Georgia Home Insurance v. Bartlett

Harrison, J.: This is an action of assumpsit, brought in the Circuit Court of Page county, by the Yalley Land and Improvement Company, for the use of J. Kemp Bartlett, Jr., trustee, against the Georgia Home Insurance Company, to obtain judgment upon a policy of insurance executed by the defendant on the 23d day of August, 1891, upon the property of the Yalley Land and Improvement. Company, situated at Luray, in the county of Page. On the 21st day of April, 1894, the following verdict was rendered, “We, the jury, find for the plaintiff, and assess the damages at $4,308.84, with interest from January 28, 1892, till paid.” The question presented for our consideration was raised, upon the trial, by the Circuit Court refusing to give the following instruction, asked for by the defendant. “The court further instructs the jury that if there is any change in the possession of the property insured, between the date of the policy and the date of the fire, without the consent or knowledge of the company, the jury must find for the defendant, unless the said company has waived the said provision of the said policy. ’ ’ There were other instructions asked for by the plaintiff and refused by the court, but, in the view taken of this case, it is only necessary to consider the one quoted. — 311 — The policy of insurance sued upon contains the following, usual provision: “Or if amy change takes place in the title or possession of the property, whether hy sale or judicial decree, without notice to the company a/nd its consent endorsed thereon, then the policy shall he void.” It is claimed by the insurance company that after the policy was executed, there was a change of the possession of the property insured, and consequently a forfeiture under the clause just quoted. The facts disclosed by the record are as follows : On the 18th day of April, 1891, the Yalley Land and Improvement Company, duly incorporated, conveyed a very large amount of real and personal property, including the Luray Inn and Caverns, in Page county, to H. J. Smoot and four others, as trustees, to secure a heavy general indebtedness due from said company. On the 1st day of May, 1891, the company leased the Luray Inn, together with the grounds and curtilage, which had been conveyed in the deed of trust, to one Frederick ~W. Evans. On the 3d day of August, 1891, certain creditors of the company filed their bill in the Circuit Court of Page county, asking the court to enjoin a sale of the property, which had been advertised by the trustees, and further praying for the appointment of a receiver to take carge of th e property, and that the trust might be administered under the orders of the court. On the 10th day of August, 1891, the court entered a decree declining to appoint a receiver, or to enjoin the sale, but directed the trustees to proceed to sell the property on • the terms prescribed by the deed of April 18, 1891, and to report any sale made, to the court, and to hold any money received, subject to the order of the court. On the 23d day of August, 1891, the trustees secured and had placed upon the property of the company, real and personal, fire insurance policies to the amount of about $100,000, — 312 — distributed among twenty-seven different companies, for which insurance a premium of $1,892.70 was paid. Among these policies was that of the Georgia Home Insurance Company, defendant in this suit, for $5,000, which was placed upon the Luray Inn. On the 26th day of September, 1891, H. J. Smoot and others, trustees, made their report to the Circuit Court, settled their accounts, and resigned their positions as trustees. The court entered an order ratifying and confirming all their acts and doings as trustees, and appointed J. Kemp Bartlett, Jr., as substituted trustee in their room and stead (Bartlett was the president of the Valley Land and Improvement Company, whose property was insured), “with all the duties and responsibilities required by law,” and with the power, among others, to lease out the Luray Inn and collect the rents. Bartlett was required to give bond and security, and to mate report of his acts and doings as trustee to the court. He did not, however, qualify as substituted trustee by giving the required bond, until the 16th day of October, 1891, and on the 5th day of Hovember, 1891, the Luray Inn was destroyed by fire. It is earnestly contended by counsel for plaintiff in error that the terms of the decree appointing J. Kemp Bartlett, Jr., as substituted trustee, in effect made him a recever of the property, and that the change from H. J. Smoot and others, trustees, to J. Kemp Batlett, Jr., receiver,'was such a change in the possession of the property insured as to release the insurer from all liability to pay the loss. In Thompson v. Phenix Ins. Co., 136 U. S. 287, it is held that a change of receivers is not such a change of possession, or title, as to for-feit the policy. The objection here is that this was a change from a trustee to a receiver. We understand counsel for plaintiff in erroi to admit that if the court had appointed one of the original trustees receiver, instead of Bartlett, there would have been no change of possession affecting the policy. — 313 — This position is unquestionably sound, and it follows, as a consequence, that the court could have appointed H. J. Smoot, one of the original trustees, as receiver, and subsequently to such appointment changed the receiver by removing H. J. Smoot and appointing J. Kemp Bartlett, Jr., in his place, and under the law as laid down by the Supreme Court of the United States in Thompson v. Phenix Ins. Co., 136 U. S. 287, it would not have worked a forfeiture of the policy, because it would have been only a change of receivers. I can see no propriety in the court adopting the circuitous method suggested for appointing Bartlett receiver. It would