Rent-A-Car Co. v. Globe & Rutgers Fire Ins. Co.

• Decision Date: 08 January 1930
• Docket Number: 46.
• Parties: RENT-A-CAR CO. v. GLOBE & RUTGERS FIRE INS. CO.
• Court: Maryland Court of Appeals

148 A. 252

158 Md. 169

RENT-A-CAR CO. v. GLOBE & RUTGERS FIRE INS. CO.

No. 46.

Court of Appeals of Maryland

January 8, 1930

Appeal from Baltimore City Court; Robert F. Stanton, Judge.

Action by the Rent-A-Car Company and another against the Globe & Rutgers Fire Insurance Company. From a judgment for defendant, the named plaintiff appeals. Reversed and remanded as to the named plaintiff, and affirmed as to the other plaintiff.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, and PARKE, JJ.

Edward L. Ward, of Baltimore (George Eckhardt, Jr., of Baltimore, on the brief), for appellant.

Leonard Weinberg and Howard A. Sweeten, both of Baltimore, for appellee.

PARKE J.

The Rent-A-Car Company is a corporation which, at its principal office located at 701 East Baltimore street, and a branch office at 1239-41 Light street and a second in the 3700 block of Eastern avenue, carried on in Baltimore in April, 1926 the business of renting automobiles for hire. About the middle of November, 1927, the business of the corporation together with its automobiles and equipment and the unexpired term of its lease for 1239-41 Light street, was sold to Myer M. Astrin, trading as Myers Drive-It-Yourself Company, for $16,000, and on December 1, 1927, the sale was completed by a delivery to the purchaser, who paid $1,000 in cash and agreed to pay the remainder in monthly installments and to secure the seller by a lien on the automobiles purchased. Before the various documents of title contemplated by the seller and buyer were executed, an insurance policy was issued by the Globe & Rutgers Fire Insurance Company to Myer M. Astrin, trading as Myers Drive-It-Yourself Company, and the Rent-A-Car Company, to insure them for one year from December 1, 1927, against loss or damage by fire, lightning, and transportation, or by theft, robbery, and pilferage in an amount not in excess of $13,500 of the actual cash value of the sold automobiles at the time of happening of any loss or damage because of any of the perils against which the insurance was written. The premium was paid by the buyer, the policy was handed to him on December 1, 1927, and he gave it to the seller to hold. On December 14, 1927, the parties put in documentary form their contract by the Rent-A-Car Company executing and delivering to Myer M. Astrin, trading as Myers Drive-It-Yourself Company, a bill of sale for the automobiles sold and a sublease for the unexpired term in the Light street premises; and Myer M. Astrin, trading as set forth, executing and delivering to the seller a chattel mortgage on the automobiles sold to secure the payment of the residue of the purchase price of $15,000 in monthly installments of not less than $150. The contemporaneous execution and successive delivery and recording of these legal instruments were in fulfillment of the agreement between the parties and simply evidenced in a formal manner the terms of the bargain and sale, and, so, did not change in any respect the relation of the assured to each other or to the insurer.

The buyer remained in possession of the premises and the subject-matter of the policy until January 3, 1928, when a fire occurred. The mortgagee and mortgagor complied with the preliminary requirements of the policy, and they and the insurer having agreed that any action by the underwriter in investigating the cause of the fire and in ascertaining the amount of the loss and damage to the property by fire should not affect any right or liability of either the assured or the insurer under the policy, and the parties not being able to agree as to the amount of the loss, appraisers were named, who selected an umpire, and the three, conformably to the terms of the policy, appraised the sound value of 31 automobiles before the fire at $8,600, and the actual damage by fire at $5,275. The insurer declined to pay the loss. In an action at law brought by both of the named assured, the insurer successfully set up the defense that the plaintiff Myer M. Astrin wrongfully set fire to the premises to collect the insurance on the automobiles; and the judgment at nisi prius was in favor of the defendant.

