Germania Fire Insurance v. Home Insurance

The trial judge delivered the following opinion: McAdam, J. Questions of forfeiture in consequence of transfer of interest have arisen in almost every conceivable shape, mainly for the reason that the phraseology of the so-called alienation clause is diverse in different policies. In 1 May Ins. (3d ed.) pp. 552-556, are collected fifty variations of this clause, and the reported decisions must be read in the light of the particular language employed in the policy construed. In the present instance the condition of the policy is that “ if the property be sold or transferred, or any change takes place in title or possession, * * * the policy shall be void.” Yerdier, the person insured, by taking in Brown as a partner, made the corpus of the effects joint property. Each acquired a concurrent title in the whole (Story Part. § 91), but neither had any exclusive rights to any part of the stock in trade, so as to enable him to separate it from the common property and sell it as his own. Rogers v. Batchelor, 12 Pet. 221. Indeed, Yerdier ceased to have any separate interest in the corpus, and the share of each partner could be thereafter determined only after the partnership debts were paid and [445] accounts taken. Menagh v. Whitwell, 59 N. Y. 158. See, also, Williams v. Whedon, 109 id. 333; 5 Wait’s Act. & Def. 119. Each in effect became possessed of the whole property for all the purposes of the partnership until they were in some mode accomplished. It would be solecism to hold that the formation of this partnership and the introduction of Brown as part owner, did not work a change of both title and possession of the property insured. True, Yerdier might have insured his interest as a copartner in the firm, and recovered any loss sustained in that character. But that is not the case. He did not do that; he insured as sole owner, under a condition that when he ceased to bear that relation to the property, the policy was to become void. That condition was a valid one, and however much the law abhors forfeitures, it is a material part of the contract, and must be respected and enforced. The rule is not unreasonable, for the risk assumed by the insurers depends upon the character and circumstances of the insured. They have a right to know with whom they are contracting, and to whom they are to account, and no new party can be thrust upon them contrary to the terms of them contract, which is personal in its nature and does not pass with the title to the property. These conclusions accord with the authoritative decisions upon the subject. See Drennen v. London A. Co., 20 Fed. Rep. 657; Malley v. Atlantic Ins. Co., 51 Conn. 222; Biggs v. Ins. Co., 88 N. C. 141; Hathaway v. State Ins. Co., 64 Iowa, 229 ; Card v. Phoenix Ins. Co., 4 Mo. App. 424. The earlier Iowa case of Cowan v. Ins. Co., 40 Iowa, 551, holding that the portion of the property sold to the incoming partner would lose the benefit of the insurance, but that the policy would remain operative to protect the interest of the vendor still remaining in him, has been unfavorably criticised (Malley v. Atlantic Ins. Co., 51 Conn. 222), and subsequently the Iowa court explained that the Cowam case was decided on the ground that the alienation clause was not pleaded as forbidding “a chamge in title or possession,” but only as forbidding an entire sale or transfer. Hathaway v. State Ins. Co., [446] 64 Iowa, 229 ; and as to the same distinction see Blackwell v. Ins. Co., 21 Ins. L. J. 97. The Cowcm case must be rejected as authority here. The case of Hoffman v. Ætna Ins. Co., 32 N. Y. 405, is not in conflict with the views expressed. There, a policy was issued to a firm, and one of the partners, upon retiring, transferred his interest to the remaining partners, and the court held that the effect of the usual proviso against sales, in policies of insurance, is not to interdict sales of the owners as between themselves, but only sales of proprietary interests by the parties insured to third persons. The court did not decide that a stranger could be introduced into the firm and made a party to the contract of insurance without the consent of the other contracting party. That question was not before the court, although it intimated strongly against the feasibility of any such scheme. In the case last cited the insurance company had accepted all three members of the firm as parties entirely satisfactory to intrust with possession and control. In the present case the company had no knowledge of the transfer to Brown until after the fire; had no opportunity of passing on his qualifications as custodian of the property, and never assented to his introduction as a party to the contract. The company may have been willing to insure Yerdier so long as" he was the exclusive owner and custodian of the property, but when the change of interest occurred and possession was to be turned over to a copartner with equal power of control, the company became so far affected by the transfer that the policy became void, unless it first assented to the change. Uo snch consent having been given, neither Yerdier nor his partner, nor the plaintiff as their assignee, have any right of action whatever in the policy. It follows that the defendant is entitled to judgment, with costs. Per Curiam. For the reasons set forth in the opinion of the learned court below, the judgment appealed from is affirmed, with costs. Judgment affirmed.