Caraher v. Royal Insurance

Merwin, J. Two questions are presented, which are involved in each of the cases: First, that the referee erred in finding the actual loss and damage to be $25,500; and, second, that the interest of Caraher in the property was not that of unconditional and sole ownership, and that, therefore, the policies, by their terms, were void. 1. The evidence was conflicting upon the subject of the amount of the loss. Witnesses upon either side made their estimates,and stated the manner in which they arrived at results. We are of the opinion that the evidence warranted the conclusions of the referee upon the subject. In this connection, the defendants claim that the referee erred in sustaining the objection of the plaintiffs to the question put by defendants to one of their witnesses: “Would you be willing to rebuild this building at these figures?” The witness was a carpenter and builder, called by the defendants, and he had testified to making measurements and an estimate of the cost of rebuilding, and had stated what that estimate was, and what, in his judgment, was the amount of the damage to the building by the fire. He was then asked the question above set out. What the witness would be willing at the time of the trial to do, was not the test. He had given his estimates, and the court already had the benefit of his judgment in the matter. The objection was properly sustained. 2. The proposition that the interest of Caraher was not that of unconditional and sole ownership is based on the circumstance that, at the time of his purchase at the foreclosure sale, he was one of the trustees of the corporation which had given the mortgage. The claim of the defendants is that Caraher, being a trustee, could not purchase for his own benefit, and that the interest which he acquired in the property was not that of unconditional and sole ownership, but that he thereafter held the same as a trustee for the benefit of the church. The plaintiffs claim that the possibility that the corporation might have the right, in equity, to pay Caraher what he had paid for the property, and compel him to convey to the corporation, is no defense to these actions; that this was a right which, if the corporation had it, it might or might not enforce, at its option; and that the defendants cannot take advantage of it. Many cases are cited by the learned counsel for the defendants to the general proposition that a trustee cannot deal with trust property to his own benefit, although he may hold it as security for what he has advanced. It is said that if he purchases such property the cestui que trust has the option of taking the benefit of the purchase. In Duncomb v. Railroad Co., 84 N. Y. 199, [863] it is said the beneficiary may avoid the act of the trustee, but cannot do so without restoring what it has received. The cases cited by the counsel do not discuss the effect of such a situation upon a case like the one here in controversy. The counsel for plaintiffs refers us to Olcott v. Railroad Co., 27 N. Y. 546, and Bicknell v. Insurance Co., 58 N. Y. 677, as supporting his view of the matter. In Olcott v. Railroad Co. it was held (page 567) that a purchase of trust property by a trustee at public sale is good at law, and is, in equity, not void, but voidable only, at the election of the beneficiary, and that the purchase cannot be impeached in a suit to which the beneficiary is not a party. Judge Seldbn says: “The mortgagor (the beneficiary) is the party most directly interested in the question, and the validity of the sale cannot be impeached without its consent, or, at least, without giving it an opportunity to be heard. ” In Bicknell v. Insurance Co., 1 Thomp. & C. 215, the action was on a policy which provided that the company should not be liable for loss for property owned by any other party, unless the interest of such party was stated in the policy. The defendant alleged that Thompson & Judd were the equitable owners of the property, and that their interest was not stated in the policy. The plaintiff bid off the property at a receiver’s sale; and the defendant on the trial offered to prove that the purchase at such sale, although in plantiff’s name, was, in point of fact, for Thompson & Judd. This, being objected to, was ruled out. The general term sustained the ruling, it being said that the plaintiff was the absolute owner, so far as the defendant was concerned. This was affirmed in the court of appeals, (58 N. Y. 677:) it being said that plaintiff “had the legal title as against the whole world, save, perhaps, Thompson & Judd and their creditors, and, as the owner of the legal title, he could insure.” In Noyes v. Insurance Co., 54 N. Y. 668, the defendant insured plaintiffs for $3,000 on a quantity of cotton in the gin-house. The policy contained a condition that “if the assured is not the sole and unconditional owner of the property insured” the policy should be void. It appeared that plaintiffs made an arrangement with one Flournoy to operate his plantation in Arkansas for one year; they to furnish certain supplies, and Flournoy to attend to the work; the crop of cotton to be delivered to plaintiffs at the river bank for transport to market and sale, and the proceeds to be applied, first, to reimburse the plaintiffs for advances, and the balance to be divided equally between the plaintiffs and Flournoy. While in the gin-house a portion of the cotton was destroyed by fire. It was held “that by the terms of the agreement plaintiffs were not necessarily the sole and unconditional owners of the cotton, but that they were either partners or tenants