Fuller v. New York Fire Ins. Co.

Decision Date19 June 1903
PartiesFULLER SAME v. NEW YORK FIRE INS. CO. SAME v. FARMERS' FIRE INS. CO. SAME v. FIREMEN'S INS. CO. SAME v. TRADERS' INS. CO. SAME v. GREENWICH INS. CO. SAME v. INDIA MUT. INS. CO. SAME v. MILLERS' & MANUFACTURERS' INS. CO.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court
COUNSEL

A. Chalkley Collins, for plaintiff.

G. L Huntress and F. W. Brown, for defendants.

OPINION

BARKER, J.

These actions are in contract upon policies of fire insurance issued to one Callender upon his mill. They were tried together, and with a verdict for the plaintiff in each case. On March 2, 1900, Callender filed a voluntary petition in bankruptcy, and was adjudicated a bankrupt. On March 10 1900, at 12:30 o'clock p. m., a receiver of the bankrupt's estate was appointed, and at 7:55 p. m. on the same day the insured property was destroyed by fire. On April 23, 1900, the plaintiff was appointed trustee in bankruptcy, and thereafter brought the actions.

One exception was to the introduction of evidence. Although this exception is stated in the defendants' brief, it has not been argued by them, and we treat it as waived.

Sixteen requests for rulings to the jury were made by the defendants, and the other exceptions relate to the requests.

The policies were of the Massachusetts standard form, and upon each was a rider containing the following clause: 'It is understood and agreed that the automatic sprinkler system is in complete working order, and in further consideration of reduction of rate it is hereby made a condition of this policy that the assured shall use due diligence that such equipment shall continue to be maintained in complete working order during the full term of this insurance.' The defendants contended that they were not liable, because the terms of this clause had not been complied with; that the burden of showing compliance with both parts of the clause was upon the plaintiff. They also relied upon alleged breaches of the usual conditions against failure fairly to represent the material facts and circumstances, against change of situation or circumstances affecting the risk, and against a sale of the property or an assignment of the policy, and the requests for instructions were addressed to the questions arising under these various defenses.

The arguments of the defendants' brief are embraced in two classes: First, those founded upon the effect of the bankruptcy proceedings upon the contracts evidenced by the policies; and, second, those founded upon the rider concerning the sprinkler system.

One contention is that neither the policies, nor any right of action upon them, passed to the plaintiff as trustee in bankruptcy. But the policies were in their nature assignable, and, while failure to obtain the written consent of the insurers might defeat the policies, it would not render their transfer invalid. Hewins v. Baker, 161 Mass. 320, 37 N.E. 441. Therefore they were property which prior to the filing of the petition the bankrupt could have transferred, and so were a kind of property enumerated in section 70 of the bankruptcy act (Act July 1, 1898, 30 Stat. 565, c. 541 [U. S. Comp. St. 1901, p. 3451]) as vested by operation of the law in the trustee upon his appointment and qualification. The proviso of the section dealing with insurance policies which have a cash surrender value payable to the bankrupt, his estate, or personal representatives, is an implication that all insurance policies are property which it is the intention of the section shall vest in the assignee. But whether the policies passed to the plaintiff would be immaterial, if the fire created a chose in action to recover for the loss, and if such right of action passed to the plaintiff.

The next contention is that, upon the adjudication that Callender was a bankrupt, he ceased to have an insurable interest in the property. But neither the policies nor the insured property vested in the trustee at the time of the adjudication. The insured property never vested in the trustee, because it was not in existence at the time of his appointment and qualification. The title to it remained in Callender until it was destroyed by fire, as also did the title to the policies. Hence the destruction of the property changed or ripened the conditional obligation of the insurers into a fixed obligation to pay the amount of indemnity stipulated for in the policy. To hold that this ripening of the obligation made it after-acquired property, which would not vest in the trustee, but which the bankrupt could hold as his own, would be as absurd as to hold that, if goods which he had at the time of adjudication were converted by a stranger to his own use between the time of the adjudication and the appointment of the trustee, the right to maintain trover for their value would not pass to the trustee, but might be enforced by the bankrupt as after-acquired property. If an unmatured obligation on which there was no right of action at the date of adjudication should mature between it and the appointment of the trustee, the right of action upon it would be one which did not exist until after the adjudication, but there can be no doubt that it would vest in the trustee. In all such cases the new right of action may be compared to a fruit which has grown and ripened during the period of transfer, and which, being upon the branch at the moment when the property vests in the new owner, becomes his. The statute is to be construed in view of its general purpose of applying the property and rights of debtors for the benefit of their creditors, and, while the debtor's property vests as of the date of the adjudication, it yet has the incidents which have become attached to it up to the time when it vests in the trustee upon his appointment and qualification. Even if the change wrought in the ownership of the policy will, if the insurer does not assent in writing to the transfer, make the policy void as to future losses, it does not make void the matured obligation to pay a loss incurred before the time when the ownership of the policy was changed.

The same considerations dispose of the contention that the adjudication and the appointment of a receiver before the fire violated the right of the insurer to have the insured property cared for by Callender. He was still the owner of the property, and in its actual control; and the rights and obligations of the receiver tended to add to, and not to diminish, the care and oversight of the insured property, and could in no way increase the risk or alter it to the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT