Hanover Fire Ins. Co. of City of N.Y. v. Brown

• Decision Date: 19 January 1893
• Citation: 25 A. 989,77 Md. 64
• Parties: HANOVER FIRE INS. CO. OF CITY OF NEW YORK v. BROWN et al.
• Court: Maryland Court of Appeals

25 A. 989

77 Md. 64

HANOVER FIRE INS. CO. OF CITY OF NEW YORK

v. BROWN et al.

Court of Appeals of Maryland.

Jan. 19, 1893.

Appeal from Baltimore court of common pleas.

Action by Alexander Brown & Sons against the Hanover Fire Insurance Company of the City of New York on a fire insurance policy. From a judgment for plaintiffs, defendant appeals. Reversed.

The other facts fully appear in the following statement by Bryan, J.:

Alexander Brown & Sons brought an action against the Hanover Fire Insurance Company on a policy of insurance. The defendant pleaded three pleas, as follows: "It says, for a first plea, that, in and by said policy of insurance in the declaration mentioned, it is, among other things, provided that said policy should become void, and of no effect, immediately upon the passing or entry of a decree of foreclosure; or upon a sale under a deed of trust or levy under an execution; or if the assured shall be adjudged a bankrupt; or if the property insured be assigned under any bankrupt or insolvent laws, or if any change take place in title or possession of the property, whether by sale, transfer, conveyance, legal process, or judicial decree .(possession by reason of death excepted;) and the defendant avers that prior to the 29th day of March, 1891, and prior to the happening of the fire in the declaration mentioned, the property was sold by the plaintiffs under a deed of trust, and this it is ready to verify. And for a second plea the said defendant says that the said policy in the declaration mentioned, by reason of the aforesaid provisions therein contained, became and was void and of no effect prior to the said 29th day of March, 1891, and prior to the happening of said fire, because it says that prior to said day, and prior to said fire, a decree of foreclosure of the mortgaged property was passed and entered in the circuit court of Baltimore city, and this it is ready to verify. And for a third plea it says that the aforesaid policy, in the declaration mentioned, by reason of the said provisions therein contained, became and was void and of no effect prior to the said 29th day of March, 1891, and prior to the happening of said fire, because it says that prior to said day, and prior to said fire, a change took place in the possession of the said mortgaged property, and this it is ready to verify." The defendant also filed a fourth plea, alleging that the plaintiffs had been fully indemnified and paid by other insurers for all loss and damages alleged to have been sustained by them by reason of the fire. The plaintiffs filed six replications to these pleas, and the defendant demurred to all of them. The demurrers were overruled, and the defendant had leave to plead over. The replications and demurrers are sufficiently stated in the Opinion of the court. The defendant joined issue on the replications, and the case was tried before the court without a jury. The policy was effected in October, 1890, by O. Hammond, Jr., on a brick building, and certain machinery contained in it. The amount insured was $2,500, and the loss, if any, was made "payable to Alexander Brown & Sons, as interest may appear." The property insured, and the direction that the loss should be paid to Brown & Sons, appear in an indorsement on the policy which seem to have been made at the time it was issued. The evidence in behalf of the plaintiffs tended to show that the building and machinery were seriously injured by fire on the 29th day of March, 1891, and that the damage exceeded the sum of $18,900, and that they held a mortgage from Hammond, executed in 1884, for $50,000, on the insured property, and that at the commencement of foreclosure proceedings, (as they are called in the hill of exceptions,) hereafter mentioned, the sum of $36,000, with some interest, was due. The evidence for the plaintiffs further tended to show that at the time the policy was issued, and continuously down to the time of the fire, the insured premises were leased by Hammond to the Charles H. Rohr Packing Company, and that neither the mortgagor nor the mortgagees nor the plaintiffs, as purchasers, were in actual possession of the premises, hut the lessees had exclusive occupancy of them, and that the property was insured on the same risk by 21 policies, including this one, and one by the Merchants' Fire Insurance Company; that the aggregate amount insured was $33,000 on the building, and $23,000 on the machinery ;and that all the policies had substantially the same contributory clause, so called, as the policy of the defendant. There was also evidence tending to show that the portion of loss payable by defendant was $775.64. Notice of loss was given to defendant, and proofs of loss furnished. By the terms of the policy, it was to become void and of no effect "immediately upon the passing or entry of a decree of foreclosure; or upon a sale under a deed of trust or levy under an execution; or if assured shall be adjudged a bankrupt; or if the property insured be assigned under any bankrupt or insolvent laws; or if any change take place in title or possession of the property, whether by sale, transfer, conveyance, legal process, or judicial decree, (succession by reason of death excepted;) or if the policy, before loss, be assigned without consent of the company indorsed hereon." It contained also the following clause: "In no case shall the claim be for a greater sum than the actual damage to or cash value of the property at the time of the fire, nor shall the assured be entitled to recover of this company any greater proportion of the loss or damage than the amount hereby insured bears to the whole sum insured on said property, whether such other insurance be by specific or by general or floating policies, and without reference to the solvency or the liability of other insurers." The defendant offered in evidence the mortgage from Hammond to Alexander Brown & Sons. This mortgage contained a power of sale by Stewart Brown, named as the duly-constituted attorney or agent of the mortgagees. The defendant also proved that the attorney, on the 26th day of March, 1891, sold the insured property to the plaintiffs for the sum of $25,000, and the sale was reported to the circuit court of Baltimore city. On the 28th of March, 1891, the usual order nisi was passed, and on the 2d of July of same year the sale was finally ratified and confirmed. The auditor's report allowed to plaintiffs from the proceeds of sale more than $23,000 on their mortgage debt, and showed a balance due them of more than $13,000. Defendant offered evidence tending to prove that the total loss to the property insured amounted to $17,310, as ascertained by arbitration between the plaintiffs and 19 insurance companies who had issued policies on the same risk, and that this sum had been paid to the plaintiffs, and that the amount of insurance covered by these 19 policies aggregated $51,000, and that on 17 of these policies the agents of the insurance companies had made an indorsement in the following form on the 26th day of March, 1891: "This policy continued in name and for account of Alexander Brown & Sons, who have purchased the within-described property under foreclosure sale, subject to ratification by court." The plaintiffs then, in rebuttal, offered evidence that they were not satisfied with the amount of the loss awarded in the arbitration, and commenced suit on some of the policies, and threatened suit on all the rest, whereupon a compromise was effected, whereby, in addition to the sum awarded by the arbitration, they were to receive the amounts which, upon proper contribution, would be payable to the said companies by the Merchants' Insurance Company and the Hanover Insurance Company, and that the claim for these amounts was assigned by them. This evidence was admitted against the defendant's objection, and it...