Commonwealth Cas. Co. v. Arrigo

• Citation: 154 A. 136,160 Md. 595
• Decision Date: 09 April 1931
• Docket Number: 26.
• Parties: COMMONWEALTH CASUALTY CO. v. ARRIGO.
• Court: Court of Appeals of Maryland

154 A. 136

160 Md. 595

COMMONWEALTH CASUALTY CO. v. ARRIGO.

No. 26.

Court of Appeals of Maryland

April 9, 1931

Appeal from Superior Court of Baltimore City; Samuel K. Dennis Judge.

Suit by Harry Arrigo, an infant, by Ignatius Arrigo, his father and next friend, against the Commonwealth Casualty Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

BOND C.J., dissenting.

Argued before BOND, C.J., and PATTISON, ADKINS, OFFUTT, DIGGES PARKE, and SLOAN, JJ.

Edward L. Ward, of Baltimore (Foster H. Fanseen, of Baltimore, on the brief), for appellant.

J Cookman Boyd, Jr., of Baltimore (Herbert R. O'Connor, Charles C. Dipaula, J. Cookman Boyd, and Boyd & Boyd, all of Baltimore, on the brief), for appellee.

PATTISON J.

Charles R. Oliver, in April, 1926, became the purchaser of a White truck. Prior thereto he had purchased a truck from the International Harvester Company, and, in part payment therefor, had given to that company notes, containing power to confess judgment thereon.

The truck, as claimed by Oliver, was defective, and he returned it to the company. Nevertheless, it seems, judgments were entered upon the notes, and were outstanding and in force against him at the time of his purchase of the White truck. Because of these judgments, Oliver, with the consent of Edward Malone, a friend, had the title to the truck placed in the latter's name, pending settlement of the controversy with the International Harvester Company. Oliver not wishing to operate the truck without first obtaining automobile liability insurance on it, application was made for and on June 10, 1926, insurance was obtained from the appellant, the Commonwealth Casualty Company, in the name of Malone as owner of the truck. On the 14th day of June, 1926, Oliver, while operating the truck, ran over Harry Arrigo, a child six years of age, crushing his left leg, necessitating an amputation of it just below the hip.

The infant, Arrigo, by his father, sued both Malone and Oliver for the damage resulting from the injuries to Arrigo. The Commonwealth Casualty Company assumed the burden and management of the defense. The first trial in November, 1928, resulted in a disagreement of the jury.

In November, 1929, a second trial was had which resulted in a verdict against the defendants for $7,500. At both trials, prayers were offered on behalf of Malone to take the case from the jury, but were refused.

On January 15, 1930, the infant appellee, Harry Arrigo, by his father, Ignatius Arrigo, brought suit, under the provisions of the policy of insurance, against the appellant for the amount of the judgment, interest, and cost, against Oliver and Malone, and judgment was recovered therein, against the appellant, the Commonwealth Casualty Company. From that judgment, the appeal in this case was taken.

The questions presented by this appeal are: (1) Was the interest of Malone in the subject-matter of the policy of insurance issued to him sufficient to render the appellant liable thereunder for any loss or injury to him covered by the provisions of the policy, and (2) what effect, if any, did the alleged false warranty of sole ownership of the truck in Malone have, under the policy, upon the liability of the appellant?

In Cooley's Brief on Insurance, vol. 1, page 145, it is said: "What constitutes an insurable interest in property has been the subject of much discussion. It is difficult to give a comprehensive and at the same time accurate definition. In the early history of insurance there was apparently a tendency to require title and ownership, or, at least, a substantial vested pecuniary interest, as a basis of insurable interest. But, as pointed out in Riggs v. Commercial Mutual Insurance Company, 125 N.Y. 7, 25 N.E. 1058, 10 L. R. A. 684 , affirming [57 N.Y. Super. Ct. 78] 5 N.Y.S. 183, the tendency of recent decisions has been in the direction of a more liberal doctrine than formerly prevailed. It is no longer required that there shall be an absolute right of property in the subject of the insurance." And later on in the same work, under "Guaranty and Indemnity Insurance," page 237 of vol. 1, it is said: "An insurable interest exists whenever there is a reasonable degree of probability that the insured will suffer loss by reason of any contingency which affects the subject of the insurance (Agricultural Ins. Co. v. Clancey, 9 Ill.App. 137)."

A very clear statement of the law upon the subject under consideration is found in 14 Ruling Case Law, page 910, par. 87, where it is said: "The courts of this country, as well as of England, are well disposed to maintain policies where it is clear that the party assured had an interest which would be injured, in the event that the peril insured against should happen. The term interest, as used in application to the right to insure, does not necessarily imply property in the subject of insurance, and neither the title nor a beneficial interest is requisite. Although a person has no title, legal or equitable, in the property, and neither possession nor right to possession, yet he has an insurable interest therein if it is primarily charged in either law or equity with a debt or obligation for which he is secondarily liable." Howard Ins. Co. v. Chase, 5 Wall. 509, 18 L.Ed. 524; Buck v. Chesapeake Ins. Co., 1 Pet. 151, 7 L.Ed. 90; Phoenix Ins. Co. v. Hamilton, 14 Wall. 504, 20 L.Ed. 729; Note to Mahoney v. State Insurance Co. (Iowa) 9 L. R. A. (N. S.) page 490.

In deciding whether Malone had an insurable interest in the subject-matter of the policy, we are to consider the character of the insurance. In cases like the one under consideration, the character of insurance is quite different from fire insurance, where the insurance is against injury or loss, by fire, of the property insured, and where the assured should have some real interest in the property insured. In the case before us, the risk and hazard insured against is not the injury or loss of the property named in the policy, but against loss and injury sustained by others, caused by the use of the property therein named, for which the assured, as its titled owner, might be liable, and the right of the assured to recover does not depend upon his being the holder, in fact, of either a legal or equitable title in the property, but whether he, the holder of the title, as stated in the certificate of title issued by the motor vehicle commissioner and in the policy of insurance, is primarily charged at law or in equity with an obligation for which he is liable.

Malone, though not the owner of the truck, gave to his friend, Oliver, permission to have its title placed in his name, which was done, and, thereafter, the insurance policy was issued in the name of Malone. This was done, as we have said, because of the controversy then existing between Oliver and the International Harvester Company. The company, as claimed by Oliver, had wrongfully entered judgment against him upon notes given for a defective truck bought by him from it, which had been returned to the company. The controversy between Oliver and the company was subsequently settled, and the title to the White truck placed in Oliver's name and the policy of insurance assigned to him, but this was not until after the accident resulting in the injury to the infant, Arrigo.

Malone, in consenting to the title of the truck being placed in him, assumed the liability attached to an owner, and because of such liability was entitled to insure against the risks and hazard incident thereto. This right was not dependent upon his being, in fact, the owner of the truck. Condon v. Sprigg, 78 Md. 330, 28 A. 395.

The conclusion reached as to the liability of Malone is, to say the least, largely justified by the fact that in each of two trials, to which reference has been made, in which different judges presided, the liability of Malone was recognized by the instructions granted, and, in the last of these trials, a verdict was rendered by the jury against Malone, with Oliver, for the sum of $7,500, and a judgment entered thereon.

An execution issued upon the judgment recovered against Malone and Oliver was returned unsatisfied, whereupon this suit was instituted by the infant plaintiff against the insurance company under a provision of the policy, authorizing the same upon such return of the execution.

In answering the second question, as to the effect of the alleged falsity of the...