Hartford Fire Ins. Co. v. Liddell Co.

• Decision Date: 31 January 1908
• Citation: 60 S.E. 104,130 Ga. 8
• Parties: HARTFORD FIRE INS. CO. v. LIDDELL CO.
• Court: Georgia Supreme Court

60 S.E. 104

130 Ga. 8

HARTFORD FIRE INS. CO. v. LIDDELL CO.

Supreme Court of Georgia

January 31, 1908

Syllabus by the Court.

A policy of fire insurance was issued by an insurance company to A. upon two described articles of personal property. It was provided in the policy that the loss should be payable to B. and C. as their interests may appear. At the time the policy was issued the interest of B. was as a purchase-money creditor retaining title to secure the payment of the same to one of the articles, and the interest of C. was of a similar nature as to the other article. These facts were known to the company at the time the policy was issued. Subsequently to the issuance of the policy A. executed and delivered to B. a chattel mortgage upon his interest in the article purchased from C. The policy contained a stipulation that the same should be void "if the subject of insurance be personal property, and be or become incumbered by a chattel mortgage." Held, that the execution and delivery of the chattel mortgage dy A. to B. worked a forfeiture of the policy under the stipulation against incumbrancing.

[Ed Note.-For cases in point, see Cent. Dig. vol. 28, Insurance §§ 829-839.]

Error from Superior Court, Early County; E. J. Reagan, Judge.

Action by the Liddell Company against the Hartford Fire Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed.

King Spalding & Little, for plaintiff in error.

A. G. Powell, W. C. Worrill, J. R. Pottle, and C. L. Glessner, for defendant in error.

EVANS P.J.

The facts of this case may be thus summarized: Collins was the owner of a ginning outfit, as well as a boiler and engine and appurtenances. The ginning outfit had been purchased from the Liddell Company, and that company had retained title to secure the purchase money. The boiler and engine had been purchased from the R. D. Cole Manufacturing Company, and that company had retained title to secure the payment of the purchase money. The policy of insurance was issued with full knowledge on the part of the insurance company that such was the condition of the title. When the first policy was issued there was a provision in the policy that the loss should be payable to the companies above referred to as their interests may appear. This clause was, by mistake, omitted from the policy when it was renewed. The evidence established the fact that this was due to a mistake, and it is conceded that the case is to be treated as if such clause had been duly attached to the policy. Subsequently to the issuance of the policy Collins gave the Liddell Company a mortgage on his interest in the boiler and engine. The insurance company pleaded that the execution and delivery of this mortgage was a breach of that provision in the policy which declares that the same "shall be void if the subject of insurance be personal property and be or become incumbered by a chattel mortgage." Policies of fire insurance often contain a stipulation that if there be a sale of the property or a change of interest in the same, or an alteration of the same, that the policy will be void. A condition in a policy that the policy "shall be void if the subject of insurance be personal property and be or become incumbered by a chattel mortgage" is a reasonable requirement; and when the insured accepts a policy with this condition in it, and commits a breach of the condition, he cannot recover in case the property is destroyed by fire. Alston v. Phenix Ins. Co., 100 Ga. 287, 27 S.E. 981.

It is the contention of the defendant in error that the giving of the mortgage to the Liddell Company on the boiler and engine did not violate this condition, because they and Collins sustained the relation of joint owners of the property to the insurer, and the transaction was but a shifting of their interest and was not violative of the condition of the policy. By the great preponderance of authority, where the subject of insurance is partnership property, and the insured are partners, a sale by one partner to another is not such an alienation as will work a forfeiture of the policy under a stipulation of this character. 1 May on Ins. (4th Ed.) § 279; 1 Biddle on Ins. 218; Hoffman v. AEtna Ins. Co., 32 N.Y. 405, 88 Am.Dec. 337; Pierce v. Nashua Ins. Co., 50 N.H. 297, 9 Am.Rep. 235; Allemania Fire Ins. Co. v Peek, 133 Ill. 220, 24 N.E. 538, 23 Am.St.Rep. 610; German Mut. Fire Ins. Co. v. Fox, 4 Neb. (Unof.) 833, 96 N.W. 652, 63 L.R.A. 334; Powers v. Guardian Ins. Co., 136 Mass. 108, 49 Am.Rep. 20; Lockwood v. Middlesex Assur. Co., 47 Conn. 553. Our own case of Ga. Home Ins. Co. v. Hall, 94 Ga. 630, 21 S.E. 828, is in accord with the current of authority. Likewise a transfer from one joint owner to another, because of their common and undivided ownership of the whole property, will not terminate an insurance policy issued to the joint owners, because of a covenant against alienation or incumbrancing. 2 Cooley's Briefs on the Law of Ins. 1726. The underlying principle of the proposition that a covenant against alienation by the insured does not terminate a policy issued to partners on partnership property because of a transfer of interest by one partner to his copartner is that each partner is interested in the whole property, and, as the insurer contracted to insure the purchasing partner's interest in the whole property, the hazard is not increased because the purchasing partner has acquired a greater interest in the property by a transfer of his copartner's share. The same reasoning which supports this proposition applies to a...