
    ELIZA M. SMITH, Plaintiff and Respondent, and also Appellant, v. THE EXCHANGE FIRE INSURANCE COMPANY, Defendant and Appellant, and also Respondent.
    I. INSURANCE.
    1. Policy insuring a mortgagor of chattels against loss on the mortgaged property, loss, if any, payable to the mortgagee, issued after the mortgagee's title had become absolute at lam, by reason of the mortgagor’s failure to fulfill the conditions of the mortgage, in neglecting to pay two installments of interest, and after the filing of a copy of the mortgage setting forth the mortgagee’s interest in the mortgage as being the amount of the principal sum secured thereby, and said two installments of interest past due; the mortgagor never having taken possession, but the mortgagee having remained in undisputed and undisturbed possession of the property;
    1. What is insured by the policy.
    
      (a) The entwe property is, and not merely the value of the property which might be realized upon sale over and above the amount due on the mortgage.
    2. Over-valuation in proof of loss. Excessive valuation, wheS not presumptive evidence of fraudulent intent.
    1. Where the articles valued were very numerous, and had been in prior use for greater or less periods of time, and their depreciation depends on the quality of the material when new, and the skill of the workmanship in its manufacture, and upon the wear in the use, very great discrepancies in the opinions of all the witnesses, as to the value of the several items, furnishes the best proof that the claimant’s estimates, though in many respects excessive, can not be considered presumptive evidence of fraudulent intent.
    8. Valuation of numerous items.
    1. Gross and itemized, which to be taken.
    
      (a) The itemized valuation should be taken.
    4. Declarations by mortgagor.
    1. Made after issue of policy loss payable to mortgagee, cure not admissible as against the mortgagee.
    
    Before Speir and Sanford, JJ.
    
      Decided March 20, 1876.
    This and two other actions were brought to recover upon policies of fire insurance issued by the several companies on the shafting, belting, tools, benches, fixtures, and machinery used in a rubber factory in Water Street, Brooklyn. The party insured by the policy is Fitzhugh Smith, son of the plaintiff, but by a clause inserted in the policies subsequently to their issue, the loss or damage was .made payable to the plaintiff.
    On September 9, 1867, Fitzhugh Smith executed a chattel mortgage on the property in the usual form, whereby the title to the property was absolutely transferred to the plaintiff upon the condition : That if Fitzhugh Smith shall pay to her the sum of one thousand five hundred dollars, the interest to be paid on the same on the first days of January and July of each year, the same to remain for 'five years from date, if the interest is paid when due, then the transfer shall be void.”
    It was also provided in the mortgage that if default should be made in the payment of the said sum of money, the mortgagee was authorized to enter the place where the property might be, to take and carry the same away, and sell it in the usual manner, and until default should be made in the payment of the mortgage, Fitzhugh Smith was to continue in the possession of- the property. The installments of interest which fell due on January 1, and July 1, 1868, remained unpaid when the policy was issued, and the plaintiff filed a copy of her mortgage in the office of the Register of New York, with a statement signed by her exhibiting her interest in the mortgage as mortgagee, including, in addition to the principal, the two unpaid installments of interest.
    The plaintiff placed the value of the articles insured at eighteen thousand five hundred dollars, and the loss thereon at fifteen thousand five hundred dollars.
    On the question of the value of the insured articles two witnesses were called for the plaintiff, one of whom testified to the value of each article, making an aggregate of twenty-two thousand nine hundred and forty-three dollars ; the other testified that the damage to the property was beyond question in excess o' thirteen thousand dollars. The defendant called several witnesses, one of whom gave three general estimates, one of six thousand dollars, one of eight thousand dollars, and one of ten thousand dollars ; and in addition to this general estimate gave the value of some nine or ten items (some two hundred articles being covered by the insurance) which amounted to about eleven thousand dollars.
    The case was refere.d. The referee reported in favor of the plaintiff, against the defendant, for the sum of one thousand five hundred and forty-five dollars and fifty-seven cents, besides costs, and judgment was entered thereon. Both parties appeal from the judgment.
    
      W. K. Thorn, attorney, and J. Langdon Ward, of counsel for defendant, appellant, and respondent, submitted an elaborate brief in support of the proposition that plaintiff’s estimate was a fraudulent overvaluation.
    
