Union Insurance v. Barwick

Maxwell, Ch. J. On the 12th day of January, 1890, the defendant insured “his wholesale stock of cigars, cigarettes, snuffs, pipes, and all kinds of tobacco, including packages, cases, and boxes containing same, and other merchandise usually kept by wholesale tobacconists, all of which contained in the second story and basement, brick, composition roof, building, situate on lot A of subdivision of lots 11 and 12, block -33, Lincoln, Nebraska,” with each of — 230 — the plaintiffs in error for the sum of $2,000, said policies to continue in force for one year. On the 17th of February, 1890, the stock of goods, then alleged to be of the value of $6,500, was badly injured by fire, the loss claimed being $5,000. After the loss the adjusters of both of the insurance companies named appeared and examined the goods, but seem to have failed to make an adjustment of the loss, hence the defendant in error brought an action in the district court of Lancaster county upon both policies. The cases were tried together, and the jury returned a verdict in favor of the defendant in error and against each company for the sum of............................. $1,750 00 With interest at seven per cent.................... 140 87 $1,890 87 And a motion for a new trial having been overruled, judgment was entered on the verdict. Four errors are relied upon by the plaintiffs in error to secure a reversal of the case. These will be noticed in their order. “1. That the plaintiff was not the real party in interest, as he had assigned his interest in the goods.” The testimony shows that C. C. Burr, of Lincoln, had befriended the defendant in error and among other things had indorsed his notes for considerable sums at the First National Bank of Lincoln. Burr seems to have asked for no security, but the defendant in error, to protect him from possible loss, assigned the policies with the assent of the companies to him, “ as his interest should appear,” and also executed a chattel mortgage on a part or all of his goods to Burr to secure the same contingent liability. There was no change of possession, and the defendant in error paid the notes in question and released Burr from liability thereon. He (Burr) was a witness on the stand and disclaims any right, title, or interest in the goods in question. It also appears that the defendant in error is — 231 — the only party who has any right or title to the property. The defendant in error, therefore, is the real party in interest, and the first error assigned is not well taken. “2. That two conditions precedent were not complied with, viz., proof of loss and submission to arbitration.” The propositions are considered together in both briefs, but we will consider them separately. 1. The proof shows that both companies were notified of the loss immediately after it occurred; that an adjuster appeared and with the defendant in error took an account of the goods and personally saw and inspected the injured goods, and seems to have obtained a pretty accurate view of the condition of the stock before the fire. The principal object of proof of loss is to obtain a correct statement from the owner of the property injured or destroyed, of the amount of the loss and the date of its occurrence. Other things are required in the proof, but they are subsidiary to the main statements. If objections are made to the form of the proof they should be communicated to the insured and he should be required to make out a full statement; otherwise the objections will be unavailing. A company may have notice from their own agent at a given point that a certain loss has occurred, and if it acts upon that information and sends an adjuster to estimate the amount of the same, etc., it is no doubt a waiver of proof. We find the following letter in the record: “ Omaha, Neb., 31st March, ’90. “ J. S. Harwich, Esq., Lincoln, Neb. — Dear Sir : I am in receipt of a paper containing a list of goods said to have been damaged by fire on February 17, 1890, which are alleged to have been insured under policy 1313 of the German-American Insurance Company, said paper being signed and sworn to by you. “If we are correctly informed you parted completely with the title of all goods which may have been covered by any policy of ours on February 4, 1890, and have not — 232 — since become the owner of any such goods, consequently we fail to recognize any liability towards you. “Respectfully, Francis Dana, “Special Agent.” In the case at bar the testimony shows that proof of loss was made, to which no objections were taken, and it is now too late. 2. The Union Insurance Company’s policy contains this provision: “The amount of sound value and of loss or damage shall be determined by agreement between this company and the assured, but if differences shall arise as to the amount of any loss or damage, or as to any question, matter, or thing, except the validity of the contract or the liability of this company, concerning or arising out of this insurance, every such difference shall, at the written request of either party, be submitted to competent and impartial persons, one to be chosen by each party, and the two so chosen shall select an umpire to act with them in case of their disagreement; and the award, in writing, of any two of them shall be binding and conclusive as to the amount of such loss or damage, or as to any question, matter, or thing so submitted.” There is no claim that either party desired to arbitrate the matters in difference between them, and hence the provision has no force. In the German Insurance policy there is no provision for arbitration. That provision, however, is inserted in a policy for the purpose of having the amount of the loss adjusted in an amicable manner, where, in fact, the insurance company admits its liability, but is uncertain as to the amount of the loss. If the company denies its liability for the loss there would be nothing from its standpoint to arbitrate. Hence, the rule does not apply where the company denies its liability. (German-Am. Ins. Co. v. Etherton, 25 Neb., 505.) In the case cited it was held that a provision of the kind named in a policy was void, the effect being to oust the courts of their legitimate jurisdiction. The second objection is not well taken. — 233 — 3. The third error assigned is that the proofs of loss were not sufficient, and were for the court and not the jury to pass upon. We do not care to comment further upon the proofs of loss. They were sufficient to notify the companies and they acted upon such notice, but refused to pay the loss. If the proofs were defective the defects were waived. 