Loventhal v. Home Ins. Co.

• Decision Date: 26 May 1896
• Parties: LOVENTHAL v. HOMES INS. CO.
• Court: Alabama Supreme Court

20 So. 419

112 Ala. 108

LOVENTHAL v. HOMES INS. CO.

Supreme Court of Alabama

May 26, 1896

Appeal from circuit court, Jefferson county; James J. Banks, Judge.

Action by Rebecca Loventhal against the Home Insurance Company upon a fire policy. There was judgment for defendant, and plaintiff appeals. Reversed.

This action was brought by the appellant, Mrs. Rebecca Loventhal against the appellee, the Home Insurance Company, to recover $700, alleged to be due on a policy of insurance taken out by plaintiff in the defendant company on a building which was destroyed by fire previous to the bringing of the suit. There were many pleas interposed, and demurrers were sustained to several of them, but under the opinion in this case it is deemed unnecessary to set them out in detail. The sixth plea of the defendant was as follows: "This defendant, for further answer to the complaint, says that in and by the terms of the policy executed by the defendant to the plaintiff, and which contains the contract of insurance, it is provided that the entire policy shall be void, 'if the subject of insurance be a building on ground not owned by the insured in fee simple,' and defendant says that the building insured in and by said policy was on ground not owned by the plaintiff in fee simple; wherefore the defendant says that the said policy is void, and the plaintiff, by reason of the premises, ought not to recover." Upon this plea issue was joined by the plaintiff. The facts of the case are sufficiently stated in the opinion. Upon the hearing of all the evidence the court, at the request of the defendant gave the general affirmative charge in its behalf, to the giving of which charge the plaintiff duly excepted. There were verdict and judgment for the defendant. Plaintiff appeals, and assigns as error the several rulings of the trial court to which exceptions were reserved.

Condition in the policy that insured owns the ground in fee simple, or that he is the unconditional and sole owner of the building insured, is not violated by mortgage or other incumbrance on the ground and building. Bl. Comm. bk. 2, cc. 10, 12, marg pp. 152, 158, 179; Burson v. Association, 136 Pa St. 267, 20 A. 401, and 20 Am. St. Rep. 919; American Artistic Gold Stamping Co. v. Glens Falls Ins. Co. (Com. Pl.) 20 N.Y.S. 646; Insurance Co. v. Haven, 95 U.S. 242; Insurance Co. v. Allen, 80 Ala. 576, 1 So. 202; Taylor v. Insurance Co., 120 Mass. 254; Conover v. Insurance Co., 1 N. Y. 290; Savage v. Insurance Co., 52 N.Y. 502; Noyes v. Insurance Co., 54 N.Y. 669; Pelton v. Insurance Co., 77 N.Y. 605; Carson v. Insurance Co., 43 N. J. Law, 300; Insurance Co. v. Walsh, 54 Ill. 164; Insurance Co. v. Spankneble, 52 Ill. 53; Insurance Co. v. Kelly, 32 Md. 421; Hubbard v. Insurance Co., 33 Iowa, 325; Kronk v. Insurance Co., 91 Pa. St. 300; Strong v. Insurance Co., 1 Alb. Law J. 162; Green v. Insurance Co., 17 Hun, 467; Dolliver v. Insurance Co., 128 Mass. 317.

Ward & John, for appellee.

Mountjoy & Tomlinson, for appellant.

HEAD J.

Contested policy of fire insurance. That portion of the policy material to the main question raised by the record is as follows "Mrs. Rebecca Loventhal. $700 on her two-story, frame, shingle-roof building," etc. (describing it). "This entire policy shall be void if the interest of the insured be other than unconditional and sole ownership, or if the subject of insurance be a building on ground not owned by the insured in fee simple." The interest of Mrs. Loventhal in the land was that of vendee under an executory contract of purchase, holding the bond of the vendor to make title to her upon full payment of the purchase money, a portion of which remained unpaid. She was, and had been for several years, in actual possession under the contract of purchase, exercising all the claims and acts of ownership of an absolute owner; and had, since the purchase, erected upon the land the house forming the subject of insurance. The last installment of purchase money was past due. Upon these facts, is the policy void? It cannot be questioned that if the policy had merely defined the assured as the owner of the building, with stipulation, even, that it should be void if she was not owner, her interest would have answered the stipulation, and rendered the contract of insurance valid and binding. No doubt can be raised that such an interest constitutes ownership that is insurable. The authorities are many, and all one way, upon this point. Speaking of the character of title such as Mrs. Loventhal's, we said in Wimbish v. Association, 69 Ala. 575: "The general principle prevailing in a court of equity is that from the time a valid contract for the purchase of lands is entered into, the vendor, as to the land, becomes a trustee for the vendee, and as to the purchase money the vendee becomes a trustee for the vendor. When, as in the present case, the agreement is, in its legal nature, executory, the vendor covenanting to make title on the payment of the purchase money at a future day, a court of equity, pursuing its own maxim of looking upon or treating that as done which ought to have been done, or which the parties contemplate shall be done in the final execution and consummation of the contract, for most purposes, regards the contract as specifically executed. The vendee is the equitable owner of the land; the vendor is the owner of the purchase money. To the land a trust attaches. Of it the vendor is seised for the use of the vendee. The trust binds the land, while the legal estate remains in the vendor; and it binds the heir or devisee succeeding to it, and every one claiming under the vendor, with the exception of a bona fide purchaser without notice. 1 Story, Eq. Jur. §§ 789, 790. As land, the vendee may convey or devise it; and as land it is descendible to his heirs, who may, in a court of equity, compel a specific execution of the contract. If there is not a stipulation to the contrary, the contract of itself operates a transmutation to the vendee of the possession, entitling him to the right of entry and enjoyment. Reid v. Davis, 4 Ala. 83." We, substantially, reiterated these principles in Ashurst v. Peck, 101 Ala. 499, 14 So. 541. They are familiar to the text writers. 2 Story, Eq. Jur. §§ 789, 790; 1 Pom. Eq. Jur. §§ 368-372; 3 Pom. Eq. Jur. §§ 1161-1406. Again, in many of our decisions, we have said that the relation of vendor to vendee, in cases like the present, is precisely that of mortgagee to mortgagor. All the incidents of the latter relation attach to it. Bankhead v. Owen, 60 Ala. 457, where the authorities are collated on page 467. See, also, Ashurst v. Peck, supra, where we recognized this rule, and held that such a vendor in possession is liable to the vendee for rents and profits to the same extent that a mortgagee in possession is liable to the mortgagor. And see, also, Hester v. Hunnicutt (at the present term) 16 So. 162, where we enforced the principle with emphasis. In Conner v. Banks, 18 Ala. 42, Judge Dargan said: "It is a well-settled rule that the vendor or real estate, who has not executed a deed to the purchaser, holds the legal title as a security for the payment of the purchase money; and, if he executed a bond to make titles when the purchase money is paid, the contract, in a court of equity, will be considered in the nature of a conveyance to the purchaser and a reconveyance back by way of mortgage." See, also, Moses v. Johnson, 88 Ala. 517, 7 So. 146, which states the principle very broadly. In view of these unassailable principles, we must regard Mrs. Loventhal as owner of the property, and just such an owner as she would have been if her vendor had conveyed to her by deed the entire, absolute, and unconditional estate therein, in fee simple, and she had reconveyed it to him, by way of mortgage, to secure payment of the purchase money. Then the simple question is, was that interest, so held by her unconditional and sole ownership, or was the ground owned by her "in fee simple," within the meaning of the policy? Conditions in a policy of insurance, limiting or avoiding liability, are strictly construed against the insurer, and liberally in favor of the insured. Insurance Co. v. Young, 86 Ala. 424, 5 So. 116. No intendments will be indulged to invalidate the policy unless forced by the plain language and import of the contract. It is really not contended by counsel for the insurer that the interest of the assured in the land is not unconditional and sole. Indeed, that clause of the policy is not set up in the pleas. We refer to it, that no question may be raised upon it hereafter, for that Mrs. Loventhal was the unconditional and sole owner of the equitable title admits of no question. She was confessedly armed with the right to go into a court of equity and obtain the absolute, unconditional legal estate in the lands upon simply discharging the incumbrance created thereon by the quasi mortgage for the purchase money. There was no condition annexed to her equitable estate, the nonperformance of which would forfeit or foreclose her right thus to obtain the legal title. Such a forfeiture could occur only by judicial proceedings, at the suit of her vendor, decreeing the foreclosure of her equity; and these proceedings themselves she could defeat, at any time before decree, by paying the purchase money, and thereby removing the incumbrance. Such an estate is not one upon condition, as conditional estates are commonly understood in the law. Then, was her estate one in fee simple? The term "fee simple" has never been used to distinguish between legal and equitable estates. It is used to denote the quantity or duration of estates, whether the enjoyment is limited or unlimited in point of continuance or duration. It defines the largest...