McElroy v. British America Assur. Co. of Toronto, Canada

• Decision Date: 08 May 1899
• Docket Number: 479.
• Citation: 94 F. 990
• Parties: McELROY v. BRITISH AMERICA ASSUR. CO. OF TORONTO, CANADA.
• Court: U.S. Court of Appeals — Ninth Circuit

94 F. 990

McELROY v. BRITISH AMERICA ASSUR. CO. OF TORONTO, CANADA.

No. 479.

United States Court of Appeals, Ninth Circuit.

May 8, 1899

Harold Preston, E. M. Carr, and L. C. Gilman, for plaintiff in error.

George Donworth, and James B. Howe (S. H. Piles, of counsel), for defendant in error.

This action was brought by James F. McElroy, plaintiff in error in the superior court of the state of Washington, to recover $2,169.30 and interest, alleged to be due upon a policy of fire insurance issued to Mrs. J. C. Powers, plaintiff's assignor, by the defendant in error. Upon the petition of defendant, the case was removed to the circuit court of the United States for the district of Washington, where it was tried before a jury. At the close of the testimony, the court, at the request of the defendant, instructed the jury to return a verdict for the defendant, and the jury found accordingly. Judgment was entered on the 5th day of August 1898, to reverse which the plaintiff sued out this writ of error.

The policy in question-- No. 825,596-- was issued on January 23 1896, insuring the steamer Cricket, her hull, cabins, tackle, furniture, etc., against loss or damage by fire, to the extent of $3,000. The defense set up in the court below was that the policy was rendered void by the action of the insured in procuring concurrent insurance on the same property in excess of the amount permitted in defendant's policy, and because a chattel mortgage upon the property insured was in existence at the time the policy was issued, of which defendant had no knowledge or notice. It appears that Mrs. J. C. Powers was the owner of the steamer Cricket from the 1st day of January, 1896, up to the time of its loss, on or about February 5, 1896; that during this period Capt. E. M. Barrington, son of Mrs. Powers, was captain and managing agent of the Cricket, and was operating the steamer for the transportation of freight and passengers upon the waters of Puget Sound, between the cities of Seattle and Everett. Some days prior to January 23, 1896, H. C. Ewing, a member of the firm of Calhoun & Co., insurance agents in Seattle for a number of companies, called on Capt. Barrington, requesting the privilege of writing insurance upon the Cricket. No contract was made at this time. Some days later, W. M. Calhoun, of the same firm, saw Capt. Barrington, and conversed with him regarding the insurance. In this conversation Barrington claims to have told Calhoun that he wanted to carry $10,000 insurance on the steamer, but that he could probably give Calhoun & Co. only $6,500 of it, because a mortgage on the steamer was held by Capt. McFarland, who might wish to personally procure the writing of insurance to cover the mortgage. Barrington further testifies that on January 24th he had a conversation with Calhoun by telephone, in which he told Calhoun that the mortgagee had consented to his procuring the insurance, but that he had decided to place that amount ($3,500) through another agent, J. S. McCormick, and would therefore give Calhoun & Co. the writing of $6,500, as previously talked of; that Calhoun told him the steamer had been covered to that amount already, and he would bring the policies to Barrington very soon. Calhoun testifies, with reference to these conversations, that Capt. Barrington told him of the mortgage, but that the largest sum mentioned as insurance desired on the steamer was $6,500; that in the conversation by telephone the captain mentioned his intention of giving $3,500 of the insurance to McCormick, but before the close of the conversation decided to leave matters as they were, thus giving to Calhoun & Co. the entire amount of $6,500. He testifies that he did not know of the additional $3,500 being placed on the steamer, or that it was desired to secure any insurance over $6,500, until after the fire occurred. Immediately after this telephone conversation, which occurred about noon of January 24th, Barrington ordered $3,500 insurance from McCormick. This was written by two companies, the Connecticut, of Hartford, and the Providence, of Washington, and was in favor of the mortgagee, covering the risk from noon of January 24, 1896. These policies were delivered to Capt. Barrington on January 25th. The insurance given to Calhoun & Co. was not written by the companies they represented, but was placed by Calhoun with Hanford & Stewart, agents in Seattle of the Palatine Insurance Company, and C. A. McKenzie, agent for the British America Assurance Company, of Toronto, Canada (the defendant in error), in the amounts of $3,500 and $3,000, respectively. The policy of the latter company covered the risk from noon of the 23d day of January, 1896, and was delivered to Barrington by Ewing, of Calhoun & Co., on January 24, 1896, together with the policy of the Palatine Company, which was written on January 24th. The premium on the defendant's policy was $75,

