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DE LANCEY V. INSURANCE COMPANY.

[No. 2.

unless it appears to have been intentionally and fraudulently made." Charters are generally subject to amendment, and may be amended as well by general laws as by particular acts, if the intention is clear; but no amendment of a charter can amend or alter the construction of a contract made before the charter was amended. The General Statutes took effect January 1, 1868; and the policy was made November 19, 1866. This section of the General Statutes originated in an act passed July 11, 1855, which contained similar provisions, though less broad in their application, the act of 1855 being confined to cases where applications were made to agents, and the General Statutes applying to all policies. If there is any conflict between the act of 1855 and the act in amendinent of the charter, the act in amendment must prevail. Both derive their authority from the same source, and the act in amendment was passed at a later date, namely, June 19, 1862. Brown v. Lowell, 8 Met. 172; Fales v. Whiting, 7 Pick. 225. If both are to be construed together as parts of one act, the special act would modify the General Statutes, and not the General Statutes the special act. Ordinarily, specific legislation supersedes general statutes upon the particular subject of its enactment. Ellis v. Swanzey, 26 N. H. 266; Titcomb v. Union M. & F. Ins. Co. 8 Mass. 326. A general statute does not repeal a special prior act, unless the intent is clear. Brown v. Lowell, before cited; Tracy v. Goodwin, 5 Allen, 409. The construction that a misrepresentation of title must be fraudulent to avoid a policy under section 3 of the amendment, where the application was taken by an agent, would render it practically a nullity. A fraudulent misrepresentation always avoided a policy, and, if there had been any doubt on the subject before, it is made certain by the act of 1855 by plain implication. It is a matter within everybody's knowledge, that nearly every application for insurance in home companies is made through the local agents, whose appointment is regulated by the same act of 1855; and if misstatements of title, when made to them, must have been fraudulent to avoid a policy under this section, it could have no operation except in the rare cases where the application was made directly to the directors or secretary, and it would be very difficult to conjecture any reason why a misstatement of title to them should involve any different consequences from a misstatement to an agent.

There is no repugnancy between the act of 1855 and this section of the defendants' charter, when the true intent and purpose of each are kept in view. The charter does not contemplate that they should have any capital. It provides for borrowing to meet their losses, to save the labor and expense of too frequent assessments. Security to the assured who meet with losses, and justice to all the members, require that the company have security from each member for the payment of his assessment; and the amendment of June 19, 1862, was enacted for the specific purpose of providing such security by lien on the property insured. To make the lien effectual to give such security, the assured must have a title to the property insured, and if he have an interest sufficient to satisfy the lien, the company should know what it is; otherwise, the expense of an investigation to ascertain what it is might exceed the assessment, and render the lien of no value practically. The amendment is remedial, and should be liberally construed to suppress the mischief and advance the remedy.

A

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DE LANCEY v. INSURANCE COMPANY.

[No. 2.

misstatement of title without fraud would impair the security by lien just as much as a fraudulent misrepresentation. The statute of 1855 was enacted for a very different purpose. Prior to that statute, a misrepresentation material to the risk, though not fraudulent, avoided a policy. The consequences of this rule were often highly penal. Where the application was made to a local agent, who was, or could make himself, fully acquainted with the risk, and upon whose judgment it was probably taken, it might be very unjust that an inadvertent misstatement of facts, open to the observation of the agent, should render the policy void. The wording of the section in the General Statutes, which is substantially a reenactment of the act of 1855, renders it clear that the mistakes and misrepresentation intended are such as affect the risk. The jury are to reduce the amount as much as the premiums should have been increased. The state of the title has nothing to do with the risk, except so far as it may induce design or negligence on the part of the assured. The title is also peculiarly within the knowledge of the applicant. See, upon this point, Campbell v. M. & F. Ins. Co. 37 N. H. 35.

The misstatement of the title was not a mistake. The plaintiff does not claim that the application does not contain a correct statement of what he said about his title, when it states that the land and buildings were his, and unincumbered, nor that he was under the influence of any error as to what his true title was, but says the misstatement was inadvertent. It was not a misrepresentation merely, as that term is understood in insurance law, but the truth of the statements was made an express condition by the terms of the policy. Boardman v. N. H. Mut. Fire Ins. Co. 20 N. H. 551. Prior to the statute of 1855, the law raised an implied condition that every material representation should be true; and if any were false, the policy was made void. The statute does away with these implied conditions, unless the misrepresentation is intentional, but does not attempt to change the effect of express conditions or warranties.

