Hathaway v. State Insurance Co.

• Decision Date: 22 July 1884
• Parties: HATHAWAY ET AL. v. THE STATE INSURANCE COMPANY
• Court: Iowa Supreme Court

20 N.W. 164

64 Iowa 229

HATHAWAY ET AL. v. THE STATE INSURANCE COMPANY

Supreme Court of Iowa, Des Moines

July 22, 1884

Appeal from Fayette Circuit Court.

ACTION on a policy of insurance against loss or damage by fire. There was a verdict and judgment for plaintiff. Defendant appeals.

REVERSED.

Fouke & Lyon, Ainsworth & Hobson and J. B. Johnson, for appellant.

John Hutchinson, and Hoyt & Hancock, for appellee.

D. W Clements, for intervenor.

OPINION

REED, J.

The policy of insurance in question was issued to Hathaway & Smith, a partnership composed of plaintiff and E. P. Smith. They were merchants, and the policy covered the stock of goods kept by them in their store. Before the loss occurred the partnership was dissolved, and plaintiff bought the interest of Smith in the firm property, and continued to carry on the business. He alleges in his petition that Smith wholly transferred to him his interest in the policy, and that defendant had notice of such transfer, and consented to it. The policy contains the following provision. "If the title of the property is transferred, incumbered or changed or if, without written consent hereon, the policy is assigned, then, and in every such case, the policy shall be void. "

The principal matter of defense relied on by defendant is the sale and transfer by Smith to plaintiff of his interest in the insured property,--the claim being that, under the provision quoted, the policy is rendered void by such sale and transfer.

The allegation that defendant had notice of the sale and transfer, and consented to it, was not proved on the trial and the circuit court held, in effect, that it was not essential to plaintiff's right to recover that it should be proven. Defendant presented a number of instructions to the court, and asked that they be given to the jury. These instructions present, in various forms, the proposition that the sale by Smith to plaintiff of his interest in the insured property, before the loss, was such a change of the title to the property as avoided the policy. The court refused to give these instructions, and told the jury that the only questions which they had to determine were, whether the stock of goods covered by the policy was damaged by fire, and, if so, whet was the amount of the damage so caused.

The vital question in the case, then, is whether, under this provision of the policy, said sale and transfer by Smith of his interest in the property had the effect to terminate the contract. Appellee insists that the assignment of errors is not sufficiently specific to raise this question. But we think otherwise. As stated above, a number of instructions asked by defendant presented the single proposition that this sale and transfer of the interest of Smith had the effect to avoid the policy; and the refusal to give each of these instructions is assigned as error. As the instructions present but a single proposition, the assignment that the court erred in refusing to give them, and each of them, specifically "points out the very error objected to."

Whether the sale by Smith of his interest has the effect claimed by defendant depends upon the construction which shall be placed on the words of the provision of the policy quoted above. The question as to the effect on the contract of insurance of the sale by one joint owner to another of his interest in the joint property, when the policy contains a provision against alienation, has often been before the courts; and the numerical weight of authority is probably in favor of the proposition that a sale by one partner to his co-partner of his interest in the partnership property does not have the effect to terminate a policy of insurance which contains a provision against the sale or transfer of the property. The case of Hoffman v. AEtna Insurance Company, 32 N.Y 405, is probably the leading case holding this doctrine. The policy in that case provided that it should be null and void, "if the said property shall be sold or conveyed." The policy was issued to a partnership, one member of which sold his interest in the property to his co-partner before the loss, and it was held that this did not have the effect to avoid the policy; and this holding is followed in Dermani v. Ins. Co., 26 La.Ann. 69; Pierce v. Ins. Co., 50 N.H. 297; Burnett v. Ins. Co., 46 Ala. 11, and West v. Ins. Co., 27 Ohio St. 1; in each of which cases the policy contained substantially the same provision. The ground upon which the holding is put is, that the alienation against which the parties provided by the provision was of the whole of the insured property, and not merely a portion of it, or some interest in it less than the whole; and that a sale of his interest by one partner to his co-partner was not such a disposition of the property as was contemplated by the parties when they...