4. The fourth error is in refusing to hold that the chattel mortgage referred to did not avoid the policy. It is now well settled that a mortgage of chattels, where there is no change of possession, will not avoid a policy of insurance. In Byers v. Farmers Ins. Co., 35 O. St., 606, the fifth point in the syllabus is as.follows: “ It was a condition of the policy, that ‘ if the property be sold or transferred, or any change take place in the title, either by legal process or otherwise, * * * without the consent of the company, the policy shall be void.’ This condition was not broken by the execution of a mortgage on the property without such consent.” (See, also, Commercial Ins. Co. v. Spankneble, 52 Ill., 53; Aurora Fire Ins. Co. v. Eddy, 55 Id., 213; May, Ins., sec. 269, and cases in note; Quarrier v. Peabody Ins. Co., 27 Am. Rep., 582; Bryan v. Traders Ins. Co., 145 Mass., 389.) In Hammel v. Queen’s Ins. Co., 54 Wis., 72, 11 N. W. Rep., 351, it is said: “In Strong v. Ins. Co., 10 Pick., 40, it was held that a condition in the policy which provided, ‘that if the property should be sold or conveyed in whole or in part the policy should be void,' was not broken by a sale upon execution and that the provision in the policy referred only to voluntary assignments. (See, also, Smith v. Putnam, 3 Pick., 221; Doe v. Carter, 8 Term R., 57; Stetson v. Ins. Co., 4 Mass., 330; Franklin Ins. Co. v. Findley, 6 Whart., 483; Wood, Ins., sec. 326; Baley v. Ins. Co., 80 N. Y., 21; Barlow v. Ins. Co., 63 Id., 399; Commercial Ins. Co. v. Spankneble, 52 Ill., 53; Starkweather v. Ins. Co., 2 Abb. — 234 — [U. S. C. C.], 67.) These cases and numerous others that might be cited seem to settle the question that the condition prohibiting a sale, transfer, or conveyance of the insured property is to be construed as limited to a voluntary transfer, and not to a sale or transfer made by adverse legal proceedings. In all these and similar cases it is probable that if an adverse legal sale, transfer, or conveyance of the insured property had been made previous to the loss, so as to divest the insured of all right, title, or interest therein, no recovery could be had for want of an insurable interest in the policyholder at the time of the loss.” It is also said (11 N. W. Rep., 355): “ In the following cases it is held that executory contracts for the sale of the insured property do not avoid the policy under similar conditions: Ins. Co. v. Lawrence, 4 Metc. [Ky.], 9; Martin v. Ins. Co., 11 Barb. [N. Y.], 624; Clinton v. Ins. Co., 45 N. Y., 454; Phillips v. Ins. Co., 10 Cush., 350; Hill 4). Ins. Co., 59 Pa. St., 474; Washington v. Ins. Co., 32 Md., 421; Jackson v. Ins. Co., 16 B. Mon. [Ky.], 224; Power v. Ins. Co., 19 La., 28; Hutchinson v. Wright, 25 Beav., 444. The last case was a marine insurance, and before loss the assured transferred his interest to a third person by an absolute conveyance, and his vendee was entered as owner on the register; but upon the trial it was proved that the transfer was in fact a mortgage. The defendant insisted the policy was avoided under two provisions of the association. The first was that if the ship was sold, the risk should cease from the date of the sale, unless notice was given to the secretary. No notice of sale or mortgage either was given to the secrelary. The other provision was, ‘that no vessel which is mortgaged shall be insured, unless the mortgagee give a written guarantee,' etc. No such guarantee had been given. It was held the plaintiff could recover, notwithstanding the form of his conveyance, upon proof that it was intended as a mortgage in fact; and, second, that the mortgage given after the in — 235 — su ranee was not a violation of the second provision. It seems to us that the words used in the condition in this policy clearly look to such a sale, transfer, or alienation as passes the title and carries with it the right of possession. Such is the definition of the words ‘ sold/ ‘ transferred/ * alienated ’; and, if they are made to include a sale upon execution, it is by giving them a meaning which they do not ordinarily receive. The added words, ‘ change in the title or possession/ do not extend the meaning. It is the title to the estáte which is to be changed, not a mere right which may or may not ripen into a change of title.” These cases and many others which might be cited show that a mere security does not transfer the title and defeat a recovery for loss. The fourth point, therefore, is not well taken. 5. The fifth error assigned is in giving the fourth paragraph of the instruction, which is as follows: “ You are instructed that the insurance policies issued by defendants to plaintiff constitute contracts in writing between the insurer and insured, equally binding upon each party to the agreement; and if it appears that either party to the agreement has failed to comply with the terms thereof in any material part, then the party so failing cannot insist upon the performance of the agreement by the other party, unless you should further find that compliance with the agreement on the part of the party failing had been waived by the other party.” It must be confessed that the particular object of this instruction is not apparent. It seems to be an indirect mode of saying to the jury that if they found that the plaintiff below had not complied with the conditions of the policy in any respect, then he could not recover. It is evidently directed at the plaintiff below, and was prejudicial to him, and the attorney for the companies does not contend that it was prejudicial to them. The other instructions are not objected to, and are presumed to be correct. Upon the whole case it is apparent that the plaintiff below is entitled to recover, and no real — 236 — defense has been shown to the action. A contract of fire insurance is one of indemnity in case of loss or damage by fire. Like any other contract, it should be sustained if possible. Where there has been an actual loss without fault of the accused it should be adjusted and paid with reasonable promptness. That is the contract; and there is no justice in contending in court for years against a just claim in order to secure a compromise or diminution in the amount. There, is. nothing in this record that tends to impeach the good faith of the defendant in error, and so far as appears his claim is just. The judgment is Affirmed. The other judges concur.