Home Ins. Co. of New York v. Scott

proofs shown in that on 19, plaintiff June tho 1926, executed a mort gage property on the to the Cumberland Sav ings Company, mortgage Bank subsisting principal with the unreduced appeared time further the fire. It though mortgage that the had not been veri deposited required by fied nor for record as Upon Ohio Statutes. evidence this latter concluded court that it was not a mort gage, contract, and, a collateral being of the opinion further that no other valid defense was out, made directed verdicts plaintiff for the for the full amount policies with interest. Columbus, Edmonds, Rolland M. Ohio The statutes (Gen. pro Code) Ohio Columbus, (Mooney, Edmonds, & Bibbee vide: 8560, mortgage Section a of chattels appellants. Ohio, brief), on the accompanied by “which an immediate Monnett, Columbus, (James F. S. Ohio * * * delivery shall absolutely bo void Joyce, Cambridge, Ohio, and Mur- Elwood the creditors of mortgagor, sub phy, Columbus, Ohio, brief), on the sequent purchasers, mortgagees good appellee. faith, unless tho mortgage, or copy a true Before MOORMAN and HICKEN- thereof, deposited be forthwith as directed in LOOPER, Judges, KILLITS, Circuit succeeding section”; next section Judge. District mortgage such deposited “must he county county recorder of the where the mort gagor resides”; MOORMAN, Judge. section “tho mort Circuit gagee, before tho instrument brought in Those suits were state filed, must state thereon, oath, under wore several removed tho defendants claim, just amount of the and that it is whore con- court, federal unpaid.” We do not find sought recovery Each of them solidated. statutes failure the mort policy upon of fire insurance issued comply gagee to with them vitiates the mort wool, including bags, woolen belonging gage as between him and the maker. It has plaintiff. To each of thorn the defense it does ruled the courts of plaintiff placed made that mort- Ohio. Hutchins v. Cleveland Mutual Ins. gage property in provi- violation of a Co., 477; St. 11 Ohio Francisco et al. v. policies sion as follows: “This entire Ryan, 54 Ohio St. 43 N. E. 56 Am. policy, provided by agree- unless otherwise 711; Rep. Boyer St. Co., Knowlton hereto, indorsed hereon or shall ment added * * * Ohio St. N. (N. E. L. A.R. if the interest of insured be void S.) 224; York Cassell, 201 U. S. other unconditional and than sole owner- * * * 481, 50 L. S. Ct. Ed. 782. Hence subject ship; if tho insur- or point the court was wrong, wo think and that personal and be become ance must held that was an mortgage.” a chattel incumbered In each meaning incumbrance within the poli provision the further there was provisions cy upon. relied representative officer, “no company power shall have waive Three of policies, those issued any provision Office, or condition of this ex- the Sun Insurance the Norwich Union cept tho terms of Society, Fire Insur Home subject agreement Company, be the hereon providing ance endorsed carried riders hereto; and added as to such occurring under the We not, assured should tion. proved to be due the hold did also trial court should and Cumberland directed verdicts “be the assured have subject, York Savings Company, neverthe- the New Underwriters and West Bank Companies. less, of the chester terms and conditions Fire Whether to all the grounds plaintiff the there are policy.” them, Two of those issued and the yet policies by' Company seek reformation of New York the issued Underwriters companies Company, presented those Fire carried are Westchester Insurance matters not plain- this record. no It claimed the See reference to Northern such clause. Ass . Case, uranee 308, Co. 183 22 policies, that Stottsber- U. S. Ct tiff, as these latter 133, City in- 46 them, 213, was L. Ed. v. agent Forkner Twin ry, the local who wrote A.), hence, Co., F.(2d) (6 Fire Ins. 19 mortgage, and 419 C. knew of the C. or formed j National Union & under Scottish v. Foster policies As providing the with riders E. 127 N. 180, 101 Ohio Co., St. Insurance 865, any that occurring policies under the Glass, v. Ins. Co. and Hartford Fire to the should Cum-. assured the were 93, 117 158 E. there 145, Ohio St. N. Savings berland Company, Bank question the prohibiting provisions policy the waivers of is different. two In decisions this court— incumbering of There the property. the Commercial Union Fire v. Co. Insurance first objections two to this contention: The Marshall, etc., F.(2d) 18 457 and Firemen’s law, by Ohio is the controlled question not F.(2d) Insurance v. 32 Brooks, Co. general jurisprudence, Hart- but is of one 65 A. L. 909—it R. has held that such (6 Nance, 575 Company F.(2d) 12 ford a rider is tantamount to an indorsement other, of A.); C. the contracts C. provisions accordance policy with the of the a waiver specifically provide that surance permitting property. an of incumbrance way, and designated in a be made policies pro It is true that the cases in those attempt in that waivers there was to effect no payment vided of the loss “interest way held in both the eases. We may appear”; but the circumstances under Jones, 15 Nance and Hartford Co. v. Case do, legal we think a distinction can F.