Western Massachusetts Ins. Co. v. Riker

• Decision Date: 03 June 1862
• Court: Michigan Supreme Court
• Parties: The Western Massachusetts Insurance Company v. George S. Riker and another

10 Mich. 279

The Western Massachusetts Insurance Company v. George S. Riker and another

Supreme Court of Michigan

June 3, 1862

Heard April 30, 1862

Error to Genesee Circuit. The case, so far as passed upon, will be found stated in the opinion.

Judgment reversed, with costs.

D. B Duffield and G. V. N. Lothrop, for plaintiff in error, to the point that the deed given by the insured avoided the insurance cited, 13 Gray 433; 1 Allen 311; 29 Me. 292; 16 Barb. 257; 1 Seld. 405; 17 N. Y., 402; 30 Pa. St., 311; 26 Conn. 165; 31 Pa. St., 438; 18 Mo. 128; 22 Ill. 272; 23 Barb 623.

W Newton and M. Wisner, for defendant in error, argued that the object of the condition attached to the policy prohibiting a a sale, transfer or change of title of the property insured, was to prevent the insured from parting with their title during the continuance of the policy, upon the principle, doubtless, that so long as the insured retained their interest in the premises, there would be a strong motive to protect them, and guard against fire. An entire alienation of the whole title would make the policy void under this clause.

But in Michigan (as in most of the other States) a mortgage is neither a "sale, transfer, or change of title" of the property mortgaged. The mortgagee has a chattel interest merely: 3 Mich. 581; and the giving of a mortgage is not prohibited by this condition: 23 Pick. 218; 11 Barb. 624; 3 Denio 254; 1 Comst. 290; 10 Pick. 40.

If wrong in these positions, still as the conveyance by the insured was of an undivided third only, the interest the insured retained was far beyond the amount of the insurance; and this interest is to be protected unless a conveyance of a part of the premises is prohibited by the condition: 16 Wend. 385. The policy is only avoided to the extent of the interest sold.

Manning, J. Martin, Ch. J. and Campbell, J. concurred. Christiancy, J. was absent when the case was decided.

OPINION

Manning J.:

One of the conditions attached to the policy of insurance, and forming a part of it is in these words: "And in case of any sale, transfer or change of title in the property insured by this company, such insurance shall be void and cease." The property insured was a three-story frame flouring and grist mill, belonging to the insured. After the insurance and before the fire, the insured conveyed an undivided one-third interest in the premises on which the mill stood, to Latourette. The conveyance was in the usual form, but was intended by the parties to it as security to Latourette for a debt the insured were owing him, and to secure further advances to be made to them by Latourette, who, after the fire, on being paid what was due him, reconveyed the premises to the insured.

The insurance company insist that the conveyance to Latourette annulled the insurance, under the condition of the policy above stated. The company also insist that the court erred in admitting parol evidence to show the conveyance to Latourette was intended as security only for what the insured were owing him, and for further advances. While, on the other hand, the insured insist they had a right to introduce on the trial parol evidence for that purpose; and that if the court erred in admitting it, they are still entitled to recover the whole amount insured, which is $ 2,000, as the mill, which was wholly destroyed by fire, was shown on the trial to have been worth $ 6,000 at the time of the fire; or if they are not entitled to the $ 2,000, that they are entitled to two-thirds of the insurance, as they had only conveyed to Latourette one-third of the mill.

The words transfer or exchange of title are more comprehensive than the word sale, which immediately precedes them. A sale is a parting...