Harding v. Norwich Union Fire Ins. Society
| Decision Date | 16 June 1897 |
| Citation | 71 N.W. 755,10 S.D. 64 |
| Parties | HARDING, Plaintiff and respondent, v. NORWICH UNION FIRE INS. SOCIETY, Defendant and appellant. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Lawrence County, SD
Reversed
Martin & Mason, Deadwood, SD
Attorneys for appellant.
Rice & Polley
Attorneys for respondent.
Opinion filed June 16, 1897
This action is on an insurance policy containing the following provision:
“This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if … the subject of insurance be personal property, and be or become incumbered by a chattel mortgage.”
The insurance was on plaintiff’s household furniture and effects. Before the policy was issued plaintiff and his wife executed a chattel mortgage upon the property to secure a note of $451.50 payable on demand. An action was commenced to obtain possession of the property, for the purpose of foreclosing such mortgage, and the insured had given a redelivery bond. Subsequent to the fire, the aforesaid action was tried, and it was determined therein that, when such action was commenced, the mortgagee was entitled to possession of the property. Defendant is a foreign corporation. L. W. Stilwell was its agent at Deadwood. He had an arrangement with one Kimball, whereby the latter solicited insurance for defendant, delivered policies, and collected premiums. The employment of Kimball was unknown to defendant. Stilwell’s authority was in writing, and authorized him to receive proposals for insurance against loss or damage by fire in Deadwood and vicinity, to fix rates of premiums, to receive moneys, and to countersign issue, renew and to consent in writing to the transfer of policies of insurance signed by the resident manager of defendant, subject to its rules and regulations and the instructions of its manager. In this case the insurance was secured by Kimball. Stilwell countersigned the policy, gave it to Kimball, who delivered it to plaintiff, collected the premium, and paid it to Stilwell, who remitted it to the defendant. Kimball received a part of Stilwell’s commission. Plaintiff testified that when he negotiated with Kimball for the insurance, he informed him of the existence of the chattel mortgage, the action to obtain possession, and that he desired the insurance as protection to the sureties on his redelivery bond. In this he is flatly contradicted by the evidence of Kimball. There was no communication between Stilwell and insured until after the fire. Neither he nor defendant had any knowledge or notice of the incumbrance before the loss occurred, and neither of them made any inquiry concerning the interest of the insured. The mortgage was not filed. It is not shown that plaintiff ever had any dealings with either defendant, Stilwell or Kimball, other than in connection with this policy. Nor does it appear that he knew anything about the relations existing between Stilwell and Kimball. There was no written application.
Evidently upon the theory that the incumbrance affected plaintiff’s interest in the property, the learned circuit court charged the jury as follows:
“If you are satisfied from the evidence in this case that the defendant issued the policy of insurance to the plaintiff, without any misrepresentations or concealment by the plaintiff of the existence at the time of the chattel mortgage upon the insured property, and without the defendant making any specific inquiries of the plaintiff as to the existence of any such chattel mortgage, and without any representation by the plaintiff upon this point, then the defendant was guilty of negligence and carelessness, which amounted to a waiver of this clause in the policy, and this defendant cannot avoid the policy thereby.”
Information of the nature or amount of the interest of one insured need not be communicated unless in answer to inquiries, except that the policy must specify the interest of the insured in property insured, if he is not the absolute owner thereof. Comp. Laws, § 4126, 4142. If it was not the duty of plaintiff to inform defendant of the incumbrance, except in answer to inquiries, its existence did not avoid the policy, and the court should have so directed the jury, as the evidence shows there were no inquiries. But the statute cited does not relate to mortgages. In this state a chattel mortgage merely creates a lien, and does not transfer the title. Comp. Laws, § 4330. It neither increases nor diminishes the owner’s insurable interest, but its existence is a fact peculiarly within the knowledge of the insured, material to the contract, which should be communicated to the insurer. In Texas it is held that the existence of a lien on property is not a breach of a condition in a fire policy requiring “unconditional and sole ownership,” in the assured. Insurance Co. v. Brooks (Tex. Civ. App.) 32 S.W. 714. Such in effect is the decision of this court in Peet v. Dakota F&M Ins. Co., twice before the court, and reported in 1 SD 462,(1891), and 7 SD 410,(1895). On the first appeal the court considered the clause of the policy relating to the insured’s ownership or title, and properly concluded that as the insurer had issued its policy without specific inquiries of the plaintiff as to the title to the land, and without any representations by the insured upon that point, it was its own carelessness and it could not avoid the policy. On the second appeal the court considered the clause relating to incumbrances, taking care to state that such clause was not involved in the former appeal, and decided that the lease was an incumbrance, which avoided the policy. It follows that the court below erred in charging the jury that this incumbrance did not avoid the policy if defendant failed to make any inquiries.
But, if defendant knew of the mortgage when its policy was issued, it is estopped from asserting a forfeiture by reason of the incumbrance. Authorities need not be cited in support of this...
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