Insurance Co. of North America v. Garland

Mr. Justice Mulkey delivered the opinion of the Court: This is an appeal from a judgment of the Appellate Court affirming a decree of the circuit court of Cook county, in favor of Helen L. Garland, the appellee, and against the Insurance Company of North America, the appellant, for the sum of $3000, the amount of a loss by fire, under a policy of insurance issued by the company to Mariq G. McConnell on her dwelling house, on the 23d day of November, 1876, and by her assigned, with the consent of the company, to appellee, less the sum of $1746, the amount of a certain mortgage upon the insured premises, then held by the company. After the issuing of the policy, and but a few days before the 23d of January, 1878, Mrs. McConnell, the assured, sold and conveyed the premises to Mrs. Garland, the appellee, and thereupon moved out, leaving them vacant and unoeeupied, in which condition they so remained until the time of their destruction by fire, on the 25th of September, 1879, being a period of some twenty months. The policy, among others, contained this provision: “And if the assured shall allow the building herein insured to become vacant or unoccupied, and so remain, * * * unless the consent of this company be indorsed hereon, this policy shall become void.” On the 23d of January, 1878, and but a short time after the sale and transfer of the property to appellee, her husband, John C. Garland, called at the company’s office for the purpose of obtaining the company’s assent to the transfer of the policy, which, after some little delay, by reason of the policy not being present, was indorsed thereon in these words: “The‘property hereby insured having been purchased by Helen L. Garland, the Insurance Company of North America consents that the interest of Maria G. McConnell in the within policy may be assigned to said purchaser, subject, nevertheless, to all the terms and conditions therein mentioned and referred to. 0. H< Cas^ Ageni„ Garland’s account of. what occurred at the company’s office is as follows: “After the purchase of this property from McConnell, and after the McConnells had moved out of the house, I called at the office of Mr. Case, agent of this company, whose name is'signed to the policy, at No. 120 La Salle street, to have the insurance transferred from Mrs. McConnell to Mrs. Garland, and the clerk at the desk said that I would be obliged to bring the policy before the insurance could be transferred on their books. I remarked to the clerk that it was late in the afternoon, and I had just got knowledge that the house was vacant, and desired to have the transfer made. The clerk remarked that they could put it on their book,— put the transfer on their books,—but it would not be legal without I had the policy with Mrs. McConnell’s signature attached, and if the house was vacant I had better attend to that part of the business, because it would not amount to anything if the house was destroyed,—they would not be liable for any loss. I then went out to find McConnell, and found him. Got his wife’s signature to the assignment on the back of the policy. It was signed by Mr. McConnell, who said he was his wife’s agent. I then took the policy back to Mr. Case’s office, and they wrote on it their transfer. The policy was then taken back in where Mr. Case was sitting, and signed by him, and brought and handed to me. ” In answer to the question, “Now state again precisely what you said, if anything, with reference to the property being vacant?” he further said: “I told this clerk that I wanted the transfer put on the books that day, because the property was vacant, and it had just come to my knowledge that the McConnells had moved out of it and moved into the city. ” Upon this state of facts it is claimed by appellee that the company having assented to the transfer of the policy in the manner stated, with notice that the insured premises were at the time of such transfer vacant and unoccupied, was in law a waiver of the condition which declares the policy void upon the happening of such contingency,—and so the Appellate Court held. We do not think the evidence, or a proper construction of that clause of the policy, warrants the conclusion reached. We see nothing in Garland’s statement of what occurred at the company’s office that would justify the inference that the company intended a waiver of that condition in the policy. There was certainly nothing said by any one present to warrant that conclusion,—so that if the position can be maintained at all, it must be solely on the ground that the consent of the company, having notice of the fact the property was at the time unoccupied, is of itself, in law, a waiver of the condition. We are aware of no authority sustaining this view, and certainly none has been cited going that length. We do not understand that a policy having a condition in it like the one under consideration becomes absolutely void by reason of the premises becoming vacant or unoccupied. Nor do we understand that in ease of a breach of the condition of the policy in this respect the company is bound, at its peril, upon notice of such breach, to declare the policy forfeited for that reason, even conceding it has the power to do so, of which it is unnecessary now to express any opinion. And it is well settled if the company should not exercise this power while the assured is in default, and the premises should again become occupied, its right to do so would cease, and its liability on the policy would again attach. Schmidt v. Peoria Marine and Fire Ins. Co. 41 Ill. 295; Insurance Company of North America v. McDowell, 50 id. 120; Westchester Fire Ins. Co. v. Foster, 90 id. 121. Now, the object of the company in assenting to the transfer ' of the interest of the assured in the policy to the purchaser was clearly nothing more than to place the latter in the same position, with, respect to all rights and