CHADBOURNE V. GERMAN-AM'ERICAN INS. CO.
GERMAN-AMERICAN INS. Co.
(Circuit (Jourt, S. D. New York.
July 16, 1887.)
INSURANOE-CANOELLATION OF POLICy-NOTICE.
A policy of insurance provided that it might be terminated at any time on giving notice to that effect. and that, on surrender of the policy, the insurance company should refund any premium that. might have been paid, reserving pro rata rates when terminated by the company. The. polie:v was taken out by A., who gave his obligation for the premiums, and made payable to B., a mortgagee. Subsequently the policy was confirmed to B., who had beCome the owner of the property, ,and was made payable to .c., a new mortgagee. The company notified B., and C. by mail on Friday, which notice was received about 10 o'clock Saturday, that the premium was unpaid, and that the policy would be canceled unless the same was paid on or before the next day. On Saturday the company,notified B. and C. by mail. which notice was received about 10 o'clock Monday, that the policy was canceled, and demanded a return of the policy, and payment of the earned premium. The premium. was not paid: and the prope'i-ty was destroyed by fire between noon and 2 o'clock onthe same day. HeN" that no notice having been m",ilcd to A., who was alone under any obligation to pay the premium, B. and C. were not guilty of any fraud or default authorizing the attempted cancellation of the policy, and that the company was liable for the loss. The question of reasonable notice in such case sho,uld be submitted to the jury, when it appears that the property was of such a nature that insurance companies would not take a risk upon it without a survey, and the fact was controverted as to whether there was sufficient time for such survey and reinsurance after the first notice was given, and before the time of the fire. In such case it would seem that a surrendEll' of the obligation given by A.. the original mortgagor, for the premiums. was requisite to effect a termination of the ,risk: and if this was so the plaiontiff was entitled, in a suit on the policy, to the direction of a verdict in his favor, and the defendant company was not, therefore, wronged bv the submission of the case to the jury.
,SAME-REASONABLE NOTICE-QUESTION OF FACT.
SAME-StrnRENDER OF OBLIGATION-SUBMISSION TO JURY.
Motion for a New Trial. Roger Foster, for plaintiff. WiUiam D. Murray and Luke A. Lockwood, for defendant..
WHEELF.R, J. This action is brought upon a policy of fire insurance. It was originally procured by Nye & Co., on credit for the premiums, and made payable to the Jennings Lumber Drying Company, mortgagees. This company became the owners of the property, and the policy was confirmed to them, and made payable to the plaintiff as mortgagee. It contained a clause providing that it might be terminated at any ,time on giving notice to that effect, and that, on surrender of the policy, the defendant should refund any premium that might have been paid, reserving pro rataratas when terminated by tqe defendant. On Friday the defendant issued a notice to the Jennings Lumber Drying Company that the premium remained unpaid, and that, if it was not paid on or before the next day, the policy would be canceled, and sent the notice to that company, and a duplicate of it to the plaintiff, both of whom received iton the next day at about 10 o'clock. The premium was not paid by anyone, and on that next day, the defendant sent another no-
tice to that company, and a duplicate to the pla!ntiff, that the policy was car-celed, and demanding a return of the policy, and.payment of the earned premium. These notices were received by that company and the plaintiff on the next Monday, at about 10 o"clock in the forenoon, and the property was destroyed by fire between noon and 2 o'clock on the same day. The defendant resisted recovery ori the ground, among othel,'s,that the policy was canceled, and notice given before the loss. Tho court charged the jury on.thissubject, in substance, that the policy would continue in force untilnoticewas given that it was canceled, and fora reasonl.l.ble time after, for procuring other insurance to replace it. The jury returl1ed a verdictfor the plaintiff, and the defendant moved for a new trialbec!!,use of this direction to the jury. . In Wood, Fire Ins. § 107, it is laid down that "tbe insurer cannot be permitted to cancel a policy inBtanttr,except in case of fraud on the part of the assured, Ol'actsor omissions that amount to fraud .onhis part, but must give tbe assured a reasonable opportunity to seoure protection by insurance elsewhere. " None of tbe cases cited by the counsel for the defendant involved this precise point, tbey are not reapy in conflict with this proposition. Stone v. F'ranklJin Ins. 00., (N. Y. Ct. App. May, 1887,) 12 N. E. Rep. 45; Van Valkenburghv. Leru>z F,ire Ins. Co .. 