Columbian Insurance Company of Alexandria v. Lawrence/Opinion of the Court

THIS was a writ of error to the circuit court of the county of Alexandria in the district of Columbia.

The action was brought, originally, by Lawrence & Poindexter, on a policy of insurance for $7000 against fire on a mill.

The declaration, after setting out the contract of insurance, avers that the plaintiffs 'were interested in and the equitable owners of the insured premises at the time the insurance was made.' After stating the loss by fire on the 14th February 1824, as within the policy, there is the following averment: 'of which said loss, together with the proofs thereof in conformity with the conditions subjoined to the said policy, the defendants, on the 20th February 1824, at, & c. had due and regular notice.'

Upon the trial of the general issue, verdict and judgment passed for the surviving plaintiff, Lawrence, for the whole amount of the insurance, under certain instructions from the court, stated in two bills of exceptions tendered by the defendants, now plaintiffs in error.

During the progress of the suit, Poindexter, one of the plaintiffs, died, and the suit instituted in their joint names, was carried on in the name of the survivor, for the use of his assignee.

The evidence exhibited to the jury on the part of the plaintiff, showed that Lawrence & Poindexter, by their agents, had made application in writing to the defendants for insurance, in these words:

'What premium will you ask to insure the following property, belonging to Lawrence & Poindexter, for one year, against loss or damage by fire, on their stone mill, four stories high, covered with wood, situated on an island about one mile from Fredericksburg, in the county of Stafford? The mill called Elba; seven thousand dollars is wanted; not within thirty yards of any other building, except a cornhouse, which is about twenty yards off.'

The premium demanded, was one hundred and five dollars.

The application was made upon a printed form, of which blanks are kept at the insurance office, and filled up as required. At the foot of this document was the following:

N. B. Persons offering for insurance are requested to be particular in their descriptions, more especially of what materials the walls and roofs are constructed, &c.

The policy, an unsealed instrument, was executed in the usual form, containing the several stipulations, provisos, and exceptions, usual in fire policies; and among others, the following:

'And it is understood and agreed, as well by this company as by the assured named in this policy, and all others who may become interested therein, that this insurance is made and accepted in reference to the conditions which accompany these presents; and in every case the said conditions are to be used to explain the rights and obligations of the parties, except so far forth as the policy itself expressly declares those rights and obligations.'

Upon the back of this policy were printed the Fundamental rules of the Columbian Insurance Company,' and also, the Rates of annual premiums to be paid for insurance,' among which were:

'1. Persons desirous to make insurance on buildings, are to state in writing the following particulars, viz. Of what materials the walls and roofs of each building are constructed, as well as the construction of the buildings contiguous, thereto-whether the same are occupied as private dwellings or how otherwise-where situated-also the name or names of the present occupiers.

'Each building must be separately valued, and a specified sum insured thereon; and in like manner a separate sum insured on the property contained therein.

'All manufactories which contain furnaces, kilns, stoves, ovens, or use fire heat, are chargeable at additional rates.

'In the assurance of goods, wares and merchandise, the building or place, in which the same are deposited, is to be described, also whether such goods are of the kinds denominated hazardous, and whether any manufactory is carried on in the premises. And if any person or persons shall insure his or their buildings or goods, and shall cause the same to be described in the policy otherwise than as they really are, so as the same be charged as a lower premium than would otherwise be demanded, such insurance shall be of no force.

'2. Goods held in trust, or on commission, are to be insured as such, otherwise the policy will not extend to cover such property.

'9. All persons assured by this company, sustaining any loss or damage by fire, are forthwith to give notice to the company, and as soon as possible thereafter, deliver 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 of the same by their oath or affirmation, and by their books of accounts, or other proper vouchers, as shall be reasonably required; and shall procure a certificate under the hand of a magistrate or a sworn notary, of the town or county in which the fire happened, not concerned in such loss, directly or indirectly, importing that they are acquainted with the character and circumstances of the person or persons insured, and do know, or verily believe, that he, she, or they, really, and by misfortune, without any kind of fraud or evil practice, have sustained by such fire, loss or damage to the amount therein mentioned; and, until such affidavit and certificate are produced, the loss claimed shall not be payable; also, if there appears any fraud, the claimant shall forfeit his claim to restitution or payment, by virtue of his policy.'

The property intended to be insured, was proved to be a square building, four stories high, built of stone to the square or eaves, the roof being framed, and covered entirely of wood, the two gable ends running up perpendicularly from the stone wall to the top of the roof, they being constructed of wood.

On the 14th of February 1824, the property was destroyed by fire; and the following documents were given in evidence, to sustain the right of the plaintiffs to demand payment of the loss; the same having been exhibited as 'the preliminary proof of the loss claimed under the policy.'

Fredericksburg, February 16, 1824.

To the president, directors, and company, of the Columbian Insurance Company of Alexandria.

Gentlemen;-We regret that we have now to inform you of the total destruction of our mill by fire, on the night of the 14th inst., which was insured in your office, the particulars of which we will forward you as soon as we can prepare the necessary documents as laid down in the conditions accompanying the policy.

LAWRENCE & POINDEXTER.

The affidavit of the said Lawrence & Poindexter, with the certificate of Murray Forbes, was annexed.

We hereby certify, that by the burning of our mill, situate on an island in the county of Stafford, about one mile from the town of Fredericksburg, and state of Virginia, called the Elba mill, four stories high, the walls of stone and covered with wood, on which seven thousand dollars were insured by us in the office of the Columbian Insurance Company of Alexandria, on the 9th day of April last, per policy No. 279, and which was destroyed by fire on the night of Saturday last, the 14th inst., we lost, or were damaged at least twelve thousand dollars, exclusive of the contents of said mill. We are entirely ignorant of the circumstances which occasioned the fire, and we further certify that we have no other insurance, directly or indirectly on the aforesaid property, except the above mentioned.

JOSEPH W. LAWRENCE. THOS. POINDEXTER, JUN.

Commonwealth of Virginia, Stafford County, to wit:

Joseph W. Lawrence and Thomas Poindexter this day personally appeared before me, a justice of the peace for the said county, and made oath, in due form, that the above certificate contains the truth to the best of their knowledge and belief.

MURRAY FORBES.

