Arthur v. Palatine Ins. Co.

• Decision Date: 24 April 1899
• Citation: 57 P. 62,35 Or. 27
• Parties: ARTHUR et al. v. PALATINE INS. CO., Limited.
• Court: Oregon Supreme Court

57 P. 62

35 Or. 27

ARTHUR et al. v. PALATINE INS. CO., Limited.

Supreme Court of Oregon

April 24, 1899

Appeal from circuit court, Multnomah county; Henry E. McGinn, Judge.

Action by J.M. Arthur & Co. against the Palatine Insurance Company Limited. Judgment for plaintiffs, and defendant appeals. Affirmed.

W.E. Thomas, for appellant.

W.D Fenton, for respondents.

BEAN J.

This is an action upon a fire insurance policy issued by the defendant to McGee Bros., insuring them to the amount of $3,500 on certain buildings, engines, boilers, and other mill machinery at Ballard, in the state of Washington, "loss, if any, payable to J.M Arthur & Company, Portland, Oregon, as their interest may appear." The insurance was for one year from the 3d of February, 1895, and the property was destroyed by fire on the 25th of the same month. At the time the insurance was effected, McGee Bros. did not own the property covered by the policy, but were in possession thereof, under a contract with plaintiffs for its purchase, containing a covenant and condition to the effect that the title should not pass until the purchase price was fully paid, and the further condition that they should keep the property insured, and have the loss, if any, made payable to the plaintiffs as their interest might appear. A portion of the real property was incumbered at the time by sundry mechanics' liens, and the personal property by a chattel mortgage in favor of the plaintiffs, given as collateral to the conditional sale notes held by them. The policy provides that it shall be void "if the insured has concealed or misrepresented, in writing or otherwise, any material fact or condition concerning the insurance or the subject thereof, ***" and "unless otherwise provided by agreement indorsed hereon or added thereto; *** if the interest of the insured be other than unconditional and sole ownership *** or if the subject of insurance be personal property, and be or become incumbered by a chattel mortgage." For the defendant it is claimed that, under these provisions, the policy is void because (1) the liens and incumbrances on the real property were material to the risk, and were concealed from the defendant by the assured at the time of the application for the insurance; (2) that the personal property was incumbered by a chattel mortgage of which the defendant had no knowledge; and (3) that the assured were not the sole and unconditional owners of the property. The questions on this appeal are confined, however, to the first and second defenses, because the jury found--and there was abundant evidence to support the finding--that the defendant was advised and had knowledge of the condition of the title, and of the interest of McGee Bros. in the property, at the time the insurance was effected; and it is not disputed that such knowledge operated as a waiver of the provision in the policy that it should be void "if the interest of the assured be other than unconditional and sole ownership."

Upon the first defense, the court charged the jury, in effect that the failure of the assured to inform the defendant of the liens and incumbrances on the property would not render the policy void, unless it was intentional and with the design to defraud, and this is assigned as error. It is argued that the failure to inform the company of any facts or circumstances material to the risk would, under the provisions of the policy already quoted, render it void, without regard to the intention or design of the assured. The policy was issued upon an oral application, and the agent of the defendant company, who made the contract of insurance and who was familiar with the property, made no inquiries in reference to liens or incumbrances thereon, and no statements or representations whatever were made in reference thereto by the assured or any one in their behalf. In such case the intention of the assured becomes of controlling importance, and, in order to avoid the policy, it must appear, not only that the matter concerning which the insurer had no information was material to the risk, but also that it was intentionally and fraudulently concealed by the assured. Where inquiry is made, it is the duty of the assured to disclose the facts relating to the construction, location, situation, condition, and uses of the risk, as well as to its character and...