East v. New Orleans Insurance Association

• Decision Date: 03 April 1899
• Citation: 26 So. 691,76 Miss. 697
• Court: Mississippi Supreme Court
• Parties: WILLIAM THOMAS EAST v. NEW ORLEANS INSURANCE ASSOCIATION

26 So. 691

76 Miss. 697

WILLIAM THOMAS EAST v. NEW ORLEANS INSURANCE ASSOCIATION

Supreme Court of Mississippi

April 3, 1899

March 1899

FROM the circuit court of Lincoln county, HON. ROBERT POWELL Judge.

William Thomas East, appellant, was the plaintiff in the court below the New Orleans Insurance Association was defendant there. The insurance association, on the twenty-third day of May 1896, insured James W. East for one year from that day against loss by fire to the amount of $ 500 on a residence described in the policy. A total loss occurred by the burning of the residence on the twenty-seventh day of March, 1897, of which the association had due notice. William Thomas East, at the time of the insurance and loss, had an interest as mortgagee in the residence amounting to the sum of $ 500. The policy of insurance which was attached to the declaration and which, by statute, became a part of it, contained the following provisions:

1. "Loss payable clause. Any loss that may be ascertained and proven to be due the assured under this policy shall be held payable, first, to William Thomas East as interest may appear, and balance, if any, to assured.

2. "This policy shall be void if any change other than by the death of insured take place in the interest title or possession of the subject of insurance, whether by legal process or judgment, or by the voluntary act of the insured, or otherwise.

3. "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, or attached, or appended thereto."

This suit was brought by the mortgagee, William Thomas East, in his own name, and in his declaration he alleged the foregoing facts; and also that said residence was of the value of $ 900, and that James W. East, who owned the property when insured, after the issuance of the policy of insurance, and before the burning of the residence, had, without the knowledge and consent of plaintiff, conveyed the same and the premises of which it was a part to one Smith. To the declaration the insurance association demurred; the demurrer was sustained by the court below and the plaintiff's suit dismissed; from such judgment the plaintiff, William Thomas East, appealed to the supreme court.

Case reversed and remanded.

Cassedy & Cassedy, for appellant.

The general conditions of the policy were intended to apply exclusively to the insured, and, ordinarily, when loss by the consent of the insurer is made payable to another having a limited interest in the subject of insurance, his right of recovery on the policy would be measured by the right of the insured, and any breach of the conditions working a forfeiture as to the insured would defeat recovery by the party to whom loss was made payable. In this case, for instance, if a provision in the policy, limiting the operation of its condition when applied to an interest existing under the policy in favor of the mortgagee, etc having an interest in the subject of insurance, so that they shall apply in the "manner" with reference to such interest "as shall be written upon, attached or appended thereto, " had been omitted, and only the loss payable clause inserted, then the general conditions of the policy would have applied, and the right of appellant to recover would have been dependent upon the right of the insured to recover. The special provision referred to, however, taken in connection with the loss payable clause, constituted an independent contract with the mortgagee. The failure to write upon the policy, to attach or append to it in writing, the manner in which the conditions of the policy were to apply to the interest of the mortgagee, is equivalent to an express declaration that they shall not apply to such interest in any manner whatever, and without such condition the loss, to the extent of the interest of the mortgagee, would be payable to him absolutely and unconditionally. If this is not the construction to be placed upon the special provision, then it is useless and meaningless in the policy, and to so treat it would be to violate the well-known rule of construction requiring effect, if possible, to be given to every provision of a contract.

The only case directly in point upon the very question involved here, that we have been able to find, Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb., 717, s.c. 58 Am. St. Rep., 633, sustains our position.

As to the right of the mortgagee to maintain the action, we cite the case of Lowry v. Ins. Co., 75 Miss. 43, and as to the rules governing the construction of fire insurance policies, we cite Boyd v. Ins. Co., 75 Miss. 47.

A. C. McNair, for appellee.

By the terms of the policy it is avoided if any "change other than by the death of the assured takes place in the interest, title or the possession of the subject of insurance." That such is the result when the assured sells or conveys the insured property cannot be doubted. 3 Joyce on Insurance, sec. 2238; Savage v. Howard Insurance Co., 11 Am. Rep., 741; Trabue v. Insurance Co., 48 Am. St. Rep., 523; Cottingham v. Insurance Co., 9 L. R., 627.

The policy having been taken in the name of the mortgagor,...