Pennsylvania Fire Ins. v. Hughes

McCORMICK, Circuit Judge, having stated the case as above, delivered the opinion of the court. There are no contested issues of fact involved in this case. All of the substantial facts are either admitted or accepted as established by undisputed evidence.. The questions arising thereon, and in reference to which there is contention, are all questions of law. [501] The assignment of errors embraces 22 specifications. Counsel for the plaintiff in error insists on those numbered 7, 8, 9,10, 21, and 22. The first 4 are based on the action of the court in overruling the.demurrer of the defendant to the third, fourth, fifth, and sixth replications to the sixth plea. The last 2 are based on the court’s action in directing a verdict for the plaintiff. These assignments raise the following questions: (i) Whether the plaintiff in the court below was the sole and unconditional owner of the property insured, and owned the buildings in fee simple. (2) Whether the personal property insured was incumbered by a chattel mortgage. (3) Whether the defendant was estopped, by demanding proofs of loss or denying liability prior to the suit solely on the ground that the plaintiff was not the unconditional and sole owner of the property, that he did not own the building in fee simple, and that the personal property ivas incumbered by a chattel mortgage;, from afterwards setting up the other grounds of forfeiture, to be found in the sixth plea, namely, the misrepresentation or concealment by the defendant that there ivas a lien on the property for the unpaid purchase money. (4) Whether, under the evidence, (he court was justified in directing a verdict for the plaintiff. In a comparatively recent and well-considered case, the supreme court of Alabama has held, as expressed in the headnote, which accurately formulates the doctrine of the decision, that: “A vendee of land, in actual possession, exercising acts of ownership under a valid executory contract of purchase, and holding the bond of the vendor to make title upon full payment of the purchase money, a portion of which remains unpaid, is the unconditional and sole owner in fee simple of said land, within the meaning of a policy -of insurance which is conditioned that the ‘entire policy shall he void if the interest of the insured he other than unconditional and sole ownership, or if the subject of insurance he a building on ground not owned by the insured in fee simple’; and, as to an insured holding such interest, a policy with this condition is not void, but can bo enforced at the suit of the insured.” Loventhal v. Insurance Co., 112 Ala. 108, 20 South, 419, 33 L. R. A. 258. The distinguished counsel for the plaintiff in error accepts this authority as conclusive as to the real estate, but he insists, notwithstanding, that the proper construction of the bond, so far-as the personal property is concerned, is that it amounted only to a conditional sale. The property denominated “personal,” the subject of Oils contention, is described in the bond for title as being the fixtures, tools, and implements on the property used in connection with the foundry, situate thereon, and now in the possession of the purchaser. The other proof does not show or indicate with any clearness the extent and the character of the physical connections of the fixtures, tools, and implements to the land and the buildings thereon, so far as to determine to what extent the same had become part of the realty, or had retained their original status as personal property, under the rules of the common law, which is in force in Alabama. But if the common law in force in that state, as construed by its supreme court, declares that as to real property an unconditional estate Is conveyed by a bond for title, on the theory that the seller holds a vendor’s lien, and the real estate passes to the purchaser subject [502] to this lien, it seems to us that this theory would have greater force as to personal property, title to which passes by delivery, unless the parties have expressly stipulated otherwise. On the authority of the case of Loventhal v. Insurance Co., just cited, supported as it is by sound reason and abundant precedents, we hold in this case that, within the meaning of the terms used in the provisions of the policy of insurance on which the plaintiff in error relies, the insured was the unconditional and sole owner of all of the property insured, and that the building was owned by him in fee simple. It cannot be contended, and we understand that it is not, that the vendor’s lien to which the personal property in this case may be subject is a chattel mortgage. . Conditions for forfeiture in the printed forms of insurance policies now in general use have been prepared by the insurance companies with studious care, and should be strictly construed against the insurer, and liberally in favor of the insured, when invoked by an insurance company to limit or avoid its liability. No intendment will be indulged to invalidate the policy which the language used does not require. The plaintiff in error having, before suit brought, put its denial of its liability solely on the ground that the insured was not the unconditional and sole owner of the property, that he did not own the building in fee simple, and that the personal property was incumbered by a chattel mortgage, and having placed its original defense to the action on the same ground, as shown by its fourth and fifth pleas, should not be allowed to set up the additional ground presented in the sixth plea, six days before the trial, unless the settled rules of decision on this subject are avoided or qualified by the nonwaiver agreement. Like the forfeiture provisions of the policy, above referred to, if not more strictly, the language of this agreement should be construed strongly against the company, and liberally in favor of the insured. Without undertaking to define exhaustively its scope, it seems clear to us that it cannot reasonably be construed to take out of the operation of the general law on the subject the action of the company itself, as evidenced by the letters set out in our statement of the case, and by the special pleas in its original defense to the action. A,s the case, in our view of it, presents only questions of law, which should be resolved in favor of the plaintiff below, we conclude that the circuit court did not err in directing a verdict for the plaintiff, and the judgment is affirmed.