I, Murray Forbes, a magistrate duly commissioned, in and for the county of Stafford, and state of Virginia, do hereby certify that I am acquainted with Joseph W. Lawrence and Thomas Poindexter; that the fire originated in their mill burnt on the night of the 14th inst. by accident, or without fraud or design on their part, as far as I know or believe; and that the damage or loss they sustained by the said fire is at least ten thousand dollars. And I further certify, that the said mill was not within thirty yards of any other building, except a corn house, which was about twenty yards off.

MURRAY FORBES.

The affidavits of Thomas Sedden and James Vasse, were annexed.

I, Thomas Sedden, of the town of Fredericksburg, in the county of Spottsylvania, and state of Virginia, do hereby certify, that I am well acquainted with the mill called and known by the name of the Elba mill, owned and occupied by Joseph W. Lawrence and Thomas Poindexter, situate on an island in the county of Stafford, about one mile from the town of Fredericksburg; that the said mill was built of stone four stories high and covered with wood; that between ten and eleven o'clock on Saturday night, the 14th inst., I was alarmed by the cry of fire, which I soon ascertained to be the mill aforesaid; that I have since viewed the ruins, and am of opinion that it would require at least ten thousand dollars to rebuild the same, and restore the proprietors in the situation they were in previous to the said fire; that I have no knowledge or idea how the fire originated.

THOMAS SEDDEN.

Commonwealth of Virginia, Stafford County, to wit:

Thomas Sedden this day personally appeared before me, one of the commonwealth's justices of the peace of the county aforesaid, and made oath to the truth of the foregoing certificate signed by his hand.

MURRAY FORBES.

I, James Vasse, of the town of Falmouth, in the county of Stafford, and state of Virginia, do hereby certify, that I am well acquainted with the mill called and known by the name of the Elba mill, owned and occupied by Joseph W. Lawrence and Thomas Poindexter, situate on an island in the county of Stafford, and about one mile from the town of Fredericksburg; that the said mill was built of stone four stories high and covered with shingles; that between the hours of ten and eleven o'clock on Saturday night, the 14th current, I was alarmed by the cry of fire, which I soon ascertained to be the mill aforesaid; that I have since viewed the ruins, and I am of opinion that it will require the sum of ten thousand dollars, or thereabout, to restore the proprietors to the situation they were in previous to the said fire; farther, that I have no knowledge whatever how the fire originated.

JAMES VASSE.

Commonwealth of Virginia, Stafford County, to wit:

James Vasse this day personally appeared before me, one of the commonwealth's justices of the peace of the county aforesaid, and made oath to the truth of the foregoing certificate signed by his hand.

MURRAY FORBES.

The plaintiff also gave in evidence the following extracts from the minutes of the proceedings of the insurance company in relation to the claim of payment for the loss.

Friday, 20th February 1824.-Lawrence & Poindexter. Claim made by them this day by their attorney, Anthony Buck, with the policy and certificates of loss by fire, on policy No. 279.

On the application of Anthony Buck, leave is given to Joseph W. Lawrence and Thomas Poindexter to assign to William J. Roberts policy No. 279, effected in this office, without prejudice to any defence which this office may have against the payment of the sum insured, or to the claim of John H. Ladd, & Co. under their attachment heretofore served on the president of this company.

Saturday, 13th March 1824.-Ordered, That the secretary address a letter to John Scott, to require the title of Lawrence & Poindexter to the Elba mill.

Thursday, 1st April 1824.-The following papers were this day received, to wit: A letter from John Scott, esq. Fredericksburg, covering copies of a deed from William and George Winchester to Joseph Howard and Joseph Lawrence; an agreement between Joseph Howard and Joseph Lawrence; and an agreement between Joseph Lawrence and Thomas Poindexter, Jun.

Friday, 16th April 1824.-In the case of Lawrence & Poindexter, Ordered, that a copy of the mortgage to the banks, proof of the execution of the contract between Lawrence and Poindexter on the day it bears date, and a copy of the notes in the bank be required.

Thursday, 22d April 1824.-Lawrence & Poindexter. The following papers were presented by R. I. Taylor, esq. inclosed to him by Mr. John Scott, Fredericksburg:-Deed of trust from Joseph Howard and Mary his wife, and Joseph W. Lawrence, to William J. Roberts, for the benefit of the banks, dated 13th May 1814.

An agreement between Joseph W. Lawrence and Thomas Poindexter, dated 28th November 1822.

A copy of a note drawn by Howard & Lawrence, dated 10th March 1824, to the Farmer's Bank of Virginia, at Fredericksburg, for $1,800.

A copy of another note, dated 5th March 1824, drawn by the same, to the Bank of Virginia, at Fredericksburg, for four thousand one hundred and eighty seven dollars.

Saturday, 26th June 1824.-Walter Jones, esquire's opinion having been submitted to a called board this day, on motion of Mr Mandeville, it was resolved that the claim of Lawrence & Poindexter be resisted, and that the secretary furnish them with a copy of this resolution.

Wednesday, 11th November 1824.-Will the board now enter into a compromise with John Scott, esq. for the claim of Lawrence & Poindexter on this office, it being perfectly understood that an agreement to enter into a compromise is not to be considered as an admission of the claim? Yes.

Thursday, 18th November 1824.-The board having duly considered the case of Lawrence & Poindexter, decline making any compromise at this time, and the secretary is directed to inform Mr Scott of their determination.

Friday, 10th December 1824.-A communication from John Scott, esq. of Fredericksburg, was received; whereupon it was ordered that a board be called for to-morrow at twelve o'clock, to receive said Jonh Scott's proposals for an arrangement in the case of Lawrence & Poindexter.

Saturday, 11th December 1824.-On application of John Scott, esq. it is agreed to receive propositions for an arrangement between John Scott and this office, in the case of Lawrence and Poindexter, without prejudice to either of the parties concerned. John Scott, esq. has this day proposed to settle his claim against this office by receiving from them fifty cents in the dollar in full for said claim. Will the board now agree to pay said Scott fifty cents? They will not.

The opinion of Walter Jones, esq. counsel of the defendants, referred to in the minutes, was as follows.

'Claim of Lawrence & Poindexter, as stated by the Columbian Insurance Company of Alexandria.

