Collins v. Merchants' & Bankers' Mut. Ins. Co.

• Decision Date: 09 October 1895
• Citation: 95 Iowa 540,64 N.W. 602
• Court: Iowa Supreme Court
• Parties: COLLINS v. MERCHANTS' & BANKERS' MUT. INS. CO.

95 Iowa 540

64 N.W. 602

COLLINS

v.MERCHANTS' & BANKERS' MUT. INS. CO.

Supreme Court of Iowa.

Oct. 9, 1895.

Appeal from district court, Dallas county; J. H. Applegate, Judge.

Action at law upon a policy of fire insurance issued to one J. R. Biery; loss, if any, made payable to E. L. Collins, mortgagee, as his interest may appear. Trial to a jury. Verdict and judgment for plaintiff, and defendant appeals. Affirmed.Read & Read, for appellant.

White & Clark, for appellee.

DEEMER, J.

On the 16th day of September, 1890, the defendant issued to one J. R. Biery a policy of insurance in the sum of $800, upon a certain flouring mill, machinery, and fixtures, situated in Guthrie county, Iowa, of which Biery was the owner, subject to incumbrances amounting in the aggregate to $1,460. Loss, if any, was made payable to appellee, Collins (who held a mortgage upon the property), “as his interest may appear.” On the 16th day of February, 1893, the property covered by the policy was totally destroyed by fire. Due notice and proofs of loss were given to defendant, but it failed to make payment. Suit was thereupon instituted, which resulted in a verdict for the appellee, Collins, and the insurance company appeals.

But two questions are presented for our determination:

1. The defendant pleaded in the second count of its answer the following provision of the policy: “This contract shall be void and of no effect unless consent in writing is indorsed thereon by the president and secretary of the company in each of the following instances: * * * If it [the property] be in any manner incumbered or in litigation, and such fact be not stated in this policy or the assured's application for insurance,”--and further averred that on or about the 21st day of May, 1891, the property covered by said policy was incumbered by a mortgage for $600, executed by J. R. Biery, the assured, and his wife, to one F. Peters, without the knowledge or consent of the defendant. A demurrer to this count of the answer, on the ground that it constituted no defense, for the reason that there is no warranty or condition in the policy sued on against future incumbrances, was sustained. Appellant complains of this ruling, and insists that the statement in the policy before quoted is not only a present, but a continuing, warranty, and that the $600 mortgage placed upon the property after the issuance of the policy was a breach of warranty, which rendered the policy void and of no effect; while appellee insists that the affirmation or warranty is as to an existing condition, and should not be construed to be a continuing or future warranty. If the statement in the policy was that it should be void if the property be in any means incumbered or in litigation, then, no doubt, it should be so construed as to cover future as well as existing incumbrances. Mallory v. Insurance Co., 65 Iowa, 450, 21 N. W. 772;Ellis v. Insurance Co., 61 Iowa, 577, 16 N. W. 744. But the policy contains more than this. It says it shall be void under these circumstances, unless the fact is stated in this policy or the assured's application for insurance. Taking the whole of the statement, and viewing it in the light of the settled rules of construction to be applied in interpreting such instruments, and we think it is reasonably clear that the incumbrance stipulated against is one which would ordinarily be stated in the face of the policy or in the application for insurance. Manifestly, this is an existing or present one, and not one created in the future. The words used are certainly open to this construction, and, if so, we would adopt that which is most favorable to the assured under all the established tenets. Garretson v. Association (Iowa) 61 N. W. 952;Morse v. Insurance Co., 30 Wis. 534;Insurance Co. v. Kranich, 36 Mich. 289;De Graff v. Insurance Co. (Minn.) 38 N. W. 696;Insurance Co. v. Scammon, 100 Ill. 644;Thompson v. Insurance Co., 136 U. S. 287, 10 Sup. Ct. 1019;First Nat. Bank v. Hartford Life Ins. Co., 95 U. S. 673; Insurance Co. v. Mund, 102 Pa. St. 89. Courts will not give such statements the force of continuing warranties, unless, from the language used and the nature and usages of the risk, it is evident that it was so intended and understood by the parties. It will leave the future subject only...