III. If, as matter of law, the defendants' charter is modified by the act of 1855, or any other statute, the plaintiff has waived the benefit of any such modification by entering into a contract to be bound by the terms and conditions of the charter as it stands. The policy provides that said company doth promise and agree to insure the plaintiff, "subject to the provisions and conditions of the charter and by-laws of said corporation hereto annexed." This makes the annexed charter and bylaws a part of the contract, just the same as if written in it. Marshall v. Columbian Mut. Fire Ins. Co. 27 N. H. 157, before cited, and authorities there cited. The question is, then, not what would be the legal rights and obligations of members of the company in the absence of any contract, but what is the construction of the charter and by-laws annexed to the policy, and making a part of it, as a matter of contract? The act of 1855 does not make any contract of the parties illegal. It simply declares the effect upon the contract of mistakes and misrepresentations made when the contract is entered into. It does not prohibit the parties from making a contract, that the effect of such mistakes and misrepresentations shall be different from that declared by the act to be the effect in the absence of such a contract. The party may release the legal liability of the company, as he might the legal liability of a com

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DE LANCEY V. INSURANCE COMPANY.

[No. 2.

mon carrier, by express contract. Aliquis renunciare potest juri pro se introducto. The language of the charter cannot be misunderstood. "Policies shall be void unless the true title of the assured, and the incum

brances on the same, be expressed therein." "The law frequently supplies by its implications the want of express agreements between the parties, but it never overcomes by its implications the express provisions of the parties. If these are illegal, the law avoids them. If they are legal, it yields to them, and does not put in their stead what it would have put by implication, if the parties had been silent." 2 Par. on Con. 27 (2d ed.).

DOE, J. In the application for insurance, signed by the plaintiff, he is made to say, among many of the things, and in the kind of print extremely difficult to be read, usually found in such documents, that he covenants and agrees that the description of the property in the application is correct, so far as regards its condition, situation, value, and risk; that the misrepresentation or suppression of material facts, in the application, shall destroy his claim for a damage or loss; and that he holds himself bound by the charter and by-laws of the company. The policy, after reciting, in diminutive type, in long and compact lines, that he has entered into the numerous stipulations of the application, “which is made a part of this policy," goes on to declare, in type of good size, well spaced, and set in a legible manner, that the company, in consideration of the premises, promises to insure, subject to the provisions and conditions of the charter and by-laws "hereto annexed." Annexed to the policy, in the typographic style commonly used for the suppression of information, are copies of the defendants' act of incorporation, passed in 1833, an act in addition to that act, passed in 1862, and the by-laws.

The third section of the amendatory act of 1862 (ch. 2685) provides that "any policy of insurance issued by said company, signed by the president, and countersigned by the secretary, shall be deemed valid and binding on said company in all cases where the assured has a title in fee simple, unincumbered, to the building, buildings, or property insured, and to the land covered by said buildings; but if the assured have a less estate therein, or if the property or premises are incumbered, policies shall be void, unless the true title of the assured, and the incumbrances on the same, be expressed therein." In the application, the plaintiff was represented as stating that the house upon which he desired insurance was his property, and was not incumbered, when he had an absolute legal title, not to the whole of the house and land covered by the house, but only to part thereof as tenant in common. The sixth section of the act of 1855 (ch. 1662), entitled " An act in relation to insurance companies," provides that no such policy as the plaintiff's "shall be void by reason of any error, mistake, or misrepresentation, unless it shall appear to have been intentionally and fraudulently made; but said company may, in any action brought against them on said policy, file in offset any claim for damages which they shall have actually suffered thereby; and the jury may deduct, from the claims of the plaintiff, the amount of said damage, as they shall find it." The plaintiff's misrepresentation of title was not "intentionally and fraudulently made;" and he claims that his policy is valid by force of the sixth section of the general act of 1855;

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DE LANCEY V. INSURANCE COMPANY.

[No. 2.

while the defendants claim that the policy is void on the ground that, in cases where the assured has a less estate in the buildings insured and the land covered by the buildings than a fee simple, unincumbered, and the true title of the assured and the incumbrances are not expressed in the policy, this particular insurance company is relieved from the obligation of the sixth section of the general act of 1855, by the third section of the private act of 1862, amending its charter.

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The situation of the title was such, that, if the plaintiff was not a lawyer, or a man specially versed in the legal technicalities of real estate titles, he might well have called the real as well as the personal property his, as he did when he signed the paper called an application. His "error, mistake, or misrepresentation" does not appear to have been intentionally and fraudulently made." The case is clearly one of the class which the general act of 1855 was intended to reach; and the plaintiff's policy is valid by force of that act, unless these defendants were singled out, among all the insurance companies of the State, as worthy of being invested with the exclusive privilege of exemption from the operation of the general act, by the special act of 1852. Does the true construction of the latter act entitle the defendants to such an exemption?

