Columbia Insurance Company of Alexandria v. Lawrence
35 U.S. 507 (1836)

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U.S. Supreme Court

Columbia Insurance Company of Alexandria v. Lawrence, 35 U.S. 10 Pet. 507 507 (1836)

Columbia Insurance Company of Alexandria v. Lawrence

35 U.S. (10 Pet.) 507

ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR

THE DISTRICT OF COLUMBIA IN THE COUNTY OF ALEXANDRIA

Syllabus

There is no principle of law or of equity by which a mortgagee has a right to claim the benefit of a policy underwritten for the mortgagor on the mortgaged property in case of loss by fire. It is not attached or an incident to his mortgage. It is strictly a personal contract for the benefit of the mortgagor, to which the mortgagee has no more title than any other creditor.

The mortgagee of property insured against loss by fire is a competent witness in an action against the insurers to recover a loss alleged to have been sustained by the destruction of the property insured.

One of the fundamental rules of an insurance company insuring against loss by fire provided that any persons insured sustaining a loss by fire

"shall, as soon as possible thereafter, deliver in as particular an account of their loss or damage, signed with their own hands, as the nature of the case will admit of, and make proof . . . and shall procure a certificate under the hand of a magistrate . . . not concerned in such loss . . . importing that they are acquainted with the character and circumstances of the persons insured . . . and until such affidavit and certificate are produced, the loss claimed shall not be payable. . . ."

Held that the words "as soon as possible" cannot be drawn down to fix the construction of the clause respecting the certificate. The true intent and meaning of it is that the certificate must be procured within a reasonable time after the loss. It would be a most inconvenient course to adopt a different construction not required by the terms of the clause or the context, as it would make the material inquiry not the production of the certificate, but the possible diligence in proving it. The assured is not entitled to receive or to sue for the loss until the certificate is obtained, for it is a condition precedent to his right of action. The language is, "and until such affidavit and certificate are produced, the loss claimed shall not be payable." And besides, in the body of the policy it is expressly provided

"such loss and damage as the assured shall be entitled to receive by virtue of the policy shall be paid within sixty days after notice and proof thereof made by the assured, in conformity to the conditions of the company subjoined to the policy."

So that it is manifest that the assured could not be entitled to maintain any action until he had furnished all the preliminary proofs, so that the delay is not injurious to the company, but solely to the assured by depriving him of his right to judgment until it is procured.

In a former action against the same company by the same plaintiff on the same policy of insurance, "a certificate," intended to be a compliance with the requirements of the ninth fundamental article in the policy, was left with the insurance company by the assured, and no objection was made to it at the time it was delivered or until after suit brought on the policy and the case was on trial before a jury. Upon a writ of error, the judgment of the court below was reversed for error in the instructions given by the circuit court to the jury, on the trial. The plaintiffs, on the mandate of the Supreme Court ordering a venire facias de novo

Page 35 U. S. 508

coming into the circuit court, discontinued the suit. They immediately procured and presented to the insurance company another certificate in precise conformity with the requirements of the article. The court was of opinion that under all these facts and circumstances, the nonproduction of the certificate at an earlier period was fully accounted for and that the proper certificate was procured within a reasonable time. The first certificate was procured shortly after the loss and presented to the company, which then made no objection to it. The objection to it was first taken at the trial in the circuit court in the former suit. The court was then of opinion that the previous conduct of the company amounted to evidence proper to be left with the jury of a waiver of any objection to the certificate. The court reversed the judgment on that point, and almost contemporaneously with the annunciation of that decision, the new certificate was obtained. The nonproduction, then, of the proper certificate was occasioned not by any laches properly imputable to the party, but by the omission of the company to give notice of the defect and of the mistaken confidence placed by the party in the company itself.

The decision of this Court in the case of Lawrence v. Columbia Insurance Company, 2 Pet. 47, referred to, and the principles laid down in that case relative to representations by the assured to the assurers, reaffirmed.

Whenever the nature of the interest of the assured would have or might have a real influence upon the underwriter either not to underwrite at all or not to underwrite except at a higher premium, it must be deemed material to the risk, and if so, the misrepresentation or concealment of it will avoid the policy. One of the tests, and certainly a decisive test whether a misrepresentation or concealment is material to the risk, is to ascertain whether, if the true state of the property or title had been known, it would have enhanced the premium. If it would, then the misrepresentation or concealment is fatal to the policy.

In relation to insurance against fire on land, the doctrine seems to have prevailed, for a great length of time, that they cover losses occasioned by the mere fault and negligence of the assured and his servants, unaffected by any fraud or design.

A loss by fire occasioned by the mere fault and negligence of the assured or his servants or agents, and without fraud or design, is a loss within the policy upon the general ground that the fire is the proximate cause of the loss and also upon the ground that the express exceptions in policies against fire leave this within the scope of the general terms of such policies.

