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