Marcus v. Rhode Island Ins. Co.

• Decision Date: 01 February 1915
• Parties: JAMES T. MARCUS, Respondent, v. RHODE ISLAND INSURANCE COMPANY, Appellant
• Court: Kansas Court of Appeals

173 S.W. 30

187 Mo.App. 134

JAMES T. MARCUS, Respondent, v. RHODE ISLAND INSURANCE COMPANY, Appellant

Court of Appeals of Missouri, Kansas City

February 1, 1915

Appeal from Jackson Circuit Court.--Hon. W. O. Thomas, Judge.

Judgment reversed.

Fyke & Snider for appellant.

(1) When a contract becomes void because of the acts of one of the parties and without knowledge of the other party it remains void and cannot be reinstated without the other party to the contract consenting to such reinstatement. Hoover v. Insurance Co., 93 Mo.App. 111; Imperial Ins. Co v. Coos County, 151 U.S. 463; German Ins. Co. v Russell, 65 Kan. 373, 69 P. 345; Moore v. Ins Co., 62 N.H. 240; Kyte v. Ins. Co., 149 Mass. 116, 3 L.R.A. 508. (2) If a fire had occurred at that time or at any time during the period Rosa owned the property plaintiff would not have sustained any loss and any damage caused by the fire would have been the loss of Rosa and not his loss, and would not have been covered by the insurance. Manning v. Insurance Co., 123 Mo.App. 456; Snider v. Murdock, 51 Mo. 175.

Yates & Mastin and C. S. McLane for respondent.

(1) The conveyance of property in violation of the restriction in the policy does not create a forfeiture if the property is reconveyed before loss. 2 Cooley Briefs on Law of Insurance, 1887, 1889; Power v. Ocean Ins. Co., 19 La. 28; Lane v. Maine Mutual Ins. Co., 12 Me. 44; Worthington v. Bearse, 12 Allen, 382; German Mutual Fire Ins. Co. v. Fox, 96 N.W. 652; Wolfe v. Security Fire Ins. Co., 39 N.Y. 49. (2) A policy having become inoperative because of a violation of the contract provisions becomes reinstated immediately upon the cessation of the condition which has rendered the policy inoperative. Obermeyer v. Ins. Co., 43 Mo.App. 573; Lane v. Maine Mut. Fire Ins. Co., 3 Me. 44.

OPINION

ELLISON, P. J.

-Defendant issued to plaintiff a policy of fire insurance in September, 1912, on his store and fixtures consisting of a bakery stock. In December following he sold out to one Rosa, who took possession, and plaintiff went into other business. In about three months afterwards, plaintiff bought the stock back from Rosa and received possession from him, when, in about eight days, the property was destroyed by fire. There was a provision in the policy rendering it void if the property was sold. There was no claim that defendant waived the provision. Plaintiff's position is, that while the contract of insurance ceased when he sold the property, yet it revived when he again became the owner, within the original period of the insurance. The trial court took that view and judgment went against defendant not only for the amount of the policy, but for a penalty and an attorney's fee in addition, as a punishment for vexatious refusal to pay.

In this State, provisions in policies of fire insurance which make the contract void if there is other insurance, if the property is left vacant and unoccupied, or if there is a change of ownership, without the consent of the insurer, are valid.

The correctness of this statement of the law is not denied by plaintiff and he resorts to the idea that, after all, the contract had not become void, or at an end, but its force merely remained in abeyance, subject to renewed life if the insured happened to again become the owner of the property.

In this theory in his own behalf plaintiff leaves the defendant altogether out of consideration; and it seems to be assumed as of no consequence what defendant may think about the revivor. The idea is palpably unreasonable and unjust. During an extended term of insurance the insured, under that theory, may conclude to sell, purchase back, resell and repurchase as often as he may please, and thus, of his own will, have the insurer bound, released and rebound, at his own pleasure. It is not suggested how the insurer, in that mode of doing business, is to know what his obligations are at any specific time. Nor is it made known what would become of a business which left it in the power of one party, at his own will, to destroy and recreate obligations on the other party.

Plaintiff has cited cases in support of the judgment that deserve notice. Lane v. Ins. Co., 12 Me. 44; Worthington v. Bearse, 12 Allen 382; Wolfe v. Ins. Co., 39 N.Y. 49; Power v. Ins. Co., 19 La. 28; in the first of these the insurance was on the store building and goods, separately. The building was "hired" to another and kept a few months and the goods were sold to him. At the end of a few months the insured "took back" the goods and paid the vendee for his time. Then the property burned. The court held the "hiring" of the building was not an "alienation" provided against in the policy. On the second branch of the case, it was held that as the term of the insurance was for six years, it must have been understood by the parties that selling the goods, piece at a time, and replenishing the stock from time to time, was not an alienation. The court then said, "we see no difference in principle between the case where the quantity is diminished by a partial sale and then replenished, and where the whole is sold and entire new stock is purchased." We think that view has little reason to sustain it. Certainly the parties contemplated that the goods would be retailed and replenished during the six years the policy was to run. But they just as certainly contemplated that the insured would remain in the business and himself do the selling and replenishing, unless he notified the insurer, that he had sold out to a successor, or had quit the business. The policy provided that "when the property shall be alienated by sale or otherwise, the policy shall thereupon be void." We do not appreciate the course of reasoning which would say, that because the insured himself may sell and replenish, and thus himself continue the business that he may sell out to a third person and quit the business, without, under the plain terms of his contract, putting an end to it.

In the second case there was no absolute sale, the insured retaining his insurable interest. But if he had not, there was no provision in the policy against a sale.

In the third case, there were two transfers. The insured was a married man and transferred the goods to one Stupp, evidently that he might transfer them to the insured's wife, which Stupp immediately did. The husband then assigned the policy to his wife with the consent of the company, which was interpreted to be a consent to the transfer of the goods to her, citing Hooper v....