Farmers' State Bank v. Tri-State Mutual Grain Dealers Fire Insurance

P'OLLEY, J. This action was brought to recover on a fire insurance polity. The subject of the insurance was a grain elevator situated on a railway right of way at Parker. At the time of the issuance of the policy, and at the time of the fire that caused the loss, the elevator was in possession of, and under the control of, one Peter Meier, who was operating said elevator as the sole owner thereof. The policy was issued on the 2d d’ay of July, 1915, and the elevator was destroyed by fire on the 25th day of January, 1916. The dlefendant refused to pay the loss, and Meier commenced this action, but died soon thereafter, and the plaintiff Clisby, as administrator of Meier’s estate, was substituted in the place of Meier as plaintiff. At the time of the fire, the Farmers’ State Bank had a chattel mortgage on the elevator building and joined in the action as plaintiff. The property was-insured in an amount not to exceed $8,ooo-; $4,000 of which was on the building, additions, etc., and the other $4,000 on grain and other contents thereof, according to the amount on hand at the time of loss. The trial resulted in a verdict and judgment for $7,377.62 for plaintiffs, and defendant appeals. -The assignments of error are numerous, but they need not be considered separately. [1] It is contended by appellant that the said Meier was not the owner of the insured property at the time the policy was. issued, nor at the time of the loss; ¡but that the same was owned by the Farmers’ Elevator Company, a corporation, and that for that reason plaintiffs were not entitled to recover. It was not disputed that the elevator had belonged to the Farmers’ Elevator Company, and that prior to the issuance of the policy involved in this action appellant had insured said elevator as the property of the said elevator company; but, when the present policy was. issued, Meier directed appellant to issue it to him individually. At that time ■ Meier was in possession of the property, claiming to be the absolute owner thereof, and was operating it as his individual property. He had caused an addition thereto to be402 b.uilt. This he paid for from his individual funds. The ground on which the elevator stood' was leased' by the railway company to Meier individually. It was not claimed, nor attempted to be shown, that any person or company, other than Meier, had .any beneficial interest in the property, or that any other person suffered loss by the destruction thereof. The claim made :by appellant was that no formal transfer or conveyance of the property from the Farmers’ Elevator Company to Meier was shown. This was not necessary under the circumstances in this case. Where a person is in the. sole possession, control, and enj oyment of personal property, claiming to be the absolute owner thereof, a prima facie case of ownership is made out. It is not claimed that there1 was any concealment or attempted fraud practiced by Meier in procuring the policy. Appellant made. no inquiries touching the condition of the title to the insured property, nor is it claimed .that the condition of the title in any manner involved or increased the hazard, either moral or actual. [2] It is the recognized rule of law that, where an insurance company insures property without inquiring into the precise state of title to such property before issuing the policy, it waives the ownership clause in the policy. This, of course, does not mean that a person who has no right or title to property may insure it as his own, and then collect the insurance in case of its destruction by fire. Such transaction would be .void as against ptiblic policy, but a perfect legal title is not essential. Where the insured has a beneficial or equitable interest in the property, he may enforce an insurance contract, notwithstanding the ownership clause therein. In the language of the Supreme Court of 'Connecticut: “* * * property is his who, in case of its destruction, must sustain the loss of it.” Hough v. Insurance Co., 29 Conn. 10, 76 Am. Dec. 581. And -quoting from Manchester Fire Ins. Co. v. Abrams, 89 Fed. 932, 32 C. C. A. 426: . “It 'has been uniformly held, notwithstanding the stipulation .that the "polity shall b.e void if" the interest of-the insured be less -than. that of • the fee-simple 'title to" the land whereon the insured property is situated, that the stipulation is complied*-with if it [403] appear that the insured is substantially or equitably tfhe owner of the property, and entitled to the benefits of the same.” And in German Ins. & Sav. Inst. v. Kline, 44 Neb. 395, 62 N. W. 857, it is said: “When an insurance company issues its policy, and accepts and! retains the premium, without requiring an application by the insured, and