St. Paul Fire & Marine Ins. Co. v. Ruddy

• Decision Date: 07 April 1924
• Docket Number: 6419.
• Parties: ST. PAUL FIRE & MARINE INS. CO. v. RUDDY et al.
• Court: U.S. Court of Appeals — Eighth Circuit

299 F. 189

ST. PAUL FIRE & MARINE INS. CO. v. RUDDY et al.

No. 6419.

United States Court of Appeals, Eighth Circuit.

April 7, 1924

[Copyrighted Material Omitted]

Matthew A. Hall, of Omaha, Neb (Carroll S. Montgomery and Raymond G Young, both of Omaha, Neb., on the brief), for plaintiff in error.

F. G Hawxby, of Auburn, Neb. (Lambert & Hawxby, of Auburn, Neb., and E. F. Dougherty, of Omaha, Neb., on the brief), for defendants in error.

Before STONE and KENYON, Circuit Judges, and PHILLIPS, District Judge.

KENYON Circuit Judge.

This action is based upon an insurance policy issued by plaintiff in error to Smith & Bernard, insuring them for one year, from the 25th day of March, 1921, to the 25th day of March, 1922, against loss or damage by fire on a certain two-story composition-roof brick building situated in Howe, Neb. June 1, 1921, Smith & Bernard sold the insured premises to one Louis N. Iverson. An indorsement was placed upon the policy as follows:

'Indorsement.

'Notice is hereby given and accepted that title to property insured herein is vested in Louis N. Iverson.

'Attached to and forming a part of policy No. 17660 of the St. Paul Marine Insurance Company, St. Paul, Minnesota, issued at its Omaha, Nebraska, agency.

W. C. Lyle, General Agent.

'Dated this 10th day of June, 1921.'

A loss payable clause was also indorsed at the same time as follows:

'Loss Payable Clause.

'Any loss under this policy that may be proved due the assured shall be payable to the assured and Cress I. Bernard, subject, nevertheless, to all the terms and conditions of the policy.

'Attached to and forming part of policy No. 17660 of the St. Paul Fire & Marine Insurance Co., St. Paul, Minnesota, issued at its Omaha, Nebraska, agency.

W. C. Lyle, Agent.

'Dated June 10, 1921.'

October 12, 1921, Iverson sold the property covered by the policy to Ruddy. Ruddy did not receive any assignment thereof. Ruddy had some talk with the local agent of the company, one Cox, and from him secured the name and address of the proper party to whom to write concerning the insurance. On December 5, 1921, he wrote the company at Omaha, Neb., as follows:

'Auburn, Nebraska, Dec. 5, 1921.

'St. Paul Fire & Marine Ins. Co., Omaha, Neb.-- Gentlemen: Mr. Cox, of Howe, Nebraska, told me to write you in regard to Ins. Policy #17660 on a garage brick bldg in Howe, Nebr. I bought this building, and wish to notify you in regard to transfer, etc. Kindly give me date of expiration, amount, rate, etc.

'Yours truly,

M. E. Ruddy.'

The company replied as follows: Plaintiff's Exhibit 4.

'St. Paul Fire & Marine Insurance Company.

'Incorporated, 1862.

'William C. Lyle, General Agent,

'Peters Trust Building, Omaha, Nebraska.

'December 8, 1921.

'Mr. M. E. Ruddy, Auburn, Nebraska-- Dear Sir: We have your favor of the 5th inst., notifying us that you have purchased the brick garage building insured under policy #17660 by Howe, Nebraska, agency.

'This policy covers $5,000 on brick garage building located on lots 17 to 24, block 4, Howe, Nebraska. The rate is $2.70; premium, $135.00. Policy was written for the term of one year, from March 25, 1921, to March 25, 1922.

'There is a loss payable clause attached, in favor of Cress I. Bernard. We trust this is the information you desire.

'We presume you will wish this insurance transferred to you, therefore kindly have assignment blank filled out on the policy and forward same to this office, and we will consent to the transfer.

'Awaiting your further advices, I am,

'Yours very truly,

W. C. Lyle, General Agent, 'By V. J. Lind.'

January 29, 1922, a fire occurred which destroyed the property. Ruddy testified that he never saw the policy of insurance and never had it in his possession until after the fire; that in January, 1922, he took out insurance on this property for $3,000. The letter, Exhibit 4, seems to have been mislaid by Ruddy, and not found until several days after the fire. Ruddy brought action against the insurance company, plaintiff in error, asking judgment for the amount of his loss, and Cress I. Bernard, the mortgagee, intervened and asked judgment for the amount of his mortgage. At the close of the evidence each party asked a directed verdict in its favor, and the court, directed verdicts in favor of defendant in error, Ruddy, and Cress I. Bernard, mortgagee.

