One of five trustees of a church edifice, being the agent of an
Insurance Company, accepted a risk in it from another of the
trustees to whom the church was indebted, the policy being in the
individual name of the insuring trustee, with a proviso that in
case of loss the amount should be paid to a creditor of him the
insuring trustee, to whom, however, the church was not indebted.
The insuring trustee paid the premiums out of his own funds but on
account of the parish, and with the assent of the trustees, and the
fact of two previous insurances in other companies, where the
insurance was made in the name of the proprietors of the church
generally, was recited in this policy made in the individual name
of the one trustee. A loss having occurred,
held that the
creditor of the insuring trustee was entitled to recover on the
policy, the case showing that the insurance in the form in which it
was made was made with the assent of all the trustees and it being
a matter immaterial to the company (supposing the risk to be the
same) whether the person appointed by the insuring trustee to
receive the money retained it to his own use or paid it to the
trustees.
This controversy arose on a policy of insurance. The underwriter
admitted the loss by fire, but denied the obligation to pay,
chiefly because the party insured had not an insurable interest in
the property which was destroyed.
The case was this:
William Chase, Sewall Chase, J. F. Day John Yeaton, and J. W.
Munger were the trustees of the Congregational Church on Congress
Street, in Portland, and held the legal title to it, in trust for
the society. Munger, one of the trustees, was also the agent at
Portland of two insurance companies created by the laws of
Massachusetts -- the Howard and the Springfield. On the 25th of
November, 1859, he took fire risks for each company to the
Page 72 U. S. 510
amount of $5,000 on the church property -- the party assured in
the Springfield Company being described in the policy as "The
proprietors of the Union Church, Portland, Maine," and in the
Howard Company as "William Chase, of Portland, Maine, payable in
case of loss to Grenville M. Chase." Each policy contained a
statement of the several sums for which the property was insured in
the different companies.
Prior to these contracts of insurance, the Continental Insurance
Company of New York had insured the church for an equal amount in
the name of the proprietors, but the policy, although dated in
1857, recites the risks taken by the Springfield and Howard
Companies in 1859, the reasonable explanation of this being that
when the policy was afterwards renewed, these additional risks were
incorporated into it.
William Chase, the assured in the Howard policy, was the
treasurer of the parish for several years, and paid the premiums on
the policies and the renewals of them. The premiums on the
Springfield and Continental policies were charged to the parish;
the Howard premiums were not, but were paid out of his private
means, on account of the parish, which was done with the assent of
the trustees. The society was indebted to William Chase in the sum
of $15,000, but not to G. M. Chase. William Chase was, however,
indebted to G. M. Chase, and obtained the Howard policy to secure
him.
All this appeared by William Chase's own testimony, he having
been called by the defendants in the case, and the only witness in
it.
The church was badly damaged by fire on the 15th of March, 1862,
and the Springfield and Continental Companies, recognizing their
liability, paid to the trustees two-thirds of the loss sustained by
the fire. The Howard Company, declining to pay, was sued by G. M.
Chase, the payee in the policy, for the remaining third.
The declaration set forth that "William Chase was the owner and
possessor in trust of the Union Congregational brick and slated
Church," &c., and that
"said Insurance
Page 72 U. S. 511
Company, in consideration of a premium in money then and there
paid to them therefore by said William, made a policy of insurance,
and thereby agreed to and with said William to insure upon said
property,"
&c.
Under instructions of the court, a verdict and judgment were
given for the plaintiffs, and the case was now brought here on
error.
Page 72 U. S. 512
MR. JUSTICE DAVIS delivered the opinion of the Court.
A recovery in this case is strenuously resisted because it is
said the individual interest of William Chase was insured, and not
his interest as a trustee, and as his only interest was that of a
trustee, it follows that the contract of insurance was a gaming
one, and void from considerations of public policy.
A contract of insurance is intended to indemnify one who is
insured against an uncertain event which, if it occurs, will cause
him loss or damage. The assured must therefore have
Page 72 U. S. 513
an interest in the property insured; otherwise there is a
temptation to destroy it, which sound policy condemns.
