Dresser v. United Firemen's Ins. — 12 N.Y. St. Rep. 434

Majority

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Julius S. Dresser, Resp’t, v. The United Firemen’s Ins. Co. et al., App’lts.

(Supreme Court, General Term, Fourth Department,

Filed July, 1887.)

Headnote

1. Insurance—Conditions of—What is sufficient compliance with.

This action was brought to recover on a policy of insurance. The policy stated that it was understood, unless otherwise" therein expressed, that the interest of the assured was the entire ownership of the property, and that the buildings intended to be insured stood on ground owned in fee simple by the assured. When the agent of the insurer issued the policy in question he was informed that the buildings were upon leased land, and inserted in the policy a clause indicating that fact and his knowledge of it.

Held, that this was a sufficient compliance with that condition of the policy requiring the interest of the assured in the land to be stated, if the same should be less than the fee.

2. Same—Change of title—What does not effect—Construction op-lease.

It was provided by the lease under which the insured occupied the premises, that the rent should be payable quarterly in advance and should be a lien upon all buildings and improvements erected thereon, and further provided for the sale of them in case of a default in paying the rent. Held, that the lease was not in terms a chattel mortgage, and that it expressed no present intention to transfer the legal title of the property to the-lessor.

8. Same—Policy of—What will not avoid.

Held, that if the agent of the insurer had the lease at or before the time of issuing the policy, he became aware that through him the company received notice that the lease created a lien in favor of the lessor, and that, the policy being issued with knowledge of its existence, could not for that reason be avoided.

4. Same—Policy—Dissolution of partnership—When not considered-transfer OF TITLE.

The policy provided that it should become void and of no effect by the sale or transfer, or any change in title in the property insured. After the making of the policy, the partnership to whom it was issued was dissolved, and the interest of the other members of the firm was transferred to this plaintiff, who executed a chattel mortgage on the property to secure the purchase price. Held, that this did not constitute such a transfer of interest as to avoid the policy.

5. Same—Policy—What will not avoid.

The policy further provided that it should become void and of no effect in case of fraud, or attempt at fraud, in procuring it, or in the proofs of loss, or by false swearing, or any other means. Held, that the contracting parties did not have in mind that any Slight or unimportant innocent mistake-made in preparing the proofs of loss, or in the statement of the evidence in a preliminary examination had under the policy, should be regarded as a breach of warranty.

This action was brought to recover on a policy of insurance. The policy in question was issued on October 11, 1884, to this plaintiff and Frank J. Callanen, doing business under the firm name of Dresser & Co. The buildings upon which the insurance was effected were built on lands leased from William IT. Walton in the month of July, 1884. Subsequent to insuring the buildings, and on May 30, 1885, thecopartnership of the insured was dissolved, Callanen retir

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ing from, the business, and his interest in the firm property was transferred to this plaintiff, who executed a chattel mortgage for $3,000 to him on the property to secure the purchase price.

The policy provided that it was agreed and understood that the buildings stood on leased lands, and that unless otherwise expressed in the policy, it was understood that the interest of the assured was the entire, unconditional and sole ownership of the property, and that all buildings, intended to be insured by the policy stood on ground owned in fee simple by the assured; also, that the policy should become void and of no effect by any change in title of the property insured, or by fraud, or attempt at fraud, in the procurement of the policy or in the proof of loss, or by false swearing, or by any other means.

Garfield, Kellogg & Wells, for app’lts; Goodwin & Swan, for resp’t.

The dissolution of the partnership, the transfer of Callanen’s interest in the property to Dresser, the chattel mortgage given by Dresser & Co., to Callanen, did not work such a transfer of interest as to avoid the policy in question. (Hoffman v. The Ætna Fire Insurance Co., 32 N. Y., 405 : Keeney v. Home Insurance Co., 71 id., 402.)

When Hurlbert, the agent, issued the policy in question, he was informed that the buildings were upon leased land, and inserted in the policy the clause indicating‘that fact, and also his knowledge of the fact. We think there was a sufficient compliance with the condition of the policy requiring the interest of the insured in the premises to be stated, and that the knowledge communicated to the agent of the fact that the building stood upon leased land, and the issuance of the policy thereafter indicated that there was an intent on the part of the parties to comply with that condition of the policy which requires the interest of the assured to be stated, if the same shall be less than the fee. (Short v. Home Insurance Co., 90 N. Y., 16 .)

