
    
      The Fire and Marine Insurance Company of Wheeling v. Morrison.
    August, 1840,
    Lewisburg.
    [36 Am. Dec. 385.]
    (Absent Parker, J.)
    Insurance — Contract to Sell Insured Property — Destruction before Contract Completed — Right of Vendor to Recover on Policy — Case at Bar. — A bouse is insured against fire, by a policy containing a provision that it is to have no effect if assigned, unless the assignment be allowed by the insurance company. The owner and assured makes a written contract, by which he agrees to sell to A. the house with the lot on which it stands, and A. agrees to procure and assign to the vendor the bond of a third person for the purchase money, and to execute a mortgage on the property for securing the payment; the contract to be fulfilled on A.’s part within the month. A. fails to perform his contract within the month ; and five days afterwards, and while it is still unperformed, the house is consumed hy tire. The contract is subsequently carried into effect by the parties. In an action by the vendor against the insurance company to recover the value of the house, the parties to the suit, in addition to the foregoing facts, agree, that both before and after the execution of the written contract for the sale of the premises, it was agreed by parol between the vendor and vendee, that the former should assign the policy of assurance to the latter: reserving however the question of law, whether the said parol agreement can be admitted, either as a distinct contract, or for the purpose of aif ect-ing the terms of the written contract of sale. Hold, the plaintiff is entitled to recover, notwithstanding the contract of sale, and the subsequent performance of it : 1. because the purchaser, if sued in equity for specific execution, might have set up the parol agreement to assign the policy, and. thereby entitled himself t.o an abatement for the loss of the house ; 2. because, by the stipulation for a mortgage, the plaintiff retained an insurable interest in the premises, which gave him an immediate right of action against the insurance company upon the happening of the loss.
    Joseph Morrison brought an action on the case, in the circuit superior court of Ohio county, against the president and directors of the fire and marine insurance ^company of Wheeling, to recover the value of a house insured by the plaintiff with the defendants, and subsequently consumed by fire. Issues being made up on the pleas of non assumpsit and payment, the parties stated and agreed the following case for the judgment of the court.
    1.That on the 9th of August 1832, the defendants executed to the plaintiff a policy of insurance for one year on a certain dwelling house in Wheeling, and some furniture therein, which policy is agreed in hóec verba, and contains among others the following provisions: ‘"'that the capital stock, estate and securities of the company shall be liable to pay, make good, and satisfy unto the said insured, his heirs, executors, administrators or assigns, all such damages or loss which shall or may happen bj- fire to the house and furniture above mentioned,” within the year, “not exceeding in the whole the sum of 1000 dollars, according to the amounts as above mentioned,” (that is to say, 500 dollars for the house, and 500 dollars for the furniture) “unless the said company shall, within five days after the proof of such damage or loss of the building aforesaid insured, give directions for putting the same into as good a state of repair as the same was before the injury by fire, or make good the loss or damages by paying therefor;” with a similar provision for replacing or paying for the furniture, in case of loss or injury by fire: that the damages should be paid according to an estimate to be made by arbitrators indifferently chosen : that the house should not be occupied for certain purposes deemed hazardous: and that the policy should have no “force or effect if assigned, unless such assignment be made within thirty days after the transfer of the prop-ert3r, and allowed by the company agreeable to article 10, of the proposals annexed;” which article is in these words: “The policy may always be transferred, provided such transfer be endorsed upon the ^policy, and brought to the office for approval within thirty days from the date thereof, otherwise the premium shall be considered as sunk for the benefit of the assurers. ’ ’
    2. That the policy was renewed from time to time until the 16th of March 1836, when it was again renewed for one year from that date on the building alone, to the amount of 700 dollars, at which time the plaintiff was seized of the premises in fee, and the house was worth 700 dollars.
    3. That the premiums of insurance were paid by the plaintiff to the defendants.
    4. That on the 5th of May 1836, the house was consumed by fire, without any fraud on the part of the plaintiff, who gave due notice and satisfactory proof thereof to the defendants, and performed all the conditions precedent which were incumbent on him.
    5. That on the 11th of April 1836, the plaintiff entered into an article of agreement under seal, with a certain Austin Peay, for the sale of the house insured and the lot on which it stood, which agreement is set forth in hsec verba, and is to the following effect: That the plaintiff Morrison had sold to Peay the house and lot aforesaid, with other property, for which Peay had paid ten dollars in hand, and agreed to deliver to Morrison, duly transferred, the bond of John M. Clark for 12000 dollars, payable five years after the 1st of April 1836, and bearing interest payable half yearly from its date, and also to invest Morrison with all the security attached to the bond aforesaid, and to give him, as additional security for the payment thereof, a mortgage upon two lots, (one of them being that on which stood the building in question) ; all of which covenants on the part of Peay were to be done and performed in the same month of April: and that upon the delivery of the bond and security aforesaid, Morrison was to execute and deliver to Peay a good and sufficient deed in fee simple, with general warranty.
    *6. That at the time when the house was consumed by fire, Clark, who had been absent for some time before, and continued absent for some time afterwards, had not executed the bond which was to be delivered in payment, and Peay had not complied with the terms of the said agreement; but that afterwards the said agreement was carried into effect by the assignment of Clark’s bond, and the execution of a deed from Morrison to Peay, who had ever since been, and was still, in possession of the premises.
    7. That at the time of the bargaining between Morrison and Peay for the said property, it was agreed by parol between them, that possession was to be delivered to Peay at the time Clark’s bond should be assigned to Morrison, and that Peay was to receive the rents from the 1st of April 1836, provided the contract on his part was carried into effect: that it was also agreed by parol between Peay and Morrison, both before and after the execution of the written agreement, that the policy of assurance was to be transferred and assigned by Morrison to Peay. But the question of law was reserved, whether the said parol contracts can be admitted, either as distinct, independent contracts between Morrison and Peay, or for the purpose of affecting in any way the terms of the said written agreement.
    8. That no objection to the form of the action was to be taken : and if, upon the facts above stated, the law was for the plaintiff, judgment should be rendered in his favour for 1700 dollars, wit,h interest from the 10th of May 1836 till paid; and if the law was for the defendants, judgment should be rendered for them.
    The circuit court held that the law upon the case agreed was for the plaintiff, and rendered judgment in his favour for the damages and interest agreed as aforesaid, and his costs of suit. To which judgment, on the petition of the defendants, a superse-deas was allowed.
    ^Johnson, for plaintiffs in error. Every sort of insurance, whether marine, against fire, or upon lives, is a mere contract of indemnity. Blackstone (2 Bl. Comm. 458,) defines a policy of insurance as “a contract between A. and B. that upon A’s paying a premium equivalent to the hazard run, B. will indemnify or insure him against a particular event.” The demand of the assured is restricted to the amount of damnification as it really is at the time of action brought, and where, upon the whole event, no damage has been sustained, he can recover nothing. Godsal and others v. Boldero, 9 East 72; Hamilton v. Mendes, 2 Burr. 1198, 1210; Bainbridge v. Neilson, 10 East 329; Rhinelander v. Ins. Co. of Pennsylvania, 4 Cranch 29. Upon this principle depend the decisions that a party effecting a double or triple insurance can only . recover the amount of his loss, and if he sues one insurer for the whole and recovers, that insurer may compel the others to contribute their proportional parts. Ellis on Insurance and Annuities 13, citing Newby v. Read, 1 Bla. Rep. 416; Rogers v. Davis, Beawes’ Lex Mercat. 242, and Davis v. Gildart, Beawes ubi supra. The engagement of insurers against fire is more strict and confined than any other: it is an undertaking “to indemnify the insured against any loss or damage which.he may sustain from fire, within a limited time, in respect to certain property.” 2 Selw. N. P. 1056; Ellis on Ins. and Annuities 1, 2 Marsh, on -Ins. 784; 3 Kent’s Comm. 370. The party insured must have an interest or property at the time of insuring, and at the time the fire happens; and the contract extends only to him, and does not pass to his assignee or vendee, without the consent of the insurers. Sadlers’ Company v. Badcock and others, 2 Atk. 554; Lynch v. Dalzell, 4 Bro. P. C. (Tomlins’s edi.) 431; Graves et al. v. Boston Mar. Ins. Co., 2 Cranch 419; Dumas v. Jones, 4 Mass. Rep. 647; Pearson v. Lord, 6 Mass. Rep. 81. Now in this case, before the house *was consumed by fire, Morrison had sold and transferred to Peay all his estate in the property by a written contract, and thenceforth the premises were at the risk of the purchaser. 