(2d) A.) such (6 C. that 1 C. phrase founded of that from the absence contract, parties to binding were policies the two here under consideration. that, contained such where' the Equitable Nor is Bates v. Insurance Com agent of local of provision, pany, 10 Ed. in Wall. L. condition did effect a forbidden consistent with that that conclusion. In opinion our policy provision. In there ease there no was evidence “outside of * application those cases escape from no that two indorsements question. policies here the two any accept Bates, purchas- consent insured,” er, party whose interest was failure to ten defendants’ did the Nor question became determinable and hence the paid that were premiums of the return der a upon implications indorse- arising from the estop operate them policies on the ease, pointed out that provi alone. It ments of the effectiveness urging the had been however, that, if it shown Life Insurance Co. States United sions. dealing between A.); Georgia Home been the course (6 C. C. Smith, 92 F. recognize indorsement of (6 Rosenfield, 95 F. v.Co. a sale first assured evidence party Norwich Co. v. Kentucky, etc., M. A.); C. C. company consent A.) 146 Society (C. indorsement C. Union Fire sale, if it had been shown that the ad action of to the did the 695. Neither F. any particular place such usage in fire, investi immediately custom after the juster, might treated, so “the ease waiver of amount to a indorsements loss, gating the bar riders the case evidence different.” provisions. The breach those. to the per appear have been attached adjuster granted'the plaintiff shows that an agent company who was also by an investigation, and full make mission riders mortgagee These bank. take officer as he agreed action attached and were the form a waiver were in respect would not constitute policies, and it provided any of the manner of the conditions invalidate nor contrary ap- nothing presumed, agreement and was under this policies. attaching acted them plaintiff pearing, that the ad full consent authority. purpose attach- full juster Plaintiff was misled with nowhere acted. grant authority to ing was to encumber investigation) them prejudiced by his and cer language used property. The tainly ought result in a waiver not.to companies and suffi- insurance legal had no provision with which it connec- loss, disagreement as to the amount comprehensive for ciently arbitration, reasoning same should be ascertained intended. it was the insured each dissenting opinion insurance Judge Hook in A.) chosen arbitrator, select so (C. the two C. Company Case Reduction Atlas provided umpire. They is there- further (N. S.) select A. 9 L. R. F. for the or action Brooks on the directly In the suit applicable. fore apply recovery claim maintained follow supra, chose to this court major- equity until there had of law or reasoning than that of rather compliance by all were no been full insured with stating “if there ity opinion, requirements policies. that an consideration, the familiar arbitration, steps insur- As there was no and no ambiguity should be solved by plaintiff bring one the were taken the selected to party which company, the ance is, about, is the insurance com- applicable; it contended it language used, would be main- language panies present be used suits cannot that the not clear that the least, agree conten- to tained. intended to refer that We do not been have not pro- in the tion. of insurance did not Trimby in fact had The contracts very which interest grantor question had vide for lia- arbitration the he and his property, bility grantor and loss ease dis- but of the amount of agreed insured the should agreement. liability Trimby’s In this The denied benefit.” defendants by this brought indorsements before suit was and after was clearly appears that the it it case brought. question the facts Their went to defense the made full were with liability, the incum- not amount of loss. The to the and were intended authorize question mortgage. to be arbitrated was therefore never bering permit reached, and sufficiently comprehensive, as we defendants did not to are They say being they reached. and, so in- be In this situation cannot said, purpose, have for that that suits on they quite as the cannot be main- us to effective tended, to seem they contained tained. they would have had appear.” may phrase interest the further “as foregoing It results from the court’s rul Complaint is made of the right directing lower was court verdicts hearing ing consolidating the eases against Office, Sun Insurance the Norwich the action was together. them think that We Society, Union Fire Insurance and the Home question case was proper. main in each The Company. against judgments The and each was decided liability, ease however, companies, those carried interest any upon showing There is no its facts. own respect from they the fire. In this date the one of the de where the record erroneous, policy provided were each prejudiced