns the
Hyatt v. Wait.
policy or alienates the property when only one of them assigns or alienates it, or, which is the same thing in effect, when two persons insured assign or alienate to one of their own number. The assignment and alienation contemplated a transfer of the entire interest to some one who was not interested in it previously.
With this explanation of what the parties contracted and what it was lawful for them to do, let us see what the defendant Wait applied for to the company. Being one of the parties originally insured, and having with his copartner Simmons signed the premium or deposit note, and having purchased of his copartner his interest in the property insured, he writes to the insurance company or their secretary asking them to approve of the assignment of the interest in the policy inclosed, to him, as such purchaser. They answered, declining to give such consent unless the assessments were paid. Now it is said for the first, (for the cause was argued at the circuit upon entirely different grounds,) that Wait did not apply for a surrender or cancellation of the policy, but for an approval or consent to its assignment to him. This is true. This was the application. It was refused. The company had a right to refuse it. Their consent was asked, and it was, as we have endeavored to show, rightfully withheld at their election. They were not obliged to consent. In the next place Wait applied for it, who, as one of the insured, had no right to ask it. Again ; Wait did not offer or propose to give his own premium note. It is said this was unnecessary, because his own name appeared on the premium note originally given. But the company had a right to a new premium note as evidence of the new transaction, and they had a right to hold the old one in addition, at least until all arrearages were paid. The company had a right either to a cumulative or substituted security. They got neither, and neither were offered. It is said they put their refusal to consent upon an untenable ground. I think
Hyatt v. Wait.
not. But as the defendants were actors in that transaction, and were, or at least now are, endeavoring to get rid of a note which was perfectly valid against them, it belonged to them to make such a demand and such an offer to the company as would have made the latter wrongdoers in retaining the note. Nothing of this was ever done. The defendants have made no proper application either to get rid of the old note, or to procure the company's consent to the assignment of the policy. The note was therefore rightfully retained; the assessments were properly made; and this suit is well brought. The company had a right to hold the defendants upon the note; to treat them as members of the company; to make assessments for losses during such membership; and to refuse to sanction an alienation of the property or an assignment of the policy, until all arrearages were paid, and until an eligible substitute was presented for their acceptance, in the place of the parties originally liable.
III. The most serious difficulty which the plaintiff has to meet, in the case, appears to me to arise from the 12th section of the charter, which is as follows: “All persons who shall insure with the said company, and also their heirs, executors, administrators and assigns, so long as they shall be insured in said company, shall be and continue members thereof, and no longer.” It is said that the sale of the premises insured, without the consent of the company, has avoided the policy—has prevented a recovery by either of the defendants in case of loss or damage by fire; and that therefore they are no longer insured, and hence no longer members of the company, nor liable to contribute for losses incurred. But I think, notwithstanding this section, that they are members of the company; that they cannot cease to be members by their own volition, without complying with the terms of the contract, upon which membership is to cease; that there is at least a qualified membership, for the purpose
of compelling the payment of the deposit notes, and all assessments
Hyatt v. Wait.
for losses legally imposed, for the purpose of enforcing the obligations of the contract; and that whether or not they are members of the company in the strict and technical sense of the term, they are not by their own wrongful act released from engagements which they have undertaken to fulfill. I think, therefore, this section must be understood in a qualified sense, as not entitling them to assert and exercise the rights and privileges of members, except during the period that they shall be insured in the company; and that the section was intended for the benefit and protection of the company, and faithful and paying members, and not of delinquents and wrongdoers. Moreover the words, " so long as they shall be insured in said company,” are susceptible of the interpretation “so long as they shall have or so long as there shall be an existing and valid policy in said company” a policy valid for any purpose, duly issued in the first place, and never surrendered—a policy which is not merely null and void — a policy, upon some of the provisions of which a right of action can be enforced as an existing contract between the parties. Thus interpreted, the rights of all parties can be preserved, and full and exact justice done.
IV. Finally, it is insisted that the judgment is erroneous for including interest on the premium note, under the authority of Bangs v. McIntosh, (23 Barb. 591.) This point is now made for the first time, without even an exception to the decision of the court below upon that ground. But I think interest is recoverable. The case in 23 Barb.
. was an attempt to enforce the whole premium note ($480) with interest, as a penalty for a default in paying a trifling assessment, ($6.10.) In the case at bar the suit is brought to recover only the amount of the assessments for losses actually incurred, and interest is charged from the period when the assessments were payable. I see nothing either illegal or inequitable in such a proceeding.
I think there was no error in the disposition of this cause