The decision of this Court in 27 U. S. 2 Pet. 26, 27 U. S. 53, 27 U. S. 56, as to the effect of a misdescription of property insured on the liability of insurers against loss by fire reaffirmed.

At January term, 1829, a suit between the same parties was before this Court on a writ of error. 27 U. S. 2 Pet. 25. It was an action instituted by Lawrence, the survivor of Lawrence and Poindexter, on a policy of insurance against fire to recover from the Columbia Insurance Company of Alexandria the amount of a loss sustained by them by the destruction of a mill by fire, alleged to have been duly insured by the defendants. A verdict and judgment had been rendered

Page 35 U. S. 509

in favor of the plaintiff, and on the case's coming into this Court the judgment of the Circuit Court of the County of Alexandria was reversed and the case was remanded to that court with directions to award a venire facias de novo. The mandate of this Court stated that the circuit court erred in instructing the jury that the interest of the assured in the property insured is such as is described in the original offer for insurance and in the policy, and also in this that the said circuit court erred in this, in the opinion to the jury, that the evidence was sufficient to be left to them, from which they might infer that the defendants waived the objections to the certificate and other preliminary proof required by the ninth rule annexed to the policy.

On the coming in of the mandate, November 5, 1830, the plaintiff in the circuit court discontinued the suit.

In September, 1831, Joseph W. Lawrence, survivor of Lawrence and Poindexter, instituted another suit against the same defendants on the same policy of insurance, and after various pleadings and demurrers, &c., the case was tried by a jury in October, 1834, and a verdict and judgment entered for the plaintiff.

The defendants excepted to the charge of the court in two bills of exceptions, and they prosecuted this writ of error.

The case brought up by this writ of error was in all respects the same with that which was before the Court in 1829, with the exceptions fully stated in the opinion of the Court.

MR. JUSTICE STORY delivered the opinion of the Court.

The original action was assumpsit, brought by the defendant in error against the insurance company upon a policy of insurance against fire underwritten by the company on 9 April 1823, whereby the company insured for the defendant in error, and his partner, Poindexter (since deceased), $7,000 on their stone mill, called the Elba mill, four stories high, situated on an island about a mile from Frederickburg in Virginia. The declaration averred a total loss by fire, on 14 February, 1824.

There was a former suit brought on the same policy against the

Page 35 U. S. 510

company, in which the plaintiff obtained a verdict and judgment. That judgment was brought before this Court on a writ of error in January term, 1829, and the judgment was reversed. The cause will be found fully reported, with the grounds of the reversal, in the second volume of Mr. Peters' Reports, 27 U. S. 2 Pet. 26. One of the grounds of that reversal was the omission, before the suit was commenced, to procure a certificate from a magistrate in compliance with the ninth fundamental article of the rules of the company, upon which the policy was made, and to which those rules were annexed as a part of the conditions of the contract. On 14 February, 1829 (after the reversal, and the reason thereof were made known), being five years after the loss, a new certificate was obtained from Mr. Hooe, a magistrate of the county in which the mill was situated. The original suit was afterwards discontinued in the circuit court on 5 November, 1830. The present suit was afterwards commenced in September, 1831.

In the court below, various pleas were interposed by the company, upon some of which there were issues to the country, and others, which were special, eventuated in demurrers. Upon the former, a verdict was at the trial found for the plaintiff, and upon the latter (as well as upon the verdict) judgment was ultimately pronounced in favor of the plaintiff. Bills of exceptions were also taken at the trial upon various points of law raised in argument, and the correctness of the ruling of these points, raised both upon the special pleadings and upon the trial of the issues of fact, are upon the present writ of error brought before us for revision. All the leading facts of the case, except the new certificate of Hooe beforementioned and the testimony of Joseph Howard (which will hereafter be a subject of comment upon the inquiry as to his competency) are precisely the same as were before us upon the writ of error in 1829. And as the testimony of Howard, if admissible, does not in our opinion at all vary the operation and pressure of the point of law in the case, we deem it unnecessary to do more than to refer to the case as reported in Peters' Reports for all the material facts. It may be proper, however, to state that it was then decided that there was no waiver by the company of its right to the preliminary proofs required by the ninth article of its rules, and that the assured had an insurable interest.

In examining the case presented by the present writ of error, we shall endeavor to strip it of the artificial and complicated form in

Page 35 U. S. 511

which it comes before the Court, and instead of wandering through the maze of special pleadings and exceptions with which the merits of the case are encumbered, and under which indeed they seem almost buried, we shall consider the material questions presented by the record, and afterwards briefly apply the decisions on them to the solution of the points raised by the pleadings and exceptions.

The first question naturally presented is whether Joseph Howard was a competent witness in the suit. The original defendants (the insurance company) objected to his competency, and the objection was overruled and his testimony was admitted by the court. The facts relied on to establish his incompetency were these. Howard and Lawrence (the plaintiffs) had, in September 1813, purchased the premises of W. and G. Winchester, and in the conveyance it was declared that it was subject to the payment of the annual rent of

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