'An equitable title in general is doubtless an insurable interest against fire; but it seems that the interest in this case was so incumbered with liens and precedent conditions, as to make the legal estate not worth the calling for on the part of the insured; whilst, on the other hand, their circumstances were such as in all probability to make any suit against them, for a specific execution of the contract, or for compensation for damages, fruitless and unproductive; so that, to any practical effect or purpose, the insured were unable to call for the legal estate by performing the contract of sale, and, consequently, the vendor had no motive to throw the legal estate upon them by a compulsory execution of such contract. How the insurance may be affected by such a state of facts, is a question entirely at large, and undetermined by authority; and if there were any insurable interest, it might be matter of serious doubt, under the peculiar circumstances of the property and the parties, to what degree the general terms in which the description of the estate to be insured is given, (unlimited by any specification of the quality of the estate, or of the value and quantity of the interest) involved misrepresentation or concealment.

'Whether in the description of a stone building covered with wood the gables be necessarily understood to be a part of the masonry, is a question of art belonging to architects or house-builders, and depending upon the common use and understanding of the terms connected with that art. How upon these principles would a contract to build a house of brick or stone covered with wood be understood? would the undertakers be bound to run up the gables with brick or stone? If that question be answered in the affirmative, (as I am informed, and indeed have no doubt it should be,) then the omission in this case, to disclose the fact of timber gables, is a concealment of a material fact; and the unqualified description given of a stone mill, a material misrepresentation which avoids the policy.

W. JONES.'

The plaintiff also examined witnesses relative to the proceedings of the board, from which, as well as from the facts stated in the minutes, he claimed to infer, that if there was a defect in the preliminary proof, the same had been waived by the representatives of the insurance company. This evidence, so far as it was by the court considered to affect or influence the law and merits of the case, is sufficiently set out in the opinion of the court. After this and other testimony to the same effect had been given, on the part of the plaintiff, the defendants' counsel objected to the admissibility, competency, and sufficiency of the same, and of all or any of the facts thereby proved; admitting the same to be true as above stated; to entitle the plaintiffs to recover for the loss stated in the declaration and proved by the evidence; and the grounds of the said objections were specifically stated as follows:

1. That the interest claimed by the plaintiffs in the property insured, as disclosed by such evidence, was not at the respective times of effecting the insurance, and of the happening of the loss, an insurable interest and property.

2. That it was not such an interest as is described in the original offer of the plaintiffs' agent for insurance, and in the policy, nor such as is averred in the declaration.

3. That the said documents, produced as preliminary proof of loss, do not import a fulfilment, on the part of the plaintiffs, with the terms and conditions upon which the loss is declared to be payable by the ninth of the said printed proposals, or rules annexed to the policy.

And the counsel for the defendants thereupon prayed the opinion and direction of the court to the jury, that the said evidence was not admissible, competent, and sufficient to be left to the jury as proof of the plaintiffs' title to recover for such loss in this action.

Which instruction the court refused to give, being of opinion, 1. That the interest of the plaintiffs in the property insured, as disclosed by the said evidence, is a sufficient insurable interest to support the policy, and the averment of interest in the plaintiffs' declaration in this action.

2. That it is such an interest as is described in the original offer for insurance, and in the policy and in the declaration; and

3. That, although the said certificate of Murray Forbes is not such a certificate as is required by the said ninth rule annexed to the said policy, yet the evidence aforesaid is admissible, competent, and sufficient to be left to the jury, and from which they may infer that the defendants waived the objection to the said certificate, and to the other preliminary proof aforesaid.

The counsel for the defendants below took a bill of exceptions to the refusal and opinion of the court.

The defendants then gave evidence of the nature and particulars of the property insured, that, in a policy of insurance upon the same property, by the Mutual Insurance Society of Virginia; Lawrence & Poindexter had described the property differently, stating it to be 'covered with wood; gable ends of the roof of wood;' that Lawrence & Poindexter were insolvent; and that the property had greatly depreciated in value; that the title to the property was embarrassed, and litigated in chancery; that the property thus incumbered was not worth the purchase, and that the assured were unable to comply with their agreements to pay for the same, or to respond in damages for the breach thereof.

The plaintiff also produced evidence to show that it was the usual practice of the country to build the gable end of brick, or stone mills of wood; and that a mill so constructed had been insured by the Mutual Insurance Society, described in the same terms used in the policy, upon which this suit was brought.

Whereupon the defendants prayed the opinion of the court, and their instruction to the jury, that if the said contracts between Howard and Lawrence, and between Lawrence and Poindexter, have not been performed on either side; and if, from the actual state and condition of the title, and the value of the property bargained for between Howard and Lawrence, and between Lawrence and Poindexter in the said contracts; and from the circumstances of the parties, the said contracts between the said parties could not have been specifically performed, or effectually enforced on either side, so as to have vested the legal estate pursuant to said contracts; or to have vested in said Lawrence & Poindexter an equitable estate, with a right to call for the legal estate; and that the said contracts between the said parties were not practically available, but were, as to the practical intent and purpose which they purported an intent to effectuate, incapable of being executed; then the said Lawrence & Poindexter had not, at the time of the said insurance, and of the said loss, such as interest in the said mill as to entitle them, or either of them, to recover in this action for the loss averred in the declaration, and proved by the evidence.

Which instruction the court refused; being of opinion that it would leave a question of law to the jury, viz. Whether, under the circumstances therein stated, the said parties therein mentioned, or either of them, could be compelled specifically to perform the agreements therein mentioned; and because the court is of opinion, that, under the circumstances stated in the said evidence, the plaintiffs had, at the time of effecting the insurance, and at the time of the loss, an insurable interest in the said mill.

Whereupon the defendants prayed the opinion of the court, and their instruction to the jury, that, in order to verify the description of the property insured, as given in the policy, it is necessary that the whole of the exterior walls of the mill-house, upon which the roof or covering rests, from the foundation to the top of the roof should be of stone; and that, if the plan of the said house were such as that two of the exterior walls terminated in upright gable ends, run up perpendicularly from the eaves to the top of the roof; and sloping at the same angle as the pitch of the roof, such gable ends not properly forming, according to the ordinary rules and terms of architecture, a part of the covering or roof; it was necessary, to verify the said description, that such gable ends should have been of stone; and if, in point of fact, such gable ends, as well as the covering or roof were of wood, which, under any circumstances of actual conflagration, might have increased either the risk of catching fire, or the difficulty of extinguishing or stopping the progress of fire once commenced, it amounted to a material misrepresentation, and avoids the policy; and it is not material whether the said misrepresentation was wilful and fraudulent, or from ignorance and without design, nor whether the actual loss was produced by such misrepresentation, or by having gable ends of wood instead of stone.