trial of its fendants sum for which insurer become should opinion Nor in case with the others. our sixty days liable until accrue after permit plaintiff proceed error to to proof of loss. Proofs of loss made making mortgagee trial without bank judgments against 1926. The October plaintiff. companies party The insurance a three will therefore be af agreed pay money to ease to upon appellee condition firmed file They could the insured and the bank. have thirty days copy within a this court certified party proceedings made the bank a to filed in a remittitur the district court re they They ap preferred, had to. wanted mitting interest from the date of the parently, litigate not to do so to until 4, 1926, fire December otherwise the party primary claim with the to whom the lia judgments will be reversed. For the reasons bility doing they due. After can judgments against stated the hereinbefore permitted judgment say not be to Company York New Underwriters should be reversed bank because the Company Westchester Fire Insurance are re party. yet Furthermore, time there versed. any protection them to they obtain to against bank, be entitled as for when KILLITS, District (dissenting). ease is remanded, below will court see Fidelity Guaranty United States & Co. it, money doubt, paid no into F.(2d) Guenther, this court rights until held therein as Imperial cited Fire Insurance Co. v. Coos plaintiff between the and the bank are deter County, 452, 463,14 151 U. S. S. Ct. mined. Ed. L. effect contract remaining relates arbi involved case then defense before policies provided, manifestly according tration. it are the event “to be construed which so the terms of contract meaning of terms clause sense specifying'how, only, clear and, if be ef- used, are could have ipsissimis pro- to be taken are verbis of similar fected, unambiguous, their ordinary, present and visions in plain, contracts. their and understood in Thomp connection popular sense.” In that majority opinion In the in the Atlas Co., 136 U. S. son v. Phenix Insurance Devanter, following Van Judge, the 408, was also 1019, 34 Ed. 297, 10 Ct. L. Company County, Eire Insurance Coos policy “is so point that, if the cited equally pertinent cases, supra, instant require interpretation, and drawn as quoted: “Contracts of insurance are con fairly construc susceptible to two different indemnity upon tracts of con terms and adopted most tions, that is the one will specified ditions em insured.” favorable to the bodying- agreement parties. Eor comparatively a com- a small premise to consideration the in These citations were surer guaranty undertakes to this latter the insured ment that “resort cannot be damage upon loss or provi- nullify plain terms and and obvious agreed conditions But policy. upon, an insurance sions of other} when loss, to pay, called in ease question remains whether the the insurer, therefore, justly up mean- susceptible insist double fact will on the fulfilment of these expressed, whether it terms. ing, or, otherwise If insured has reasonably support per construc- the or that violated to fairly failed may contract, form the conditions liability of upon of the insurer the and such which tion performance violation or want of has be sustained.” been insurer, waived the then the assured Ac Life & Sanborn, Judge,"in Standard recover. It cannot is immaterial to consider A.) McNulty (C. C. Co. cident Insurance v. the provisions or reasons the conditions referring to the second rule 224, 226, 157 F. on which the is contract made terminate ought not quoted above said: “But provision policy other which has to make a permitted have the effect be accepted agreed upon. enough It is plain to in agreement ambiguous, and then parties that the have made certain terms, con terpret favor the insured.” it in of ditions on which their contract shall continue regretfully, dissent, which, I feel The or terminate. courts not make a The majority opinion re- impelled offer to' the parties. contract for the Their function and involving, specting eases considered the three duty simply carry consist in enforcing and Nor- respectively, the issued the ing actually out the one made.” Union, Sun, Home Com- wich majority opinion proceeds This to state altogether seems panies, is founded on what question the controlling in that fol- case as right application to be the to the facts to me lows: “What, plain in view of the and un- principles of cases of the above each ambiguous stipulations policy, in the the is supplement, I make stated. would but one meaning interpretation pay- seems to to be which me propriety of the Obviously, able indorsement? the words the consideration question, when that, above light must be read used therein in the of the- policy a rider or indorsement is of stipu- actuated the which plain a waiver of a offered as insurance, lating modified, could waiver, contract, provision of .the waived}, provision or condition thereof provision, can another contract provided in only by writing equal dignity and credit plain meets it effective when itself.” with attempts