Antal's Restaurant v. Lumbermen's Mut., 95-CV-1333.
Decision Date | 15 August 1996 |
Docket Number | No. 95-CV-1333.,95-CV-1333. |
Citation | 680 A.2d 1386 |
Parties | ANTAL'S RESTAURANT, INC., Appellant, v. LUMBERMEN'S MUTUAL CASUALTY CO., Appellee. |
Court | D.C. Court of Appeals |
J. Joseph Barse was on the brief for appellant.
Sanford A. Friedman was on the brief for appellee.
Before TERRY and FARRELL, Associate Judges, and PRYOR, Senior Judge.
In this case, we apply (for the first time in this jurisdiction) the settled principle that an express anti-assignment clause of an insurance contract does not bar assignment of an insured's claim (or "chose in action") against the insurer after a loss has occurred. Since the trial court's grant of summary judgment rested on a contrary determination, we reverse.
For present purposes, the facts are undisputed. Appellants operated a restaurant known as Charing Cross on the premises of 3027 M Street, N.W., under a lease with the owners of the property. The property was damaged by a fire on November 21, 1990. The property owners had purchased a fire insurance policy from appellee (Lumbermen's) that was in effect on the date of the fire. They filed a claim with Lumbermen's for loss in the amount of $48,249.82, but Lumbermen's agreed to pay only $35,202.16, leaving an amount of $13,047.66 in dispute. The owners then assigned their claim to appellants, who filed suit against Lumbermen's for that amount. Lumbermen's defended in part on the basis of an anti-assignment clause of the policy, which stated:
F. TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.
Lumbermen's had not consented to the assignment in writing. The trial judge accordingly granted summary judgment to the insurer on the ground that the "insurance policy provision clearly and unequivocally precludes assignment without consent of the insurer."
"District of Columbia law evinces a policy of free assignability of claims." National Union Fire Ins. Co. v. Riggs Nat'l Bank, 646 A.2d 966, 971 (D.C.1994) (citing D.C.Code §§ 28-2303, -2304 (1991)). As we stated in Flack v. Laster, 417 A.2d 393 (D.C. 1980):
In general, all contractual rights may be assigned, including the right to sue for enforcement of a claim. The right to assign is presumed, based upon principles of unhampered transferability of property rights and of business convenience. The effectiveness of an assignment does not normally depend upon the consent of the obligor unless the rights to be assigned involve the performance of unique personal services.
Id. at 399 ( )(footnotes omitted). Of course, courts generally "will honor an anti-assignment clause in contracts when it contains clear, unambiguous language...." Id. See also Fox-Greenwald Sheet Metal Co., v. Markowitz Bros., 147 U.S.App. D.C. 14, 19, 452 F.2d 1346, 1351 (1971) ( ). Also, policies for fire insurance are normally considered "personal" in nature, because the identity of the insured is essential to the insurer's willingness to contract on the terms specified. See 16 GEORGE J. COUCH, CYCLOPEDIA OF INSURANCE LAW § 63:14, at 744 (2d ed.1983); see, e.g., Ocean Accident & Guar. Corp. v. Southwestern Bell Tel. Co., 100 F.2d 441, 446 (8th Cir.), cert. denied, 306 U.S. 658, 59 S.Ct. 775, 83 L.Ed. 1056 (1939) ( ). So contracts of this sort are generally not assignable without the consent of the parties. Id. at 444; 16 COUCH § 63:14, at 744.
The present case, however, is controlled by another principle, one reflecting the general aversion of the law to limitations on the free assignability of claims. The great weight of authority distinguishes between assignment of an insurance policy before a loss occurs and assignment after loss.
A provision in a policy providing that the policy shall be void if assigned without the company's consent applies to assignment before loss. Such a clause restricting assignment does not in any way limit the right of assignment after the loss has occurred, and the rights of the parties become fixed thereby.
5A JOHN ALAN APPLEMAN & JEAN APPLEMAN, INSURANCE LAW & PRACTICE § 3458, at 408 (1970); accord, 16 COUCH § 63:40, at 763-65; ROBERT E. KEETON & ALAN I. WIDISS, INSURANCE LAW § 4.1, at 299 (1988); 43 AM.JUR.2D Insurance §§ 791-92, at 854-55 (2d ed.1982). The distinction applies equally to fire insurance. 5A APPLEMAN § 3459, at 411. The reason for the distinction is that, whereas before loss the insurer might be unwilling to underwrite a risk for a person of questionable "integrity and prudence," after loss "the delectus personae is no longer ... material" since "the insurer becomes absolutely a debtor to the assured for the amount of the actual loss...." Ocean Accident & Guar. Corp., 100 F.2d at 445-46. The assignment at that point is "of a chose in action — the right to compel the insurer's payment of insurance proceeds in accord with that interest... recognized in the policy and defined in the contract." Kintzel v. Wheatland Mut. Ins. Ass'n, 203 N.W.2d 799, 804-05 (Iowa 1973). See APPLEMAN § 3458, at 406-07 ( ).1
As reflected in our earlier citations,4 Title 28, Ch. 23 of the D.C.Code ("Assignment of Choses in Action") embodies this policy of free assignability of claims. Lumbermen's asserts, however, that the statute applicable here covers only "demands of a liquidated character," D.C.Code § 28-2303 (1996),5 and that Lumbermen's disputes the amount, if any, that it still owes under the insurance policy. But that restrictive reading of the statute is not justified: § 28-2303 lists a variety of assignable choses in action, including "an open account, a debt, and a demand of a liquidated character" (emphasis added). The statute, which originated in 1901,6 was enacted against a background of decisions holding that the "debt" for which an insurer becomes liable is fixed at the time of loss even though the amount of compensation is still to be ascertained. See, e.g., Boston & A.R. Co. v. Mercantile Trust & Deposit Co., 82 Md. 535, 34 A. 778, 783 (1896) (...
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