in common with Flournoy in carrying on the plantation; but it appearing that plaintiffs had expended more than the whole crop of cotton was worth, and as, therefore, they were entitled, under the contract, to the entire proceeds, and Flournoy had no interest therein, within the spirit and meaning of the policy, they were the sole and unconditional owners, and entitled to recover the loss.” In Carrigan v. Insurance Co., 53 Vt. 418, it was held that a conditional sale by the plaintiff, he remaining in possession, did not prevent his interest being the entire, unconditional, and sole ownership for his use and benefit, as required by the policy; it being said that the vendees, until they had complied with the conditions entitling them to a conveyance, had no more interest in the property than a stranger. So it has been held that an outstanding lease does not prevent the existence of such ownership. Insurance Co. v. Haven, 95 U. S. 242; Dolliver v. Insurance Co., 128 Mass. 315. In the present ease, Caraher purchased at public sale upon a foreclosure judgment, to which he was individually a party defendant, paying from his own means the full value, apparently, of the property, and immediately entered into possession, and so continued until after the fire, without any antagonistic action on the part of the corporation. If the corporation had an election, it failed to exercise it. The proceeds of the sale were applied to the benefit [864] o£ the corporation. Caraher, when he obtained the insurance, informed the agents of the respective companies that he had purchased the property, so that the companies knowingly dealt with him as individual owner. The finding of the referee on this subject should not be disturbed. 3. The further proposition is presented that the building insured became vacant or unoccupied on or about October 1, 1888, and so remained, without consent of the insurance companies, down to the time of the fire, and that, therefore, under the provisions of the policies in several of the cases, the insurance became void. The referee found, as matter of fact, that the building did not become vacant or unoccupied. Mr. Caraher, from the time he purchased the property, held therein public religious service until October, 1888. Soon after that time, another pastor was appointed for the congregation, and it worshiped at another place. Xo religious service was held in the church after October, 1888. There is evidence tending to show that Mr. Caraher quit holding services on account of ill health, and that this disability continued until after the fire; that, during all the time service was not held, and down to the fire, the church was in the care of the sexton, who had been such for several years, and that he took substantially the same care of it that he did when service was held. Mr. Caraher continued all the time to reside in the dwelling in the same yard, anil within 15 feet of the church, and he testifies that he went frequently into the church, that the ornaments and vestments used in the service of the church remained there down to the fire, and that, at the time of the fire, there was everything in the church necessary for services. It appears that some months before the fire the gas-meter was taken out of the church by the gas company. The question seems to be whether, within the contemplation of the contract, the building became unoccupied in October, 1888, by reason of the cessation therein of church services. There was no warranty that church service should continue to be held there. The fact that the insurance was to Caraher as individual owner rather rebuts the idea that the religious corporation and society that had previously owned and occupied were expected to continue to occupy for an indefinite period. A condition of this kind is to be construed in view of the situation and character of the property insured, and in view of contingencies as to its use within the reasonable contemplation of the parties. Whitney v. Insurance Co., 72 N. Y. 120. The occupancy to be expected was not such as a church corporation that bad procured insurance would be expected to have, but such occupation as an individual would have, who had, for reasons satisfactory to himself, purchased the property. The case of Herrman v. Insurance Co., 85 N. Y. 162, is strongly relied on by the appellants. There the plaintiff had procured an insurance upon his dwelling-house, and thereafter left it for the winter, leaving it, however, furnished and in charge of a servant, who lived near, and who opened and aired it once a week: and the plaintiff also visited it once a fortnight. While in this situation, it was destroyed by fire, and it was held that it was not occupied, within the meaning of the condition of the policy. It was said that for a dwelling-house to be occupied, within the meaning of the policy, it must be used by human beings as their customary place of abode. That case would seem to be clearly distinguishable from the present. And so is the case of Halpin v. Insurance Co., 118 N. Y. 165, 23 N. E. Rep. 482. There the property insured was described in the policy as “occupied as a morocco factory.” This indicated the use contemplated by the parties to the contract; and, there having become a total and absolute supension of business, it was held that the property became'unoccupied, within the meaning of the .policy. In Halpin v. Insurance Co., 120 N. Y. 73, 23 N. E. Rep. 989, it is said that forfeiture will not be permitted upon equivocal or doubtful language. When the terms used permit more than one construction, that will be adopted which supports the validity of the policy. Darrow v. Society, 116 N. Y. 537, 22 N. E. Rep. 1093. Caraher, upon his [865] purchase, became owner and occupant. Whether he ceased to occupy, or whether the property became vacant or unoccupied, within the meaning of the policy, was, under the circumstances of this case, a question of fact, and the finding of the referee should not be disturbed. 