provision, such permitting of such a come, pertinent quotation interpretation Then waive must also followed Northern Assurance Co. v. Grand under the same rules construc- View effect Building 364, Co., 308, 183 U. 22 contract itself. S. Ct. tion importance 46 Ed. a decision the L. Atlas Reduction Co. New Zealand instant, a consideration which to (C. A.) 138 F. 497, Co. C. overlooked. should situation S.) precise question (N. A. L. R. eases, present which, point now involved instant is The can be no more clearly court, fundamental in this i. stated than the- division policy, foregoing opinion.. e., of a of from the Atlas rider the.effect provision court, fered as a waiver of a is true that decisions re- defeasance It exactly herein, later has the terms of ferred to favored case, but, read character the contracts court. Hook’s dissent in before as-we parallel completed divergent opinions, is division there was-- that al- fact acceptance above, the waiver must be so worded judgment whether a difference of reasonably regarded insurer as an ease, was peculiar rider agreement spite contract to continue contract conformity terms of the avoiding presence otherwise of a mort- which, a waiver only, compliance with gage lien; e., i. situation shall be effective. could implied volve least an that an in- consent perti- restate convenient here is mortgagee. shall exist favor terest policies involved language of several nent Company In Northern avoidance of Assurance Grand providing discussion in this which, Building Association, supra, View it was held manner in contracts and he —183 46 Ed. 133,153, U. S. S. Ct. by the insurer L. right to avoid only, authority plac- grant 213—that “limited policies differ [to waived. The agent’s power is numbered the measure of paragraph is waive] ing matter, Union in the where sueh limitation and Norwich is In the Home below. contracts, expressed accept policy, executed face of on the ed, presumed, law, number herein the insured as matter of stipulations we preceding the limitation; instrument, it aware of such insur the Sun whereas in companies may instance, it ance waive forfeiture caused 3, hut, in each follows quo- stipulations. conditions; nonobservanee of sueh to the same addressed on, plaintiff where waiver is relied policy, italics must Home is from the tation show company, with mine. forfeiture, that occasioned the dis fads accepted Policy made and sub- This “1. pensed condition; observance of con- foregoing stipulations and ject to the that where waiver relied on is an act of conditions ditions, stipulations and an agent, shown, it must he either that the hereof, together with such printed on the back express authority from the com agreements, conditions provisions, pany waiver, to make or the that the com hereto-, or added may hereon be endorsed pany subsequently, knowledge representative officer, or other and no facts, agent.” ratified the (Ital action power waive company shall have to of this mine). ics policy ex- provision condition of this or any may by of this cept sweeping sueh of this and The effect decision agreement hereon subject endorsed applicable be the authority, its continued unabated hereto-, provisions to sueh and and as situations, open added ques- or to instant is to officer,agent, representative no or recognized conditions frequently recently by and tion— power or be deemed held or shall have this court unison with all other federal provisions or sueh conditions to have waived tribunals. waiver, any, if shall be written unless such follows, decision, that in It this any hereto, privi- shall nor oi’ attached knowledge by insurer, actual absence of affecting lege permission the insurance or shown, alleged waiving indorse- otherwise Policy by exist or claimed under he this ment or rider be of the must informative or unless so written attached. insured lien, existence of and the inhibited policy, unless This entire otherwise “2. knowledge agent, of the insured’s not com- hereon or provided by agreement indorsed to may his not be im- principal, municated * * * void hereto, shall be if added puted insurer. to the increased within means hazard he waiver, Atlas In the Case the rider whose * * * insured; or control “Subject sufficiency questioned, was: to subject personal of insurance loss, any, policy, all of this iO the conditions by a properly bo or become incumbered and payable Dodge to G. B. and A. M. Stevenson mortgage. may appear.” majority as their interest company, of this If, with the consent “3. holding this “in was that did not policy shall under this exist in interest an implication terms or consent the in- * * * mortgagee the condi- a favor of mortgage.” created the chattel cumbrance apply shall contained hereinbefore tions Ilbok, dissenting, (page Judge held, that expressed and sueh manner among things, notice 514 138 F.), relating to sueh in- of insurance conditions according usage and might taken attached, upon, as shall be written terest may phrase ap- their interest custom the “as hereto.” appended pear” was used in sueh to refer to eases court, My effective, view is in- chattel interest. This Company v. Union waiver, claimed to work rider, Commercial dorsement Marshall, F.