Pollard v. Somerset Mutual Fire Insurance

Appleton, J.

The plaintiff, having on the 15th Nov. 1848, effected insurance on a tavern in Greenville, and the furniture therein, on Dec. 27th, following, mortgaged the same to Oliver Eveleth, and at the same time assigned the policy of insurance thereon to him, of all which, the case finds the defendants had due notice and to which they assented.

*225 The Act of incorporation, under which the defendants claim to exercise corporate rights, provides, in § 9, “ that when the property insured shall be alienated by sale or otherwise, the policy shall thereupon be void, and be surrendered to the directors of said company, to be cancelled,” &c.

It has been held, in a series of cases, that a mortgage is not an alienation of the premises insured, within the meaning of this Act. “ The term alienation,” says Crippen, J., in Mastin v. Madison Ins. Co., 11 Barb. 224 , “has a legal technical meaning, and any transfer of real estate, short of a conveyance of the title, is not an alienation of the estate. No matter in what form the sale may be made, unless the title is conveyed to the purchaser, the estate is not alienated.” These views have been affirmed in repeated decisions in New York. Allen v. Hudson River Mut. Ins. Co., 19. Barb. 445; Tillou v. Kingston M. F. Ins. Co., 1 Selden, 405. It has been decided in New Hampshire that the mortgage of property insured by the insurer, is not an alienation within the meaning of the clause in the charter prohibiting alienation. Rollins v. Columbian Ins. Co. 5 Foster, 204 ; Dutton v. N. E. Ins. Co. 9 Foster, 153 ; Folsom v. Belknap M. F. Ins. Co. 10 N. H. 231. The same principles were sustained in Massachusetts in Lazarus v. Com. Ins. Co. 5 Pick. 76 ; Jackson v. Mass. M. F. Ins. Co. 23 Pick. 418 . In Adams v. Rockingham M. F. Ins. Co. 29 Maine, 294, it was held that to avoid an insurance, the alienation of the estate insured must be complete and entire.

It is insisted, in defence, that the plaintiff, after his mortgage and the assignment of the policy, has entirely disposed of the equity of redemption, and that there is an alienation, and that consequently the action is not maintainable.

Courts of law, in all cases, uphold and protect the equitable interests of the assignee. The policy, by its terms, is payable to the plaintiff or his assigns. The assignment to Eveleth having been made with the knowledge and assent of the defendants thereto, the assignor ceases to have the power to defeat the rights of the assignee. He cannot discharge *226 the action commenced in his own name. A payment to him by the insurers, with a knowledge.of the assignment, would be of no avail against the claims of the equitable assignee. The nominal plaintiff has no power to defeat the claims of the party in interest; and the defendants, knowing of, and assenting to the assignment, are so far parties to the same that they cannot take advantage of any subsequent acts of the assignor.

In Traders’ Ins. Co. v. Robert, 9 Wend. 404 , a policy of insurance was effected by a mortgager, and the policy, with the assent of the assurers, was assigned to the mortgagee, and a loss occurred. It was held, in an action on the policy by the mortgagee, in the name of the mortgager, that it was no bar to a recovery, that subsequently to the assignment, the mortgager effected a second assurance, and neglected to give notice to the first assurers, although there is an express condition that the policy shall be void in case of such second assurance, and neglect of notice by the insured or his assigns. “Had the nominal plaintiff in this case,” remarks Savage, C. J., “executed a release to the insurance company, it would have no effect upon the rights of the assignee; and if he could not directly discharge the right of action which he had assigned, surely he cannot do it indirectly.” In Tillou v. Kingston M. F. Ins. Co., 1 Selden, 405, Foot, J., in delivering the opinion of the Court, says: “ The assignment of a policy of insurance, with the assent of the insurers, creates new and mutual relations and rights between the assignee and the insurers, which, on the plainest principles of law and justice, cannot be changed or impaired by the acts of a third person over whom the injured party has no control.” In Allen v. Hudson River M. F. Ins. Co., 19 Barb. 445 , the insured assigned his policy with the assent of the insurers, and subsequently procured a new insurance, without giving notice, which by the terms of the policy rendered it void. “It is insisted,” says Harris, J., “by the defendants, that the insurance in the Columbian Insurance Company, and the omission to give notice of such insurance till after the fire, discharged them *227 from further obligations upon the policy. I am inclined to think this objection would have been well founded had the policy remained in the hands of the party originally insured. But it having been assigned to the plaintiffs before the last insurance was effected, and that too with the knowledge and assent of the defendants, it was no longer in the power of the assignors to do any thing to impair the policy in the hands of their assignees.” In Conover v. Ins. Co. 1 Coms. 290, Johnson, J., says: “Nor are we called upon to decide whether the absolute alienation by Conover, after the assignment of the policy, is a good defence, as the point was not raised at the trial. But if we were, I do not see how the interest of G-ridley, the assignee, could be affected by it.”

As the assignment to Eveleth has been assented to by the defendants, his rights cannot be impaired or defeated by the subsequent proceedings of the nominal plaintiff. It is not necessary, therefore, to inquire whether there has or has not been a subsequent entire alienation of the estate.

In Abbott v. Hampden M. F. Ins. Co. 30 Maine, 414, it was one of the by-laws of the defendants, that if the assured should alienate in whole or in part that the insurance should be void; and under this special provision, it was held that a mortgage was an alienation in part. But there is no such provision in the Act incorporating the defendants, nor in their by-laws. Nor in that case was there any assent to assignment of the policy as there is in the one under consideration.

By the agreement of the parties, if the action is not properly commenced in the name of Pollard, but is maintainable in that of Eveleth, the assignee, the proceeding may be amended and the cause proceed to judgment in his name.

There is a class of cases where, by special legislation, authority has been given to maintain a suit in the name of the assignee. There is another class in which suits have been upheld upon the ground of a special promise by the defendant to the assignee. But the case before us would seem to fall within neither of these classes.

The action, in all cases, by the rules of the common law, is *228 maintained by the assignee in cases of assignment, in the name of the assignor, but for bis benefit. Flanagan v. Camden M. F. Ins. Co. 1 Dutcher, 507. A mortgage by the insured, of property covered by the policy, is not “an alienation by sale or otherwiseand when the insured has executed a mortgage on the insured property, and has assigned bis policy to the mortgagee, before the happening of the loss, the suit for the amount insured must be in the name of the party insured in the policy. Conover v. Ins. Co. 3 Den. 254 . Even if the assignment was made with the consent of the assurers, still the action must be in the name of the assignor, unless there be an express promise to the assignee. Jessel v. Williamsburg Ins. Co. 3 Hill, 88 . In the absence of any provision in the charter or by-laws of a mutual fire insurance company, whereby the assignee becomes a member of the company, the action, in case of loss, must be in the name of the assured with whom the contract was made. Folsom v. Belknap Co. M. F. Ins. Co. 10 Foster, 231 . The Supreme Court of Massachusetts, in Bowdwitch M. F. Ins. Co. v. Warren, 3 Gray, 415 , seem to indicate their view of the law to be the same as has been already suggested.

But the agreement of parties in this case, renders the decision of'this question unimportant, as the rights of Eveleth are equally entitled to protection, whether the action is in bis own name or in that of bis assignor, after notice of and assent to the assignment. In either event a default must be entered.' Defendants defaulted.

Rice and Goodenow, J. J., concurred. May, J., concurred in the result.