Phœnix Insurance Co. of Hartford v. Mitchell

Mr. Justice McAllister delivered the opinion of the Court: We have carefully examined the somewhat complicated record in this case, and are unable to see wherein any rule of law has been violated to appellant’s prejudice. The principal point relied upon for reversal seems to be, that because McDougal obtained title to the property in question by fraud, though by fraud in the consideration, and such title was subsequently set aside in equity upon a bill by his vendor, he had, therefore, no insurable interest in the property insured; that at all events he was not the sole owner. The conveyance was not void, but only voidable at the election of the vendor, providing the right of disaffirmance was exercised within a reasonable time. Subject only to that right, McDougal was the legal owner of the property as against all the world. If the deed had been void for fraud in the execution, different consequences would follow. But the conveyance not being void, and a legal title vesting in McDougal, the fact that grounds existed in favor of his vendor, for having it set aside in equity, did not make McDougal’s title conditional as to the appellant, nor was it a matter with which the appellant had any legal concern. It can not get rid of its contract of insurance by impeaching the mode by which the insured obtained the legal title to his property, or, in other words, by setting up fraud committed upon third parties. In a case in the English Court of Exchequer, Marks v. Hamilton, 16 Jur. 152, it appeared that a person discharged by the Insolvent Debtor’s Court, as an insolvent debtor, had effected an insurance against fire on some property acquired by him before the insolvency. The property having been destroyed by fire, the order for his discharge was afterwards annulled on the ground of fraud, and the insolvent adjudged to undergo twelve months imprisonment from the date of the vesting order. He then brought an action on the policy, to which the insurance office pleaded that he had no insurable interest in the property, but the action was sustained. Ang. on Fire and Life Ins. sec. 70. The action at law was properly brought in McDougal’s name, but as between him and Mitchell, his vendor, the insurance money represented the property destroyed. In that action interlocutory judgment was entered in favor of the plaintiff, and both that action and the supplementary bill were brought within the time limited by the policy. Appellant had every opportunity to make defense. It could have had an issue awarded to be tried by jury, if application had been made for it. But it was the duty neither of the court, nor adverse parties, to attend to appellant’s interests. There is nothing in the record to show that the allowance of interest was improper. The decree of the court below is affirmed. Decree affirmed.