Brighton Beach Racing Ass'n v. Home Insurance

Rich, J.: The plaintiff, as assignee of one Dunne, seeks to recover a .fire loss on a policy of insurance, in the standard form, issued by the defendant upon realty situated in the borough of Brooklyn, owned in fee simple, at the time the policy was issued, .by Dunne. The policy contains the following provision : “ This entire policy, unless otherwise provided by-agreement indorsed hereon or added hereto, shall be void * * * if any change other than by the death of the insured take place in the interest, title or possession of the subject of insurance (except change of occupancy without increase of hazard) whether by legal process or judgment or by voluntary act of the insured or otherwise.” On July 17, 1903, and while the policy was still in force, Dunne entered into an executory contract of sale by which he agréed to convey to one Harvey O. Dobson, or his assigns, a parcel of land containing upwards of forty-three acres, divided, according to the map attached to the contract,‘into 660 lots, upon one or more of which the insured buildings stood, for a consideration of $109,521.51, $15,000 of which was paid when the contract was signed; $44,463.60, existing mortgage indebtedness, to be assumed by Dobson, and inter- * est thereon from March seventeenth, four months prior the date of the contract, paid by him; a second mortgage of $10,297.15 tobé given Dunne, and the balance, $39,760.76, to be paid in cash on July 16, 1904, at. which time the deed was to-be delivered. The agreement contained the following clauses: “ And the said party of the second part hereby agrees to pay all taxes and assessments levied against and becoming a lien upon the said real property, subsequent to the delivery of this contract; * ■* * and the party of the second part shall have the right to occupy any part of the real prop [730] erty' -lierenuder and before passing title, as tenant of the party "of the first part, without any pay or rent thereof, and possession of the ' said real property shall be so given to the party of the second part on the expiration of the existing tenancy on January 1, 1904.” On the ,day following the execution of this contract, Dobson assigned all his right, title and interest therein to the appellant, who went into the possession of the property, in accordance with the contract provisions, and thereafter and before the commencement of this-action paid the full purchase price and took title to said property. On February 9, 1.904, fire destroyed the building, and on November fourth following, Dunne assigned to the plaintiff said policy of insurance and all his rights therein. It appears that defendant had no notice of the contract, or of any change of possession or interest in the insured property, until after the Joss. The learned trial .justice held that the policy became void because of a change of title, interest and possession in the insured property, caused by .the executory contract of sale of the subject of insurance, coupled with the delivery of possession to the assignee of the vendee,, which made'the latter the equitable owner in fee and changed both the title,, interest and possession of Dunne. . ' . . The decisions of courts of sister; States unite,in the proposition that one in possession of real property under a valid contract of- purchase is the solé and' unconditional owner thereof, subject only to the. enforcement of payment of the price agreed Upon by- the holders of the legal title; while the cqurts of this State have held such a vendee to be the eq.uitable_owner of the premises, vendible as his, chargeable as his, capable of being incumbered as his; they may be. devised as his;-they-may,be assets; they would descend to his heir and "while he was living be insurable as his. (Pelton v. Westchester Fire Ins. Co., 77 N. Y. 605, and cases cited ; Stewart v. Long Island R. R. Co., 102. id., 601, 624 ; Beckrich v. City, of North Tonawanda,171 id. 292, 299 ; Williams v. Haddock, 145 id. 144.) It can hardly be- maintained that there can, be two sole and • unconditional owners of the same property, or ,two owners legally entitled to exercise the same sole and exclusive rights therein at the. same time; .and it is clear that such a change of title was effected by possession given the appellant under the contract of. sale as to have avoided the policy of insurance. [731] Again, it appears beyond reasonable contention that a. change in the “ interest ” and “ possession ” of Dunne in the insured property accomplished the same legal result. ' The word “ interest ” is broader and more comprehensive than the word “title;” it embraces botli legal and equitable rights. (Southern Cotton Oil Co. v. Prudential Fire Association, 78 Hun, 373.) The doctrine contended for by appellant, that when the condition is against a change in the “ title ” there is no breach unless there is a change in the legal title, and that as long as the insured retains the legal title the policy f.. not avoided by a transfer of the equitable title, cannot be applied to a condition against a change of • “interest.” The terms are not synonymous. The true test is whether the vendor has" parted with the absolute control and dominion over the property insured. If he has, a change in “interest” has been effected, and the policy is void. I a in of the opinion also that there was a change in “ possession ” within the meaning of that word as used in the policy. While it is true that the agreement designates the occupancy of the vendee as that of a tenant of the vendor without pay or rent, it is apparent that the contract gave and secured to him more than.the rights and interests of a tenant. He was charged with the liabilities of, and entitled to enforce the rights of a purchaser,in possession and could not be ejected as a tenant regardless of such rights. The possession of the vendee was absolute, and exclusive of the vendor, so long as he performed his contract. All the rights of possession of the insured property, held and exercised solely and exclusively by Dunne, when be obtained the policy of insurance, he divested himself of. by executing the contract and giving plaintiff possession under it. • From the time such possession was taken by plaintiff Dunne had no possession or right of possession while the former performed the contract provisions, and the attempted characterization in the contract of the occupancy of the vendee as that of a tenant, did not take from plaintiff its legal rights thereunder, as the equitable owner in possession, or have the legal effect of reserving to Dunne the sole and exclusive possession lie owned and exercised when the contract" of insurance was made with the respondent. As the learned trial justice,aptly says: “Names cannot do away with the nature and substance of things.” [732] , It may also be observed that by the policy of insurance, which-was a personal contract, the respondent undertook to" indemnify Dunne against loss or damage by fire to his buildings-as long as his ownership, interest and possession thereof remained exactly the same as they tlién were, and no longer. 'This obligation cannot be extended beyond a time when - Dunne voluntarily gave "such right of possession to the appellant and changed' his interest and the nature of his title in and to' the'insured property, without the consent of the respondent, who never undertook to insure the buildings for the benefit of the appellant, or if they were-to be possessed by the appellant,- or any interest therein, owned. by Dunne at the time the policy was issued, was thereafter acquired by the appellant as the result of Dunne’s act. (Lett v. Guardian Fire Ins. Co., 125 N. Y. 82.) It follows that the right. to enforce the policy of insurance terminated with the execution and the surrender of possession of the insured buildings, without- the knowledge or 'consent of the respondent, and the judgment must be affirmed, with costs. Hirschberg, P. J., Woodward and Jenks, JJ., concurred. Judgment affirmed, with costs.