Cowan v. Iowa State Insurance

Beck, J. Nothing less than a transfer of the property insured, whereby plaintiff would part with all his interest 1. insubance: transfer of property. therein, would operate to defeat the policy under r. ,. , the condition against alienation, pleaded by defendant. As long as plaintiff retained an insurable interest in the property, the policy attached thereto and protected plaintiff to the extent of his interest. May on Insurance, p. 463, § 381, p. 303, § 278; Hitchcock v. N. W. Ins. Co., 26 N. Y., 68; West Branch Ins. Co. v. Helfenstein, 40 Pa. St., 289; Sherman v. Niagara Fire Ins. Co., 2 Sweeney, 470; Fernandez v. Great Western Ins. Co., 3 Robertson, 457; Hoffman v. Place, 32 N. Y., 405. The rule is based upon sound reason and the true construction of the clause in question, which neither in its language nor spirit is intended to deprive the insured of the right to dispose of a part of the property by sale or otherwise. Tliis would operate as a restraint upon trade and the free sale and transfer of property to which business men, who most enter into these contracts of insurance, would never submit. It is not demanded for the protection of the underwriters, and we have never heard of a construction giving such an effect to a condition against alienation. The condition of the policy before us declares that the instrument shall be void upon the alienation of the property insured, not upon the alienation of a part of it. In our judgment, the same reasons will support the view that the transfer of an interest in the property to a partner, which is shown by the answer, will also fail under the condition in question, to defeat plaintiff’s right to rocover. As [554] long as the insured, owns the property, or a part of it, or an interest in it that is insurable, the policy during its life covers such part or interest. As the condition cannot be construed into a contract against a sale of a part of the property, neither can it be regarded as an undertaking on the part of the assured not to dispose of an interest in it. These views áre based upon the consideration that no increase of risk is wrought by the sale or transfer of a part of, or an interest in, the property insured. It is well settled that a partner has an insurable interest in the property of the firm. The transfer pleaded was by the plaintiff to a firm of which he was one of the partners. So far as plaintiff is concerned, 2. ___ partnership, whatever interest he retained in t-he goods never passed out of him. As the transfer is stated in the answer, plaintiff* passed the title of the property from himself to another and himself. It is true that, to a certain extent, a co-partnership is considered a person separate from the partners who may have transactions, and make contracts with it as such. But it is not true that a partner, by the sale of the property to the firm, actually parts with the- interest which, as a partner, he actually holds in the firm property. The answer, therefore, fails to show such an alienation as will defeat the policy and bar all right of recovery by plaintiff. Cases are cited by defendant’s counsel, holding that the sale by one partner to another of his interest in partnership property, upon withdrawing from the firm, or upon its dissolution, avoids the policy issued to the firm, under the condition against alienation. Finley v. Lycoming Co. Mut. Ins. Co., 30 Pa. St., 312; Keeler v. Niagara Fire Ins. Co., 16 Wis., 23; Doher & Bumb v. Ætna Ins. Co., 15 Mo., 134; Hartford, Fire Ins. Co. v. Ross et al., 23 Ind., 180; Dix et al. v. Mercantile Ins. Co., 22 Ill., 272; Western Mass. Ins. Co. v. Becker, 10 Mich., 279; Fallon v. Mut. Ins. Co., 1 Selv., 405. In some of these cases doctrines are found inconsistent with the conclusion we have reached, but we do not think the decisions themselves are in conflict therewith. It will be readily seen that by the transfer of the interest of a partner in the [555] joint property to bis co-partner and bis withdrawal from the firm, the parties in interest under the policy are changed. In the case before us, they remain the same; the change only affecting the property covered — the extent of the liability of defendant under the policy, in case of a loss, and without abridging that liability. The demurrer to the answer was, in our opinion, correctly sustained. Affikmed.