Which instruction the court refused; being of opinion that it was competent for the jury, from all the facts given in evidence, to decide, whether, in order to verify the said description in the said policy, it was necessary that the whole of the exterior walls, from the foundation to the top of the roof, should be of stone.

And being also of opinion, that, under the first of the rules annexed to the said policy, and referred to therein, no variation in the description of the property insured from the true description thereof, not made fraudulently, would vitiate the policy, unless by reason of such variation the insurance was made at a lower premium than would otherwise have been demanded.

The defendants then proved, by James Sanderson, the witness before sworn and examined on the part of the plaintiff, that, in making the insurance aforesaid, the defendants were not governed by the said printed rates of premium, and did not insure the said mill as a building under the class No. 4 of the said printed rates, though the same premium therein indicated was charged; but that the board, in their discretion, fixed the premium as for an extra risk, considering the frequent accidents to mills, from the circumstance of millers being in the habit of grinding all night; and if the insurers had understood the mill to have been built with wooden instead of stone gable ends, it would have been at their discretion to have charged a higher premium, or to have declined the risk. And the plaintiff's counsel having argued to the jury upon the presumed authority of the court's opinion upon the second of the aforesaid instructions, moved by the counsel for the defendants, and overruled as aforesaid, that the misrepresentation of the class of the building insured, if found by the jury to be such as above objected on the part of defendants, did not vitiate or avoid the policy, either as a breach of warranty or misrepresentation, unless it had been designedly and fraudulently made, or had induced the defendants to insure at a lower premium than they would otherwise have done; and that, in fact, the insurance was done at the maximum rate indicated by the said printed rates.

The counsel for the defendants thereupon prayed the opinion of the court, and an instruction to the jury, that if the jury find from the evidence that the materials and description of the mill, for the destruction of which this loss is claimed, as it actually existed at the time of insurance, differed from the representation of the same made by the plaintiffs, or their agents, at the time of effecting the said insurance, in this: that the walls at the two ends of the building, all the way from the eaves to the top of the roof, constituting what are commonly called the gable ends, were constructed of wood instead of stone, and that the risk from fire was greater with such wooden gable ends than if they had been constructed of stone; it ought to be deemed a material misrepresentation, and avoids the policy, whether such misrepresentation proceeds from fraud, or casual inadvertence in the assured; and, in such case, it is not necessary for the defendants to prove further, that a higher premium would have been charged, if a true and accurate representation of the building had been made; nor does it vary the effect of such misrepresentation, that the highest rate of premium stated in the said printed rates, was actually charged for the said insurance.

Which instruction the court refused to give for the following reason: that, under the first of the rules annexed to the said policy, and referred to therein, no variation in the description of the property insured from the true description thereof, not made fraudulently, would vitiate the policy, unless by reason of such variation the insurance was made at a lower premium than would otherwise have been demanded.

Whereupon the defendants prayed the opinion of the court, and their instruction to the jury, that the said J. W. Lawrence, as the survivor of the said Lawrence & Poindexter, if entitled, upon the principles aforesaid, to recover any thing in this action, is not entitled to recover any thing more than a moiety of the said loss. Which instruction the court also refused, and the defendants excepted.

Messrs Jones and C. C. Lee, for the plaintiff in error, made the following points.

1. In order to fulfil either the general law of insurance against fire, or the contract of insurance in this case, or the averments of the declaration; the interest of the insured in the freehold estate that constituted the particular subject of insurance, should have consisted in a substantial ownership and proprietary right, legal or equitable: whereas nothing appears from the paper-muniments, which the plaintiff relied on as the sole evidence of such interest, but a naked pretence, or mere colour of title.

2. If any technical estate, equivalent to an insurable interest, appeared, yet its essential quality, quantity and condition, were either positively misrepresented by the assertion of unqualified ownership and proprietary right; or were concealed, when a particular disclosure of the nature and condition of the interest was material.

Therefore, whether a total defect of interest appeared, or its essential attributes were either misrepresented or concealed, or the plaintiff failed in proving the more specific averment of interest in the declaration, the defendants were, at all events, entitled to the general instruction, against the plaintiff's right of action, asked of the court.

3. If these paper-muniments did import, prima facie, any insurable interest, the presumption was absolutely repelled by the facts proved on the other side; showing the supposed title in equity to have been merely nominal or colourable.

Therefore, the direction to the jury, asked by the defendants of the court on this point, should have been granted on the hypothesis of proof therein stated; not being liable to the objection stated by the court, of referring matter of law to the jury. On the contrary, the court in their positive direction to the jury, that the insured, under the circumstances supposed, had a substantial property in the subject of insurance; trenched more upon the province of fact, than the jury, under the required direction, would have done on that of law.

4. The preliminary tests of the claim of loss, required by the ninth fundamental rule above cited, are strictly in the nature of a condition precedent; and cannot be dispensed with, but by an express discharge: consequently, the evidence or inference of a waiver by implication was inadmissible.

5. The declaration avers an actual compliance with the rule; therefore, no evidence of any dispensation from it, express or implied, was admissible.

6. The circumstances, from which such a waiver was inferred by the court in this case, were wholly insufficient to raise any legal or reasonable presumption to that effect; whereas, from the terms of the court's direction to the jury, it must have been received by the jury as a positive presumption or inference of law from written evidence. The company were in no manner bound to communicate their reasons for resisting the claim; and their resolution to resist it, notified as it was in general terms to the insured, covered the whole ground; and was just as good notice, if any was required, of one defect as another in the claim.

7. The misrepresentation, of the materials and construction of the building insured, was palpable and material; and the direction to the jury, asked by the defendants and refused by the court on this point, properly referred the fact of misrepresentation, and the circumstances, from which its materiality resulted, to the jury; the effect of such misrepresentation, and the result of materiality from the circumstances, to the court.

8. The first of the said rules above cited, did not reduce the materiality of misrepresentation in the policy to the alternative tests of fraud, or of a consequent reduction in the rate of insurance, as was ruled by the court: or, if it did, then such reduction in the rate of insurance was a necessary presumption from a lower risk, and was not to be proved, aliunde, as was also required by the court.