This suit is based on a contract of insurance. Appellant claims there is no liability to defendant in error, because (a) it had no contract with him; (b) that in any event there had been a change of title in the insured property to which it had not assented, and that under the terms of the policy this voided or at least suspended the policy; (c) that it is not liable to the mortgagee because of no liability to the principal.

Two provisions of importance in the determination of this case appear in the contract, as follows:

'This policy is made and accepted subject to the foregoing stipulations and conditions, and to the following stipulations and conditions printed on back hereof, which are hereby specially referred to and made a part of this policy, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto; and no officer, agent or other representative of this Company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto; and as to such provisions and conditions no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached thereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.' Also:

'This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership, * * * or if any change, other than by the death of an insured, take place in the interest, title, or possession of the subject of insurance, * * * whether by legal process or judgment or by voluntary act of the insured, or otherwise. * * * '

The question here is one of contract. Insurance contracts are construed, like other contracts, according to the ordinary sense and meaning of the terms employed, and if they are clear and unambiguous their terms are to be taken in the plain, ordinary, and popular sense. Imperial Fire Insurance Co. v. Coos County, 151 U.S. 452, 14 Sup.Ct. 379, 38 L.Ed. 231; McGlother v. Provident Mut. Acc. Co. of Philadelphia, 89 F. 685, 32 C.C.A. 318.

If a policy is ambiguous or doubtful, or language calculated to mislead is used, courts lean to a construction that will not permit the insurance company to take advantage of the ambiguity National Bank v. Insurance Co., 95 U.S. 673, 24 L.Ed. 563; Moulor v. American Life Insurance Co., 111 U.S. 335, 4 Sup.Ct. 466, 28 L.Ed. 447; Travelers' Insurance Co. v. McConkey, 127 U.S. 661, 8 Sup.Ct. 1360, 32 L.Ed. 308. There is no such question here. There is nothing ambiguous about this insurance contract. It was a plain insurance of Smith & Bernard, and after the sale of the property to Iverson, and the indorsement on the policy by the company of the changed ownership, Iverson was we think, accepted in place of Smith & Bernard as the insured under the policy.

The provision of the contract as to the termination of the same if there was a change of title was a proper and valid provision. Farmers' & Merchants' Insurance Co. v. Iver Jensen, 56 Neb. 284, 76 N.W. 577, 44 L.R.A. 861; Ehrsam Machine Co. v. Phenix Insurance Co. of Brooklyn, 43 Neb. 554, 61 N.W. 722; Home Fire Insurance Co. of Omaha v. Michael S. Collins, 61 Neb. 198, 85 N.W. 54. Said provision applied to the situation existing between the company and Iverson, as he was accepted by the company in place of Smith & Bernard. He sold to Ruddy. Did the company accept Ruddy in place of Iverson? If it did not, there is, of course, no contract between the company and Ruddy. The alleged acceptance of Ruddy in place of Iverson as the insured is based upon the two letters which we have set out in the statement of facts.

As to the general legal phases applicable to the situation, it may be observed that there is no contract unless the minds of the parties meet; that an insurance contract is no different than any other contract in that respect; that the contract is a personal one between the insurer and the insured; that, if there is no obligation as to one of the parties, there is none as to the other; that, if anything of importance remained to be done by either party, the contract would not be complete. Stephenson v. Germania Fire Ins. Co., 100 Neb. 456, 160 N.W. 962, L.R.A. 1917B, 307; Lett v. Guardian Fire Ins. Co., 125 N.Y. 82, 25 N.E. 1088; Davis v. Bremer County Fire Ins. Ass'n, 154 Iowa, 326, 134 N.W. 860; Insurance Co. v. Young's Administrator, 90 U.S. (23 Wall.) 85, 106, 23 L.Ed. 152; New England Loan & Trust Co. v.

Kenneally, 38 Neb. 895, 57 N.W. 759; Atlas Reduction Co. et al. v. New Zealand Ins. Co. of New Zealand, 138 F. 497, 71 C.C.A. 21, 9 L.R.A. (N.S.) 433; Phoenix Life Ins. Co. v. Raddin, 120 U.S. 183, 7 Sup.Ct. 500, 30 L.Ed. 644.

Tested by these principles, let us examine the letters. The letter from Ruddy advised the company that he had bought the building and wished to notify them relative to the transfer and asked them to give him the date of the expiration amount, rate, etc., of the insurance policy. Evidently from the letter Ruddy knew very little about the insurance policy. The insurance company then...