The Home Insurance Company v. James Lindsey et al.
1. A policy of insurance, which contains a condition that the insured property shall not be alienated or incumbered, may be avoided by the insurer where a sale or incumbrance is effected without his consent, although it is stipulated in the policy that consent to an assignment of the policy will be given by the insurer if requested within a certain time after sale of the insured property. Such stipulation binds the insurer to consent to an assignment of the policy to the purchaser, only in case his consent has been given to the sale of the property.
2. In an action on a policy of .insurance which contains a condition that, in'case of loss, proof of the loss shall be made and delivered to the insurer within thirty days after the loss occurred, the petition, which does not allege performance of such condition, or a waiver on the part of the insurer, is bad on demurrer.
Error. Reserved in the District Court of Crawford county.
Tbe original action was prosecuted in the Court of Common Pleas of Crawford county, wherein' the judgment sought to be reversed was rendered on the pleadings, and a special finding of facts by the court in favor of defendants in error, who were plaintiffs below. The action was founded on a policy of insurance against loss by fire, issued by the defendant below to one Jacob Shultz, for the sum of $2,000, on a restaurant-house belonging to the assured. The policy was issued on the 25th day of May, 1867, and was to continue in force for one year, commencing at noon that day. Among the conditions expressed in the policy were the following : “If the property above named be sold or transferred, or any change take place in title or possession thereof, whether by legal process, judgment, decree, judicial sale, voluntary transfer or conveyance, mortgage or otherwise, or in case any incumbrance by mortgage or otherwise shall fall or be executed thereon; or if this policy shall be assigned, either before or after a loss, without the consent of the secretary of this company indorsed hereon; or if the *349interest of the assured in the property, whether as owner, trustee, consignee, factor, mortgagee, lessee, or otherwise, is not truly stated ; or if the assured shall keep gunpowder, phosphorus or saltpeter on storage, or keep and use camphene, spirit gas, or chemical oils without written permission in this policy; or if the cash premium, or any part thereof, shall be unpaid ; then and in every such case the assured shall not be entitled to recover from the company any loss or damage which may occur in or to the property hereby insured, or any part or portion thereof.” And also the following in case of loss : “ The assured shall forthwith give notice of any loss to the secretary of the company, and within thirty days after such loss deliver at the office of the company, in Columbus, Ohio, either personally, by agent, mail or express, a particular account of such loss, signed and sworn to by him- or them, naming each article and the cash value thereof, stating whether any and what other insurance has been made on the property, what was the cash value at the time of the loss of the subject insured, the interest of the assured therein, in ,what general manner (as to trade, manufacture or otherwise) the building insured or containing the property insured, and the several parts thereof, were occupied at the time' of loss, and who were the occupants of such building, giving copies of the written portion of all policies thereon, and when and how the fire originated, and shall also produce a certificate under the hand and seal of a magistrate, notary public, or clerk of a court of record (nearest to the place of loss not concerned in the loss as creditor or otherwise, nor related to, the assured by affinity or consanguinity), stating that he has examined into the circumstances attending the loss, knows the character and circumstances of the assured, and verily believes that the assured has, without fraud or evil practice, sustained loss on the property insured, to the amount which such magistrate, notary public or clerk shall certify.” And also the following provision: “ Assignments of policies must be made within ten days after the sale of the property, and this policy sent to the office of the com*350pany forthwith, for the consent of the company, with •one dollar for recording fee and stamps; consent will then be given to the assignment.”
On the 3d of September, 1867, Shultz sold and conveyed the property insured to the plaintiffs, who immediately entered into possession'; and afterward, on the 10th of September, Shultz assigned to the purchasers the policy of insurance. This assignment was made with the knowledge of a local agent of the defendant, who occupied a room in the insured building; and at the same time the policy was placed in the hands of the agent, with the proper fee, to be transmitted to the office of the company for its assent to the assignment. Afterward, on the 13th of September, the property insured was wholly destroyed by fire, in which the policy was also consumed.