9. The fact, that a premium equal to the highest rate for insurance on the fourth class of hazards indicated in the said printed list of rates, had been paid, was wholly immaterial; and did not, as ruled by the court, convert the risk itself to one of that class, as on a 'slight or timber building;' when the specific description of it in the policy, identified it with the lower risk indicated in the second class of the said printed rates; and it turned out, in fact, to be neither of the second nor of the fourth class, but identically of the third: nor did it supply any competent evidence whatever; far less conclusive evidence, as was, in effect, ruled by the court; that the premium was, in fact, accommodated to any higher risk than that specifically described in the policy.

10. The defendants, in the direction asked of the court to the jury on this point, condescended to the terms of materiality of misrepresentation, and an actual increase of the risk: They, nevertheless, maintain that the description of the risk, in the body of the policy, amounted to a warranty that it was actually of the class of hazards, to which that description specifically referred it.

For the plaintiffs in error, were cited, 2 ''Marsh. on Ins.'' 787. Id. 115. 118. 2 Caines's Rep. 13. 2 Caines's Cases in Error, 110. 4 Dall. 421. 1 Johns. 341. 3 Dow. 255. 2 Marsh. 811.

Mr Swann and Mr Wirt, for the defendant in error, maintained, that the circuit court did not err in giving or refusing the charges to the jury, as set forth in the several bills of exceptions. They cited Burk & Hedrick vs. The Chesapeake Ins. Company, 1 Peters, 151. 1 Marshall on Insurance, 114, 115. 8 T. R. 13. 2 New Rep. 269. 13 ''Mass. Rep.'' 96. Id. 267. 3 ''Mass. Rep.'' 133. ''Phil. on Ins.'' 85. 128. 499. 1 ''Johns. Rep.'' 220. 9 Johns. 192. 6 Harris & Johnson, 612. 6 Cranch, 338, 9. 5 Cranch, 100. 109. 2 ''Sch. & Lef.'' 712. 13 Johns. 561. 3 Marshall, 221. Doug. 11. Also 1 Chitty on Ins. 317, 18. 1 T. R. 638. Doug. 684. 687, 688.

Mr Chief Justice MARSHALL delivered the opinion of the Court.

This writ of error is brought to a judgment of the court of the United States, for the district of Columbia, sitting in the county of Alexandria; which was rendered in a cause in which Joseph Lawrence, survivor of Lawrence & Poindexter, was plaintiff, and the Columbian Insurance Company of Alexandria were defendants.

The suit was brought on a policy insuring a mill, stated in the representation and in the policy, to belong to Lawrence & Poindexter, the assured. Pending the suit, Poindexter died; and the suit was continued and tried in the name of Lawrence the survivor. The verdict and judgment were in favour of the plaintiff below. At the trial, the court, on the motion of the defendant's counsel, instructed the jury on several questions of law which were made in the case; to which instructions the counsel for the defendants in the circuit court excepted, and the cause is now before this Court on those exceptions.

The plaintiff in the circuit court had exhibited his policy, the representation on which the contract of insurance was founded; his proofs of title and of loss, the notice which he gave of that loss, together with the documents which accompanied it, as preparatory to the assertion of his claim against the company; and the proceedings of the company in consequence of that claim, which terminated in a refusal to pay it. The counsel for the plaintiff in the circuit court, having thus concluded his case, the counsel for the defendants made three objections to his right of action.

1. That the interest claimed by the plaintiff in the property insured, as disclosed by the evidence; was not, at the respective times of effecting the insurance, and of the happening of the loss, an insurable interest and property.

2. That it was not such an interest as is described in the original offer of the plaintiff's agent for insurance, and in the policy; nor such as is averred in the declaration.

3. That the said documents produced as preliminary proof of loss, do not import a fulfilment, on the part of the plaintiff, of the terms and conditions upon which the loss is declared to be payable, by the ninth of the said printed rules anexed to the policy.

And the counsel for the defendants thereupon prayed the opinion and direction of the court to the jury, that the said evidence was not admissible, competent, and sufficient to be left to the jury as proof of the plaintiff's title to recover for such loss in this action.

The court refused to give this instruction, being of opinion, 1. That the interest of the plaintiffs in the property insured, as disclosed by the said evidence, is a sufficient insurable interest to support the policy, and the averment of interest in the plaintiffs' declaration in this action.

2. That it is such an interest as is described in the original offer for insurance, and in the policy, and in the declaration.

3. That although the said certificate of Murray Forbes is not such a certificate as is required by the said ninth rule annexed to the said policy; yet the evidence aforesaid is admissible, competent, and sufficient to be left to the jury; and from whch they may infer, that the defendants waived the objection to the said certificate, and to the other preliminary proof aforesaid.

The counsel for the defendants in error have made some preliminary objections to the terms in which the opinion of the circuit court was asked. The counsel prayed the opinion and direction of the court to the jury, that the evidence offered by the plaintiff was not admissible, competent, and sufficient to be left to the jury as proof of the plaintiff's title to recover. This blending of an objection to the admissibility of evidence in the same application which questions its sufficiency, is said to be not only unusual; but to confound propositions distinct in themselves, and to be calculated to embarrass the court, and the questions to be decided.

It is undoubtedly true, that questions respecting the admissibility of evidence, are entirely distinct from those which respect its sufficiency or effect. They arise in different stages of the trial, and cannot with strict propriety be propounded at the same time. If, therefore, the circuit court had proceeded no further than to refuse the instruction which was asked, this Court might have considered the refusal as proper; unless the entire prayer, as made, ought to have been granted. But the circuit court proceeded to give its opinion on the different points made by counsel, and these opinions must be examined.

1. The first is, that the interest of the assured in the property insured, is a sufficient insurable interest to support the policy, and the averment of interest in the declaration.

The mill insured was built on an island in the Rappahannoc, which was demised by Charles Mortimer to Stephen Winchester, for three lives, renewable for ever, at the yearly rent of 80, ($266 66 cents;) with a condition of re-entry for rent in arrear, &c.

1801, Dec. 19. S. W. conveyed one undivided third part to Richard Winchester, and another undivided third part to Joshua Howard.

1806, May 9. R. and S. Winchester conveyed to Joshua Howard, by deed of mortgage in fee, their two thirds of the said island, with other property to a considerable amount, in order to secure the said Howard to the amount of $40,000.

1813, Jan. 27. Joshua Howard conveyed the whole island to William and George Winchester.

1813, Sept. 23. William and George Winchester conveyed the island to Joseph Howard and Joseph W. Lawrence.

1818, July 22. Joseph Howard entered into an agreement with Joseph W. Lawrence, by which the said Lawrence was to take the island, &c. at the price of $30,000; for which amount in debts, due from Howard & Lawrence, he was to procure a release; on his doing which, Howard was to execute a deed for the property; on the failure or inability of Lawrence to procure this release, the contract was to be void.

1822, Nov. 28. Joseph W. Lawrence enters into an agreement with Thomas Poindexter, Jun. for the sale of one half of the island, mills, &c.; for which the said Poindexter agrees to assume and take upon himself one half the debts due from Howard & Lawrence to the banks in Fredericksburg; which were secured by a deed of trust.

Nov. 29. An agreement between Howard and Lawrence to work the mills in partnership.

By the deeds of January 27, and Sept. 23, 1813, all the title of Joshua Howard to the island on which the mills insured were erected, passed to Joseph Howard and Joseph W. Lawrence. What was that title?

He held one third part in his own right, and the remaining two thirds as mortgagee.

The agreement of July 22, 1818, between Howard and Lawrence, does not appear to have been performed on the part of Lawrence; nor is there any evidence of his ability to perform it; but it does not appear that Howard has taken any step to avoid it, or has asserted any title in himself.

The agreement of Nov. 28, 1822, between Lawrence and Poindexter, admits Poindexter to an undivided moiety of any interest Lawrence might have in the property.

Lawrence & Poindexter then, when the insurance was made, were entitled to one third of the property under the deed made by Charles Mortimer, and to the remaining two thirds as mortgagees; but one moiety of the whole, which moiety was derived from Joseph Howard under the agreement of July 22, 1918, was held under an agreement which had not been complied with, and which purported on its face to be void if not complied with; but the other contracting party had not declared it void, nor called for a compliance with it.

It cannot be doubted, we think, that the assured had an interest in the property insured. Lawrence had an unquestionable title to a moiety of one third, subject to the rent reserved in the original lease, and to a moiety of the remaining two thirds as mortgagee. He had such title to the other moiety as could acquired by an agreement for a purchase, the terms of which had not been complied with

The title is thus stated, because those words which declare the contract to be void if Lawrence should fail to comply with it, do not, we think, render it absolutely void, but only voidable. No time for performance is fixed; and if Howard is content with what has been done by Lawrence, and does not choose to annul the contract, the underwriters of this policy cannot treat it as a nullity. Lawrence, having this title under an executory contract, sells to Poindexter one undivided moiety of the property. These two persons, being both in possession, partly under legal conveyances and partly under executory contracts, require an insurance on it against loss by fire. Had they an insurable interest?

That an equitable interest may be insured is admitted. We can perceive no reason which excludes an interest held under an executory contract. While the contract subsists, the person claiming under it has undoubtedly a substantial interest in the property. If it be destroyed, the loss in contemplation of law, is his. If the purchase money be paid, it is his in fact. If he owes the purchase money, the property is its equivalent, and is still valuable to him. The embarrassment of his affairs may be such that his debts may absorb all his property; but this circumstance has never been considered as proving a want of interest in it. The destruction of the property is a real loss to the person in possession, who claims title under an executory contract, and the contingency that his title may be defeated by subsequent events does not prevent this loss. We perceive no reason why he should not be permitted to insure against it. The cases cited in argument, and those summed up in Phillips on Insurance, 26, on insurable interest, and in 1 Marshall, 104, ch. 4., and 2 Marshall, 787, ch. 11, prove, we think, that any actual interest, legal or equitable, is insurable.

2. Having declared the interest of Lawrence & Poindexter to be insurable, the circuit court instructed the jury that 'it is such an interest as is described in the original offer for insurance, and in the policy, and in the declaration.'

The original offer for insurance was in these words, 'What premium will you ask to insure the following property belonging to Lawrence & Poindexter, for one year against loss or damage by fire? On their stone mill four stories high, covered with wood, on an island about one mile from Fredericksburg in the county of Stafford; the mill called Elba mill. Seven thousand dollars are wanted. Not within thirty yeards of any other building, except a corn house, which is about twenty yards off.'

The policy states that the underwriters insure Lawrence & Poindexter against loss or damage by fire, to the amount of $7000 on their stone mill, &c.

The declaration charges that the defendants insured the plaintiffs $7000 against loss or damage by fire on their stone mill, &c.; and avers that they were interested in, and the equitable owners of the premises insured as aforesaid at the time the insurance was made as aforesaid, &c.

The material inquiry is, does the offer for insurance state truly the interest of the assured in the property to be insured? The offer describes the property as belonging to Lawrence & Poindexter; and states it afterwards to be their stone mill. It contains no qualifying terms, which should lead the mind to suspect that their title was not complete and absolute. The plaintiffs in error contend that the terms import an absolute legal estate in the property; and that the insurers entered into the contract, having a right to believe that the interest of the assured was of this character.

Instead of such an estate in the property as the representation justified the insurers in expecting, the proof shows that the insured held only one half of one third, under a lease for three lives, renewable for ever, and one half of the other two thirds as mortgagees; that the other moiety was held under a contract, the terms of which had not been complied with; and which, if complied with, would give them a title to two thirds of that moiety only as mortgagees.

The defendants insist that the representation is satisfied by an equitable title under an executory contract, and that in truth and in fact, the mill did, at the time of its insurance and loss, belong to Lawrence & Poindexter.

It may be true, that a mill occupied by Lawrence and Poindexter, and held under a lease or an executory contract, would be generally spoken of by themselves and others as their mill. The property alluded to would be well understood, and no inconvenience could arise from this mode of designating it. But if Lawrence & Poindexter should proceed to sell the property as theirs, should describe it in the contract as belonging to them, no court would compel the purchaser to take the title they could make.

The assured then have not proved 'such an interest as is described in the original offer for insurance;' and the circuit court, in this respect, misdirected the jury. It may be proper to take some notice of the materiality of this misdirection.