$50 of which Barrington paid Ewing at this time. On the back of the defendant's policy was pasted a printed slip, reading: 'Return for renewal, transfer, or indorsement to Calhoun & Co., Insurance, S.E. Cor. Yesler Ave. and Commercial St., Seattle, Wash. ' The policies of the Connecticut and Providence Companies in favor of the mortgagee do not limit the amount of concurrent insurance. In the policy written by the Palatine Company, for $3,500, these words appear: '$3,000 other concurrent insurance permitted;' and in that issued by defendant in error, for $3,000, the following: '$6,500.00 insurance in all permitted, concurrent herewith;' also: 'This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy; * * * or if the interest of the insured be other than unconditional and sole ownership; * * * or if the subject of insurance be personal property, and be or become incumbered by a chattel mortgage. ' The steamer was destroyed by fire February 5th following, at Everett, Wash. Before the expiration of the 30-day credit, Mrs. Powers, tendered payment of the balance of the premium, but the tender was refused. In due season, to wit, February 21, 1896, the insured furnished proofs of loss to Calhoun & Co., and was notified by them that such proofs had been turned over to the defendant company. This company denied any liability upon its policy, refusing to pay any loss incurred thereon; hence suit was brought for the recovery of the amount apportioned by appraisement to be due from defendant upon its said policy.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

MORROW Circuit Judge, after stating the facts as above, .

There is but one assignment of error, namely, that the court below erred in granting the motion of the defendant company to give a peremptory instruction to the jury to find a verdict for the defendant, and in giving such peremptory instruction; and the single question presented is whether or not the plaintiff in error had the right to have his case submitted to the jury. It is contended on the part of the defendant, as a matter of law, that the policy is void, for the reason that it in express terms provides that, if a chattel mortgage exists on the property, or if insurance shall be obtained to any greater extent than $6,500, in all, concurrent with the amount covered by the policy, it shall be void, and both of such forbidden acts are established by the evidence on the part of the plaintiff to have been done. The plaintiff asserts, on the other hand, that defendant had notice and knowledge of the existence of the mortgage and of the intention of the insured to apply for insurance to the amount of $10,000 in all, through Calhoun & Co., its agents. To this the defendant replies that Calhoun & Co. were not its agents, but rather the agents of the insured, and therefore any notice or knowledge that Calhoun & Co. may have had was not the knowledge of the defendant. Several witnesses testify as to the notice given to Calhoun & Co. of the existence of the mortgage. Barrington was asked, with regard to his conversation with Ewing, of the firm of Calhoun & Co., if anything was said in relation to the chattel mortgage upon the steamer, and replied: 'I told him that I had to have $3,500 of it written up to Captain MacFarland, of Everett; that I could not promise him that insurance; that I did not know whether he wanted me to insure with Seattle firms or not; likely he might want the same men that insured the year before in Everett; and $6,500 for my mother. Q. What reason, if any, did you give him for the necessity of having insurance written in favor of or payable to Captain MacFarland? A. That he held the mortgage on the steamer for that amount.'

And in an interview with Mr. Calhoun a few days later he stated the following language was used:

'He (Calhoun) asked me then how much I wanted to insure for, and I told him the whole amount was $10,000. $3,500 of it was to go to Captain MacFarland, of Everett, and $6,500 to Mrs. Powers. I told him it could not promise him the $3,500 until I seen Captain MacFarland,-- whether he wanted to have it or not,-- but the $6,500 he could have; and he said, 'All right.' He says, 'You try and get the $3,500 for me from Captain MacFarland, and I will write the whole $10,000.' I told him, 'All Right;' I would see Captain MacFarland, and see what I could do for him. He asked me what I wanted to insure $3,500 with MacFarland for. I told him he had the mortgage on the boat for that amount. He said he would go ahead and write up the $10,000 just as soon as I could see Captain MacFarland, whether he would get the $3,500 or not. If he could get

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