If, then, the Howard Company did not insure the interest of
William Chase as a trustee (it is conceded he had no other), the
policy is void although he was a creditor of the church, paid a
fair premium for the policy, and disclosed everything to the
underwriter. But the recovery in this case is based on the ground
that William Chase had an insurable interest as trustee, and
insured the property for the benefit of the society. The
declaration expressly avers that William Chase, being the owner and
possessor in trust of the Union Congregational Church, for a
premium paid in money, effected an insurance on the property in the
Howard Insurance Company. If this were true and the proofs
sustained it, the verdict and judgment of the circuit court cannot
be disturbed. It is unnecessary in this case to discuss the general
law of insurance with reference to what interests are or are not
insurable. The courts of this country as well as England are well
disposed to maintain policies where it is clear that the party
assured had an interest which would be injured in the event that
the peril insured against should happen.
That a trustee having no personal interest in the property may
procure an insurance on it is a doctrine too well settled to need a
citation of authorities to confirm it. As early as 1802, the judges
of the Exchequer Chamber, in the case of
Lucena v.
Craufurd, [
Footnote 1]
held that an agent, trustee or consignee could insure, and that it
was not necessary that the assured should have a beneficial
interest in the property insured, and the rule established by this
case, has ever since been followed by the courts of this country
and England. [
Footnote 2]
Page 72 U. S. 514
A trustee, therefore, having the right, is justified in insuring
the property even to its full value although there is no obligation
on him, in the absence of express directions, to insure at all.
[
Footnote 3]
But it is argued that the legal title to the Congregational
Church was vested in five trustees, and that to give validity to
their acts, they must act jointly in whatever they do for the
benefit of the property.
It is true, that in the administration of the trust where there
is more than one trustee, all must concur, but the entire body can
direct one of their number to transact business which it may be
inconvenient for the others to perform, and the acts of the one
thus authorized are the acts of all, and binding on all. The
trustee thus acting is to be considered the agent of all the
trustees, and not as an individual trustee. [
Footnote 4] If, within the scope of his agency, he
procures an insurance, it is for the other trustees as well as
himself. If he does it without authority, still it is a valid
contract which the underwriter cannot dispute if his co-trustees
subsequently ratify it. [
Footnote
5] In fact, so liberal is the rule on this subject that where a
part owner of property effects an insurance for himself and others
without previous authority, the act is sufficiently ratified where
suit is brought on the policy in their names. [
Footnote 6]
It is contended that the contract of insurance, being in the
name of William Chase, could only cover his individual interest,
or, at the furthest, but the fractional part of the interest which
he had as trustee. But the law of insurance is otherwise, for as
anyone having any legal interest in property can insure it as his
own and in his own name without specifying the nature of his
interest, it follows that if William
Page 72 U. S. 515
Chase insured the church with the assent of his co-trustees, for
the benefit of the
cestui que trust, that the insurance
company cannot complain, that the character of the interest was not
incorporated in the policy unless, if described, it would have had
an influence on them not to underwrite at all or not to underwrite
except at a higher premium than the one actually paid by the
insurer. [
Footnote 7] It has
been held in some cases that the party applying for insurance need
not disclose his interest unless asked by the insurer.
Whether the disclosure of the interest was material to the risk
incurred and would have enhanced the premium is always a question
of fact for the jury.
Applying these rules and principles of mercantile law to the
facts of this case (for evidence is properly receivable
aliunde the policy, to explain the character of the
interest insured), is it not apparent that the defenses interposed
cannot avail the insurance company? Could Munger, who issued the
policy and was a co-trustee with William Chase, have been in
ignorance, that the property was insured for the benefit of the
parish? If so, why was he not called to contradict William Chase,
who testified that although he paid the premiums on the original
policy and for each renewal out of his private funds, yet it was
done for the parish and with the assent of the trustees.
