Walker v. Phoenix Insurance

This action was begun February 24, 1891, to recover damages alleged to be due under a policy of fire insurance issued by the defendant. The plaintiffs are partners under the firm name of Walker & Bresnan. In November, 1889, William 5. Saunderson and Charles Gr. Adams, were partners under the firm name of William S. Saunderson & Co., engaged in business on Water strdet, at the city of New York. November 23, 1889, William S. Saunderson & Co. mortgaged to Walker & Bresnan a quantity of printing materials and machinery to secure the payment of $676.92, and January 27,1890, they also mortgaged to Walker & Bresnan printing materials and machinery to secure the payment of §654.98. Both mortgages contained a covenant by the mortgagors to keep the property insured in an amount to be approved by the mortgagees, and the policy assigned to them. On the 11th of November, 1890, Charles Gr. Adams sold his interest in the firm of William S. Saunderson & Co. to James A. Starkweather, and thereupon the firm became Saunderson & Starkweather. November 11, 1890, the defendant, by its policy of insurance,—a New York standard policy,—insured Saunderson & Starkweather for one year from November 11, 1890, at noon, to November 11, 1891, at noon, against loss or damage by fire “ to an amount not exceeding one thousand dollars.” The policy contained the following provisions :

(1) “This entire policy, unless otherwise provided by agreement indorsed 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 incurñbered by a chattel mortgage. * * #”

(2) “ If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee, or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such inter

(3) “This company shall not be held to have waived any provision or condition of this policy, or any forfeiture thereof, by any requirement, act, or proceeding on its part relating or to any examination herein provided for. * to the appraisal % # ”

(4) “ This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto; and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement indorsed 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; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached. * * *»

The witnesses all agree that when the contract of insurance was entered into the defendant did not know of the existence of the chattel mortgages, nor did it know that any persons other than the insured, were interested in the property covered by the policy. November 12, 1890, the property was destroyed by fire, and on the next day, after the defendant had learned of the fire, One of the brokers who procured the policy took it to defendant’s office, and asked its application clerk to correct a clerical error in spelling the name of Starkweather, and also to attach to the policy a provision making the loss payable to the mortgagees.

The application clerk corrected the error in the name, but declined to add the provision making the loss payable to the mortgagees. Thus far these witnesses agree. The broker testified that the clerk said : “ He (the clerk) said it (the absence of the mortgagees’ provision) would make no difference as the loss would be settled with Saunderson & Starkweather, and a cheek paid to their order.” The application clerk denied saying that a check would be given for the loss. The broker testified that the interview was in the morning of the 13th, but the clerk testified that it occurred in the evening of that day. This is substantialty all the conflict there is in the-evidence. On November 13th defendant’s adjuster visited the scene of the fire, saw one of the firm of Saunderson & Starkweather, and directed him to make out an itemized statement of their loss, which they did, and on November 18th delivered the statement to defendant’s adjuster. Two or three days thereafter the amount of the loss was submitted to the arbitrament of two appraisers, one selected by the insured and the other by the insurer. The amount of the loss was fixed at $1, 505.17, and the portion, payable by the defendant, if liable, at $950. During the appraisal the existence of the chattel mortgages became known to the defendant’s adjuster, who reported the fact to the general manager of the defendant’s office in New York.

At the close of the evidence the defendant moved that a verdict be directed in its favor, which was granted, and an exception taken. The plaintiffs did not request that any issue of fact be submitted to the jury, or that a verdict be directed in their favor, but their exception is sufficient to raise the question whether any issue of fact should have been submitted to the jury. Train v. Insurance Co., 62 N. Y. 598 ; Clemence v. City of Auburn, 66 id. 334; Trustees of East Hampton v. Kirk, 68 id. 459. There was no conflict in the evidence except in respect to the hour when the conversation occurred between the broker and the application clerk, and whether the latter said that the absence of the mortgagees’ provision would make no difference, and that the loss would be paid to the insured by check. The hour when the conversation took place is not material, and the application clerk had no power to waive, orally, after the loss, any one of the provisions of the policy. This is expressly provided for in the provisions lastly above quoted from the policy There was no issue of fact for the jury; and the sole remaining question is, should a verdict have been directed for the plaintiffs? Under the provision first above quoted from the policy it is clear that the policy never took effect, and by the provision secondly quoted it is made plain that in case a mortgagee’s interest is to be protected under a standard policy, his interest must be specified in it, or in a printed or written provision attached to it. There is no such provision, and it is conceded that the defendant had no knowledge of the existence of the mortgagees’ interest until after the fire. It is urged in behalf of the plaintiffs that the failure to disclose to the defendant the fact that the insured were not unconditional and sole owners of the property and the absence of a condition protecting the interests of the mortgagees were waived by the defendant having entered upon an appraisal, and thereby fixed the amount of damages. The answers to this is that by the provision thirdly above quoted from the policy it is expressly provided that the prosecution of an examination in respect to the fire, or entering into an appraisal to ascertain the damages, shall not waive any provision or condition of the policy, or any forfeiture thereof. Kiernan v. Dutchess Co. Mt. Insurance Co., 80 Hun, 602 ; 61 St. Rep. 720 , is cited as an authority for the plaintiffs’ contention that the defense that the policy was void because of the undisclosed existence of the two chattel mortgages was waived by the defendant’s inquiry into the circumstances of the fire, and thereafter uniting in an appraisal to determine the amount of damages. The case cited is meagerly reported. It does not appear whether the chattel mortgage was given before or after the insurance was

It is urged that the correction, after the fire, of the spelling in the policy of the name of Starkweather by the application clerk, he being at the time apprised of the existence of the mortgages, was in effect a reissue of the policy, and a waiver of the provision first above quoted. This contention cannot be sustained. The interview between the broker and the application clerk must be considered as an entirety. The clerk expressly refused to waive the condition by declining to attach a provision in favor of the mortgagees, and besides, as before stated, he was without power to waive orally, after the fire, any of the conditions of the policy.

The judgment should be affirmed, with costs.

All concur.