Coffin v. Northwestern Mut. Fire Assn. , 43 Idaho 1 ( 1926 )

Matthews, the conditional buyer, having the right of possession, had an insurable interest. (Quinn v. Parke LacyMachinery Co., 5 Wash. 276, 31 P. 866.)

The contract between Matthews and Coffin Beglan was by its terms an unqualified agreement upon the part of Matthews to buy the automobile and an absolute contract upon the part of Coffin Beglan to sell the automobile to him, conditioned only upon the payment of the purchase price according to the terms of the contract. (Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 138 Am. St. 171, 52 So. 799.) The policy of insurance was therefore enforceable as against the insurance company in the absence of title to the automobile being in Matthews. Possession gave to Matthews an insurable interest in the automobile by reason of which, in case of loss by theft or fire, etc., he could collect upon the policy.

To defeat the policy the insurance company set up and relies upon the provision contained therein that it should be void: "in case of transfer or termination of any interest of the insured other than by the death of an insured, or any change in the nature of the insurable interest of the insured in the property described herein, either by sale or otherwise,"

The question therefore arises, did the insured, Matthews, have such an interest in the automobile, at the time the divorce was granted, which the court had jurisdiction to award to another? It is conceded that Matthews had no title, title being in Coffin Beglan, who had no knowledge of the divorce proceedings and were not made parties to the action. The decree of divorce, however, awarded the property, title to which was in Coffin Beglan, to Matthews' former wife. The court did not decree to her Matthews' right of possession, but gave her the absolute property in the automobile, title to which was in Coffin Beglan. In other words, the court very generously gave to Matthews' former wife property that did not belong to Matthews, to which he had no title, and because the court awarded to her the property of Coffin Beglan the majority opinion holds that, under the foregoing provision in the insurance policy, there was such a change of possession that the policy became null and void.

The primary rights of the buyer under a conditional sale contract have been defined as follows: The buyer shall have the right when not in default to retain possession of the goods, and he shall also have the right to acquire the property in the goods on the performance of the conditions of the contract. In other words, he has the right to possession when not in default even though the purchase price is not paid, and he has a right to acquire the title as well as a right of action for breach of the contract on the part of the seller.

Broadly stated, a conditional sale contract means any contract for the sale of goods under which possession is delivered to the buyer, and a property in the goods is to vest in the buyer at a subsequent time upon payment of the purchase price.

I am of the opinion that the case of Pease v. TellerCorporation, Ltd., 22 Idaho 807, 128 P. 981, is decisive of this case. In the course of that opinion this court said.

"In this contract the seller reserves the title to the property until payment is made by the purchaser, when the title passes from the seller to the purchaser and the contract of sale is completed; but until such payment is made, the contract is conditional, and there is no sale of the property but only an agreement for sale. The sale can only be completed by payment or by an election to collect the purchase price."

Now, clearly, under the principle above announced, Coffin Beglan reserved the title to the automobile until payment was made by Matthews of the purchase price. The majority opinion, however, holds in effect that the title to the property passed to Matthews' former wife, although it is conceded that the purchase price was not paid.

In Neitzel v. Lawrence, 40 Idaho 26, 231 P. 423, the following language is used in the course of the opinion, quoting from Harkness v. Russell, 118 U.S. 663, 7 Sup. Ct. 51,30 L. ed. 285:

' "It is only necessary to add that there is nothing either in the statute or adjudged law of Idaho to prevent, in this case, the operation of the general rule, which we consider to be established by overwhelming authority, namely, that, in the absence of fraud, an agreement for a conditional sale is good and valid, as well against third persons as against the parties to the transaction; and the further rule, that a bailee of personal property cannot convey the title, or subject it to execution for his own debts, until the condition on which the agreement to sell was made has been performed.' "

Matthews, being but a bailee of the automobile, was powerless to convey title thereto to his wife or to any other person, or to subject the automobile to the payment of his own debts, but the court in its decree attempted to convey to Matthews' former wife the whole title to the automobile, hereby abrogating the contract between Matthews and Coffin Beglan.

In First Nat. Bank v. Springfield Fire Marine Ins. Co.,104 Kan. 278, 178 P. 413, an action upon a fire insurance policy, the answer of the insurance company admitted the divorce, but alleged that the company had no notice thereof, or of any change of title or possession prior to the occurrence of the loss, and pleaded the provision in the policy that it should be void if any change other than death of the insured should take place in the interest, title or possession of the property, "whether by legal process or judgment, or by voluntary act of the insured, or otherwise." As in the instant case, it was alleged that the change of ownership and title was without knowledge of the company and in violation of the terms of the policy. In the course of the opinion the court, in quoting fromDurland v. Durland, 67 Kan. 734, 74 P. 274, 63 L.R.A. 959, said it was ruled in that case that:

" 'Upon the rendition of a decree of divorce, the relation of husband and wife no longer exists between the parties to the suit, and if one of them should die within six months following the date of the decree the survivor would take no share of the property of the deceased under the statute of descents and distributions, by virtue of the former relationship.' "

When the court in the instant case granted the decree of divorce, the relationship of husband and wife no longer existed between Matthews and his former wife. Matthews had no title to the automobile, but a right to acquire that title, and if he had subsequently acquired the title, in the absence of specific conditions contained in the decree, Matthews' former wife would not have received title to the automobile, or any other after-acquired property of Matthews. The decree did not provide that Matthews was to carry out the contract with reference to the purchase of the automobile and thereby acquire title thereto; neither did it provide that his former wife should be substituted to his right to carry out the contract and thereby acquire title to the automobile, — assuming, but not admitting, the authority of the court to substitute parties to the contract, — but the decree gave to the former wife of Matthews the title to the automobile, thereby annulling the contract between Matthews and Coffin Beglan, taking the property of the latter, title to which was in them without adding any conditions, and turning it over absolutely, burdened with no obligations, to Matthews' former wife, which was clearly without and beyond the jurisdiction of the court. It is not a sufficient justification for depriving the owners of property of that property to say that the decree of divorce was not aptly worded, in that it awarded to Matthews' former wife "one Hupmobile automobile 1921," and for this court to add to the lower court's decree that the use and possession and the right to pay the amount remaining due under the conditional sale contract had been granted to Matthews' former wife, when the decree makes no such provision.

To my mind the defense of the insurance company is untenable. It admits the theft of the car, the proof of loss, the rider attached to the contract, which became one of its conditions, that if the car should be lost by theft the insured should be paid the amount stipulated in the policy "subject to all the terms and condition of this policy, loss if any payable to Coffin Beglan, of Boise, Idaho, as their interest may appear, otherwise to the insured"; and it is also admitted that Matthews assigned the policy to Coffin Beglan. That Matthews could have collected upon the policy, there is no question, which being true, the right of Coffin Beglan to collect should be upheld.

It may be suggested here also that the record fails to disclose any valid service of summons made upon Matthews in the divorce proceedings. Query: Did the court have jurisdiction to enter the decree at all?

William A. Lee, C.J., concurs in this dissenting opinion.