Southern Pants Co. v. Rochester German Insurance

Clark, C. J. This action is to recover against nine insurance companies for loss admitted by tbem to have been sustained in tbe destruction by fire of a stock of merchandise. Tbe only controversy raised is as to tbe validity of said policies by reason of tbe fact tbat a receiver having been appointed of tbe Southern Pants Company, prior to tbe fire, tbe defendants contend tbat be was in actual possession of tbe property at tbe time of tbe fire, and thus they claim tbe insurance was forfeited under tbe clause in tbe policies against change in tbe “interest, title, or possession” of tbe property insured. Tbe mere appointment of a receiver does not have tbe effect to work such a change either in tbe interest or title of property as will forfeit insurance thereon under tbe nonalienation clause in tbe standard fire insurance policies. This has often been decided. In Thompson v. Insurance Co., 136 U. S., 287, tbe Court held: “Tbe title to tbe property in tbe bands of a receiver is not in him, but in those for whose benefit be bolds it.” ' Nor in a legal sense is tbe property in his possession. It is in tbe possession of tbe court by him as its legal officer. In Insurance co. v. Bartlett, 91 Va., 305, tbe Court said: “Tbe utmost effect of tbe appointment of a receiver is to put tbe property from tbat time into bis custody as an officer of tbe court, for tbe benefit of tbe party ultimately proved to be entitled, but not to change tbe title or even tbe possession in tbe property,” citing Bank v. Bank, 136 U. S., 236. In Insurance Co. v. Baker, 94 Md., 545, tbe Court beld tbat tbe appointment of a receiver does not bave tbe effect to invalidate a policy under tbe nonalienation clause. In Vance on Insurance, sec. 161, it is said: “Tbe appointment of a receiver does not constitute sucb a change of interest as violates this condition (tbe alienation clause in tbe standard policy), nor does a change of receivers, when the policy was procured by a former receiver.” Tbe defendants, however, strenuously contend tbat this was changed by Revisal, 1224, which vests tbe title of tbe property *80 in a receiver upon bis appointment and divests it out of tbe corporation. Tbat section by its terms applies only to insolvent corporations, wbicb is not tbe case bere. But even if it were insolvent, we do not tbink tbat tbe meaning of tbe section is to make tbe receiver tbe sole owner of tbe corporate property. He is vested, it is true, with tbe title, but tbat is for tbe purpose of executing tbe trust, and is in no way sucb an alienation as impairs tbe validity of an insurance policy. Tbe receiver bas tbe legal title, but be bolds it for tbe benefit of tbe equitable owner, tbe corporation, whose property is to be administered by bim under tbe orders of tbe court. In Insurance Co. v. Bartlett, supra, tbe Court says: “Tbis condition in tbe policy against alienation refers only to sucb sale or disposition of tbe property as caused all interest of tbe assured in, or control over, tbe property to cease.” Tbis Court bas always looked upon tbe receiver of a corporation as simply an agent of tbe court to bold and manage the property under its direction. In Farris v. Receivers, 115 N. C., 600, and Grady v. R. R., 116 N. C., 952, tbe Court beld: “Service upon tbe receivers is service upon the corporation as fully as if made upon tbe president and superintendent, whose duties they are temporarily discharging.” Tbe receiver, therefore, is simply temporarily, substituted for tbe president or other manager of tbe corporation. As to the possession, it was said in Gordon v. Insurance Co., 120 La., 442: “It is universally beld tbat tbe mere taking-possession of property by a receiver is not a change of possession to avoid tbe policy.” Numerous authorities can be cited to tbe above effect. We think it clear tbat while tbe appointment of a receiver vests tbe legal title in bim (Revisal, 1224), be bolds tbe same, and takes possession also, as tbe agent of tbe court for tbe beneficial owner, under tbe direction of tbe court. Such appointment in no wise invalidates tbe policy under tbe provision of tbe nonalienation clause in tbe standard policies. Tbe interest of tbe owner is in no wise changed by tbe appointment of a receiver. Tbe legal title and possession is beld by bim for the owner and tbe property is to be administered under tbe orders *81 of the court. There is no alienation from the owner till the property is sold and sale is confirmed. Till then the property still belongs to the insured. No error.