Moulton v. Ætna Fire Insurance , 49 N.Y.S. 570 ( 1898 )

Hardin, P. J.:

■ The evidence before the referee sustains the finding of fact made by him that the plaintiffs were copartners. . That copartnership was formed in the fall of 1890. There were no written articles of copartuership, hut a verbal agreement was made. Mary J. Moulton was to put in $2,000 and the use of her warehouse, and W. W. Wright was to put in $4,500 in cash, and Frank Moulton was to be employed as agent of the firm, and he was to receive $50 per month for his services, and the plaintiffs were to share alike in the profits and losses. After such an arrangement was made, the plaintiffs commenced buying and selling tobacco, with the aid of the services of Frank Moulton, son of Mary. We think the evidence warrants the conclusion reached by the referee that, at the time- the policies were issued and renewed, all the property covered by the policies and renewals was the property of the copartnership, and that the contention of the appellant, that the evidence indicates that the property belonged to Mary J. Moulton individually, ought not to be sustained.

(2) It is contended in behalf of the appellant that the chattel mortgages issued by the female plaintiff to the male plaintiff rendered the policies void, and the learned counsel for the appellant calls our attention to the clause in the policy as follows: “ If the interest of the insured in the property be not truly stated herein, or if any change take place in the interest, title or possession of the subject of insurance, or if the subject of insurance be personal property and be or become incumbered by a chattel mortgage,” the poli- ■ cies are avoided, and he calls our attention to the case of Woodward v. Republic Fire Insurance Company (32 Hun, 365). That case differs from the one before us, as in that case, when the policies, were issued, the property was subject to a chattel mortgage given to one Vandewalker; and it was said in the course of the opinion that “ the effect of a chattel mortgage is to convey the title of the-property to the mortgagee, and thereafter the mortgagor’s interest is that of an equity of redemption, and nothing more. * * * Therefore, the interest of the assured in the personal property was not that of a sole,«entire and unconditional ownership, and so much of the contract as related to that class of property was void by the. very terms of the condition.”

In the case in hand it will be observed that, at the time the policies were issued and renewed, the property belonged to the copart- • nei’ship, and that the chattel mortgages were executed several months subsequent to the issuing of the policies, to wit, one on the 5th of ' March, and the other on the 18th of June, 1894.

Appellant’s learned counsel calls our attention to Gray v. Guardian Assurance Company (82 Hun, 380). That case differs from the one in hand, as the policy there was issued on the 18th of June, 1892, to Davis Brothers,, who “ executed a chattel mortgage on the property insured to one Henrietta Briggs,” a third party in no way connected with the firm, of Davis Brothers. In the case in hand the mortgages were executed ¡by Mary J. Moulton to W. W. Wright, and so far as they were expressed to be mortgages. of the entire property held by the firm, they were inoperative, as she only had an undivided interest in the property. Besides a transfer from one partner to another of supposed interest in partnership property has been considered not to be a violation of the provisions of a policy inhibiting the. change of title or interest of the assured. Such transfer simply transfers the interest the partner may have in any surplus remaining after payment of the firm debts and the settlement of firm accounts. (Menagh v. Whitwell, 52 N. Y. 146 ; Wood v. American Fire Ins. Co., 149 id. 385.)

In the case of Dresser v. United Firemen's Ins. Co. (45 Hun, 299) the policy contained a provision, viz.: “ This policy shall, become void and of no effect * * * by the sale or transfer, or any change in title or possession of the property insured.”

The policy was issued to Dresser & Co., and the firm was dissolved subsequently, and the interest of Callanen in the firm property was transferred to Dresser and Dresser executed a chattel mortgage on the property for $2,000 to Callanen to secure such purchase price, and it was held “ that the dissolution of the partnership, the transfer of Callanen’s interest in the property to Dresser, and the giving of the chattel mortgage by Dresser, did not work such a transfer of interest as to avoid the policy.” That case was affirmed (122 N. Y. 642).

By the use of the language we have quoted, evidently it was the object of the company to guard" against “ controversies with strangers or persons other than those with whom they contracted.” (Dey v. Poughkeepsie Mutual Ins. Co., 23 Barb. 627.)

In Wilson v. The Genesee Mutual Ins. Co. (16 Barb. 511) it was held, viz.: “ Where an insurance is effected upon goods belonging to a copartnership, a transfer of interest in the partnership property and, in the policy of insurance, from one partner to the other, will not prevent a recovery in case of loss, notwithstanding a clause in the policy declaring that the interest of the assured therein is not assignable without the Written consent of the insurers. An assignment from one partner to another is not within the principle on which the prohibition is founded.” .

In the course of the opinion delivered in that case it was said : “ When underwriting for a firm the insurers are presumed to know, and to be satisfied with, each and every of its members. * * * They, therefore, agree, in effect — for such is the legal inference —■ that a transfer of interest from one partner to the other is within the original understanding, and that it shall form no objection, in case of loss, to the right of recovery. It is an assent, necessarily implied from the nature of the contract, and given in advance, and, therefore, requiring no subsequent notice.”

In Germania Fire Ins. Co. v. H. Ins. Go. (144 N. Y. 199) it was said : “ This right of. the insurance company was in nowise invaded when this court held that a sale by one partner to another of his interest, where both were insured, did not avoid the policy. It is only when a stranger is to be brought into contractual relations with the insurance company that the consent of the latter is essential.”

It seems reasonable to construe the language used in the defendant’s policy as intended to prevent ownership or interest in the insured property by any third person, rather than to limit the respective rights of the members of a firm to which the policy was issued.

In Darrow v. Family Fund Society (116 N. Y. 537) it was held that: “ For the purpose of upholding a contract of insurance its provisions will be strictly construed as against the insurer. When its terms permit more than one construction that will be adopted which supports its validity. It is only when no other is permissible by the language used that a construction which works a forfeiture will be given to it.”

In Bailey v. Homestead Fire Ins. Co. (80 N. Y. 23) it - was said : “ When a clause in a contract is capable of two constructions, one of which will support and the other defeat the principal obligation, the former will be preferred. ■ Forfeitures are not favored, and the party claiming a forfeiture will not be permitted, upon equivocal or doubtful clauses or words, contained .in his own contract, to deprive the other party of the benefit of the right or indemnity for which he contracted.” ' .

In commenting upon Hoffman v. Ætna Ins. Co. (32 N. Y. 405), where the policy provided that if the property insured be sold or conveyed the policy should be void, and the court held that this -provision was not intended to forbid changes of interest among the partners themselves, but related exclusively to assignments and alienations, to third persons, in Keeney v. Home Ins. Co. (71 N. Y. 402) Andrews, J., said : “ The court regarded the condition against alienation as intended to protect the company against liability, in-case of a transfer of the insured property to strangers to the contract. The company by issuing the policy had shown its willingness to insure all the persons composing the firm, and the suggestion that they might have been unwilling to insure two of them without the'other, was considered fanciful and unsound.”

The foregoing views lead to an affirmance.

All concurred.

■ Judgment affirmed, with costs.