      Charles M. Marsh, attorney, and of counsel for plaintiff, appellant, and respondent, submitted an elaborate brief in support of the proposition that "there was no fraudulent over-valuation, and that the referee had adopted a wrong basis of valuation, and had not awarded plaintiff the amount of damages which the correct basis would entitle him to; and also made the following points:
    I. Before the mortgage became due the entire property could undoubtedly have been insured as the property of Fitzhugh Smith (Van Deusen v. Charter Oak Ins. Co., 1 Abb. (N. S.) 350).
    II. This mortgage never had become due. (1) There was no provision in the jnortgage that the principal should become due if the interest was not paid. It provided only, “to run for five years from date, if interest is paid* when due.” It is substantially a mortgage without the interest clause. (2) If it were due, the plaintiff only had the right to so insist. She waived this right, and filed her declaration to that effect with the mortgage. The defendants, after this, by the very terms of their policy, recognize that her only interest was as mortgagee. (3) If, however, the mortgage became due it was only due on demand. This demand was never made. Until it was, the rights of mortgagor and mortgagee were as if it was payable at a definite future time (Lun v. Orser, 5 Duer, 501).
    
    III. Even if the mortgage were due it would be no defense. The insured still remained liable for the mortgage debt. He still had an interest in the property to preserve it, that it might be applied to discharge his liability ; and his interest was not limited to the amount of cash he would receive over and above the payment of his debts (The Buf. S. Works v. Sun Mut. Ins. Co., 17 N. Y. 401; Strong v. Man. Ins. Co.. 10 Pick. 43).
    IV. The remaining exceptions may be consider, d together, the question being, whether statements ana conversations of Fitzhugh Smith, the assured, are evidence against the plaintiff, to whom the loss had been made payable. (1) Fitzhugh Smith had at this time no interest in the policy. Such interest as he ever had, was transferred before the fire to plaintiff, by express consent of the defendant, evidenced by its agreement to pay the money to her. (2) Had Smith simply parted with his interest by assignment, 'to which defendant was no party,.his declaration would have been inadmissible in its favor against plaintiff. How much less are they, then, in a suit by plaintiff, upon defendant’s direct agreement with her (Tousley v. Barry 16 N. Y. 497). (3) When a loss in a policy is made payable to a third party, statements of the insured are not admissible in . evidence against the party beneficial interested in the policy (Rawls v. Am. Mu. Life Ins. Co., 27 N. Y. 282 ; Mullmer v. Guard. Mut. Life Ins. Co., 1 Sup. Ct. [T. & C.] 448).
   By the Court.—Speir, J.

The defendant raises two legal objections to the plaintiff’s recovery, both of which I think have been properly disposed of by the referee. The first is put upon the ground that it, in fact, only insured whatever interest Fitzhugh Smith may have had as owner of the equity of redémpton, and this was only the value of the property which might be realized upon the sale over and-above the amount due on the mortgage ; that the plaintiff’s title as mortgagee of the property has become absolute in law, because the mortgagor failed" to pay the interest which accrued on the mortgage. It seems to me the plain answer to- this objection is that the defendant agreed to pay the plaintiff as mortgagee after the two installments of interest had become due, and after a copy had been placed on file with a statement of the interest she had in the property as mortgagee. There is no room for doubt what interest the company intended to insure.

The second objection that the gross over-valuation by the claimant of the various articles destroyed or injured warrants the inference of a fraudulent intent, is, I think, in this case wholly unfounded. The loss was sustained upon machinery, tools and stocks consisting of a very great variety of items mostly known as second-hand, which had been in prior use for greater or less periods of time. The depreciation would depend upon the wear in the use and the quality of the material when new and the skill of the workmanship displayed in its manufacture. The discrepancies existing in the opinions of all the witnesses as to the value of the several items furnishes the best proof that the claimant’s estimates, though in many respects excessive, can not be considered presumptive evidence of fraudulent intent.

