Ellis v. Kreutzinger

Napton, Judge, delivered the opinion of the court. The authorities are very clear that the deposit of a policy of insurance with a creditor of the assured, as a security, collateral or original, for the debt, gives the creditor a lien on the proceeds of the policy, which is binding upon the underwriters and upon the assured, and upon all those who take an interest from the assured with notice of such lien. (1 Phill. Ins. § 98; 2 Duer, § 36; 10 Serg. & R. 412.) The clause in this policy, which prohibits an assignment of the policy without the consent in writing of the company, does not apply to a deposit of the policy by way of pledge. The interest of the underwriters can not be affected by any transfer which does not also transfer the title to and a control over the property assured, and therefore such restrictions have not been understood to apply to assignments in which the underwriters can have no interest, and to control which they can have no motive. (2 Duer, § 40.) The insurance company, in this case, paid up the policy, without calling for its production, to the defendants who claimed to be assignees. It is not necessary to say that the possession of the policy by the plaintiff and the failure of the defendants to produce it, were of themselves notice to the company that it belonged to the plaintiffs, or to some one else ; but it would seem to be clear that these circumstances were sufficient to put the company and the defendants upon inquiry. The evidence was that both the company and the defendants were apprised that the policy was in the hands of [315] the plaintiffs and that they claimed an interest in it. The instruction asked by the plaintiffs should have been given. (10 Serg. & R. 412.) The judgment is reversed and the cause remanded. Judge Scott concurs. Judge Richardson not sitting, having been of counsel.