The nature of the mischief intended to be remedied by the act of 1855 has a bearing upon the question whether, by a fair and reasonable construction, it appears that the legislature, having in 1855 forbidden all insurance companies to commit such mischief, did actually intend in 1862 to confer on this company the exceptional legal right to commit the same mischief. The object of the act of 1855 obviously was to remedy an evil with which the people of this State had long believed themselves to be grievously afflicted. Whether their belief had an ample or substantial foundation, or any foundation at all; whether it was justified by the conduct of a considerable number of insurance companies; or whether the course of a very few brought an undeserved reproach upon the whole system of insurance, it is not now necessary to inquire. It is the state of things believed to exist, and not its real existence, that explains the legis lation. The public belief, manifested in the annals of litigation and elsewhere, is too notorious and historic to require any specific attestation. The state of things believed to exist was this:

Some companies, chartered by the legislature as insurance companies, were organized for the purpose of providing one or two of their officers, at head-quarters, with lucrative employment, large compensation for light work, not for the purpose of insuring property; for the payment of expenses, not of losses. Whether a so-called insurance company was originally started for the purpose of insuring an easily earned income to one or two individuals, or whether it came to that end after a time, the ultimate evil was the same. Names of men of high standing were necessary to represent directors. The directorship, like the rest of the institution and its operations, except the collection of premiums and the division of the same among the collectors, was nominal. Men of eminent respectability were induced to lend their names for the official benefit of a concern of which they knew and were expected to know nothing, but which was represented to them as highly advantageous to the public. There was

Vol. I.

DE LANCEY v. INSURANCE COMPANY.

[No. 2.

no stock, no investment of capital, no individual liability, no official responsibility, —nothing but a formal organization for the collection of premiums, and their appropriation as compensation for the services of its operators.

The principal act of precaution was to guard the company against liability for losses. Forms of applications and policies (like those used in this case), of a most complicated and elaborate structure, were prepared, and filled with covenants, exceptions, stipulations, provisos, rules, regulations, and conditions, rendering the policy void in a great number of contingencies. These provisions were of such bulk and character that they would not be understood by men in general, even if subjected to a careful and laborious study: by men in general they were sure not to be studied at all. The study of them was rendered particularly unattractive, by a profuse intermixture of discourses on subjects in which a premium payer would have no interest. The compound, if read by him, would, unless he were an extraordinary man, be an inexplicable riddle, a mere flood of darkness and confusion. Some of the most material stipulations were concealed in a mass of rubbish, on the back side of the policy and the following page, where few would expect to find anything more than a dull appendix, and where scarcely any one would think of looking for information so important as that the company claimed a special exemption from the operation of the general law of the land relating to the only business in which the company professed to be engaged. As if it were feared that, notwithstanding these discouraging circumstances, some extremely eccentric person might attempt to examine and understand the meaning of the involved and intricate net in which he was to be entangled, it was printed in such small type, and in lines so long and so crowded, that the perusal of it was made physically difficult, painful, and injurious. Seldom has the art of typography been so successfully diverted from the diffusion of knowledge to the suppression of it. There was ground for the premium payer to argue that the print alone was evidence, competent to be submitted to a jury, of a fraudulent plot. It was not a little remarkable that a method of doing business not designed to impose upon, mislead, and deceive him by hiding the truth, practically concealing and misrep resenting the facts, and depriving him of all knowledge of what he was concerned to know, should happen to be so admirably adapted to that purpose. As a contrivance for keeping out of sight the dangers created by the agents of the nominal corporation, the system displayed a degree of cultivated ingenuity, which, if it had been exercised in any useful calling, would have merited the strongest commendation.

Travelling agents were necessary to apprise people of their opportunities, and induce them to act as policy holders and premium payers, under the name of "the insured." Such emissaries were sent out. The soliciting agents of insurance companies swarm through the country, plying the inexperienced and unwary, who are ignorant of the principles of insurance law, and unlearned in the distinctions that are drawn between legal and equitable estates." Combs v. Hannibal Savings and Ins. Co. 43 Mo. 148, 152; 6 Western Insurance Review, 467, 529. The agents made personal and ardent application to people to accept policies, and prevailed upon large numbers to sign papers (represented to be mere matters of form)