The evidence on the record is that Astrin was the sole incendiary, and that the Rent-A-Car Company, through its agents and servants, neither instigated, knew of, nor participated in Astrin's wrongful act. Astrin has not appealed, and the Rent-A-Car Company concedes, for the purpose of this appeal, the guilt of Astrin. So, the material facts will sufficiently appear from the preceding statement and the following relevant portions of the policy of insurance:

"The Globe and Rutgers Fire Insurance Company, Incorporated, of the City of New York, in consideration of the premium hereinafter mentioned does insure: A. The assured named herein, for the term herein specified, to an amount not exceeding the actual cash value of the property at the time any loss or damage occurs, nor, in any event, the limits of liability, if any, herein specified, against direct loss or damage from the perils specifically insured against herein to the automobiles herein described and the equipment usually attached thereto. * * *

B

Name of Assured: Myers Drive-It-Yourself Co. & Rent-A-Car Co.

Address of Assured: (No.) 1241 (Street) Light St., (City) Baltimore (County) (State) Md.

Subject to all the provisions, exclusions, conditions and warranties contained in this policy, loss, if any, payable, as interest may appear, to Assured and Rent A Car Co. * * *

C. Warranted by the Assured. * * *

6. The automobile described is fully paid for by the Assured and there is no Lien, Mortgage or other Encumbrance thereon, except as follows: (Give particulars) Notes.

If purchased on a deferred payment plan, the amount unpaid is $ 13,750. represented by ______ notes of $_______ each. Due date of first note is _______ 19_____. * * *

Definition of Perils.

F. Fire, Lightning and Transportation.

(a) Fire, arising from any cause whatsoever, and Lightning

M. * * * General Conditions.

Misrepresentation and Fraud.

This entire policy shall be void * * * in case of any fraud attempted fraud or false swearing by the assured touching any matter relating to this insurance or the subject thereof, whether before or after a loss."

The policy does not present any serious difficulty of construction. The assured are specified in the appropriate and provided place as being both the buyer and seller. In the face of this explicit contractual definition, the circumstance that the address of the assured is given as 1241 Light street does not destroy the import of the plain terms used, since both may well have adopted a common address for the purposes of the policy. Moreover, the omission of the address of one of the then assured is immaterial. Again, the defendant relies upon the phrase "loss, if any, payable, as interest may appear, to Assured and Rent-A-Car Co.," to qualify the promise of the defendant that it "does insure the Assured named herein." The complete answer to this argument is found in the fact that the nomination of the parties to whom payment is to be made as "Assured and Rent-A-Car Co." is identical in person with the policy's first declaration of the assured as "Myers Drive-It-Yourself Co. & Rent-A-Car Co."; and that if the name of the buyer were substituted for "assured" in the second combination, the meaning and effect of the paragraph would remain unchanged.

For convenience the expression "buyer" and "seller" have heretofore been used in speaking of the assured, but that relation ended with the completion of the sale when the buyer became the owner of the chattels sold, and a borrower of $15,000 of the purchase price fom the seller, who took a chattel mortgage from the buyer on the subject-matter of the transaction to secure the payment of the loan. Although the formal documents of title had not been executed when the policy of insurance was issued, yet the policy disclosed enough to advise the insurer of the terms of sale yet to be fulfilled. So, from the inception of the insurance, the relation of the assured to the chattels covered was that of mortgagor and mortgagee and the insurer wrote the policy with a knowledge of the relative rights and obligations of the assured with respect to each other and to the subject-matter of the insurance. The fact that the insurer issued the policy with both the mortgagor and mortgagee as the original promisees distinguishes this appeal from most of the cases, and requires a brief statement of certain doctrines of law relative to fire insurance.

An agreement of insurance against loss by fire is a mere personal contract of indemnity against a possible loss by fire of a valuable interest in a particular subject-matter. The policy is not incidental to or transferable with the subject-matter and does not run with it, unless by virtue of special and foreign stipulations which either have been interpolated in or added to the contract. May on Insurance (4th Ed.) § 6; Joyce on Insurance (2d Ed.) §§ 23, 24. So, a mortgagee has no right to claim the benefit of a policy underwritten for the owner or mortgagor, unless by reason of some express agreement to that effect. Heller v. Marine Bank, 89 Md. 602, 621, 43 A. 800, 45 L. R. A. 438, 73 Am. St. Rep. 212. Such a special agreement is sometimes incorporated in the body of the policy when issued, in the form of a direction to the insurer to pay the loss to the mortgagee, or to him as his interest may appear (a); and often it is later indorsed on or affixed to the policy in the form of a separate document or rider (b). But whether this provision was made, by incorporation or addition, at the inception of the policy, or was subsequently attached as a part of the...