1 Sugden on Vendors, ch. 4, $ 1, p. 171. Notwithstanding 'the destruction of the house by fire, equity would, at the instance of Morrison, have decreed a specific execution of the contract by Peay. 1 Sugden on Vend. 277; Paine v. Meller, 6 Ves. 349; Spurrier v. Hancock, 4 Ves. 667; Harford v. Furrier, 1 Madd. C. R. 532; White v. Nutt, 1 P. Wms. 62. As to the parol agreement to assign the policy of assurance, that fact must be taken to have beten introduced into the case agreed at the instance and by the agency of Morrison ; it obviously forms no part of the defendants’ case. The question as to its legal effect being expressly reserved, it is, as to the defendants, no more than a simple admission that such a parol agreement was made between Morrison and Peay, under protest that the fact is wholly immaterial in point of law. And so, in truth, it is: for upon a bill filed by Morrison against Peay to have the written contract of sale specifically enforced, Peay could not have availed himself of this parol stipulation by way of defence. Omerod v. Hardman, 5 Ves. 722. Neither could he avail himself of it as a distinct, substantive agreement, by an action against Morrison forfaiting to assign the policy; because, to such an action, Morrison might well answer that the failure proceeded from Peay’s own default, in not performing his contract for the purchase of the property within the time agreed upon, that performance being the sole consideration of Morrison’s engagement to assign the policy. In every view, therefore, Morrison was without interest in the property' at the time of the fire; and as it appears that Peay has since performed his agreement, no damage can have resulted to Morrison from the destruction of the building insured. This is further manifested by that provision of the policy *which reserves to the insurance company the option of rebuilding the premises destroyed; for if they had elected to rebuild, they would either have had no right to enter upon the land for that purpose after the sale to Peay, or (supposing the sale did not deprive them of such right) the benefit of the new building would in no manner have enured to Morrison, but exclusively’ to Peay. Morrison, then, having parted with his interest before the fire, and having sustained no damage, cannot maintain the action for his own benefit; and he cannot maintain it for the benefit of Peay, because the defendants have never contracted to insure Peay, and the contract of insurance, both upon general principles and by its express terms, was not assignable without their approval. To sustain the action for Peay’s benefit would be, in substance, to convert an executory contract to assign, into an actual assignment as between the contracting parties, and then to enforce such assignment against the insurance company though they have never assented to it.
    Price for defendant in error.
    Morrison, at the time of the fire, was in possession of the premises, and held the legal title, notwithstanding his executory contract for the sale of them to Peay; and he was the legal owner of the policy of insurance, notwithstanding his executory contract for the assignment of that also to Peay. He is therefore legally competent to maintain this action; and the court of law, which regards legal rights only, cannot properly enquire into the equities between Peay and Morrison, arising out of their contract for the sale and purchase of the property. Whether Peay was compellable in equity to perform his agreement of purchase without any abatement for the value of the house destroyed; whether, if he has voluntarily performed that agreement without such abatement, he has any demand against Morrison in respect of the contract to assign the policy; and whether Morrison is now *suing the insurance company for the benefit of Peay. — are enquiries wholly foreign to the present case. But if the court can and will undertake to determine what would have been the rights of Morrison and Peay, on a bill filea by the former against the latter to enforce specific execution of the written agreement, then it is clear that Peay might successfully have resisted such execution by setting up the parol agreement to assign the policy, and that Morrison must have consented either to rescind the entire contract and retain the property, or to allow the abatement for the value of the house destroyed; and in either case, Morrison would be entitled to maintain this action. Clarke v. Grant, 14 Ves. 519; Marquis of Townshend v. Stangroom, 6 Ves. 328; Hosier v. Read, 9 Mod. 86. The agreement to assign the policy cannot be looked upon as distinct from the agreement to sell the land; it formed a part, and an essential part, of the contract of sale ; for the parties never could have designed that if performance of the contract of sale should be waived or become impracticable, the contract of assignment should yet subsist, and the right to the policy be separated from right to the premises insured. Such a construction would, in the case supposed, have the effect to compel an extinguishment of the policy for the sole benefit of the insurance company; for their consent to such an assignment could never be obtained, and even if it could, their new contract with the assignee would be merely a wager, he having no interest in the premises insured. As that parol contract forms a part of the facts agreed, it is not material to enquire by which party the evidence of it was brought forward: but if it were material, the introduction of it must be attributed, not to Morrison, but to the defendants. Morrison’s case was complete on shewing the insurance, his legal title, and the destruction of the premises. But there is another ground on which the judgment must be held right; and this, without any necessity *to look beyond the written agreement. Morrison stipulated for the security of a mortgage upon this very property : and by that stipulation he retained an insurable interest in the premises. Traders’ Ins. Co. v. Roberts, 9 Wend. 404; 2 Marsh. 789; Ellis on Ins. and Ann. 22. And this gave him an immediate right of action against the company upon the happening of the loss, and to the full amount of that loss.
    
