Barnard v. National Fire Insurance

Ellison, J. This is an action by an assignee on a policy of insurance. Plaintiff recovered below and defendant appeals. Defendant insured Daniel Ransom against loss by fire to the amount of one thousand dollars on his two-story brick, shingle-roof building, occupied as a general store, and on a one-story frame addition, used as a ware-room, for one year beginning at noon on the sixteenth of May, 1881, and ending on the sixteenth of May, 1882, at noon. On the morning of May 16, a few hours before the expiration of the policy the premises were destroyed. The petition charged that, at the date of the policy, Ransom was indebted to the Phoenix Mutual Life Insurance Company, in the sum of thirty-five hundred dollars, and to secure the same had executed his deed of trust on the property insured to this plaintiff as trustee, and to further secure the payment of the note, he had transferred and assigned the policy and all rights thereunder; that defendant, at Ransom’s request, had transferred the policy, by writing upon the face thereof that the loss, if any, should be paid to plaintiff, as trustee, as his interest might appear. Several defences set up by defendant were, on motion of plaintiff, stricken out by the court before entering upon the trial. The first and second portions set up that Ransom had sold the property -to one Sheldon and had executed to him a written contract, as also a deed, to the property; that Sheldon was put into possession and the contract and deed deposited in escrow to secure the payment of the purchase money, which was to be paid to the Phoenix [33] Insurance Company, which held a mortgage on the property insured in connection with other land; that plaintiff and the Phoenix Insurance Company knew this at the time of the issuance of the policy and at the time it was transferred to this plaintiff. The question is, do such facts avoid the policy containing the following conditions, viz: “If the assured is not the sole, entire, and unconditional owner of the property insured, and (if a building is insured) of the land on which the building stands, by sole, unconditional, and entire ownership and title in fee-simple ; or if the building stands on leased land, or the land of another, without being specified in the written portion of said policy; or if there shall be any sale, transfer, or change of title or of possession of the property insured, or of any individual interest therein, then and in every such case the policy shall be null and void.” The assured, by accepting this policy with this provision, and in which the property is stated to be “his,” has affirmed that he was the sole, entire, and unconditional owner in fee-simple. If this was not substantially true, the policy is void. American Ins. Co. v. Barnett, 73 Mo. 364. In the case of Clay Fire & Marine Insurance Company v. Manufacturing Company (31 Mich. 346), there was a provision substantially identical with the condition of this policy. The assured had sold the property by written contract, had received the purchase money, and had put the purchaser in possession. The court held the policy void. The question, says the court, was not whether the assured had an insurable interest in the property, but whether that interest was sole, unconditional, and entire. A fair test of the character of Ransom’s interest in this property is made by an inquiry as to Sheldon’s interest. If Sheldon had such an interest, that he could not be deprived of it, without his consent; if his interest [34] was such as would justify him in calling it his own, then, certainly, Ransom was not the sole, entire, and unconditional owner in fee-simple of the same property. That Sheldon had an insurable interest in the property cannot well be controverted. Hough v. Ins. Co., 29 Conn. 10; Martin v. Ins. Co., 44 N. J. Law, 273; Franklin Fire Ins. Co. v. Martin, 11 Vrooman, 568, and cas. cit.; Ætna Fire Ins. Co. v. Tyler, 16 Wend. 396; Lingenfelter v. Ins. Co., 19 Mo. App. 268. That he might properly have described the property as his under a policy of insurance, unless the policy required the true state of the title to be disclosed, is maintained by the same authorities. That he had an interest that could not have been taken from him, without his consent, is evident. It only requires a moment’s reflection on these questions to show that if Sheldon had the interest in the property, as just set forth, Ransom’s interest was not correctly represented. The third part of the answer stricken out by the court charged that, during the continuance of the life of this policy, two other policies were taken out, without defendant’s consent, by said Sheldon, a party interested in the property, as has been set forth, one for one thousand dollars, and the other for two thousand dollars ; that these policies were taken out with the assent of Ransom. The answer then charges that said acts avoided said policy under the following condition contained therein, viz.: “If the assured, or any other person or parties interested, shall have existing, during the continuance of this policy, any other contract or agreement for insurance (whether valid or not) against loss or damage by fire on the property hereby insured, or any part thereof, not consented to by this company and mentioned in or endorsed upon this policy, then this insurance shall be void and of no effect.” That it is a reasonable condition to provide against further insurance, without the consent of the insurer, is everywhere agreed. Over-insurance is a temptation to [35] crime, and insurance companies have a right to protect themselves by such provisions. “Underwriters rely more upon the interest than the morals of the insured for protection against carelessness of owners in the preservation of the insured property, and, therefore, always leave a sufficient amount uncovered by the policy to make it the interest of the insured to take the proper care of it. To enable them to do this, it is necessary, of course, that they should be informed ” of any existing or after increase of insurance, that they may assent to, or reject it. Hutchinson v. Ins. Co., 21 Mo. 97. While the additional insurance in this case was not taken out by Ransom, yet it is charged to have been done by his procurement and authority. It has been shown that Sheldon had an interest in the property, and his taking out additional insurance with the consent of Ransom, which covered, as is charged, the interest insured by the policy sued on, was a violation of a condition of the policy that the defendant has a right to urge as a defence to the action. There was an additional condition in the policy which prohibited the keeping of gunpowder or petroleum; and defendant moved to strike out of plaintiff’s reply the following, which was overruled by the court, and is assigned for error, viz.: “ That in the written portion of the policy it is written that the building was occupied as a general store; that the clause forbidding the use or keeping of petroleum and gunpowder is among the printed conditions of said policy; that at the time of the issuance of said policy the keeping of gunpowder in amounts of one hundred pounds, and of ten barrels of petroleum, was usual and customary in general stores, and that at the time of loss such amounts only of such articles were kept and stored in said building, as was then usual in general stores.” We are of the opinion the motion was properly denied. The policy, while providing against gunpowder and petroleum, was, nevertheless, issued on a “general [36] store” in which it was alleged that it was customary to keep a limited quantity of these articles in stock. Under such a policy it would be competent to show that the supply of these articles kept in this store was within the quantity usually kept in a general store. Pindas v. Ins. Co., 36 N. Y. 648; Archer v. Ins. Co., 43 Mo. 439. The judgment is reversed and the cause is remanded. All concur.