without making any inquiry as to the condition of the property or the state of the title, and the insured has in fact an insurable interest, the company will be conclusively presumed to have insured such interest, and to have waived all provisions in the policy providing for its forfeiture by reason of any facts or circumstánces affecting the condition or title of the property in regard to which no such statement was required or' inquiry made.” See, also, Insurance Co. v. Bachler, 44 Neb. 549, 62 N. W. 911; Castner v. Insurance Co., 46 Mich. 15, 8 N. W. 534; Kludt v. Insurance Co., 152 Wis. 637, 140 N. W. 321, 45 L. R. A. (N. S.) 1131, Ann. Cas. 1914C, 609. [3] Respondents were permitted to show by parol evidence that, although the elevator had belonged to the elevator company, the said Meier had acquired all of the capital stock of said company and thereby became the owner of the property that had belonged to the company. This, was objected to as not the best evidence. The objection should have been sustained. Stock transfers are required to be recorded in a transfer book and evidenced by the issuance of stock certificates, and, where the absence of such evidence is not accounted for, parol evidence is incompetent. But' the error was not prejudicial, because there was sufficient evidence of ownership for the purposes of this case without resorting to said stock transactions. [4] It is contended by appellant that Meier violated that clause in the policy that declares that the policy shall became void if gasoline “be kept, used, or allowed” on the insured premises. The evidence in support of this contention tends to show the following factsOn the day the fire occurred, Meier undertook to operate the machinery in the elevator. Said' machinery had not been used for several months prior thereto, and it was found that portions- o'f it under the floor of the- elevator had become so badly coated with fust that it could not be operated1. Bor the purpose of removing this rust, Meier applied a mixture of kerosene and [404] gasoline to tlhe rusted parts, then started the machinery, and proceeded to load a car with grain. Shortly thereafter, fire was discovered under the elevator and) up through certain openings in the floor. Whether the presence of the above mixture of gasoline and kerosene was the cause of the fire or not is (by no means clear. It is claimed by appellant, and may be assumed, that the said mixture had been kept on. the insured premises in a five-gallon can for a considerable length of time before the fire. But it -was not shown nor claimed that to use/he said mixture for the removal of the rust was unusual or unnecessary, and it did not work a forfeiture of the policy. “What is intended to be prohibited is the habitual use of such articles, not their exceptional use upon some emergency.” Mears v. Insurance Co., 92 Pa. 15, 37 Am. Rep. 647; section 2202, Joyce, Ins. To keep or use the forbidden article on insured premises, within the meaning of the above clause, “implies a use of the premises as a place of deposit for the prohibited articles for a considerable period of time” (Bouchard v. Insurance Co., 113 Me. 17, 92 Atl. 899, L. R. A. 1915D, 187, where the cases are collected and reviewed), and further discussion of the subject would serve no useful purpose. [5] It is contended by appellant that the presence and use of the gasoline and kerosene, as above shown, was a violation of a clause.in the policy which provides that, “* * * if the hazard be increased by any means within the control or knowledge1 of the insured,” the policy shall be void. The use that was made of said gasoline and kerosene did not increase the hazard, within the meaning of the above provision. In considering this clause in a policy of insurance, this court, in Angier, etc., v. Insurance Co., 10 S. D. 82, 71 N. W. 761, 66 Am. St. Rep. 685, said: “The term 'increase of hazard’ denotes an alteration or •change in the situation or condition of the property insured, which tends to increase the risk. These words imply something o'f duration, and a casual change of a temporary character would hot ordinarily render a policy void, under the stipulations therein contained”- — citing First Congregational Church v. Insurance Co., 158 Mass. 475, 33 N. E. 572. It is contended that respondent’s counsel was guilty of mis- ■ Conduct during the course of the trial, which conduct prevented 'appellant from 'having a fair trial. After a careful examination [405] ■of the record upon this point we are not convinced that appellant was prejudiced by the conduct of which complaint is made. The other assignments have 'been examined, but are not deemed! of sufficient importance to be specially considered in this ■opinion. The judgment and order appealed from are affirmed.