Brecht v. Law, Union & Crown Ins. Co.

• Decision Date: 02 March 1908
• Docket Number: 1,488.
• Parties: BRECHT v. LAW, UNION & CROWN INS. CO.
• Court: U.S. Court of Appeals — Ninth Circuit

160 F. 399

BRECHT v. LAW, UNION & CROWN INS. CO.

No. 1,488.

United States Court of Appeals, Ninth Circuit.

March 2, 1908

Fire policies provided that they should become void if insured's interest should be other than unconditional and sole ownership, unless otherwise provided by agreement indorsed thereon, etc. Slips were attached providing that any loss should be paid to plaintiff, to whom insured after the policy issued, transferred the property in trust to dispose of it, and to apply the proceeds to certain expenses of conducting the business and to insured's indebtedness plaintiff being a creditor, and to pay any residue to insured. Held, that the provision of the policies that when with insurer's consent, an interest under the policy should exist in favor of a mortgagee, or of anyone having an interest in the insured property other than the insured's interest, the conditions "hereinbefore continued shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto," did not change the legal effect of the slips making the loss payable to plaintiff, which was to constitute him insured's appointee to receive payment of whatever sums might be due that such provision was only intended to apply in cases where insurer by some special agreement with the mortgagee or third person acquiring an interest under the policy has consented to a modification or waiver of the conditions in the policy and that, as there was no such special agreement in the case at bar, plaintiff could not recover on the policies, the policies being admittedly void as to insured.

W. T Muir, for plaintiff in error.

Zera Snow and Wallace McCamant, for defendant in error.

Before ROSS and MORROW, Circuit Judges, and DE HAVEN, District Judge.

DE HAVEN, District Judge.

This action was brought to recover the sum of $7,500 and interest claimed to be due under two policies of insurance against loss by fire issued by the defendant, the Law, Union & Crown Insurance Company, to the St. Johns Lumber Company, upon certain property described in said policies. One policy is for $5,000, dated October 5, 1904, and the other for $2,500 dated May 19, 1905, and both contain the following provisions:

'This entire policy, unless otherwise provided, by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership; * * * or if any change other than by the death of an insured, takes place in the interest, title or possession of the subject of insurance (except change of occupants without increase hazard) whether by legal process or judgment or by voluntary act of the insured or otherwise. * * * If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto.'

There was also attached to each policy a slip in the following words: 'Loss, if any hereunder, is hereby made payable to Daniel Brecht'-- the plaintiff in the action, and there was not written upon, attached, or appended to said policies any other condition or provision relating to the interest of the plaintiff in the policy or in the property thereby insured, or expressing in what manner or to what extent the conditions contained in the body of the policies should apply to the interest of Daniel Brecht therein. The action was tried by the court without a jury. The court, in addition to the foregoing facts, found that the property described in the policies was destroyed by fire, as alleged in the complaint; that, after the issuance of said policies, the St. Johns Lumber Company, by a contract entered into by and between that company and the plaintiff, granted, bargained, and sold unto the plaintiff all the property covered by the policies of insurance, in trust, however, 'to be disposed of by plaintiff, and the proceeds to be applied to certain expenses of conducting the business, and to the indebtedness of the St. Johns Lumber Company, and the balance if any remain, to be paid over to the lumber company, which said contract operated to convey title absolute, and not as a mortgage'; that immediately thereafter the plaintiff entered into the joint possession of such property with the St. Johns Lumber Company, and continued in such possession to the time of the fire, and that such transfer and change of possession were had without the knowledge or consent of the defendant.

The court also found that:

'No agreement was indorsed upon the policies, or attached or added thereto, in any manner waiving or modifying any of the terms or conditions of the policies, above set out, in relation to a change of ownership, or possession, of the property insured and that the plaintiff had an insurable interest in the property covered by the policies, as chattel mortgagee, in an amount exceeding the sum for which the property was insured and that this was known to the defendant when the policies were issued.'

Upon these facts the court held that the execution of the contract of sale mentioned in the findings and above referred to rendered the policies sued on void, and judgment was thereupon rendered that the plaintiff take nothing by his action and in favor of the defendant for its costs and disbursements. The case is brought here by the plaintiff upon a writ of error.

1. It is not disputed that the policies sued on became void, as to the St. Johns Lumber Company, by reason of the change of title to, and possession of, the insured property referred to in the findings of the Circuit Court, but the plaintiff in error contends that the court erred in holding, upon the facts found by it, that the conditions of the policy against alienation and change of possession were binding upon him, as such conditions were not indorsed upon the policies, or attached to the slip making the loss, if any, payable to him.

The question thus presented requires for its decision the construction of the following provision, in the policies sued on, read in connection with the loss payable clause:

'If, with the consent of this company (the defendant insurance company), an interest under the

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