4. The policy issued by the Springfield Company contained the condition that the policy should be void if an execution be levied on the property insured; and the other policies contained conditions rendering them void if any change take place in the interest, title, or possession of the property, whether by legal process or judgment, or by voluntary act of the insured, or otherwise. It is claimed by the appellants that the issuing and delivery to the sheriff of executions on the property against Caraher, and the advertisement of sale by the sheriff, amounted to a seizure and levy, and avoided the policies. There was no possession, in fact, taken by the sheriff. It is not claimed that the recovery of the judgments simply made the policies void. It has been in effect held to the contrary. Chamberlain v. Insurance Co., (Sup.) 3 N. Y. Supp. 701, and cases cited. Nor was the issuing of the execution, followed by the notice of sale, a levy upon the property, within the meaning of the policy. This was, in substance, held in Colt v. Insurance Co., 54 N. Y. 595. It was there said that the “levy of an execution” referred only to a levy on persona] property, as a levy upon real estate is unnecessary, and is now unknown to the law. See, also, 1 May, Ins. § 274. It follows that the issuing of executions and notice of sale did not affect the policies. 5. The policy issued by the Royal Company on April 2, 1887, had upon its face, in writing, the following clauses or indorsements: “ Other insurance permitted, concurrent in form herewith. ” “Loss, if any, payable to L. M. Thomson, executor, to the extent of his mortgage interest.” The policies issued by the Home and the Springfield at the same date had similar clauses. The policy of the American Central, issued on the 23d August, 1887, had the clause, “Other concurrent insurance permitted,” but no clause as to loss being payable to the mortgagee. The policy of the Standard Company, issued January 20,1888, and of the Newark, issued October 26,1887, had the clause, “Other insurance permitted without notice until required,” and no clause as to the payment of the loss to the mortgagee. It is claimed by the Royal, Home, and Springfield Companies that their policies are void because other policies were obtained that did not have the loss payable to the mortgagee; and it is claimed by the American Central that its policy is void because other policies were obtained or held that did have the loss payable to the mortgagee. The argument is that there was, in effect, a warranty by the assured that all other insurance should be concurrent in form, and that this warranty was broken in regard to the three companies first named by the failure to make the loss in the other cases payable to the mortgagee, and was broken in regard to the American Central by the fact that the loss in the first three cases was so payable. This reasoning is founded on the idea that the provisions as to other insurance and as to the payment of the loss are parts of the policy, while in fact they are not. They are simply indorsements, and treated as such, and made by the companies in pursuance of provisions of the policy requiring indorsements in regard to other insurance, or in regard to the payment of loss to other than the assured. The provision as to the payment of loss did not refer to the other permitted insurance, but to the loss on the policy upon which the indorsement was made. Besides, it is not made clear that other insurance would fail to be concurrent in form, because the loss, if any, in the one case, would be payable to the assured, and. in the other the company had by indorsement assented to its payment to a mortgagee as his interest might appear. The subject of the insurance and the interest insured would be the same in each case. The insurance in all the cases would run together. 6. The policy issued by the New'ark Company insured Mr. Caraher to the amount of $500 upon the organ in the church. The referee allowed the plain [866] tiff upon this the sum of $433.33, with interest from February 1, 1890; and this forms part of the judgment against the Newark Company. The claim of that company is that there is no proof that Mr. Caraher had any title or interest in the organ. There seems to be no answer to this claim. The only proof of title or interest given by Caraher is the deed upon the foreclosure. The organ was not included in that, or in the mortgage by the corporation. It was not real estate. The possession that Caraher had was under the deed, and would not afford any presumption of ownership of the organ. The amount allowed for the organ must, therefore, be deducted from the recovery. It is suggested on the part of the appellants that the altars in the church were personal property, and therefore not covered by the insurance. We are, however, of the opinion that they were part of the real estate. No other questions are presented. It follows that all of the judgments, except the one against the Newark Company, should be affirmed, with costs. The judgment against the Newark Company should be modified by deducting therefrom the sum of $433.33, with interest from February 1, 1890, and, as so modified, affirmed, without costs upon this appeal to either party. All concur.