Monongahela Insurance v. Batson

Wood, J., (after stating the facts). Under the pleadings, the uncontradicted evidence and the instructions of the court, the only question for our determination on this appeal is whether or not the instrument set forth in the statement is a chattel mortgage, for if it is a chattel mortgage, under the terms of the policy, it renders the insurance contracts void, and the appellee was not entitled to recover, and the instructions given by the court were erroneous, and .the court erred in not giving the prayer for instructions on behalf of appellants. But on the other hand, if it is not a chattel mortgage, the instructions of the court were more favorable to appellants than they were entitled to, and they could not have been prejudiced by the giving of same, and the verdicts and judgments were correct and should he affirmed. The terms “chattel mortgage,” used by the appellants in their policies of insurance, must be interpreted according to their strict legal meaning. The appellants have not seen proper to provide, in their insurance contracts, that the policies should be rendered void by equitable liens then existing or that might be thereafter created during the period of the insurance contract by the assured in favor of third parties. The appellants have plainly designated a “chattel mortgage” as the ground of forfeiture of rights under the policy, and the court will not create a forfeiture by construing the term “chattel mortgage” to mean some other liens created in some other way than by a chattel mortgage. The rule, where the terms of the contract are unambiguous, is to construe them according to their plain meaning, but where there is any ambiguity the doubts must be resolved in favor of the insured and against the insurer in order to prevent a forfeiture of the contract of insurance. This court, in German American Insurance Company v. Humphrey, 62 Ark. 350, said: ‘ ‘ The courts, by interpretation, can not engraft upon insurance contracts any more than upon any other a meaning totally foreign to that which the plain terms employed by the parties themselves convey.” It is undoubtedly true that where the- contract on account .of any ambiguity of the language used is reasonably susceptible of different constructions, that construction should be adopted most favorable to the insured. German Am. Ins. Co. v. Humphrey, supra; Industrial Mutual Indemnity Co. v. Hawkins, 94 Ark. 417; Brotherhood of L. F. & E. v. Aday, 97 Ark. 425; Atlas Fire Ins. Co. v. Malone, 99 Ark. 428; American Bonding Co. v. Morrow, 80 Ark. 49; Surety Co. v. Fulton, 89 Ark. 471; Home Insurance Co. v. Ice & Electric Co., 86 Ark. 538; Hope Spoke Co. v. Md. Casualty Co., 102 Ark. 1. Applying these familiar rules to the instrument contained in the statement, alleged by the appellants to be a chattel mortgage, we unhesitatingly say that whatever equitable or other lien it may have created in favor of Ross against the property insured, it was not a chattel mortgage, and it is not necessary for us to determine here what the real character of the instrument is. In the recent case of Clinton v. Ross, 108 Ark. 442, 159 S. W. 1103, when the same instrument was under review, we said: “In conditional sales of personal property where the title is retained by the vendor until the purchase price is paid, the vendee acquires an interest that he can sell or mortgage, etc., * * * the contract entered into between the parties here is an agreement upon the part of the appellant (Clinton) to pay the debt owed by Bat-son to appellee (Ross), the amount of which is specified therein and a recognition of his (Ross’s) right to the lumber until the payment thereof.” It suffices to say that the instrument under consideration does not come within the definition of a “chattel mortgage ’ ’ as given by standard law writers on that subject. Cobbey says: “Perhaps the simplest definition of the term ‘chattel mortgage’ is a bill of sale with a defeasance clause incorporated in it.” 1 Cobbey, Chat. Mort., § 2; Jones, Chat. Mort., § 1; Pingrey on Law of Chat. Mort., § 1; Bouvier, Chat. Mort. There is no defeasance clause in the instrument under consideration, and such clause is essential to a chattel mortgage. The judgments were correct, and they are affirmed.