Va. Fire & Marine Ins. Co v. Vaughan

• Decision Date: 10 March 1892
• Citation: 88 Va. 832,14 S.E. 754
• Court: Virginia Supreme Court
• Parties: Virginia Fire & Marine Ins. Co. v. Vaughan.

14 S.E. 754

88 Va. 832

Virginia Fire & Marine Ins. Co.

v.Vaughan.

Supreme Court of Appeals of Virginia.

March 10, 1892.

Service of Summons—Commencement of Action —Insurance—Transfer of Interest.

1. A summons issued March 29th, returnable on the first Monday in the following April, and served on defendant March 80th, is not a legal service; Code, § 3227, requiring a summons to be served 10 days before the return-day thereof.

2. Where the court refused to quash such defective summons, and remanded the case to rules to be properly matured, and an alias summons was regularly issued and duly served, the commencement of the action was the issuance of the original summons.

8. A clause in an insurance policy prohibiting any change "in the title or interest of the assured" in the property insured, without the consent of the insurers, does not preclude a recovery thereon where one partner of the insured firm sells and transfers his interest to the other partner, and no third person is taken into the firm.

4. The policy contained a provision that it should be invalid for any false swearing, fraud, or attempt at fraud by the insured in support of his claim for loss or in the proofs of loss. The insured proved his loss by duplicate invoices of stock, alleging that the originals had been burned. It was proved by defendant that several of these invoices had been materially and fraudulently altered. The insured was not examined as a witness, offered no explanation in regard to the false invoices to which he had sworn, and assigned no reason for not doing so. Held.in an action on the policy, that the insured was presumed to know that his statements were false, and could not recover.

Action by C. C. Vaughan against Virginia Fire & Marine Insurance Company. Judgment for plaintiff. Defendant brings error. Reversed.

The other facts fully appear in the following statement by Lewis, P.:

Error to judgment of the circuit court of Southampton county, rendered January 15, 1891, in an action of trespass on the case in assumpsit, wherein C. C. Vaughan was plaintiff, and the Virginia Fire & Marine Insurance Company was defendant, the case being as follows: On the 27th of September, 1888, D. Lassiter and M. L. Beale, under the firm name of D. Lassiter & Co., commenced business as grocers and liquor merchants in the town of Franklin, Southhampton county. On the 27th of the following month the defendant company, the plaintiff in error here, issued a policy of insurance for $1,500, insuring the firm against loss or damage by fire on their stock of goods. On the 12th of November following Beale withdrew from the firm, and transferred his interest therein to Lassiter, and, on the 5th of the following December, he assigned his interest in the policy of insurance to Lassiter. The next day the goods were destroyed by fire. After loss Lassiter assigned his interest in the policy to Vaughan, the plaintiff in the court below, for $1,100. The policy, among other things, provides that the same shall be avoided by "any change in the title or interest of the assured in or to said property, " without the consent of the company. It also contains the following provision: "That this company shall not be liable under this policy, if there be fraud or false representations in the procurement thereof by the assured, or any false swearing, fraud, or attempt at fraud before or after loss or damage by him in support of his claim for loss, or in the proofs of loss." The original summons to commence the action was sued out on the 29th of March, 1889. It was made returnable to rules on the first Monday in the following April, and was served on an agent of the defendant company the next day. This, of course, was less than 10 days before the return-day, and therefore not in conformity with the requisitions of the statute in such cases. Code, § 3227. Accordingly the defendant moved the court, at a subsequent term, to quash the writ and return, and to dismiss the case from the docket. The circuit court overruled the motion, but did remand the case to rules, to be "properly matured, " to which ruling the defendant excepted. An alias summons was afterwards issued, and duly served and returned. The defendant pleaded the general issue, and also a number of special pleas, setting up in the latter various instances of false swearing and attempts of fraud on the part of Lassiter, in furnishing on oath preliminary proofs of loss. It was charged in several of the pleas that invoices of goods purporting to be invoices of goods destroyed in the fire were so furnished, but which in fact were never in the store of D. Lassiter &amp Co., but belonged to other parties, and were not covered by the policy sued on, as the said Lassiter well knew. In other pleas six instances were charged of invoices so furnished that had been fraudulently altered by a change of dates, so as to bring them down to September 27, 1888, the date at which D. Lassiter & Co. commenced business in Franklin. The jury found for the plaintiff the amount of the policy, whereupon the defendant company moved for a new trial, on the ground that the verdict was contrary to the law and the evidence. But the court overruled the motion, and entered judgment on the verdict, to which ruling the defendant excepted, and the facts are certified. Other facts are stated in the opinion.

W. W. & B. T. Crump, for plaintiff in error.

Benj. B. Nash and J. B. Prince, fur defendant in error.

Lewis, P., (after stating the facts.) 1. There is no error in the order of the circuit court remanding the case to rules to be properly matured. The defect was not in the writ itself, but in the service and return, and that was no ground for quashing the writ. The recent case of Railroad Co. v. Rudd, (Va.) 14 S. E. Rep.361, is a sufficient authority upon this point.

2. This also disposes of the question whether the action was commenced within the time stipulated for in the policy, that is, " within six months next succeeding the date of the fire or damage. " The commencement of the action was the issuance, not of the alias, but of the original, summons, and that was within the stipulated period.

3. The next question relates to the action of the circuit court in instructing the jury, at the instance of the plaintiff, that the right of the latter to recover on the policy was not affected by the transfer by Beale of his interest in the copartnership to his partner, Lassiter, notwithstanding the provision in the policy prohibiting any change "in the title or interest of the assured" in the property without the consent of the insurers. There is much diversity of judicial opinion upon the question whether a sale by one partner to another, under such circumstances, avoids the policy; but the weight of authority, and the better reason, we think, is in favor of the view that it does not. Wilson v. Insurance Co., 16 Barb. 511; Hoffman v. Insurance Co., 32 N. Y. 405; Powers v.Insurance Co., 136Mass. 108; Burnett v. Insurance Co., 46 Ala. 11; Dermani v. Insurance Co., 26 La. Ann. 69; Pierce v. Insurance Co., 50 N. H. 297; West v. Insurance Co., 27 Ohio St. 1; Cowan v. Insurance Co., 40 Iowa, 551; Lock wood v. Assurance Co., 47 Conn. 553; Insurance Co. v. Cohn, 47 Tex. 406; Insurance Ass'n v. Holberg, 64 Miss. 51, 8 South. Rep. 175. The object of such a provision is to protect the insurers against the risk of the introduction of a stranger to the contract perhaps not in any way known to them, or, if known, not deemed worthy of their confidence. But this reason cannot apply where there is simply a transfer of interest by one partner to another, the inter-est of each being per my et per tout. It Is suggested in the present case, as it has been in other cases, that the provision in the policy may have been designed to secure the continuance in the firm of the only member in whom the insurers reposed confidence. But to this we answer in the language of the New York court of appeals in the well-considered case of Hoffman v. Insurance Co., where, in answer to a similar suggestion, it was said: "The only evidence of the confidence of the insurers in either of the assured is the fact that the company contracted with all, and the theory is rather fanciful than sound that the former may have intended to conclude a bargain with rogues, on the faith of a proviso that an honest man should be kept in the firm to watch them. Certainly nothing appears in the present case to indicate that all the assured were not equally worthy of confidence, and it is not to be presumed that in any case underwriters would deliberately insure those whose integrity they had reason to distrust." Such a construction is no doubt in accordance with the intention of the parties in the present...