51 N. Y. 465; Bergs01l, v. Builders'Ins, Co., 38 Cal. 541; Internati01ULl Life Ins. e'o. v. F'ranklin Fire Ina. 00.,66 N. Y. 119; Afltna Ins. 00. v. Maguire, 51 Ill. 351; Grace v. American Cent. Ins Co., 16 Blatchf; 433. The plaintiff in this case was not guilty of any fraud, or of any act or omission amounting to frauq,or tending in that direction. Neither he nor the Jennings Lumber Drying Company were under any obligation to pay tbe premium. The defendant had accepteq. the undertaking of Nye & Co. to pay the premium, and delivered the policy as if the premium had been actually paid, instead of withholding it until the premium should be paid; and the policy came to the Jennings Lumber Drying Company and the plaintiff as a valid policy paid for. Nye & Co., on whom the obligation to pay for the policy rested, were not notified that the policy would be canceled. ifthe premium was not paid, and the Jennings Lumber Drying Company and: the plaintiff were not notified that Nye &00. had not been so notified, and would not knowtbat the premium had not been paid by Nye & Co. until they received notice that the defendanthad canceled the policy..Tbey are tberefore not only not shown to have been guilty of any fraud, but not of any default even. The defendant could unquestionably cancel the policy in the manner prescribed in it for the default of Nye & Co., or for any other cause, or without any cause, but had no claim upon anyone else for the premium, and could not enforce payment from any, one else except by threatening to cancel the policy if payment should not be made. This part of the defendant's case rested, therefore, upon the right of the defendant to cancel the policy stantly, so as to terminate all liability. upon it at that moment, which, according to this proposition,did not exist. The defendant urges further, in stl.pport of the motion, ·that the question of reasonable notice sbould bave been determined by the court, and
THOMSON-HOUSTON ELECTRIC CO. V. BRUSH-SWAN ELECTRIC L. & P. CO.
not submitted tq the jury. This would probably be true if there was no question about the. facts. . But evidence was introquced tending to show that this property was ofauch a nature that insurance companies w.ould not take a risk uptm'it without a survey, which could not have been had, and insutance effected, after was given even, before the fire; and on the other side it was claimed that by the known usages of such business it could have been done in a very short time. On this there was a question of fact to be subnlitted to the jury as to how longit would take to effect an insurance, if any time was to be allowed for that purpose. Itis'further·to be llotieedthat, by the terms of this policy, it could betePminatedon giving notice to that effect, but the premium was to be refunded :ooly on surrender of the policy. These notices were sent by mail, and the plaintiff and the Jennings Lumber Drying Company had no opportunity to surrender the policy, and have an adjustment of the premium, 'without seeking out the defendant· for that purpose. No 'premiumhaq.been actually paid, but the defendant had the obligation .of others for ii which had' been accepted in lien ofit. The right to cancel qepemdson;pursuing very strictly the course prescribed, which includes the fefundingofthe premium, without requirinK anything from the ag.. -aured. This is shown by the cases cited by the defenrlant's counsel lithe note of the assured is taken for the premium, it must bedtefunded the same as if money had been paid in order to 1erminatethe: risk.. Wood, Fire Ins. § 106. " The defendant did not -surrendElrthe obligation of Nye& Co., held for the premium either to Nye & Co."or the Jennings Lumber Drying Company, or the plaintiff, but holds that obligation still. On principle it would seem that the surrender of that was a part of what was required to be done to effect a termination of the risk. If so, the plaintiff was entitled to the. direction of a vefdict in his favor as to this part of the case, and the defendant was not wronied by having it submitted to the jury. Motion denied.
ELECTRIC. Co. v. BRUSH.SWAN ELECTRIC LIGHT POWER Co.
(Circuit Cowrt, D. Vmnont.Ju1yI9, 1887.)