Tittemore v. Vermont Mutual Fire Insurance

The opinion of the court was delivered by Davis, J. The plaintiff, it is not doubted, had, at the time this policy of insurance was effected, a fee simple, unincumbered estate in the house and shed, for the destruction of which by fire, this action was brought, as also in the land, on which they stood; so that the contract assumed legal validity in the outset, in accordance with the intentions of the parties, and in pursuance of the provisions of the 10th section of the statute, incorporating the company. The policy covered a period of six years from its date, which was August 6, 1842; and in March, 1846, the buildings, together with a quantity of personal property comprised in the policy, were destroyed by fire; of which seasonable notice was given to the proper officers. The defendants declined to settle and adjust this loss, and now resist a recovery solely on the ground of the conveyance by the plaintiff to Yan D’Waters of the insured premises, in January 1843, and the reconveyance from the latter to the former of the same date. These, it is insisted, constituted an alienation of the property, within the true intent and meaning of the 12th section of the statute, which provides, that, when any house, or other building, shall be alienated by sale, or otherwise, the policy shall thereupon be void, and be surrendered to the directors to be cancelled. The plaintiff does not claim exemption from the just consequences of the transaction, whatever they are, by reason of the proviso to the section referred to, which contemplates a transfer to the grantee of all legal rights under the contract, upon compliance with certain conditions and formalities, — none of which were observed in the present instance. The main effort, on the part of the defendants’ counsel, has been to show, that the reconveyance from Van D’Waters, though of the same date as the deed to him, had not the effect of revesting the fee — 550 — of the laud in Tittemore, but was a mortgage conveyance, in usual form, intended to secure the payment of the purchase money; and that> though not paid by the time limited, yet an equitable estate remained in the mortgagor, until a decree of foreclosure should put an end to it. Assuming this to be correct, they infer, that an alienation by sale took place, and that, ipso facto, by the very terms of the statute, which is to be taken and deemed a part of the contract, being expressly referred to, the policy became void ; and that, even if the strict principles of the ancient law were to be applied to this case, without the modifications which. courts of equity have introduced into the law of mortgages, and the plaintiff, by the lapse-of three years without the payment of the $2000, were to be considered as restored to his full and absolute dominion over the premises, before the destruction thereof, the liability of the corporation would not thereby be revived. I am not disposed to controvert this last- proposition. Upon a clear and distinct alienation being made, though no actual surrender of the policy to be cancelled may have followed,. I am inclined to think, the contract ceases to have any binding force, so that a repurchase of the premises before loss would have no effect in restoring vitality to it. The question then recurs, was here an alienation by sale ? It was undoubtedly such, if an alienation at all. There is nothing to bring the case within the operation of any other mode of alienation. There can be no question, that the deed from Tittemore to Van D’Waters, taken by itself, imports a sale. It is a regular warrantee deed of lot No. 109, in Highgate, on which it is admitted, the buildings in question were situated, conveying the title in fee. But simultaneously with this conveyance is a reconveyance in the same form, with a proviso, or condition, annexed thereto, that if the grant-pr should, within three years from that time, pay or cause to be paid to the grantee $2000, and allow the latter to hold the peaceable possession in the mean time, then the deed was to be void. So far as the deeds are concerned, the transaction is in the usual form of a sale of real estate, with an express lien upon the property to secure the payment of the purchase money. But in one important particular it departs from the usual form, that is, in omitting fhe execution of any note, or bond, or other written evidence of the — 551 — indebtedness created by the sale. There was not, in the present case, it seems, even a verbal agreement to pay the two thousand dollars. There is nothing, from which we can infer an indebtedness on the part of Van D’Waters, which would impose a personal duty, or subject him to a personal remedy for the payment, unless it be implied from the word pay used in the clause of defeasance. That phrase, however, is equally appropriate to describe the completion of a contract of purchase left wholly optional with the purchaser, as where it is otherwise. A doubt has been suggested, whether, if this could be comprehended in the class of ordinary sales, with mortgage security for payment, it necessarily follows, that, until payment is made, or,, at any rate, until payment falls due, it should be regarded as an alienation, within the meaning of the act of incorporation. Were we to apply merely the ancient legal principles of mortgages to the case, there would be certainly plausibility in holding, that the fee of the land remained all the time in the plaintiff, — that at most an inchoate, contingent interest was created, which, on payment of the stipulated price by the time limited, would, by virtue of the' original conveyance, ripen into a perfect title. But mortgages, when any independr ent indebtedness exists, — for I have no doubt a mortgage may exist, without any such indebtedness, — have long been here, as everywhere, regarded as a pledge of real estate as security for the debt. The legal title, for most purposes, even after condition broken, is treated as still in the mortgagor, until a final foreclosure. Nor would the circumstance, that, in this case, a clause was inserted, allowing to the mortgagee possession of the premises, to which, without such a clause, he would not be entitled until default of payment, affect the'question now under consideration, as the right to immediate possession, unless prevented by statute or express agreement, belongs