Fidelity-Phenix Fire Ins. Co. v. Queen City Bus & Transfer Co.

• Decision Date: 27 January 1925
• Docket Number: No. 2307.,2307.
• Parties: FIDELITY-PHENIX FIRE INS. CO. OF NEW YORK v. QUEEN CITY BUS & TRANSFER CO.
• Court: U.S. Court of Appeals — Fourth Circuit

3 F.2d 784 (1925)

FIDELITY-PHENIX FIRE INS. CO. OF NEW YORK v. QUEEN CITY BUS & TRANSFER CO.

No. 2307.

Circuit Court of Appeals, Fourth Circuit.

January 27, 1925.

Walter L. Clark, of Baltimore, Md. (Walter C. Capper, of Cumberland, Md., on the brief), for plaintiff in error.

Morton P. Fisher, of Baltimore, Md. (Arch A. Young and Clarence Lippel, both of Cumberland, Md., on the brief), for defendant in error.

Before WOODS, WADDILL, and ROSE, Circuit Judges.

WOODS, Circuit Judge.

The plaintiff, the Queen City Bus & Transfer Company, recovered judgment against Fidelity-Phenix Fire Insurance Company on six policies of insurance, identical in form, each covering a motor bus therein described. The only difference in the policies is in the description of the automobiles, the amount and rate of insurance, and statement of actual cost of the property. It will be more convenient to refer to only one of the policies. The policy provides:

"This policy is made and accepted subject to the provisions, exclusions, conditions, and warranties set forth herein or indorsed hereon, and to all conditions printed on the back hereof, and upon acceptance of this policy the assured agrees that its terms embody all agreements then existing between himself and the company or any of its agents relating to the insurance described herein, and no officer, agent, or other representative of this company shall have power to waive any of the terms of this policy unless such waiver be written upon or attached hereto; nor shall any privilege or permission affecting the insurance under the policy exist or be claimed by the assured unless so written or attached.

"* * * This policy shall not be valid unless countersigned by a duly authorized agent of the company at Cumberland, Md."

"Unless otherwise provided by agreement in writing added hereto, this company shall not be liable for loss or damage to any property insured hereunder

"(a) While incumbered by any lien or mortgage."

"The automobile described is fully paid for by the assured, and is not mortgaged or otherwise incumbered except as follows:

"Harry Lippold and R. Harry Morton."

At the date of the policies the six automobiles were mortgaged to Lippold & Morton for $8,000. The District Court correctly held that this did not invalidate the policy because the mortgage appeared on the face of the policy. The policy must be read as a whole, and the two provisions relating to incumbrance construed together. In case of doubt, that interpretation which imports validity will be preferred to that which would make the instrument of no effect. The two clauses, taken together, clearly mean that any mortgage on the property except that mentioned in the policy would avoid it. Phœnix Life Insurance Co. v. Raddin, 120 U. S. 183, 190, 7 S. Ct. 500, 30 L. Ed. 644; McMaster v. New York Life Insurance Co., 183 U. S. 25, 40, 22 S. Ct. 10, 46 L. Ed. 64.

Evidence was adduced tending to prove intentional burning of the insured property by Morton, one of the mortgagees. In view of this evidence, the defendant complains of the refusal of the request for the instruction that, if the mortgagee intentionally burned the property, the mortgagor could not recover. It is true the condition of the mortgage had been broken at the time of the fire, and the mortgagees were therefore the legal owners. It is also true that the mortgage required the mortgagor to carry insurance on the busses payable to the mortgagees as their interests might appear; but the mortgagor had an insurable interest, and the policy was not in fact made payable to the mortgagees. The mortgagee, Morton, holding one-fourth of the capital stock, was not the substantial owner of the mortgagor corporation and its property. As its president, he participated in its management, but he did not control it, as in Northern Assur. Co. v. Rachlin Clothes Shop (Del.) 125 A. 184. There is no evidence that the other stockholders and officers participated in or sanctioned the burning. Under these facts, incendiarism of the mortgagee cannot be imputed to the mortgagor corporation. Kirkpatrick v. Allemannia Insurance Co., 102 App. Div. 327, 92 N. Y. S. 466; Meily Co. v. London & Lancashire Fire Ins. Co. (Third Circuit)...