If this statement was untrue and Munger did not authorize the
payments of the premium on account of the parish, it was surely his
duty to the company he represented to have denied it. Not having
done so, the inference is irresistible that William Chase told the
truth. If he did, there is an end of the controversy, for an assent
on the part of the trustees to the payment of the premiums is an
assent to the procurement of the policy of insurance. Besides, this
authority was a continuing one, for the policy was several times
renewed, and each time for the benefit of the parish. The jury had
no right to disregard the evidence of William
Page 72 U. S. 516
Chase, for he was called by the defense, and was the only
witness sworn on the trial. And why was the sum for which each
policy was given inserted in the other unless to show that it was
one and the same transaction? If the insurance to William Chase was
not a part of the general plan of the trustees to insure the church
property, it is not easy to see why the fact of such insurance is
recited in the policies issued by the other companies. On what
ground, then, can the Howard Company resist the payment of this
demand? William Chase swears he acted for the parish with the
assent of the trustees; confirmatory evidence is furnished by the
policies of insurance, and there is not a particle of
countervailing testimony. Why the trustees, in insuring the church
for fifteen thousand dollars, allowed one policy to issue in the
name of William Chase, payable, in case of loss, to G. M. Chase, is
not disclosed by the record, but it is a fair inference from the
evidence that it was designed, if the peril insured against should
occur, to appropriate the money to the use of William Chase, and
thus discharge in part the indebtedness of the society to him, and
that William Chase, under the direction of the trustees, chose to
have the money paid to his creditor furnishes no defense to the
insurer.
As we have seen, William Chase, with the assent of the trustees,
could insure the trust title in his own name, and whether the party
appointed by him to receive the money, after having recovered it,
can retain it to his own use or must pay it to the trustees is
wholly immaterial to the insurer. This depends on the private
arrangement between the trustees, William Chase and Grenville M.
Chase, with which the Howard Company has no concern. [
Footnote 8]
If the trust property was insured, and the benefit of the
insurance goes to the society, and there was no concealment or
unfair dealing which could avoid the risk, then the underwriter is
concluded from any further inquiry. That there could have been no
undue concealment is very evident, because Munger, the agent of the
underwriter, was a co-trustee
Page 72 U. S. 517
with William Chase, and had equal knowledge with him of the
whole transaction.
The foregoing views dispose of this case, and it is unnecessary
to refer in detail to the charge of the circuit court, because it
was in conformity to them.
The instructions asked by the insurance company were properly
refused. A portion of them were right in the abstract, but would
have misled the jury, there being no evidence in the case
applicable to them. The rest were inconsistent with the law of the
case as given in this opinion.
The judgment of the circuit court is
Affirmed with costs.
MR. JUSTICE MILLER dissented.
[
Footnote 1]
3 Bosanquet & Puller 75.
[
Footnote 2]
Columbian Insurance Company v.
Lawrence, 2 Pet. 25;
S.C., 35 U. S. 10
Pet. 510;
Swift v. Mutual Fire Insurance Company, 18 Vt.
313, note by Redfield, J.; Goodall v. New England Fire Insurance
Company, 5 Foster 186; 2 Greenleaf's Evidence § 379; Parsons'
Mercantile Law, chapter 18, § 3;
Putnam v. Mercantile Insurance
Company, 5 Metcalf 386; Angell on Life and Fire Insurance §§
56, 57, 73;
Craufurd v. Hunter, 8 Term 13.
[
Footnote 3]
Lewin's Law of Trusts and Trustees 383;
Page v. Western
Insurance Company, 19 La. 49; 1 Phillips on Insurance 163;
Angell on Fire and Life Insurance § 73.
[
Footnote 4]
The Law of Trusts and Trustees, by Tiffany and Ballard, pp. 539,
540, and the cases there cited.
[
Footnote 5]
Blanchard v. Waite, 28 Me 59.
[
Footnote 6]
Finney v. Fairhaven Insurance Company, 5 Metcalf
192.
[
Footnote 7]
Parsons on Mercantile Law, chapter 19, § 3; 1 Phillips on
Insurance 165, 30;
Columbia Insurance Company
v. Lawrence, 10 Pet. 516.
[
Footnote 8]
King v. state Mutual Fire Insurance Company, 7 Cushing
7.
