Hutchings v. Caledonian Ins. Co. of Scotland

• Decision Date: 15 October 1929
• Docket Number: No. 2851.,2851.
• Citation: 35 F.2d 309
• Parties: HUTCHINGS et al. v. CALEDONIAN INS. CO. OF SCOTLAND.
• Court: U.S. Court of Appeals — Fourth Circuit

35 F.2d 309 (1929)

HUTCHINGS et al. v. CALEDONIAN INS. CO. OF SCOTLAND.

No. 2851.

Circuit Court of Appeals, Fourth Circuit.

October 15, 1929.

Davis D. Moise, of Sumter, S. C., and Henry E. Davis, of Florence, S. C. (Lee & Moise, of Sumter, S. C., on the brief), for appellants.

Joseph L. Nettles, of Columbia, S. C. (R. E. Whiting, of Columbia, S. C., on the brief), for appellee.

Before NORTHCOTT, Circuit Judge, and GRONER and SOPER, District Judges.

GRONER, District Judge.

This is an action begun by Hutchings and Pratt, copartners, against Caledonian Insurance Company for the recovery of $8,000 on a policy of insurance commonly known as "use and occupancy insurance," under the terms of which defendant, as insurer, agreed if the tobacco warehouse, described in the policy, should be destroyed or damaged by fire so as to necessitate a total or partial suspension of business, the insurer would be liable for the loss of profits at the rate of $200 a day for a definite period.

In July, 1927, Hutchings, individually, had leased a tobacco warehouse in the city of Sumter, S. C., for the season 1927, with the purpose of conducting therein daily auction sales of leaf tobacco. On the following August 24 a fire occurred which totally destroyed the building and put an end to the business for the current season. Prior to the fire, Hutchings had applied to the local agents of defendant company for both fire and occupancy insurance, and three policies of fire insurance and the occupancy policy — the subject of this suit — were written in the usual way, but the policies themselves were never delivered, but were retained by the agent of the insurer. Shortly thereafter Hutchings, finding he needed financial assistance to carry on the business, entered into a partnership with Pratt, and the business thereafter and until the fire was conducted in the name of and for the benefit of the partnership. A few days after the policy was written, and prior to the fire, Hutchings and Pratt notified the agent who had written and retained the policy of the formation of the partnership, and requested that the insurance be transferred from Hutchings to the partnership, and this the agent agreed to do. At the trial in the lower court, the agent testified: "At that time an agreement was made between me, representing the Caledonian Insurance Company, and Messrs. Hutchings and Pratt, that they wanted the insurance and that I would look after it. It was a firm and binding agreement. I was representing the Caledonian Insurance Company. At that time, to the best of my knowledge and belief, the insurance policy was in my office, and remained there until after the fire. * * * Mr. Hutchings told me to do what was necessary to protect the copartners, * * * and I, representing the company, agreed to make any necessary endorsements. * * * I have been representing the Caledonian Insurance Company for a good many years, and have transferred policies before from one person to another. It was the common practice. * * * The method is by endorsement — one copy of the endorsement is sent to the company, one is put on our records, and one on the policy. All the fire policies were transferred from Hutchings to Hutchings and Pratt, co-partners, by endorsement." He explained the failure to transfer the use and occupancy policy as wholly due to inadvertence on his part, and this he said was not discovered until after the fire.

The complaint set out the facts stated above, and prayed for judgment in behalf of the partnership for the amount of the loss. The policy to Hutchings was written on the standard form, and contained the usual condition to the effect that no waiver of any provision of the policy should be valid unless in writing added or attached to the policy, and the further condition that, unless by agreement in writing added thereto, the policy should be void if the interest of the insured was other than unconditional and sole ownership. The insurance company defended, first, on the ground that no written waiver of any provision of the policy was made; and, secondly, that the policy was void and unenforceable because of change of ownership of the subject-matter insured from Hutchings to Hutchings and Pratt as copartners. At the trial in the lower court, evidence was offered to show the writing of the policy to Hutchings as the insured; its retention by the agent of the insurer; the request for the transfer of the insurance to the partnership; the agent's assent to the transfer and his agreement to make the proper indorsement upon the policy; his authority to act for the insurance company; and that through inadvertence alone the transfer and indorsement were not made.

At this stage of the case, the learned District Judge, on motion of the insurance company, rejected the plaintiff's evidence in the respects mentioned, and directed a verdict for the defendant on the ground that the policy sued on, being in the name of Hutchings and not in the name of the partnership, the latter could not maintain an action at law to recover the insurance money. In the recent case of Great American Ins. Co. v. Johnson (C. C. A.) 25 F.(2d) 847, which was an action at law against an insurance company on a policy of insurance mistakenly written in the name of a corporation rather than in the name of certain of its stockholders, the real owners of the property insured, we pointed out at some length the fundamental objection to the right of one not a party, but with an equitable interest, to sue at law to enforce a contract made in the name and on behalf of another.

In this case the policy sued on was in writing and for the benefit of Hutchings, as sole owner of the property insured. Parol proof, in an action at law, of the transfer to the partnership prior to the fire, was clearly inadmissible. Great...