      
      Contract to Sell Insured Property — Right of Vendor to Recover on Policy Where Property Destroyed before Contract Performed. — In MacCutcheon v. Ingraham, 32 W. Va. 385, 9 S. E. Rep. 263, it is said: “In wood on Fire Insurance, p. 558, § 330, we find that ‘a mere contract to sell property covered by insurance, even though the insured has bound himself to convey upon the performance of certain conditions, does not affect the validity of the policy ; and if a loss occurs before the conditions are performed a recovery may be had by the insured, even though the conditions are subsequently performed ; and, if it was agreed that the policy should be assigned to the purchaser, the judgment will inure to his benefit. Neither will a conditional transfer of property avoid the policy, but, if the insured parts with all his interest in the property, the policy ceases to be operative.’ See, also, 2 Bart. Ch. Pr. p. 918, § 290 ; also, Insurance Co. v. Morrison. 11 Leigh 354.” See also, monographic note on “Insurance, Fire and Marine” appended to Mutual, etc., Soc. v. Holt, 29 Gratt. 612.
    
   STAHARD, J.

In this case certain facts have been agreed by the parties, and the law on those facts submitted to the court; the parties agreeing that if it be for the plaintiff, judgment shall be entered for a specified amount. The only question presented then is, has the plaintiff, on the facts agreed, a right of action against the defendants? the agreement of the parties as to the amount of damage precluding an enquiry by the court into that matter.

The original insurance is free from all exception, and the property embraced by it having been destroyed by the risk insured against, the right to the action is clear, unless the interest of the insured in the property had been extinguished at the time of the loss. It is said to be extinguished by the executory contract of sale made before the loss. That contract, if it had been carried into full execution according to its provisions, would have left the insured a mortgagee. The existence of that interest, of sufficient stability to sustain an original policy, is surely sufficient to repel the pretension that the interest was extinguished. If the contract executed would not extinguish the insurable interest, the contract executory surely would not. The interest so abiding in the insured would have entitled him to recover the full amount of the insurance on the loss, without subjecting him to a delay of his claim on the insurers, until he had shewn, by the pursuit of the claim on the mortgagor, that it could not be recovered from him. Stetson v. Massachusetts Fire Ins. Co., 4 Mass. Rep. 330.

*The mortgagee confessedly has an insurable interest, and yet it is nowhere intimated in any treatise or adjudication on the subject, that, in the event of destruction of the property, his claim on the policy must await the pursuit of his claim on the mortgagor.