liabilities under it, that the assured herself occupied before such transfer. Suppose Mrs. McConnell had simply vacated the property without selling it or assigning the policy, and it had remained vacant until the loss by fire in the same way it did, and this action had been brought by her instead of Mrs. Garland, and the company had invoked the breach of this condition in the policy as a defence, would it have been any answer to have replied the company knew the premises were vacant and unoccupied, and had declared no forfeiture of the policy? Surely not. And yet, on principle, we can see no difference in this case and the one supposed, if, as we have already seen, the transfer of the policy with the company’s consent is a mere substitution of appellee as a party to the policy for Mrs. McConnell. Upon such change of parties, her relation to the policy, the company, and the subject matter of the contract, became precisely the same as that of Mrs. McConnell before the substitution. It was, in effect, re-issuing the policy to another party upon the same terms and conditions it had been issued before. Suppose this had been an original policy, issued to appellee in the first instance, under the same circumstances, how would thi’ case stand ? To say the delivery of. the policy under such circumstances would be a waiver of the condition altogether, would be to not only disregard the manifest intention of the contracting parties, but would be clearly doing violence to an express provision of the contract itself. We have no doubt in such case the condition would remain in full force to the same extent as other provisions in the contract, and that in order to secure the benefits of the policy the assured would be bound to see the premises did not “remain” vacant or unoccupied. In such a case we have no doubt the company would have a clear right to insist on the performance of the condition, and until that was done its liability under the policy would not attach. On the other hand, whenever the terms of the policy in this respect were complied with, the company’s liability would at once begin. The case in hand does not, in our opinion, differ in principle from the one supposed. The precise language of the policy affecting this question should be particularly noted. The condition is not that the policy shall become null and void if the assured shall allow the building to become vacant or unoccupied. That is not sufficient. By the very terms of the policy the assured must go a step further. She must not only allow the building to become vacant or unoccupied, but, in the language of the- policy, she must also allow it to “remain so.” It is clear that under a provision of this kind, if the premises were to be suddenly vacated the assured would be bound to-procure without delay another tenant or occupant, for until that was done his or her rights under the policy would be suspended, though the policy for that reason would not become void. On the contrary, as soon as the premises were re-occupied the company’s liability would again attach. It may be, for any unreasonable delay by the assured in re-occupying the property the company would have the right to declare the policy forfeited altogether, but it is not bound to do so in order to avail itself of this condition. In the present ease there was a wanton disregard of the condition in question altogether, and we think justice to the company demands that its rights under the policy should not be sacrificed by a láx or latitudinous construction, which would do violence to the very terms of the company’s consent to the transfer. By those terms it agreed that Mrs. McConnell’s interest in the policy might be .assigned to appellee, “subject, nevertheless, to all the terms and conditions therein mentioned and referred to.” And yet we are asked to hold, in the face of this express stipulation to the contrary, that the company thereby waived this condition in the policy. We can not give our assent to any such construction. So far as this case may be supposed to depend upon whether the company had notice of the fact the premises were vacant and unoccupied at the time of the transfer, the evidence is by no means satisfactory or conclusive, yet in the view we take of the question it is not important to discuss the evidence relating to it. Conceding it to be sufficiently established, it distinctly appears, as we understand the testimony, the company, at the very time of receiving such notice, informed the appellee’s husband, who was then acting as her agent, that the company would not be liable for any loss so long as the premises remained vacant and unoccupied. Garland himself swears he was informed, at the time of the transfer, that if the house was vacant he “had better attend to that part of the business, because it would not amount to anything if the house was destroyed,—they would not be liable for any loss. ” It is claimed, however,< the expression, “that part of the business, ” has reference to the transfer of the policy. But that would certainly, in the connection in which it occurs, be a very forced construction. We think the plain common sense of the thing requires this expression to be referred to the vacancy of the premises, and not the assignment of the policy. There was no occasion to admonish Garland to quicken his steps in getting the policy assigned. He was already there, in the company’s office, for that purpose, and doing all that one reasonably could do to accomplish that object. But not so with respect to the property being occupied. That was liable to be overlooked, and some time would necessarily be required in procuring an occupant, hence the admonition. The judgment of the Appellate Court is reversed, and the cause remanded, with directions to reverse the decree of the circuit court, and remand the cause to that court for further proceedings in conformity with the views here expressed. Judgment reversed.