Cook v. Citizens Ins. Co. Op Mo.

• Citation: 105 W.Va. 375
• Decision Date: 10 April 1928
• Docket Number: (No. 6008)
• Court: Supreme Court of West Virginia
• Parties: C. W. Cook v. Citizens Insurance Company op Missouri

105 W.Va. 375

C. W. Cook

v.Citizens Insurance Company op Missouri

(No. 6008)

Supreme Court of Appeals of West Virginia.

Submitted March 6, 1928.

Decided April 10, 1928.

1. Sales Buyer, to Whom Goods Are Delivered Under Conditional Sales Contract, Has Equitable Property Right Therein.

Where the seller has delivered goods to the buyer under a conditional sales contract, the interest of the buyer therein is an equitable property right, (p. 376.)

(Sales, 35 Cyc. p. 668.)

2. Insurance. Buyer May Recover on Fire Policy Requiring Sole and Unconditional Ownership, Although Legal Title Was in Seller Under Conditional Sales Contract.

When property in the possession of the buyer under a conditional sales contract is destroyed by fire, recovery therefor by the buyer on an insurance policy containing the "sole and unconditional ownership" provision is not defeated merely because the legal title is in the seller, (p. 377.)

(Fire Insurance, 26 C. J. § 212.)

(Note: Parenthetical references by Editors, C. J. Cyc. Not part of syllabi.)

Error to Circuit Court, Wyoming County.

Action by C. W. Cook against the Citizens Insurance Company of Missouri. Judgment for plaintiff, and defendant brings error.

Affirmed.

Myers & Snerly, D. D. Moran, and Sieptoe, Maxwell & Johnson and James M. Guiher, for plaintiff in error. E. W. Worrell, for defendant in error.

Hatcher, Judge:

Plaintiff recovered $1,000.00 upon a policy insuring store furniture and fixtures. The policy was in the standard form, containing a clause providing that it should be void if the interest of the assured be other than sole and unconditional ownership. When the policy was issued, three fixtures, valued at $915.00, were subject to conditional sales contracts. At the time of the fire, $260.00 remained unpaid on the three items. After the fire the furniture and fixtures were listed by plaintiff at $1,859.00.

The insurance company defends on the theory that the interest of Cook under the contracts is not sole and unconditional as required by the policy. The cases supporting that theory are so numerous that Cooley concludes that they have "well-established the rule" in that respect. Cooley, Briefs on Ins., 2d ed., p. 2199. An examination of those cases discloses that they are based on precedent or the strict letter of the policy. We are unable to accord to them the weight we otherwise would, because they are not in harmony with the former decisions of this Court. We are committed to a construction of insurance contracts which is liberal to the insured. Tucker v. Insurance Company, 58 W. Va. 30; Booker v. Ass'n., 91 W. Va. 468. We view such contracts in much the same way as the Supreme Court of California. "It is to be remembered that contracts of this sort are to be interpreted in the light of the fact, that they are drawn by the insurance companies, and are rarely, if ever, understood by the people who pay the premiums. Every rational indulgence must be shown the assured." Coniglio v. Conn. Fire Insurance Company, 180 Cal. 596, 599; Insurance Company v. Walsh, 54 Ill. 164. We regard the clause requiring sole and unconditional ownership as having to do "not with nice questions of title to be precisely determined" (Groce v. Insurance Company, 95 Miss. 201, 207), but with beneficial and practical ownership. An inquiry into the character of the buyer's interest under a conditional sales contract is therefore pertinent. We turn to Williston as a leading exponent of the law on conditional sales. Williston declares repeatedly that a buyer under such a sale has a special, equitable property right in his purchase. Williston on Sales (2nd ed.), sees. 284, 304, 330 and 579. It seems thoroughly established that an equitable title is a sufficient compliance with the condition in question. Cooley, supra, p. 2187. Ice Company v. Insurance Company, 100 W. Va. 728. The quality of an equitable right is not affected by a balance due on the purchase price. Equitable title is not dependent on the amount paid, but rests rather "on beneficial ownership and the right to the use and income". Insurance Company v. Kuhn, 207 111. 166, 171; Bumsey v. Insurance Company, 17 Blatch, 527; Pelton v. Insurance Company, 11 N. Y. 605, 607. In recognition whereof a large majority of the cases apply this doctrine irrespective of unpaid purchase money. See Cooley, supra, p. 2188, and the host of cases there cited. Most of the cases in point involve real estate. But why make a distinction between real and personal property in the application of this doctrine? No reason is apparent. '' The same rule will apply with equal if not stronger force to the personalty," says the Federal Court in Bank v. Insurance Company, 153 Fed. 440, 450. Then if the ordinary equitable title to personal property should satisfy the requirement of sole and unconditional ownership, why make an exception of the particular equitable title held under a conditional sales contract? Again no reason appears. Let us illustrate. A borrows $500.00 and executes a deed of trust on his automobile to secure the lender. B buys and is delivered possession of an automobile under a conditional sales contract, upon which $500.00 is unpaid. A has the equitable title to his automobile B a like title to his. In each case the legal title is outstanding simply as security for the debt. How can it be held consistently that while A's equitable title satisfies the provision of sole and unconditional ownership, B's violates it? No reason appears to differentiate between the two. As AVilliston well says, the transaction under a conditional sales contract, "is in its essence a mortgage, though futile distinctions are often made." See sec. 330.

Here Cook had the sole possession of the fixtures with the exclusive right to their use and profit. He could hold them against the world as long as he was not in default. He could sell them; he could encumber them; he could devise them; they were taxable as his; they would have been assets in the hands of his creditors or personal representative subject of course to the seller's lien and in case of their destruction the loss was his. He therefore had every proprietary right in them except the bare legal title. He had the real and beneficial estate which has been asserted to be the "absolute interest" and "equivalent to the fee simple at law". Insurance Company v. Kelly, 32 Md. 421, 440. We have expressly defined sole and unconditional ownership to refer to just such a title as Cook possessed. "This clause is held to refer to character and quality of title to the actual and substantial ownership, rather than the strictly legal title; in other words, the insured's interest must be such that he would sustain the whole loss if the property is destroyed." Scott & Callaway v. Insurance Company, 70 W. Va. 533, 537. The Virginia Court has repeatedly held that this clause does not even refer to the legal title, but only to the interest of the insured. Insurance Company v. Rodefer, 92 Va. 747, 751-2. The title in any event is simply a means to the end, and that end is "to prevent overinsurance and neglect to take proper precautions against loss." Misheloff v. Insurance Company, 102 Conn. 370. Ice Co. v. Ins. Co., supra; 14 R. C. L. p. 1052; 38 A. L. R. 200 (Annotation); Cooley, supra, p. 2176. After delivery of goods under a conditional sales contract, loss thereof falls on the purchaser. Williston, supra, ...