Sun Ins Office v. Scott Norwich Union Fire Ins Soc v. Same Home Ins Co of New York v. Same
| Decision Date | 23 November 1931 |
| Docket Number | Nos. 28-30,s. 28-30 |
| Citation | 76 L.Ed. 229,52 S.Ct. 72,284 U.S. 177 |
| Parties | SUN INS. OFFICE v. SCOTT. NORWICH UNION FIRE INS. SOC., Limited, v. SAME. HOME INS. CO. OF NEW YORK v. SAME |
| Court | U.S. Supreme Court |
Mr. Rolland M. Edmonds, of Columbus, Ohio, for petitioners.
Messrs. F. S. Monnett, of Columbus, Ohio, and Elwood Murphy, for respondent.
The respondent instituted five actions in a common pleas court in Ohio on as many policies of fire insurance. The causes were removed to the District Court for Southern Ohio, where they were consolidated, tried together, and resulted in verdicts and judgments for respondent. On appeal two of these judgments were reversed, and the three here under review were affirmed.1 We granted certiorari.2
Each suit seeks recovery upon a fire policy issued upon wool belonging to respondent. In each, defense was made that he placed a chattel mortgage on the property in violation of a provision of the policy as follows: 'This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * 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.'
It is admitted that on June 19, 1926, the respondent executed a chattel mortgage on the insured property to a bank, and that the mortgage continued in force at the time of the fire. The policies of the Sun Insurance Office and the Norwich Union Fire Insurance Society, Limited, were is- sued on June 14, 1926. That of the Home Insurance Company of New York bore date July 6, 1926. Each of the policies had attached to it a 'loss payable clause' reading substantially as follows: 'Any loss under this policy that may be proved due the assured shall be payable to the assured and Cumberland Savings Bank Co., Cumberland, Ohio, subject, nevertheless, to all the terms and conditions of the policy.'
These riders were attached by the local agent of petitioners, to the Sun and Norwich policies after their issuance, and to the Home policy on the date it was issued.
To the petitioners' defense of violation of the chattel mortgage clause, the respondent answered that the loss payable clause, as a matter of law, constituted a waiver and a recognition of the interest of the bank as chattel mortgagee. He averred, moreover, that by custom in the community in which the policies were written such clause was so understood and was customarily used for the purpose of giving the insurers' consent to chattel mortgages. In the alternative he insisted that under section 9586 of the Ohio General Code a person who solicits insurance and procures the application therefor must be held to be the agent of the party, company, or association thereafter issuing a policy upon such application or a renewal thereof, anything in the application or policy to the contrary notwithstanding; and that if the loss payable clause did not have the effect for which he contended, nevertheless the agent who wrote the policies and attached the clause knew of the existence of the chattel mortgage, and his knowledge was to be imputed to the insurers and constituted an agreement on their part that notwithstanding the mortgage the insurance should remain in force.
To this petitioners replied by denying any such custom as was alleged, and quoted a provision appearing in each of the policies that 'no officer, agent or other representative of this Company shall have power to waive any pro- vision or condition of this Policy except such as by the terms of this Policy may be the subject of agreement endorsed 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 hereto.'
The Court of Appeals held that under the law of Ohio the chattel mortgage was valid as between respondent and the bank, and would have avoided the policies except for the loss payable clause, which it held either by its own force or by its customary use for the purpose constituted a waiver and consent on the part of the insurers. On this ground it affirmed the judgments.
We are of opinion that upon the uncontradicted facts the petitioners made out a valid defense to the suits...
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