If the agent, Hurlbert, read the lease before or at the time of issuing the policy, he became aware, and through him the company received notice that the lease created a lien in favor of the lessor. After notice or knowledge of that fact the policy was issued, and cannot be avoided by reason of the existence of the lien in favor of the lessor. The clause in the lease did not operate to transfer the title to the property to the lessor. On the contrary, the lease expressly provides that the title to the property shall remain in the lessees, subject, however, to the lien. By the terms of the lease the title to the property and the possession

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thereof was to remain in the lessees until steps were taken to enforce the lien given upon the property. The lease in terms was not a chattel mortgage. There was no present intention to transfer the legal title to the property to the lessor. (McCaffrey v. Woodin, 65 N. Y., 459 ; Streeter v. Ward, MS. opinion, Follett, J., July 1, 1887, and cases cited.)

It is .contended by the appellant “ that the proofs of loss were false in reference to the existence of the Watson mort • gage or Hen and this avoids the policy.” The language of the policy is that the same shall be void and of no effect “ by fraud, or attempt at fraud, in the procurement of this policy, or in the proofs of loss, or by false swearing, or by any other means.”

Upon looking into the evidence given upon the trial, we are of the opinion that there was not sufficient proof to warrant a finding by the jury that the plaintiff attempted fraud by means of his proofs of loss submitted to the company. It is quite apparent that he was not attempting to mislead the company by his statement in the proofs of loss that “no other person had any interest in said property.” There had been no seizure of the property by the lessor, or other enforcement of the Hen clause contained in the lease, and, taking the entire language of the lease, it is apparent there was an intent to leave the ownership of the property in the lessees and to subject it to a conditional Hen in favor of the lessor. But if it be assumed that the Hen clause of the lease created “an interest in the lessor,” the evidence faHs far short of showing that the plaintiff wilfully and fraudulently stated that no other person had any interest in the property. 2 Wood on Fire Ins., §§ 455, 1004 (ed. of 1886); Titus v. Glens Falls Insurance Co., 81 N. Y., 410 .

It is contended by the appeHant that by reason of the insertion of the words in respect to the absence of the Hen in the proofs of loss, and by a statement to like effect on the prehminary examination had of. the plaintiff, that there was a breach of warranty. We are of the opinion that the position is not tenable. It is difficult to suppose that the contracting parties had in mind any slight or unimportant mistake that might be made in the course of the preparation of proofs of loss, or in a statement of the evidence in a prehminary examination had under the pohcy, and that any such mistake or innocent deviation from the actual facts should be regarded a breach of warranty. We are more, inclined to regard the language used by the parties as providing for a forfeiture of the policy in case of any fraud or fraudulent practices in regard to the proofs of loss or the preliminary evidence required of the insured.

We are, therefore, of the opinion that the learned trial

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judge committed no error in receiving testimony tending to show that the insertion in the proofs of loss, as well as the statement made in the preliminary examination in regard to the absence of any incumbrance' upon the property, occurred without any fraud or fraudulent intent or felonious purpose on the part of the insured:

As the trial was nearing the close, the court inquired of the counsel for the defendant, viz.: ‘ ‘ Do you desire to have any questions of fact submitted to the jury?” The counsel answered, “ There is no question I can have except the question of value.” Again the court inquired: “I understand, then, that you do not request the court to submit anything else to the jury except the question of damages? ” The counsel replied, “ I don’t know of any question that I can go to the jury on.” Near the close of the charge, the counsel for the defendant observed, viz.: “If they find that the fire was caused by the act of the plaintiff, or by his procurement, knowledge, connivance or consent, then their verdict should be for the defendant.” Thereupon the court observed: “You have not asked me to submit any such question to the jury before. What question of fact am I to submit to them? ” The counsel replied, viz.: ‘ ‘Simply that.” Thereupon the court observed, viz.: “What question of fact am I to submit to them to permit them to find for the defendant?” The counsel responded, “That simple question; if they find that the fire was caused by his own act, knowledge, connivance or consent, that they should find for the defendant.” Thereupon the court observed: “ Do you claim that there is any evidence on that? I want to know whether you claimed upon the evidence that there was any question of fact, except the question of damages, for the jury? ” Thereupon the counsel replied: “I think I was right; but let them take it and determine it; never mind.”

It is quite apparent from the quotations we have just made, as well as from a perusal of the evidence, there was no question of fact beyond that of damages, upon which the jury would have been warranted in finding a verdict in favor of the defendant.

We are of the opinion that the learned trial judge committed no error in the progress of the trial, of which the defendant can complain. We think the judgment should be sustained.

Judgment affirmed, with costs.

Boardman and Follett, JJ., concur.