Smith v. Retail Merchants' Fire Ins.

MeCOY, P. J. The -complaint of plaintiff, in so far as is material to a consideration of the question presented on this appeal are concerned, in substance, states that on the 25th day of September, 1909, defendant issued to one Satter a certain policy of fire insurance for $1,000 upon a certain stock of merchandise then owned by Satter at Carthage, S. D., and thereby insured said merchandise ag'ainst loss by fire for the period of one-year; that on May 31, 1910, said Satter was adjudged an involuntary bankrupt, and plaintiff appointed and qualified as trustee in said bankruptcy proceedings; that on the 6th day of June, 1910, said stock of merchandise was wholly destroyed by fire-. Thereafter plaintiff, a>s said trustee in bankruptcy, commenced this action to recover upon said policy for the benefit of the creditors of said Satter. [1] defendant demurred to said complaint upon the ground that the same failed to state facts sufficient to constitute a cause of action against defendant. The said demurrer was sustained, and plaintiff appealed, .and now urges said ruling of the court as error. We are of the opinion that the demurrer was properly sustained. Smith v. Security Mutual Fire Ins. Co., 137 N. W. 46, decided by this court involving a similar complaint by the same plaintiff upon another policy issued- by another company upon the same -stock of merchandise. [2] The intervener, by his complaint in intervention, in substance, states that on the 25th day -of September, 1909, defendant issued to said Satter said policy of fire insurance for $1,000 on said stock of merchandise then -owned by Satter at Carthage, and thereby insured the same against loss by fire for the period of one year; that on January 27, 1910, Satter, being indebted to the State Bank of Carthage, assigned said stock of merchandise to the intervener, L,. J- Walker, cashier of said- bank, as security for 339 the said indebtedness, and also assigned to said Walker said insurance policy by words as follows: “The interest of M. A. Satter as owner -of property covered by this policy is hereby assigned to L. J. Walker, subject to the consent of the Retail Merchants’ Fire Insurance Company of South Dakota.” The consent of defendant indorsed upon said policy is also in words as follows: “The Retail Merchants’ Fire Insurance Company of South Dakota hereby consents that the interest of M. A. Satter as owner of the property covered by this policy be assigned to D. J. Walker.” On the 6th day of June, 1910, the said stock of merchandise was wholly destroyed by fire. Intervener, as said assignee of said policy, sought by said complaint in intervention to recover of defendant the sum of $1,000 by reason of the said destruction of said merchandise by fire. Defendant interposed a demurrer to said complaint in intervention on the ground that the same failed to state facts sufficient to constitute a cause of action against defendant. The demurrer was sustained, and intervener also appeals to this court, urging the sustaining of said demurrer as error. We are of the opinion that this demurer was also properly sustained. The policy sued upon is the South Dakota standard. form prescribed by section 2, c. 164, Laws 19Q9, which, among others, contains'- two clauses we deem material to the issues involved in this case, either of which, by the terms of said policy, rendered the same void: (1) “If the interest of the insured' be other than unconditional ownership”; (2) “if any change, other than by the death of the insured, take jplace in the interest, title or possession of the subject of insurance, whether by legal process or judgment or by the voluntary act of the insured or otherwise.” Provisions of this character are generally construed to be valid and proper subjects of fire insurance contracts. The assignment of a fire insurance policy with the consent of the insurer has the effect of creating a new contract between the assignee and the insurer- subject to all the original terms of the policy. 19 Cyc. 635. Ostrander, Fire Ins. p. 23. The assignment to Walker, not as trustee for the bank, but to Waker in his own individual capacity, would - seem to contemplate him as the owner of the property insured in his own right, when, as shown by the complaint, he was 340 not owner, but was in truth and in fact a trustee for the bank, who was not the owner, but only had a lien thereon as security for a debt. There is nothing in the complaint of intervener that would indicate that defendant had any knowledge that Walker was such a trustee, or any knowledge that Walker had any other or different title or interest than that of absolute ownership. By the very terms of the assignment itself Walker was'assigned “the interest of M. A. Satter as owner of -the property covered by this policy,” which was the interest of unconditional ownership. What interest Walker in fact had was very material to defendant, and of which it had the right to be truly informed. One who insures property as owner in case of loss cannot recover under such policy for property held by him as trustee, in the absence of some special provision therefor in the policy. 19 Cyc. 669-696; Corkery v. Security F. Ins. Co., 99 Iowa, 382, 68 N. W. 792; Fuller v. Phœnix Ins. Co., 61 Iowa, 350, 16 N. W. 273; McCormick v. Springfield F. & M. Ins. Co., 66 Cal. 361, 5 Pac. 617; Milling Co. v. Insurance Co., 25 Mo. App. 259; Bradley v. Insurance Co., 90 Mo. App. 369. The assignment of said stock of merchandise to the Bank of Carthage, without the consent of defendant, had the effect of changing the interest and title of the subject of insurance so as to render the policy void. When Satter assigned the policy to Walker by an unqualified assignment, and when defendant consented to an unqualified assignment only, Satter ceased to have any interest in said policy so far as defendant was concerned; and, the fact of having made an unqualified assignment of the interest of Satter as absolute owner, when Walker was as a matter of fact not the owner of the insured property at all, rendered the contract of insurance as between Walker and defendant void. Satter parted with his interest in the policy by the assignment to Walker, and Walker took his place in the contract. At the time of the appointment of plaintiff as trustee in bankruptcy, Satter had no interest in the insurance policy to go to plaintiff as trustee, unless the provisions of the federal bankruptcy act rendered the assignment to Walker void because made within four months of the adjudication of 'Satter as a bankrupt. It is not-every transfer or incumbrance 341 made by a person within four months of the time when such person becomes an adjudicated bankrupt that is 'void. Section 67, Bankr. Act. (Act July i, 1898, c. 541, 30 Stat. 564 [U. S. Comp. St. 1901, p. 3449]). There are no facts alleged in either the complaint of plaintiff or intervener that would render the said assignment to Walker void under the bankruptcy laws. The orders and judgments appealed from are affirmed.