have been a vain thing. Hor do I think his appointment as receiver, in the mode adopted by the court, wrought any such change in the possession or title of the property as is contemplated by the clause of the policy under consideration. ‘ ‘A receiver derives his authority from the act of the court appointing him, and not from the act óf the parties at whose suggestion or by whose consent he is appointed; and the utmost effect of his appointment is to put the property from that time into his custody as an officer of the court, for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession, in the property Chicago Union Bank v. Kansas City Bank, 136 U. S. 236. Under this authority, it may be conceded that the effect of the decree of September 26, 1891, was to make Bartlett a receiver. Still, that did not change the title or right of possession in the property. H. J. Smoot and others, trustees, were, presumably with the consent of the Yalley Land and Improvement Company, acting as receivers in fact, though not in law, and the change from them to J. Kemp Bartlett, Jr., as receiver could not, under Thompson v. Phenix Ins. Co., have operated to forfeit the policy. I do not think the sound and just rule laid down in the case cited can be limited to a change of receivers. I think the same reason — 314 — ing would apply to a change of trustees, or a change from a trustee in control to a receiver in like control. In fact, no change of this character, merely affecting the control of the rents of the property, is the change ' contemplated by the policy, and therefore would not forfeit the insurance. This condition in the policy against alienation refers only to such a sale or disposition of the property as causes all interest of the assured in, or control over, the property to cease. Commercial Union Ass. Co. v. Scammon, 126 Ill. 355. The object of providing against a transfer or change of title or possession is.to guard against a diminution in the strength of the motive which the insured may have to be vigilant in the care of his property. “Any change in, or transfer of, the interest of the insured in the property, of a nature calculated’ ’ to make the insured less watchful in guarding and preserving the property from destruction by fire, “is in violation of the policy. But if the real ownership remains the same, if there is no change in the fact of title, but only in the evidence of it, and if this latter change is merely nominal, and not of a nature calculated to increase the motive to burn, or diminish the motive to guard the property from loss by fire, the policy-is not violated.” Ayres v. Hartford Fire Ins. Co., 17 Iowa, 176, 185-6. Now, let us consider what change had taken place in the possession of the property insured that is complained of by the plaintiff in error. At the time the assurer executed the policy, the insured property was in the lawful possession of the Valley Land and Improvement Company. It was in the actual possession of Frederick ~W. Evans, under a iease. The policy was taken out in the name of the Valley Land and Improvement Company, and made payable, in the event of loss, to H. J. Smoot and others, trustees, “as their interest may appear.” The trustees, presumably with the consent of the owner, the Val — 315 — ley Land and Improvement Company, were collecting the rents from the property, and disbursing the same in discharge of their duties as trustees. At the time of the fire,the property was still in the lawful possession of the Yalley Land and Improvement Company, and it was still in the actual possession of Frederick W. Evans, as lessee. The only change that had taken place was that the court had appointed J. Kemp Bartlett, Jr., as the hand tc receive and sign i eceipts for rent arising from the Luray Inn, in the room and stead of H. J. Smoot and others, trustees, resigned. The only act performed by J. Kemp Bartlett, Jr., as receiver, after his qualification on the 16th of October, 1891, disclosed by the record, was to make an endorsement thereon, extending for a further time, the same lease that was on the property when the policy was executed; thus continuing the property in the actual possession of the same lessee. We must look at the substance of things, and not at the shadow. The purpose of the clause under consideration was not to work a forfeiture; it was intended to protect the insurer against wrong or injury. The plaintiff in error has not been injured by J. Kemp Bartlett, Jr., having been appointed to receive and receipt for rents arising from the Luray Trm in the place of H. J. Smoot and others. Whether he performed that duty as receiver or as substituted trustee, in either case, he was doing no more than the trustees were doing when the policy was executed. FTor has the appointment of J. Kemp Bartlett, Jr., as receiver, produced any such change of interest in the property as to make the assured less watchful in guarding and preserving it from destruction by fire, and consequently there has been no forfeiture of the policy. It is a fact worthy of note that the large insurance on this property, nearly $100,000, represented by twenty-seven different companies, was promptly paid without question under the advice of counsel, except by — 316 — one insolvent company and the plaintiff in error here; and it is conceded that all these companies had the same provision in their policies that is relied on to forfeit the policy in this case. These insurance policies abound with innumerable stipulations, forfeitures, and provisions hard to understand, and difficult of performance, and it is a well-settled rule that they must be strictly construed against the insurer, and liberally in favor of the insured. For the foregoing reasons, I am of opinion that there is no error in the judgment of the Circuit Court, and it must be affirmed. The other judges concur in the opinion of Harrison, J. Affirmed.