Schanberg v. Auto. Ins. Co. of Hartford, Conn.

• Decision Date: 16 February 1934
• Citation: 189 N.E. 105,285 Mass. 316
• Parties: SCHANBERG et al. v. AUTOMOBILE INS. CO. OF HARTFORD, CONN.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

285 Mass. 316

189 N.E. 105

SCHANBERG et al.

v.AUTOMOBILE INS. CO. OF HARTFORD, CONN.

Supreme Judicial Court of Massachusetts, Worcester.

Feb. 16, 1934.

Exceptions from Superior Court, Worcester County; W. A. Burns, Judge.

Action of contract by Samuel Schanberg and others against the Automobile Insurance Company of Hartford, Conn., heard by the superior court without a jury. Finding for plaintiffs for $2,281.92, and defendant brings exceptions.

Exceptions overruled.

L. E. Stockwell, of Worcester, for plaintiffs.

G. B. Rowell and G. P. Van Arkel, both of Boston, for defendant.

LUMMUS, Justice.

This is an action by the holders of a real estate mortgage for $2,500, on a policy of insurance against fire in the standard form prescribed by G. L. (Ter. Ed.) c. 175, § 99, made payable to the plaintiffs as mortgagees. One Thomas Doyle was the mortgagor. A loss by fire amounting to $2,110 occurred two days after an entry by the plaintiffs for the purpose of foreclosing the mortgage, and a foreclosure sale under the power of sale in the mortgage, at which the property was bid in by the plaintiffs for $1,000. The auctioneer made a sufficient memorandum to satisfy the statute of frauds. One of the terms of the sale was that the deed should be given within ten days. The foreclosure deed was never executed or delivered, and no affidavit of entry was executed. The trial judge found for the plaintiffs, denying certain requests for rulings presented by the defendant, and the defendant alleged exceptions.

The policy provides that it ‘shall be void * * * if, without such assent [in writing or print of the company], the said property shall be sold.’ In Clinton v. Norfolk Mutual Fire Ins. Co., 176 Mass. 486, 489, 57 N. E. 998, 999,50 L. R. A. 833, 79 Am. St. Rep. 325, Hammond, J., said, ‘Conditions of this kind are strictly construed against the insurer, and the general rule is that such a condition refers only to an absolute transfer of the entire interest of the insured, completely devesting him of his insurable interest. Any sale or transfer short of this is not within the scope of the condition.’ See, also, Stuart v. Reliance Ins. Co., 179 Mass. 434, 438, 60 N. E. 929;Bryan v. Traders' Ins. Co. of Chicago, 145 Mass. 389, 14 N. E. 454;Dailey v. Westchester Fire Ins. Co., 131 Mass. 173. Compare Brown v. Cotton & Woolen Manufacturers' Mutual Ins. Co., 156 Mass. 587, 31 N. E. 691;Oakes v. Manufacturers' Fire & Marine Ins. Co., 131 Mass. 164. A foreclosure sale followed by a deed from the mortgagee to himself as purchaser makes a policy void under the quoted provision, unless proper assent of the insurance company is obtained. Boston Co-Operative Bank v. American Central Ins. Co., 201 Mass. 350, 87 N. E. 594,23 L. R. A. (N. S.) 1147;Trustees of Thayer Academy v. Corporation of Royal Exchange Assurance of London, 281 Mass. 150, 154, 183 N. E. 264.

The defendant argues that the mortgagees always had the legal title, subject only to the equity of redemption; that the equity of redemption was barred as soon as the property was knocked down at the foreclosure sale (White v. Macarelli, 267 Mass. 596, 166 N. E. 734); and that at that moment the title became perfect and absolute in the mortgagees without any deed under the power and became ‘sold’ to them. One trouble with that argument is that it proves too much. If its premises were sound, it would seem that there was no sale at all which could violate the policy, and that there would have been none though a deed had been given under the power, for on the defendant's theory such a deed would have no real effect. Such a result would seem inconsistent with the decision in Boston Co-Operative Bank v. American Central Ins. Co., 201 Mass. 350, 87 N. E. 594,23 L. R. A. (N. S.) 1147.

In that case at page 351 of 201 Mass.,87 N. E. 594, Knowlton, C. J., described the nature of a foreclosure sale as follows: ‘Coupled with the interest conveyed to the mortgagee was an independent power to make an absolute sale of the property, which should convey all the title, both of the mortgagor and the mortgagee. * * * The ownership [was] entirely changed and a new title created by the exercise of the power of sale.’ Whether the mortgagee or another be the purchaser, the title does not pass under that ‘independent power’ to sell until the mortgagee gives a deed to the purchaser. ‘The auction sale was in effect a mere contract of sale. The sale was not executed until the deed was delivered, when the title passed to the purchaser.’ Beal v....