The contract for insurance is one in which the underwriters, generally, act on the representation of the assured; and that representation ought consequently to be fair, and to omit nothing which it is material for the underwriters to know. It may not be necessary that the person requiring insurance, should state every incumbrance on his property, which it might be required of him to state, if it was offered for sale; but fair dealing requires that he should state every thing which might influence, and probably would influence, the mind of the underwriter in forming or declining the contract. A building held under a lease for years about to expire, might be generally spoken of as the building of the tenant; but no underwriter would be willing to insure it as if it was his; and an offer for insurance, stating it to belong to him, would be a gross imposition.

Generally speaking, insurances against fire are made in the confidence, that the assured will use all the precautions to avoid the calamity insured against, which would be suggested by his interest. The extent of this interest must always influence the underwriter in taking or rejecting the risk, and in estimating the premium. So far as it may influence him in these respects, it ought to be communicated to him. Underwriters do not rely so much upon the principles as on the interest of the assured; and it would seem, therefore, to be always material that they should know how far this interest is engaged in guarding the property from loss. Marshall, in treating on insurance against fire, p. 789, b. 4, ch. 2, says; 'It is not necessary, however, in order to constitute an insurable interest, that the insured shall, in every instance, have the absolute and unqualified property of the effects insured. A trustee, a mortgagee, a reversioner, a factor or agent, with the custudy of goods to be sold upon commission, may insure; but with this caution, that the nature of the property be distinctly specified.'

In all the treatises on insurances, and in all the cases in which the question has arisen, the principle is, that a misrepresentation, which is material to the risk, avoids the policy. In this case the circuit court has decided that there is no misrepresentation; that the interest of the assured was truly described in the offer for insurance; and consequently, no question on the materiality of the supposed variance was submitted to the jury.

As this court is of opinion that a precarious title, depending for its continuance on events which might or might not happen, is not such a title as is described in the offer for insurance, construing the words of that offer as they are fairly to be understood; the circuit court has in this respect mis-directed the jury.

3. The third opinion given to the jury is, that the evidence given by the plaintiff in the circuit court, was admissible, competent and sufficient to be left to the jury, and from which they may infer that the defendants waived the objection to the said certificate, and to the other preliminary proof aforesaid. The certificate to which this instruction refers, is, by one of the rules which form conditions of the policy, declared to be an indispensable requisite; without the production of which, the loss claimed 'shall not be payable.' A certificate intended by the assured to satisfy this condition, accompanied the proof of loss; but it is not such a certificate as the condition requires; and such was the opinion of the circuit court. The testimony which the court left to the jury as being sufficient to authorize them to infer a waiver on the part of the insurers of this certificate, consisted of entires on the minutes of the board, with some parol proof.

On the 20th of February 1824, the claim of Lawrence & Poindexter was submitted to the board with the policy and certificate of loss.

On the 13th of March, an order was made, requiring the title papers of Lawrence & Poindexter to the Elba mill. On the first of April, copies of the deed from William and George Winchester to Joseph Howard and Joseph Lawrence, of the agreement between Howard and Lawrence, and of the agreement between Lawrence and Poindexter, were laid before the board. On the 16th of April, farther proof respecting the title was required, which was produced on the 22d of the same month.

The opinion of Mr Jones was taken on the case, which was submitted to the board on the 28th of June, when it was resolved, 'that the claim of Lawrence & Poindexter be resisted; and that the secretary furnish them with a copy of this resolution.

The opinion of Mr Jones turns on the interest of the assured, and on the question whether the loss was fair or fraudulent.

On the 11th of November, inquiry was made whether the board would enter into a compromise, 'it being understood that the agreement' 'is not to be considered as an admission of the claim?' Answered 'yes.'

On the 18th of November, the board passed a reasolution declining a compromise, which was communicated to the agent of Lawrence & Poindexter.

On the 11th of December, a farther and more specific proposition for a compromise was made by the agent of the assured, which was rejected by the company.

The secretary of the company was examined, to prove the communications between him and the agent of the assured. When the documentary evidence was exhibited, he informed the agent that he would call a board to decide on the claim. After the board had met and adjourned, he informed the agent that the claim would probably be resisted; that the company thought the interest of the assured was not insurable; that the representation was not faithful; and that Poindexter had set fire to the mill. No objection was made to the preliminary papers. The custom of the board was, if the claim for indemnity was thought just, to refer the preliminary papers to their secretary to see if they were regular. In this case no such reference was made.

From the first presentation of the papers in February, till the passing of the final resolution in June, the claim was pending undetermined before the board, waiting for the advice of counsel. This advice being delayed by the absence and other engagements of counsel, an agreement was entered into with the agent of the assured, that if the final resolution should be to resist the claim, the suit should be put as forward on the docket as if brought to the intervening April term. This agreement was complied with. All the orders and resolutions of the board which have been stated were communicated by the witness to the agent of the assured; and are the only communications which he was authorized to make.

According to the invariable usage of the board, the sufficiency of the documents offered by way of preliminary proof of loss, as required by the ninth article of the rules annexed to the policy; was not to be considered by the board, till the principle of the claim should have been admitted, and then the course was to submit such documents to the secretary for a special report thereon; in this case the sufficiency of the documents was never discussed or considered by the board, nor referred to the secretary. It never was contemplated by the witness, nor to his knowledge by the board, to waive any compliance with this ninth article. The consideration of the documents offered under it, did not regularly come on till the claim should be admitted in principle.

The agent of the assured was present at some of the meetings of the board when the witness was absent. He has understood that on these occasions the communications between them, turned entirely on questions respecting the fundamental objections to the claim. The regularity or irregularity of the preliminary proof was never mentioned. The opinion given by counsel was never communicated to the assured or their agent. To have done so, would have been contrary to the rules and to usage.

This evidence was left to the jury as testimony from which they might infer that the preliminary proof, required by the ninth rule annexed to the policy, as indispensable to entitle the assured to demand payment for a loss, had been waived by the underwriters.

It will not be pretended that any expression is to be found either in the resolutions of the board or in the conversations held by their secretary with the agent of the assured, having the slightest allusion to this preliminary proof or to the waiver of it. If then the jury might infer a waiver, the inference must be founded on the opinion that the board was bound to specify this particular objection; or that they have taken some step or made some communication, which presupposes an acquiescence in the certificate which was offered.