(2d) stipulation where provided in the numbered *** proven “Any loss than the rider was: in a could be where case the clause under is be due to this poliey, the assured simultaneous with loss the—for [Dacus], payable payable customary as interest clause shall held is means of 'may appear)” preference protecting its existing indicated then interest in the Judge conclusion, property.” reasoning Hook’s appeared,” in “expressly found foregoing concerning Judge Hook’s usages according it, record before “that position in Case, Atlas view community practices and of these Cases, this court Marshall Brooks companies, phrase interest insurance ‘as conclusively controlling shows fact in- appear’ may was understood cover phrase each was the may ap- “as interest mortgage interest, clude a chattel pear” in the waiver rider. In each dis- regular- printed form of words in a rider cussion centers around it and final con- ly companies for cov- insurance depends entirely upon interpreta- clusion its ering describing kind of interest.” tion and the effect thereof. These cases held, independently also It was unique respect. Citation Case, “the Atlas view Hook’s multiplied to show that its use is of the ut- payable stipulation loss should be importance most safeguard an interest * * * may appear,’ Dacus ‘as interest which otherwise work to avoid the con- interest, was, and applied his whatever it tract, presence, rendering its least, recognition by the insurer notice to alleged waiving rider ambig- or indorsement property, then or there- of his in the interest uous, permitting the rule of construction after.” operate when ambiguity present. Company v. In Firemen’s clearly established, longer and no F.(2d) Brooks, court, also controvertible, the insured select was, page 451: rider A. L. R. nominate, eopartieipation pro- * * * shall be held “Any ceeds of contract, person who has in- Trimby may appear, interest Thomas terest of corpus kind in the nevertheless,” etc. that decision subject, property, sured and that when that done squarely Judge Hook in followed insurer called to consider adding, page 452 Atlas F. whether in case of loss will honor such consideration, (2d): “If no other there were appointment. clearly recognized This was ambiguity the familiar rule that by both sides of the division Atlas company, against the solved insurance page minority opinion, opinion, language used, party which selected the would page 509, seq., F., by et also and this is, least, applicable; for it at not clear court in paragraph the Brooks in decision might been used not have quoted. See, also, the Bates Case, last very interest which refer intended to to that Judge minority in Hook, opin- fra. the Atlas Trimby property, fact had in the in ion, mind, applied with that in also agreed grantor be in- had Judge construction followed Denison grantor for this sured opinion ambiguity Brooks where ex- Trimby’s benefit.” ists, finding ambiguity in waiver him, before rider then wherefore he saw In Sun Norwich Union cases examine into intent of the .occasion nearly a week after waiver rider attached contracting parties, conceding [page while given, and mortgage chattel had been 513 of 138 that it cannot be said that F.] policies had issued. weeks after the nearly two inquiry is room to resort into contempo- done In Case that was the Home plain unequivocal language intent “when raneously policy. with the issuance employed.” Upon Brooks this court in the phase, this length upon I have dwelt three page F.(2d): “One observed, Case preceding involved in the decisions discussion may suggested, inherent in the distinction majority support cites them in because payable of the Atlas Case. facts The position, whereas, my in of their of its view the-policy clause was there after added respective facts and the acute issue involved in time force. was a dis- some There each, together which, with in the manner tinctly greater possibility that insured attained, nega- its solution each, using poliey security might be in some majority. conclusions of the tive the way property, disconnected so that proceeds ‘interest’ mean matter, interest in from another Aside to be dis- property, later, outstanding rather than interest there are three dif- cussed capacity decided by comparison in which ho at- ferenees, plainly shown in tached riders. eases distinguishing the three records, . question. Nor am I able find in record waiving alleged First, wording of the testimony proof supporting this in the startlingly considering. This is we are rider majority opinion: language (of “The by -any of the supported inadequate riders) used was insurance com- decisions, may appear” “as interest panies.” court, This Marshall’s entirely absent. Its important phrase is F.