A copy of the policy was attached to and made part of the petition. The averments of the petition (amended) as to performance of the conditions of the policy were as follows :
“ That the plaintiffs and the said Jacob Shultz duly performed all the conditions of said policy of insurance on their part, and more than ninety days before the commencement of this action, to wit: on the thirteenth, fourteenth, and sixteenth days of September, a. d. 1867, the plaintiffs gave the defendant verbal notice of said fire and loss, and made profert thereof to the general agent, the adjusting agent and the local agent of the said defendant, on the premises where said restaurant house had been consumed by fire; and again, on the nineteenth day of October, a. d. 1867, the plaintiffs gave the defendant due notice and proof •of the fire and loss aforesaid, and sent said notice and proof to the office of the defendant, and the same was there received by the defendant, and also there duly demanded payment of the said sum of two thousand dollars, the amount of their said loss covered by the said policy of insurance ; but no part thereof has been paid, and the defendant is now justly indebted to the plaintiffs therefor in the surtí of two thousand dollars, now over due, with inter*351est thereon from the nineteenth day of January, A. D. 1868; for which they pray judgment.”
A general demurrer to the petition was overruled by the court, and thereupon the defendant answered, and, among other things set up, denied “ that said plaintiffs and said •Jacob Shultz have performed all the conditions of the policy on their part.”
To certain new matter set up in the answer, which it is not necessary to state, the plaintiffs replied.
The facts specially found by the court were as follows:
“ The court finds that the policy set out in the plaintiffs’ amended petition was duly executed and delivered by the defendant to the plaintiffs’ assignor, as alleged in the amended petition; that the property insured was, at the time of the issuing of the policy, owned by the said Jacob •Shultz, the party insured; and that his application and representations therein stated were substantially true, and made by him in good faith. The court further finds that the said Shultz, on the third day of September, 1867, sold and transferred the property insured, together with the personal property in said restaurant house, of the value of seven hundred and six and twenty-one hundredth dollars, to the plaintiffs, with the understanding that the policy of insurance should be assigned to the plaintiffs and inure to their benefit; that such assignment was, in fact, made on the 10th day of September, 1867, in pursuance of the terms of said policy;' that the total consideration of said sale and assignment of said real and personal property was fifty-two hundred and six and twenty-one hundredth dollars, 'and that the value of said restaurant house and said Shultz’s interest in the land upon which it stood, was forty-five hundred dollars; that plaintiffs paid said Shultz, upon th „r said purchase, the sum of two thousand dollars, and gave their notes, secured by mortgage upon said restaurant house and grounds, for the balance of said purchase price, no part of which, at the date of said assignment, had been paid. And the court further finds that the said plaintiffs made reasonable arrangements, under the circumstances, *352for the.transmission of the assignment to the home office-for the purpose of procuring the written consent of the defendant’s secretary thereto, but before such transmission, and without the fault of the plaintiffs, to wit, on the morning of the thirteenth of September, 1867, the property insured was totally destroyed by fire, but that said policy, assignment and transfer fee were in fact never forwarded to-said secretary for his written consent to said assignment, and that the consent of the said company or said secretary was not in fact given to the said assignment and transfer. That due notice of said loss.was given to the defendant, and the adjustment of the loss demanded by the plaintiffs. And the court further finds that the alienation of the property by Shultz to the plaintiffs did uot tend to increase the risk, but was fair and proper, and the transfer of the policy to-the plaintiffs was one coming within the purview of the policy itself, and should have been consented to by the said secretary had an opportunity been presented.”
Under the assignments of error two questions have been considered by the court.