A commission merchant, in the habit of making advances on consignment, has an insurable interest in the consigned property to the extent of his advances. Though I have not found a judicial decision on the precise point, j’et in the case of Parks v. General Interest Assurance Co., 5 Pickering 34, the immediate right to demand of the insurer the amount of advances on the property destroyed, without a previous pursuit of the claim on the consignors for the advances, was not questioned by the insurers.

Where the hundred is responsible for the loss by fire, it would seem that the insured is entitled on the policy to the full amount, though he might recover full indemnity from the hundred.

But, independent of the foregoing considerations, I think that on the facts agreed, the insured was entitled to recover the full insurance; those facts ascertaining that he was interested in the loss to that extent. There is no ground on which his claim is resisted, but that furnished by the ascription to the court of law, of power to look at the executory contract of sale in the manner a court of equity might, and to consider the interest in the property to have passed by the sale, if a court of equity would, at the instance of the insured, decree its specific performance. Without giving' a judicial approbation to this proposition, but for this case conceding its correctness unquestionable, the enquiry is, on what terms .would this contract be enforced at the instance of the vendor? To the solution of this question it is material to ascertain the effect of the parol agreement, stated in the agreed case to have been made before and after the execution of the written contract of *sale, for the transfer by the vendor to the vendee of the policy of insurance. No one can reasonably suppose that the contract to transfer the policy was separate from and independent of the contract of sale. In the nature of things it is not to be surmised that such a separate and independent contract could precede that for the sale of the propert3r. We must understand that it constituted a part of the parol treaty for the sale, and formed one of the considerations of that parol agreement which must precede the reduction of it to writing, — -was omitted by accident or design in reducing it to writing, — and was subsequently recognized. By it, the vendor was to assure to the vendee the benefit of the insurance, and was bound to obtain the assent of the insurers to the assignment. This, in' a court of equity, could have been set up by the vendee in resistance of the specific performance which would deny him the benefit of the insurance; and a court of equity would not have compelled performance without an abatement for the loss. The assured was therefore interested at the time of the loss, to the full amount; and in every view of the case, I think the judgment ought to be affirmed.

TUCKER, P.

Without impugning the doctrines of insurance as laid down in the cases cited for the plaintiffs in error, I am of opinion that the judgment in this case was right.

In the formation of this opinion, I have been mainly influenced by the agreed fact, that both before and after the contract between Peay and Morrison, there was a parol agreement that Morrison should transfer to Peay the policy of insurance. It is objected however that that agreement cannot be admitted, either as a distinct, independent contract,.or for the purpose of affecting the written contract. And this question is reserved. It must, I think, be decided against the plaintiffs in error.

*By whom was the evidence of this parol contract introduced, and on whose behalf was it designed to operate? Was itintroduced by the plaintiffs in error? If so, how is it competent for them now to deny the validity and effect of their own evidence? It is impossible; and it is accordingly intimated at the bar that it was introduced by and on the part of Morrison. Now Morrison was the party to be bound by it, and if he chooses to recognize it as a binding and valid agreement, notwithstanding it was by parol and not introduced into the body of the agreement, who can gainsay it? A parol contract is not void by the statute of frauds, though its obligation may be repelled by the party sought to be bound by it. The protection is introduced for his benefit by the statute, and may of course be renounced by him. If he is willing to abide by it; if, disdaining the mala fides of breaking his plighted faith, merely because the ceremonies of the law have been neglected, he recognizes the contract and confesses its obligation, shall it not be enforced? Let the unvarying course of equity cases answer the question. How then can it be objected by a third person, that the contract which the party himself acknowledges and claims to be valid and binding upon him, is not to be so considered? The pretension I conceive to be utterly without foundation.

I take the agreement, then, to assign the policy, as a substantive and most material part, of this case; and I will now proceed to shew how (taking that fact into consideration) Morrison, at the time of the fire, was damnified by the destruction of the premises.

