Wood v. American Fire Insurance

The action in this case was prosecuted by the assignee of an insurance policy issued by the defendant to a firm known and designated as Wood Bros. The defendant, by its answer, and on the trial, relied upon various grounds of defense, and urged the same on this appeal as grounds for a reversal of this judgment.

The first is that the - assignment of the cause of action to the plaintiff is insufficient. We see no valid objection to the validity of this assignment. It was in writing, contained a sufficient description of the matter assigned, was made after the loss, stated a valuable consideration, and was executed by all of the survivors of the firm.

The second objection—that the insured had no title to the insured property—seems equally untenable. The insured property which was destroyed by the fire, and was covered by the policy, was in possession of the firm, and appears to have belonged to it; and no question upon the proof was made as to the validity of the title of the insured, and the defendant, in issuing its policy, treated it as the property of the Wood Bros. In the absence of proof, this court, on appeal, cannot assume want of ownership in the assured for the purpose of avoiding the policy. In McMaster v. Ins. Co. of N. Am., 55 N. Y. 232 , Folger, J., says: “The currents of decisions run to this; that the courts will not be astute to find ways to work the forfeiture of a contract of insurance.”

Applying this rule of construction, we cannot hold that the Wood Bros, had not, at the time of this insurance, the title to the property insured. The assured is not bound, in the first instance, before a recovery can be had for a loss, to prove title as he would be required to do in an action of ejectment. Possession of the property at the time of taking the policy is enough, in the absence ■of an affirmative defense of want of title, and proof sustaining such defense. It was alleged in the answer, and proved on the trial, that one of the copartners, at the time of the issuance of the policy, had made a general assignment of all his property for the benefit of creditors, and that the assignee had sold his interest at public auction ; but it also appeared affirmatively that no actual dissolution of the copartnership had been effected, and that the firm continued to transact its copartnership business down to the time of the fire which destroyed the insured property.

It is insisted by the defendant that, the interest of one member of the firm having passed to his assignee, the interest of the Wood Bros, is not truly stated in the policy, and that such misstatement annuls it. If this were an individual policy, taken in the name of the assignor after such assignment, such misstatement would doubtless avoid the policy. But the insolvency of a member of a firm, or his assignment, does not, we think, per se dissolve the firm, except as to future events; and, as between the copartners,

Within this principle it is doubtful whether the fee of the firm’s real property did not remain in the firm after the assignment of the individual partner for the purposes of the partnership. If the title remained in the firm after this individual assignment, it cannot be claimed that the existence of that assignment was a breach of warranty of title of the premises in Wood Bros. The same may be said, we think, as to the other assignment by individual partners, and the appointment of a receiver as to one not setup in the answer, but proved upon the trial. They did not divest the firm of title, and the defendant issued its policy to the firm, and not to the individual members thereof. The provisions of the policy as ot the title referred to its quality, and the the title, being in the firm, was not in any way affected by the assignment of individual members. American Artistic Gold Stamp. Co. v. Glens Falls Ins. Co, 48 St. Rep. 653 ; 20 N. Y. Supp. 646 . But if it can be held that the assignment or transfer by individual members of a firm of their individual interests affects the title of the firm, so that it cannot be said to be the owner in fee, still, as the real condition of the member of this firm who had assigned was known to the agent of the defendant who took this application and issued this policy, it cannot be claimed that this transfer constituted a breach of warranty of title as to his company. The knowledge on the part of the agent who transacted the business was the knowledge of the company, and was a waiver of the warranty claimed to be broken. Berry v. Am. Central Ins. Co., 30 St. Rep. 53 ; 8 N. Y. Supp. 762 . See, also, Broadhead v. Lycoming Ins. Co., 14 Hun, 425 ; 23 Hun, 397 . A waiver, after the issuing of the policy, must be in accordance with its terms, but at or before its inception will be ])resumed, if the agent had knowledge at that time of the facts claimed to be a defense. If a company issues a policy and accepts a premium with knowledge of the facts on the part of the agent, it will not be permitted to set up such facts to avoid the policy in case of loss. To permit the defendant to attack the validity of the policy on account of those facts would be to impute to it a fraud in receiving the premium and issuing a policy in the first instance, which it knew to be void. Haight v. Continental Ins. Co., 92 N. Y. 51 , 55; Van Schoick v. Niagara F. Ins. Co., 68 N. Y. 434 -441; Woodruff v. Imperial F. Ins. Co., 83 N. Y. 133 -141; Richmond v. Niagara F. Ins. Co., 79 N. Y. 230 ; Whited v. Germania Ins. Co., 76 N. Y. 415 .

The Wood Bros., at the time the insurance was effected, had an insurable interest in the property. That interest they sought to protect by this policy. There is no claim that this policy was procured by fraud, and the loss far exceeds the amount of insurance, and the happening of the event insured against would result in pecuniary loss to the assured. Cone v. Niagara F. Ins. Co., 60 N. Y. 619 ; Herkimer v. Rice, 27 N. Y. 163 . Under such circumstances, while the court should not overlook any clear violation of the contract, it should not seize upon imaginary or doubtful pretexts for the purpose of forfeiting the policy. After the making of this policy a judgment was recovered against the Wood Bros., to whom it was issued, on which an execution was issuedj and the premises on which the building covered by this policy stood were sold, and a sheriff’s certificate of sale executed to the purchaser; but before the time of redemption under such sale had expired the insured building was burned. The defendant now insists that by the terms of the policy this judgment, execution, sale, and sheriff’s certificate rendered the policy void. The exact provision of this policy upon that point is not contained in the case, but is partially stated in both the brief of the plaintiff and that of the defendant, from which it appears that to invalidate the insurance by judgment the interest, title, or possession of the subject of the. insurance must be changed. This was not effected by the judgment or proceedings under it. The judgment debtor was still entitled to. the possession of the insured property. Section 1440 of the Code of Civil Procedure provides as follows: “ The right and title of a judgment debtor * * * is not divested by the sale until the expiration of the period within which it can be redeemed.

We must, I think, therefore, treat this judgment and sale under it, so long as the right to redeem exists, as inoperative as against the terms of the policy, and the right of the insured or their assignee as unaffected by the same. The right and title of the assured under that section were changed at the time that the liability for this loss attached. In Cone v. Niagara F. Ins. Co., 60 N. Y. 619 , the policy contained this provision: “Any interest in the property insured, not absolute, or that is less than a perfect title, or if a building is insured that is on leased ground, the same must be specifically represented to the company, and expressed in this policy in writing; otherwise this policy shall be void.”

In discussing the effect of a sale under execution of the property insured under this policy the court uses this, language: “ Palmer (the owner) has this interest certainly until the last day

This and kindred cases seem to settle the doctrine that the right of the insured is not affected by a judgment and sale until after the expiration of the fifteen months allowed for redemption. Baley v. Homestead F. Ins. Co., 80 N. Y. 21 ; Green v. Homestead F. Ins. Co., 82 N. Y. 517 ; Colt v. Phœnix Ins. Co., 54 N. Y. 595 ; Walradt v. Phœnix Ins. Co., 136 N. Y. 375 ; 49 St. Rep. 666 .

We have carefully examined the numerous exceptions taken by the learned - counsel for the defendant to' the findings and refusals of the learned judge to find, and see no error for which this judgment should be reversed. Judgment affirmed, with costs.

Putnam, J., concurs; Herrick, J., concurs in result.