to- the mortgagee. Looking at the matter in' the point of light in' which it is viewed by the courts,- by the community, and it is to be presumed by the legislature, I should have no difficulty in saying, that, if this transaction be not plainly distinguishable from the ordinary one of a sale upon a credit of three years, with the usual lien upon the premises as securityfor ultimate payment, it ought to be regarded as an alienation, and consequently a forfeiture of all right of action under the policy of insurance. — 552 — But we are satisfied, that this cannot be fairly ranged under the head of mortgages. Taken in connection with the depositions of Van D’Waters, and Peake, it is evident, that no obligation existed, on the part of the former, to pay the $2000, which could be enforced by suit. It was wholly optional with him, whether to pay it, and thus perfect his title to the property, or omit to do so, — in which case all things would remain as before any contract was made. The absence of any express stipulation to pay, together with the renunciation of all rights to the possession, until the title should be acquired by actual payment, are, in our opinion, decisive indications, that the parties intended a conditional sale. Both instruments; being executed simultaneously, may well be regarded as constituting one entire contract, to be construed precisely as it would be, were a similar condition inserted in the deed from Tittemore to Van D’Waters. In the one case the payment of the money would constitute a condition precedent, without which no title would pass; in the other, the reconveyance is perfect in form, subject only to be rendered inoperative by a condition subsequent. It is a mere matter of formal arrangement. In substance there is no difference. The case of Porter v. Nelson, 4 N. H. 130, is much in point. In that case a conveyance was made, for the purpose of effecting a sale of the farm by the efforts of the grantee, and, to secure the owner, the grantee reconveyed immediately, with a condition that the re-conveyance should be of no effect-, in case the original grantee paid the sum of $2000; it being understood by the parties, that any excess above that sum, for which the farm might be sold, should be retained by the grantee for his trouble. This, in form, was a mortgage, and exactly like the form adopted here; but it was held not to be a mortgage in fact. The case was a stronger one than the present, inasmuch as both plaintiff and defendant, — (the latter was not the grantee but an assignee of the grantor,) — had treated the reconveyance as a mortgage. The case of Page v. Foster, 7 N. H. 392, is similar in principle; where, whether a mortgage, or not, is made to depend on the inquiry, whether a debt existed, for which the party had a remedy independent of the conveyance. The case of Stetson v. Mass. M. F. Ins. Co., 4 Mass. 330, fully recognizes the propriety of considering successive deeds, and other — 553 — legal instruments, as parts of one entire contract, for the purpose of carrying into effect the true intention of the parties. The defendants there set up in defence, that the plaintiff had conveyed a moiety of the insured premises in fee, reserving a term of seven years, to one Harris, — averring, that the trustees of the company on that account had declared the policy void. By the replication it appears, that Harris immediately reconveyed to the plaintiff in mortgage, to secure an acknowledged debt, and thereupon the plaintiff demised to Harris and another person the premises for seven years, reserving rent. The whole was regarded as a conditional sale after the expiration of seven years. The court, it is true, thought that neither under the rules of the company, which differed essentially from the clause under which the question arises here, nor by virtue of the common law principle, which denies to the insured a right to recover, if the property insured have been alienated before loss, was the plaintiff’s right to recover affected. I infer from the reasons and grounds of the decision, as stated by Judge Sewall, that, had there been there, as there subsequently was, (Jackson v. Same, 23 Pick. 418,) a rule, or by-law, almost literally like the clause now in question, it would have interposed no obstacle to a recovery for the whole loss. The case of Bigelow v. Kinney, 3 Vt. 353, affords an example in this court of construing a deed of conveyance and a mortgage back as constituting parts of one contract, when contemporaneous, so that one party, an infant, could not be allowed to affirm one instrument and disaffirm the other. Later authorities go somewhat farther, and dispense with absolute identity of time, in the assertion of this principle. Lovering v. Fogg, 18 Pick. 540. As we construe this contract, then, as no part of the $2000 was paid, or tendered, within the time limited, whatever prospective conditional interest Van D’Waters ever had in the premises had ceased, before the destruction of the property, and the fee of the land never having been out of the plaintiff, — for I do not regard a conveyance and reconveyance, when simultaneous, as divesting him of title at all, — there was no alienation, which, by the terms of the statute, could vitiate the policy. Upon the views herein indicated, with respect to the true character of this transaction, it will hardly be pretended, that a mere con — 554 — tingent interest, a naked right to purchase and appropriate the property on payment of a certain sum by a given time, unaccompanied by possession, or any right to the possession, in the meantime, presents a case within this clause of the statute. It has been determined, both in New York and Massachusetts, that a conveyance in mortgage, under clauses of similar import, does not avoid the policy. Jackson v. Mass. M. F. Ins. Co., cited above. Conover v. Mut. Ins. Co. of City and County of Albany, 3 Denio 254. There is as little ground to contend, that, by the principles of the common law, which prohibit a recovery upon a wagering policy, where the insured never had any interest, or where the insured, previous to the loss, has assigned and transferred his interest to another, the plaintiff is precluded from recovering. Even as a mortgagee, he would have a substantial insurable interest. Swift et al. v. Vt. M. F. Ins. Co., 18 Vt. 305. The judgment of the county court is affirmed.