It cannot be denied that according to the spirit of the agreement to assign the policy, Morrison was bound to give to Peay the benefit of it when the house was burnt. By that occurrence, however, the policy became functus officio. An assignment after that would have been futile. But as, by the agreement, Peay was to have *the benefit of the indemnity, so it is clear that he would have been entitled to demand from Morrison any benefit which he might derive from the insurance. Nay more, if Morrison had instituted his bill against Peay to enforce a specific execution of the contract of sale, a court of equity must have departed from its ordinary principle of holding the purchaser bound by the loss, and have refused a specific execution except upon the terms of making gobd that loss. It could not have compelled Peay to sustain a loss which, by the very contract itself, it was clear he did not engage to abide, but against which, in effect, he contracted to be insured. If therefore Morrison could have enforced the policy, the court would have obliged him to give the benefit of his recovery to Peay, or to relinquish the contract; or if, as is now contended, the policy was rendered nugatory by the sale, the court, in the exercise of its sound discretion, would not have deemed a specific execution reasonable, since Peay was not in equity bound to bear the loss against which he had in effect contracted to be insured. Morrison must then have lost his contract, or indemnified against the damage.

What then was the state of the case immediately upon the happening of the fire? Morrison then had the legal title in him. But it is said, that having sold, the title was to be considered to be in Peay upon equitable principles. This position has been advanced upon false deductions from the principle that equity considers that as done which ought to have been done. But equity never so considers, but in behalf of one who has done equity, and has put himself in a condition to demand the execution of his contract. Now, at the time' of the fire, it did not appear whether the contract ever would be carried into complete effect. It did not appear whether Peay ever would or could comply, and therefore equity could not consider the title to be in him. He had not delivered the bond which was to *have been delivered. That bond was to be the bond of a third person, and it might never have been in his power to deliver it. It was not delivered within the stipulated time. He then, on the Sth of May 1836, was in default, (for the bond had not even then been delivered) and on that day he had no right to demand a specific execution of the contract, and of course could not be deemed to have the title. The title was then in Morrison; the house burned was his house, and the loss sustained was his loss. This is the more manifest when we reverse the picture. Morrison sues for a specific execution. Peay repels the demand unless he will pay for the house: alleging that by his contract he was to be protected against loss by fire; that Morrison either can or cannot give him the benefit of the policy of insurance for which he contracted; that if he can, but will not, he has no title to relief; that if he cannot, then he cannot give what was most essential in the contract, and a court of equity will not relieve him. In the exercise of that discretion which is always exercised in bills for specific performance, it will not compel a party to execute the contract, when he cannot get that which he contracted for. It would be unreasonable to compel him to take the property without the indemnity, when he expressly contracted for the indemnity: and equity will not do that which is unreasonable.

This defence would be unanswerable, and Morrison must either have kept the land, or paid for the loss. If he kept the land, he would be clearly entitled to recover of the insurers. If he paid the loss, he would be a loser and entitled to indemnity from them to the identical amount.

It has been contended, however, that as the contract was carried into execution subsequently, it appears that Morrison sustained no damage. I am by no means satisfied that the fullest proof of his having received the entire consideration, without deduction for the loss, *could take from him a right of action which had previously attached. But if proof of indemnity by that means could be a bar, then it must be clearly established, and the onus is on the defendants. The damage having been proved by the plaintiff, the indemnification must be shewn by the defendants. But it is not shewn; since, for aught that appears to the contrary, Morrison is liable to the action of Peay for not transferring the policy, or has indemnified him for the loss, which, upon every equitable principle, he was bound to do.

Upon the whole, I think the judgment is right. The insurers have received their premium for a succession of years, and now seek to avoid the fulfilment of their contract, upon the pretext that the insured has received indemnity from another quarter. Without calling in question the cases on insurance, we should not be too astute, I think, in the application of a principle by which a burden is to be taken from the shoulders of those who have been paid to bear it, and cast upon one of two innocent persons who have advanced their money to be absolved from it.

PER CURIAM, Judgment affirmed.  