Germania Fire Ins. Co. v. Turley

• Decision Date: 24 November 1915
• Parties: GERMANIA FIRE INS. CO. v. TURLEY.
• Court: Kentucky Court of Appeals

179 S.W. 1059

167 Ky. 57

GERMANIA FIRE INS. CO. v. TURLEY.

Court of Appeals of Kentucky.

November 24, 1915

Appeal from Circuit Court, Daviess County.

Action by T. J. Turley against the Germania Fire Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

C. M Finn, of Owensboro, for appellant.

Miller & Sandidge, of Owensboro, for appellee.

SETTLE J.

The appellee, T. J. Turley, by this action sought to recover of the appellant, Germania Fire Insurance Company, $200, alleged to be the fair cash value of a barn owned by him, upon which by its policy issued January 28, 1910, appellant granted him that amount of insurance against its loss by fire; it being alleged in the petition that in May, 1914, the barn was destroyed by fire. It appears from further allegations of the petition that the policy in question also granted to the appellee insurance of $3,500 on his dwelling house, located on the lot upon which the barn was situated, and that for the insurance upon the two buildings he paid appellant the premium demanded, amounting to $73.20; that the policy insured the two buildings for a period of five years from its date, and contains a provision making the insurance, in case of loss on either building, payable to the Fidelity &amp Columbia Trust Company, of Louisville, Ky. as its interest may appear; this provision being made because the trust company then had a mortgage upon the two buildings and the lot upon which they are situated.

The answer of appellant admitted the contract of insurance, as contained in the policy referred to, but denied any liability upon the policy, or that appellee was the owner or holder of the policy at the time of the destruction of the barn by fire, and pleads that, subsequent to the issuance of the policy, and before the burning of the barn, the appellee sold and conveyed the property to Ben J. Head, and then assigned to him the policy sued on, by which he parted with the title to both the property and policy; that Head sold and conveyed the property to another, the sale and conveyance being accompanied by an assignment of the policy in question, without the consent of appellant indorsed on the policy; that by the terms of the policy it is provided that in case any change should take place in the title, possession, or interest of the assured, the policy in that event should become null and void, unless otherwise provided by agreement indorsed thereon; and, further, that appellant did not, by any agreement indorsed on the policy, waive its right to declare it null and void because of a change in the title to the property. Finally, it was alleged in the answer that, by reason of such change in the title to the property, the policy became and is null and void.

Appellee filed an amended petition in which it was averred that on May 17, 1912, appellee sold and by deed conveyed the property in question to Ben J. Head, and at the same time assigned and transferred to him the policy of insurance upon the dwelling house and barn, and that on July 3, 1912, appellant, by an indorsement on the policy, consented to the assignment to Head; that on August 19, 1912, Head sold and conveyed the property to J. M. Hamilton, and at the same time transferred to him the policy, to which appellant, through its local agent at Owensboro, consented, and agreed to later indorse such consent upon the policy, which was then in the hands of the Fidelity & Columbia Trust Company, but which indorsement it did not, in fact, make; that on January 1, 1914, the property was sold and conveyed by Hamilton to R. H. Ford, and Hamilton then agreed to and did assign Ford the policy, to which assignment appellant, through its local agent, again agreed, such agreement being accompanied by a promise to have such consent indorsed on the policy, with which promise it also failed to comply; that on April 22, 1914, Ford sold and conveyed the property to the appellee, the original owner and vendor, Ford assigning the policy to appellee; and that at that time appellee applied to appellant's local agent at Owensboro for its assent to the assignment of the policy from Ford to him, but that the agent informed him that he was not then acting as agent for appellant, and that the latter had determined to quit business in this state, or would soon do so.

It was further alleged in the amended petition that when Ford delivered to the appellee the deed reconveying to him the property, he also assigned and delivered to him the policy in question, and that when thereafter the barn was destroyed by fire he (Turley) was in possession of the policy and then held the title to the property covered by the policy, which restored the situation occupied by appellee and appellant to what it was when the policy was issued and delivered to the former by the latter. The facts alleged in the amended petition were also, in substance, pleaded in a reply filed by appellee to the appellant's answer. The reply, in addition, contained a traverse of the averments of the answer with respect to the alleged right of appellant to rely upon the forfeiture claimed as arising under the clause of the policy providing therefor in case of a change in the title of the property, and pleaded a waiver on the part of appellant of such right of forfeiture.

By agreement of the parties a jury was waived, and the law and facts submitted to the court, the trial resulting in a judgment in favor of appellee against appellant for the $200, claimed in the petition as the loss sustained on the barn. Appellant complains of that judgment, and has moved this court to grant it an appeal, as provided by rule 20 (169 S.W. vii) of this court, adopted in conformity to the act of March 17, 1914 (Laws 1914, c. 24) regulating appeals in civil cases when the amount in controversy, exclusive of interest and costs, is as large as $200 and less than $500, which appeal, in view of the novelty of the question involved, we deem it proper to grant.

The provision under which appellant seeks to enforce the forfeiture claimed in this action is in the following language:

"If the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, the property covered in whole or in part by this policy * * * or in case any change takes place in title, possession or interest of the assured in the above-mentioned property * * * or if this policy be assigned * * * then in each and every one of the above cases this entire policy shall be null and void, unless otherwise provided by agreement indorsed thereon."

The above clause does not mean that every conceivable change that might take place in the title of the property, or assignment of the policy, without the agreement of the insurance company indorsed thereon, would have the effect to forfeit the policy. In construing this clause the courts seem to have held that many transfers which apparently come literally within its terms cannot reasonably be held to be covered thereby. Thus it has been held that such a policy provision does not apply to transfers from one joint owner to another. Cooley's

Insurance Briefs, 1726; Lockwood v. Middlesex Ins. Co., 47 Conn. 553; Hyatt v. Wait, 37 Barb. (N. Y.) 29; German Mutual Fire Ins. Co. v. Fox, 4 Neb. (Unof.) 833, 96 N.W. 652, 63 L.R.A. 334; Tillou v. Kingston Mut. L. Ins. Co., 7 Barb.

(N. Y.) 570; Royal Ins. Co. v. Sockman, 8 O. C. D. 404.

The provision in question now appears in all similar policies. Its principal object being to secure to the insurer a contracting party of its own choosing, we reasonably infer that it is intended to cover only such transfers of the property and policy as would permanently vest the interest of the person with whom the insurer contracted in another, or others, who were strangers to the transaction and with whom it had not consented to contract. It cannot be claimed that the provision in question will prevent a merchant from selling to retail customers goods covered by the policy, yet if literally construed, it might be said to do so. Neither can it be claimed that a transfer by one partner of all his interest in the insured property covered by the policy to his copartner is such a transfer as would be covered by the clause in question. It has also been held that this clause does not cover a change in the title, whereby the interest of the...