It appears from the record that the plaintiff ’ s witnesses, two at least, have described with much particularity and minuteness the different articles of machinery and other property claimed to have been on the premises at the time of the fire. But the learned referee seems to think that their estimates are not founded on reliable data, that no opinion has been furnished by either of them of the value of the machinery at the time of the fire, and that the witness Birbeck’s statements are of a general and vague character, and his examination of the property too superficial to justify him in attaching any great weight to the estimate he gave of the amount of the loss,

On the other hand, the defendant’s witness Davis appears from his disinterested manner to have justly acquired the confidence of the referee. The testimony of this witness was accordingly adopted by him exclusively as the basis of value. It is a general estimate of the whole property in mass, and not by items in detail. The witness gave three general estimates, first, six thousand dollars ; second, eight thousand dollars ; and third, ten thousand dollars. The latter sum was adopted by.the referee as the entire value at the time of the fire, and he fixes the value of the articles which remained after the fire at four thousand dollars; consequently the loss sustained by the defendant on the old stock amounts to the sum of six thousand dollars, as found by the referee.

This witness had been an engineer and machinist for twenty years, and his then present business was in buying and selling all kinds of machinery new and second-hand. There can be no doubt, I think, of his qualification to ascertain the true value of second-hand or injured machinery. The question is, has the proper method been adopted by the court in determining the loss sustained by the company, in view of all this witness has testified to in the case? He says: “I visited the factory within two days after the fire occurred. . . I did not take a close, but only a casual, observation of the machinery, with a view of purchasing, such as to enable me to make a value. . . . After the fire I wanted to purchase the washing-machines and three of the grinders. . . I don’t take into account the small hand-tools such as saws, but only the heavy machinery, such as calenders, heaters, washers, and shafting.”

It appears there are some two hundred and forty items contained in the schedule unquestioned as having been upon the premises at the time of the fire. Many of these lighter articles could not be seen to be valued. They were covered up by the heavy machinery and debris, as abundantly appears in the testimony. Now, this witness, in addition to his general estimate, gave the value of some nine or ten items, which amount to about eleven thousand dollars, and there are six or seven items valued by the defendant’s other witnesses, amounting :o some six or seven hundred dollars besides. Assuming, then, that the value of the old stock after theffre was worth four thousand dollars as found by the referee, there was still more than a total loss. It may be added that this result corresponds .with the general estimate made by the witness Birbeck. This witness had more than thirty years’ experience as engineer and machinist, and made three visits to the ruins at the request of an insurance agent and adjuster, to examine the amount of loss. He was informed that the insurance amounted to thirteen thousand dollars, and being furnished with a schedule list of machinery and tools, reported that the loss was greater than the insurance, and he did not therefore have the ruins cleared out to examine all the items on the list. From a careful examination of all the testimony I have come to the conclusion that an error has been made in not adopting the proper rule in estimating the defendant’s loss. Although the gross valuation made by Davis may have been satisfactory " to the referee, it is clear if the itemized value of Davis himself and the other defendant’s witness are in excess of that sum, there is error to the amount of that excess.

There is one exception taken by the plaintiff which deserves consideration. The witness Davis, on his direct examination, was asked whether he had since the lire any conversation with Fitzhugh Smith touching the value of this machinery. This was objected to, admitted, and exception taken. Fitzhugh Smith had no interest at this time in the policy. The defendant had agreed at this time to pay the amount of insurance to the plaintiff. It does not appear that Fitzhugh ■Smith had been examined at this time on the trial as a' witness. He was afterwards examined. Nor was there any evidence that the transfer of the interest to the plaintiff was colorable, or not made in good faith. A clear legal transfer was shown upon good consideration, and negative evidence was made out of entire ignorance on the part of the plaintiff that any defense existed or was claimed to exist against the transfer. The supreme court has decided that declarations are inadmissible even where.the defendant has been no party to the transfer, and that admissions of the mortgagee are inadmissible against his assignee (Booth v. Swezey, 4 Seld. 276 ; Paige v. Cagwin, 7 Hill, 361; Tousley v. Barry,. 16 N. Y. 497). In this case the defendant made a positive agreement with the plaintiff. Statements of the insured are not admissible in evidence against a party beneficially interested, where a policy is made payable to a third party. Where a party whose declarations are sought to be proved is dead it affords no ground for the admission of such declarations. Here the party was living. It seems to me to be an attempt to prove a fact by the declaration of a person not a party to the action, and the evidence ° was hearsay and secondary (Rawles v. American Life Insurance Co., 27 N. Y. 282; Mulliner v. Guardian Mut. Life Ins. Co., 1 N. Y. Supreme Court R. 448).

The judgment must be reversed and the order of reference discharged.

Sanford, J., concurred.  