(2d) 457, apparently no entertained “Any wording is: loss under Judge criticism of Hook’s notice customs pay- proved assured shall may be due the 514). (138 prece- F. If we follow Cumberland Sav- and The able to the assured consider, said, dent Hook a“is subject, ings Cumberland, Ohio, Co., Bank knowledge” what, “among matter common all and conditions nevertheless, to the terms having to those do with fire insurance either policy.” agents insured,” of insurers or was the form of Secondly, slightest clause, adopted at- a loss there is not allege prove, companies doing tempt, case, fire the instant insurance business in terms, Ohio, Ohio, aside from with what intent as the uniform standard its own used years before, purpose rider and in or to serve what was used. and ever since time, to this it would be found to include this Thirdly, attempt there was no here to pregnant phrase, which Bracken did not em- show, apparently what was -on the record in ploy by implication: even (the “As their Case, supra, Marshall’s that the rider is in respective payees’) may appear.” interests printed regu- “the form of in a rider words larly the insurance majority opinion invites attention to covering describing that kind inter- eases, of the instant un- “circumstances” est,” e., i. interest. opinion der which is of “legal (between Judge opinion distinction Hook’s short, the records is consid- Cases) those the Marshall and Brooks meager ering allegation, proof, are so as to founded can be the absence of that ad- attempt prove that, my view, we are (as phrase ditional appear) interest forced, majority minority, judge policies.” are, from these There indeed, un- poli- eifeet attachment to several exclusively usual circumstances shown cies, by considering language used, the naked us, these, records before so far from quoted stipulations the ma- diminishing importance of the absence of jority qualify considers it to three —these my phrase, judgment the critical empha- and, absolutely, nothing factors else. using necessity sizes the it if the rider was apparently agree does not majority operate as a the lien inhibition. this, hesitatingly and I pro- therefore ceed take issue with certain order fact state- First of time was the insured’s opinion. ments situation, Therein June when the Sun and said of the riders: “The of attach- Norwich Then, Union issued. ac- ing grant them authority cording was to (Scott’s) testimony, to encumber insured’s he property by mortgage.” stored, destroyed, chattel had Aside afterwards at least 70,000 from the fact that there mortgage, pounds wool, bought was a mostly I anything cannot find 1925, year on sup- falling and held for a record market. port that statement. my proof All that His catches of loss admits this at- tention is comment, $34,800, without him in 1925 the riders cost and that its value were offered and as $28,700, received at the time the fire was attachments to policies the several shrinkage and that Bracken, the is- in value of per cent. The 17% suing agent, said this nothing 70,000 and wool pounds depends more: amount of “At I that time attached payable attempt the loss his naked An clause word. at cor- policies agent to those going for his companies.” roboration disclosed vendors ambiguous Even 40,006 pounds purchased 1925, 7,187 time and supports and inference, 1926, 47,247 pounds pounds incorrect in all. On Sun and Norwich Union had, 14, $5,000 until June were issued insurance 14, mortgage company. June 19, executed Westchester June He was indebt- 24, according the riders ed, attached June testimony, while to his the Home to the Cum- July bearing Savings issued principal the rider berland Bank at- sum tached as of that $18,200, “represented date. (language Hereafter will be of of chat- equivocal discussed the position mortgage) promissory various them, pay- using the critical ignore, in the use of an effective loss while still to depended, is, think, and, against creditors, I upon clause Scott’s which each able fact necessary When are elimi- justification. with the mort- what was to-be done without hazard, always opinion it seems to (5) majority that-the moral rec- from the gage; nated arising mortgage lien, precedent, a unless it be the ognized entirely in the without be in this instance because of soon to be discussed. was intensified Case Bates failing fortunes; signifi- (6) that Scott’s language of this rider As I construe mortgage to that cance attaches the facts impression that the bank rebut to it tends filed, and that riders of character property, in the insured an interest held in the records shown were used. right because, partici- if its sort, whatever recovery consequence such in a why pation stupidity may explain Brack- Crass of that all, the measure existed at interest protect failed his bank Scott’s en interest recovery of the be the extent would rider, and used a defective but a creditors damages policy, paid “due the that is that be —here the direction Bates.” As to majority this case “payable opinion says: assured” assured” are to the “In that equal apparently case there bank, was no evidence divided ‘outside of the two * * * nothing which, indorsements There is terms between them. that there was insurer, accept accepted by Bates, purchaser, consent to once