Hartford Fire Ins. Co. v. Morris

• Decision Date: 10 July 1928
• Docket Number: No. 5006-5010.,5006-5010.
• Citation: 27 F.2d 508
• Parties: HARTFORD FIRE INS. CO. v. MORRIS et al., and four other cases.
• Court: U.S. Court of Appeals — Sixth Circuit

27 F.2d 508 (1928)

HARTFORD FIRE INS. CO. v. MORRIS et al., and four other cases.

Nos. 5006-5010.

Circuit Court of Appeals, Sixth Circuit.

July 10, 1928.

C. W. Sellers, of Cleveland, Ohio, and Paul H. Heineke, of Chicago, Ill. (Myers & Snerly, of Chicago, Ill., Thompson, Hine & Flory, and Stearns, Chamberlain & Royon, all of Cleveland, Ohio, and Hicks & Folonie, of Chicago, Ill., on the brief), for plaintiffs in error.

Clinton M. Horn, of Cleveland, Ohio (Dustin, McKeehan, Merrick, Arter & Stewart, of Cleveland, Ohio, on the brief), for defendants in error.

Before DENISON, MOORMAN, and KNAPPEN, Circuit Judges.

KNAPPEN, Circuit Judge.

In May, 1924, Emily Morris owned in fee a considerable parcel of land in Cuyahoga county, Ohio, on which were several cottages, a dwelling house, a bath house, two garages, and other buildings, and apparently an inn. The dwelling house was insured against loss by fire for $20,000, the contents for $6,000, under nine policies of insurance (all in the same form and with identical provisions), five of which policies were respectively issued by the plaintiffs in error, two by the Hartford Company, and one each by the Phoenix, the Fidelity-Phoenix, and the Niagara. Each policy covered its pro rata of the aggregate insurance. The policies also covered a bungalow, not involved in this suit.

While the several policies were in force, and on May 31, 1924, Emily Morris mortgaged the real estate in question to the Guardian Savings & Trust Company (now the Guardian Trust Company) for $12,000, the policies being thereupon indorsed: "Loss, if any, on buildings, payable to the Guardian Savings & Trust Company, as mortgagee (or trustee), as such interest may appear." Later, and on June 21, 1924, Emily Morris leased the entire premises to the Sampliner Realty Company for a term of 99 years; the Sampliner Company purchasing the contents of the dwelling house. Under that lease the Sampliner Company was to keep the buildings insured to the extent of 80 per cent. of their value at its expense, with provisions in the policies making the loss payable to the Guardian Savings & Trust Company as trustee of insurance moneys, and that all insurance moneys received by such trustee be held in trust, not only as additional security to the lessor for the payment of rentals and other charges provided for in the lease, pending rebuilding or repairing of the buildings damaged or destroyed, but also in trust for the purpose of defraying the cost of rebuilding or repairing, and of paying to the lessor (Emily Morris) any excess remaining in the hands of the trustee after the work of rebuilding or repairing shall have been fully completed and paid for. There was thereupon attached to each of the policies, a rider reciting the fact of the lease and its duration, that the fee was in Emily Morris, that the Sampliner Company should be recognized as the assured, loss, if any, under the respective policies to be payable to the trust company as mortgagee of the fee, and to the trust company as trustee, in accordance with the provisions of the 99-year lease.

Thereafter the Sampliner Company took possession under the lease, and later supplied the dwelling house with additional furniture, etc., and sublet it to others, who occupied it as a hotel or roadhouse until put out of business by the public authorities. About two weeks thereafter the house burned, while unoccupied, except by a watchman. Proofs of loss were furnished by the Sampliner Company to each insurer; each refused payment, for the reason that the hazard had been increased by the change of use from dwelling house to the new use referred to, in violation of a promissory warranty in the insurance policies to the effect that the property was used and was to be used as a family dwelling house; also by virtue of a provision of the policy making it void, and relieving the insurer of liability, if the hazard be increased by any means within the control or knowledge of the assured; and by virtue of a further policy provision that the terms and conditions thereof should not be the subject of waiver, except as indorsed upon the policy or added thereto, etc.

The suits here under review were brought by Emily Morris, the Guardian Trust Company, and the Sampliner Company against each of the defendant insurance companies, to recover its pro rata of the aggregate loss under all the policies. The five suits were tried together. Under mutual requests for directed verdicts, the court rendered joint judgment in favor of Emily Morris and the Guardian Trust Company, trustee, against each defendant insurer, for its pro rata share of the entire loss on the building under all the policies, but denied recovery by the Sampliner Company on account of insurance on either building or contents. These writs are severally brought by the defendant insurers. The Sampliner Company does not ask review.

In our opinion recovery was properly awarded to Emily Morris and the Guardian Trust Company on account of the fire loss on the building. We are unable to assent to the contention that Emily Morris was not a party to the contract of insurance at the time of the loss. The policies were issued directly to her. She does not appear to have assigned them to any one else. She still owned the fee, subject to the mortgage and the rights of her lessee. The latter had not exercised its option of purchase. The indorsements upon the policies before referred to were plainly intended for the benefit of the trust company, both as mortgagee and as trustee under the lease in a fiduciary capacity, including the primary protection of the rights of the beneficiary, Emily Morris. True, the policy indorsement declares that the Sampliner Company shall be recognized as the insured under the policy. But we think that, when considered with the writings and the conceded situation generally, this does not mean that Emily Morris and the trust company were not insured, but we think means little, if any, more than that the Sampliner Company could lawfully enforce the insurer's liability for loss. It brought suit...