Ellis v. Insurance Co. of North America

Decision Date01 January 1887
CourtU.S. District Court — Southern District of Iowa

William L. Ellis, as assignee of certain policies of insurance brought suit against the Insurance Company of North America to recover for the loss by fire of a stock of goods and building under four policies issued by the said company, to E. R. Ellis & Co., a firm composed of E. R. Ellis alone. The first policy was issued June 10, 1881, insuring a stock of merchandise for $500. The second policy on said stock was for $500, and dated October 10, 1881. The third policy, dated August 20, 1881 insured the building containing the stock. The fourth policy was one for $1,000 on the stock, and was dated December 8 1881.

Each of the policies contained the following terms and conditions of the insurance therein.

'(a) If insurance is desired * * * on property * * * on leased ground, or on property of any kind in which the interest of the applicant for insurance does not amount to the entire sole, and absolute ownership, it must in every such case be so represented to the company, and clearly expressed in the body of the policy, otherwise there will be no liability hereunder as to such property or limited interest.

'(b) The procuring of insurance on said property for more than its cash value, or the having of other insurance thereon, or any part thereof, valid or invalid, prior or subsequent, not made known to this company, and consented to hereon, * * * will render this policy null and void.

'(c) The acquiring by a third party of an insurable interest in the property, or any part thereof, by virtue of a mortgage or deed of trust executed by the assured subsequent to the date hereof, * * * or any change whatever in title or right of possession, not herein specified, succession by reason of the death of the assured excepted, shall each and all cause the immediate termination of this policy, unless otherwise provided by special agreement, clearly expressed in the body of the policy.

'(d) Agents of the company have no authority to bind the company in violation of any of the printed terms or conditions of insurance as herein expressed; and no printed or written condition or restriction hereof, which by its terms may be subject to waiver, shall be deemed to have been waived, except by a distinct specific agreement, clearly expressed in the body of the policy.

'(e) If the assured shall, by voluntary transfer or conveyance, dispose of the property covered by this policy, or of an undivided interest therein, or a change shall take place in the membership of the firm or copartnership for whose benefit the insurance hereunder was effected, this policy may be assigned to the party or parties succeeding to the ownership of the property, providing the company shall first consent thereto by indorsement thereon, otherwise this insurance shall cease from the date of such change in ownership. * * * This policy shall be subject to cancellation at any time, at the request of the assured, the company to retain earned premium, reckoned at the usual short rates for the time expired. The policy may also be at any time canceled by the company on refunding or tendering to the assured his, her, or their agent, a ratable portion of the premium for the time expired.'

The first three policies were issued by the duly-authorized agent of the company, at Albia, Iowa; the last by its agent at Des Moines, who had no actual knowledge of the existence of the prior policies, though they had been reported to the company. December 6, 1881, E. R. Ellis executed and filed for record a chattel mortgage covering all the goods described in the policies. December 5, 1881, E. R. Ellis made a mortgage upon the lot and building covered by the policy, dated August 20th, which mortgage was recorded the same day. December 15, 1881, E. R. Ellis sold and conveyed to William M. Ellis, the plaintiff, the lot and building aforesaid, and December 20, 1881, the entire stock of goods therein contained was also transferred to him. An assignment of the policies was duly made December 23d, and the consent of the company thereto was indorsed upon each, as follows: 'The property hereby insured having been purchased by William M. Ellis, the Insurance Company of North America hereby consents that the within policy may be assigned to said purchaser, subject to all the terms and conditions of insurance herein mentioned and referred to. Dated Albia, Iowa, this twenty-third day of December, 1881. M. CARRIER, Agent.'

December 21st, William M. Ellis and wife executed and delivered a mortgage upon the lot whereon the building and goods were situated, which mortgage was filed for record December 24th thereafter; at the time of the assignment of the policies, and the consent of the company given, neither the plaintiff nor the company had actual knowledge of the mortgages given by E. R. Ellis. The property was destroyed by fire, December 27, 1881; and, the defendant failing to comply with plaintiff's demands for adjustment, suit was commenced in the state court, but afterwards transferred to the United States circuit court, where the case was tried before Judge LOVE without a jury. The court found and entered judgment for plaintiff, whereupon a motion was made for a new trial; the defendant claiming that the first three policies were avoided by the mortgages of December 5th and 6th, and that the policy of December 8th was void because Ellis, being a mortgagor, was not the entire, sole, and absolute owner of the property.


Two questions have been presented and argued; one of them of great difficulty as well as of some importance.

The first question arises upon these facts: One E. K. Ellis was the owner of the property upon which he had taken out insurance policies, one of them that in suit. He sold that property to the plaintiff, William Ellis, and assigned the policy. The consent of the company was given to the assignment. At the time of the assignment...

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