1. Did the court below err in rendering judgment in favor of the plaintiffs ?
2. Did the court err in overruling the demurrer to the petition ?
Jacob Scroggs, for plaintiff in error:
In the case before the court there was, on the 3d of September, 1867, a change in both title and possession, either of which changes rendered the policy void unless the company consented. Mt. Vermont Manufacturing Co. v. Summit County Mutual Fire Insurance Co., 10 Ohio St. 347; Phillips on Insurance, sec. 87; Angelí on Insurance, sec. 193; 16 Ohio, 148; Am. L. Cas. 431, and cases cited.
In the case before the court there was not only a change of title and possession of the thing insured, but there was an assignment of the policy. By the conditions of the policy above quoted, an assignment of the policy without *353the consent of the company harred the right to recover from the company for any loss.
The assignment of a policy without consent of the company does not nullify the assignment merely, but the policy also, t Ilill, N. Y., 497; 3 Hill, 508.
The policy in suit is, then, both by law’ and the conditions of the policy, void, unless the company consented to the sale of the property and assignment of the policy. This consent could only be given in one way, and that is'the way prescribed by the policy itself. The secretary of the company must indorse his consent upon the policy. No other person is authorized to give consent. Mutual Insurance Co. v. Edwin C. Hurd, 19 Ohio, 177; Angelí on Insurance, see. 216, 217; 8 Gray, 28; 47 Me. 232.
Neither the petition nor any of the amended petitions aver that such consent was given.
Another condition of the policy is that the assured shall give notice of the loss forthwith to the secretary of the company. The second amended petition does not showT that the secretary of the company ever had notice of the loss.
Another condition of the policy is, that the assured shall, within thirty days after a loss, deliver or cause 'to be delivered at the. office of the company, in Columbus, Ohio, a particular account of such loss, etc. The petitions do not state that this had ever been done. The proof of the fire and loss, delivered to the company on the 19th October, 1867, was not a compliance with this condition.
Scott &; Harris and N. Jones, for defendant in error:
The company expressly stipulate that they will give consent to the assignment of the policy, if made within ten days after the sale of the property insured, upon the sending of the policy forthwith to the office of the company, with one dollar for recording fee and stamps.
In this case, the property insured wms, during the continuance of the risk, and but little over three months from the date of insurance, in good faith, sold and transferred to-*354the plaintiffs ; and within ten days from said sale, the policy was regularly assigned to them by the assured, and before the expiration of said period of ten days, said property was wholly destroyed by fire, without fault of the plaintiffs, and the policy and its assignment to them, was, by the act of God and without their fault, also destroyed and consumed, so that the transmission, for which reasonable arrangements had been made, of said policy and assignment to the home office of the company became impossible. Had this casualty not occurred and the policy been forwarded, neither the insurance company nor its secretary could arbitrarily refuse to consent to the assignment. Such consent was pledged in the policy, and could only be withheld for just cause, which is not claimed to have existed in this case, and which the court below found not to exist. On this question, the case of Palm, adm’r, v. Medina Insurance Co., 20 Ohio, 520, is quite analogous, and much in point. The attention of the'court is respectfully called to that case.
We submit, that if plaintiffs were not in default when the loss occurred, that loss, ispo facto, relieved the plaintiffs from the useless task of procuring the consent of the secretary to the assignment of the policy, and left it incumbent on the plaintiffs only to give due notice of the loss, and demands its adjustment, all which the court below found to have been duly done.
M. A. Daugherty, in reply,
insisted that the consent of the company must be first had to the sale and transfer of the property insured before it is under any obligation to consent to or sanction the assignment of the policy; that the important condition in the clause of the policy on this subject is that relating to alienation, because that involves not only a change of the condition of the property insured, but also of the person insured, and that this condition of the policy was broken without any consent of the company or any attempt to procure that consent; and that any other 'construction would leave the company at the mercy of every person insured, with liberty to substitute, as the assured, *355the most unfit and improper person, and to impose risks growing out of the change of title and possession of the property insured that would never be accepted by any company, and that can not be supposed ever to have entered into the contemplation of any company in making any insurance.