The resolution of the board to resist the claim is expressed in general terms, and consequently applies to every part of the testimony offered in support of it. We know of no principle nor usage which requires underwriters to specify their objections, or which justifies the inference that any objection is waived. We know of no principle by which this preliminary proof should be separated from the other proofs which were required to sustain the claim, and its insufficiency be remarked to the assured. The general resolution of the board was notice to the assured that if they intended to assert their claim in a court of justice, they must come into court prepared to support it.

2. Did the examination of the title and the proceedings of the board respecting it, presuppose an examination of the preliminary proofs, and an acquiescence in its sufficiency?

We think not. The proof of interest, and the certificate which was to precede payment, if the claim should be admitted; are distinct parts of the case to be made out by the assured. Neither of those parts depends on the other. The one or the other may be first considered, without violating propriety or convenience. The consideration of the one does not imply a previous consideration and approval of the other. The language of the ninth rule does not imply that the proof it requires is first in order for consideration. After stating what shall be done by the assured, the rule requires the affidavit and certificate in question; and adds, that 'until such affidavit and certificate are produced, the loss claimed shall not be payable.' The affidavit and certificate must precede the payment, but need not precede the consideration of the claim.

The testimony of the secretary, if not conclusive on this point, is, we think, entitled to great weight. He states the invariable usage of the office to have been, to consider the merits of the claim before looking into the preliminary proof, which, after deciding favourably on the claim, was always referred to him for examination and report. In this case the decision having been unfavourable to the claimant, no reference was made to him.

We do not think the assured can be presumed ignorant of the standing usage of the office, to which he applied for insurance; or be admitted to found upon that ignorance a claim to exemption from the necessity of producing a document required by the policy, as indispensable to his demand of payment for his loss.

We think the case exhibits no evidence of waiver; no evidence from which the jury could infer it, and consequently that this instruction of the court is erroneous.

It would have been subject of much regret, had the merits of the case been clearly in favour of the defendants in error, to reverse the judgment of the circuit court on account of the non-production of a document, which may perhaps be so readily supplied. But the cause must go back on the opinion expressed by the circuit court to the jury, that the title proved at the trial agrees with that stated in the offer for insurance.

After the opinions which have been stated had been delivered to the jury, the defendants offered evidence to prove the insolvency of the plaintiffs, so as to disable them from obtaining a legal title; and additional embarrassments on the property; and again moved the court to instruct the jury, that the assured had not such an interest in the property as entitled them or either of them to recover. This instruction the court refused to give, being still of opinion that the assured held an insurable interest in the mill. An exception was taken to this opinion.

The additional incumbrances to the title, and the circumstances of Lawrence & Poindexter, might constitute additional objections to the representation contained in the offer for assurance; but do not, we think, disprove an insurable interest in those who were still in possession of the property, and claimed title to it under executory contracts.

The defendants in the circuit court then proved that the mill was a square building built of stone to the eaves, that the roof was framed and covered entirely of wood, and that the two gable ends running up perpendicularly from the stone wall to the top of the roof, were also constructed of wood. They also offered evidence to prove the general understanding, that the description of a stone house covered with wood was not verified or supported by a house whose gable ends were of wood; that the gable ends were understood to be a part of the wall, not of the roof or covering. They then moved the court to instruct the jury, that if two of the exterior walls terminated in upright gable ends; such gable ends not properly forming, according to ordinary rules and terms of architecture, a part of the covering or roof; it was necessary in order to verity the said description, that such gable ends should have been of stone; and if, in point of fact, such gable ends as well as the covering or roof were of wood, which under any circumstances of actual conflagration might have increased either the risk of catching fire or the difficulty of extinguishing it; it amounted to a material misrepresentation, and avoids the policy; and it is not material whether the said misrepresentation was wilful and fraudulent, or from ignorance and without design; nor whether that actual loss was produced by such misrepresentation, or by having gable ends of wood instead of stone.

The court refused to give this instruction, being 'of opinion that it was competent to the jury, from all the facts given in evidence, to decide whether, in order to verify the said description in the said policy, it was necessary that the whole of the exterior walls from the foundation to the top of the roof should be of stone. And being also of opinion that under the first of the rules annexed to the said policy, and referred to therein; no variation in the description of the property insured, from the true description thereof, not made fraudulently; would vitiate the policy unless by reason of such variation the insurance was made at a lower premium than would otherwise have been demanded.'

To this opinion also an exception was taken. The rule referred to in the opinion requires, that

'Persons desirous of making insurance on buildings should state in writing the following particulars, to wit, of what materials the walls and roof of each building are constructed,' &c. 'And if any person shall cause the same to the described in the policy otherwise than as they really are, so as the same be charged at a lower premium than would otherwise be demanded, such insurance shall be of no force.'

If the court was correct in the construction of this rule, and of its effect upon the policy, it will become unnecessary to examine their opinion, leaving the question whether the property insured was truly described, entirely to the jury.

This rule takes up the subject of describing the property, and provides for it. It requires that the materials of which the walls and roof are constructed shall be truly stated, and prescribes the penalty for a mis-statement. The penalty is, that the insurance shall be void, if the assured shall cause the building to be described in the policy otherwise than it really is, so as the same be charged at a lower premium than would otherwise be demanded.

The rule does not place the invalidity of the policy on an untrue description of the building; but on such a description as shall reduce the premium which would otherwise have been demanded. This was a question of fact which the jury alone could decide.

The rule having provided for the case, and prescribed the precise state of things in which the penalty shall be incurred, we do not think that it could be applied in any other state of things. The jury was of opinion that if the building was untruly described, still the misrepresentation was not such as to cause the same 'to be charged at a lower premium than would otherwise have been demanded.' If this verdict was against evidence, the remedy was a new trial.

This court is of opinion 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 the opinion given 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.

The judgment is to be reversed, and the cause remanded to the circuit court that a venire facias de novo may be awarded.

This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Columbia, and was argued by counsel; on consideration whereof, this Court is of opinion that the said circuit court erred in this; 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 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. Whereupon, it is considered by this Court that the said judgment of the said circuit court in this cause be, and the same is hereby reversed and annulled, and that the said cause be, and the same is hereby remanded to the said circuit court with directions to award a venire facias de novo, and for further proceedings to be had therein according to law and justice.