direction is as the party go insured,’ behind its terms whoso interest requires the latter and hence question upon bank’s interest became see that the extent of the determinable im- plications arising recovery exactly upon protected easts from the is indorsements —it inquiry pointed alone. duty ease, the insurer no whatever. out in that how- ever, that if it had been shown that it had practice, by Justice The insurance noted dealing course of between the Case, infra, Judge Bates Miller in the recognize party indorsement of the Case, appointing, Denison in Marshall first assured as evidence of a in- sale or the loss, who no interest copayee of a one has dorsement of the company as a consent to the subject insurance, is a of in- factor sale, or had been if it shown that custom terpretation in such eases as we have here— usage particular place such in- issuing companies were upon one which the dorsements treated, might were so ‘the case rely, entitled to and which this court should ” different.’ noteworthy also consider. It is also that the a of the provision waiver defeasance In the instant eases there are none of the says attached or indorsed clause qualifications, such as are referred to in the “agreement” shall take the form of an foregoing quotation, because of which “the question, therefore, wheth- to waive. The might different,” case wherefore, here, as dignity “agree- achieves of an er this rider Case, question the Bates “the becomes de- very hazard, ment” to waive a serious moral upon implication terminable arising from therein, and not referred to which the terms the (rider) indorsements alone.” specific inhibit a the contract without My conclusion, based on what seems to agreement. unambiguous me to be the character of its slightest ambiguity, I am unable to see the language merely appoint the bank as a co- language whatever the rider in these participant recovery with Scott in on the just cases—it what it well be to policies, informing qual- its utter lack of appointee proceeds a make the bank mere ity that the moral hazard of a lien recovery alone, suggestion with no majority attends the risk, settled that the appointment subsisting based failed has to observe the rule laid down corpus. interest in the Eiders and indorse Judge Hiekenlooper, in the Guenther equivocal ambiguous of no less ments char opening opinion, referred to at the of this acter than have been courts before the to equally applicable to the construction of an be.interpreted to citation, that result. One provision effort work waiver of the authoritative, cites, still defeasance case of a lien increase present is sufficient for the discussion. In risk, had,” that “resort in a cannot case Equitable Company, Bates v. here, respecting rule resolution (77 S.) 33, 34,19 L. Wall. U. Ed. where ambiguities, because there is here no “dou- contained usual covenant meaning” ble that here the property sold, the insurance “fairly reasonably support will not ceased unless insurer consented writ liability construction ing, held it was indorsement that the judg- sustained,” surer our “payable, loss, in case of E. C. be, ment should as in the Westchester and Bates,” followed the insurer’s indorsement cases, New York Underwriters that the trial hereby given “consent is to the above in should have directed verdicts for dorsement,” imply did not either a defendants whose cases herein considered. property. or consent to sale of the insured majority opinion savors, judg- my In this case had been sold to ment, Bates, appointee. it, of a controversion of Sanborn’s here, injunction, Company McNulty, was, Miller, page as noted Mr. Justice supra, ambiguities report, dealing of a cannot proof course of parties permitted “to have effect to usage between the of make and custom language agreement ambiguous, qualified used, plain and then to wherefore language terpret “nothing saw in it in favor of the insured.” concluding Hook, his dissent in the Atlas than the direction Philbrick in more [the says (page F.) deci- , company, 516 of 138 of the the consent that Case sured] Supreme Northern by Philbrick, Court any loss sustained sion covered law, hy eases at con Case, supra, that it “the tenden- to relieve Assurance sequence ineptitude in pres or carelessness cy invasion the clear to the unrestrained by oral testi- entation. insurance rights mony was so destructive my judgment significant the fact is not been well checked.” companies has issuing poli- the Home case the majority position me seems cy attachment of the rider were si- to such invasion which to lower the bars tends multaneous, in the other whereas eases majority Supreme Court erected. The policy. rider to an old was attached appear me, also, inconsistent conclusions disposition As intimated I concur Nance decisions of this court majority New the Westchester and Cases, F.(2d) 575, Syllabus and Jones Home, Sun, York Underwriters eases. The Syllabus 3. F.(2d) and 15 clearly seem me Norwich Union eases attaching if Bracken’s acts Even findings same deserve the order. imputed insurers rider should he interest, spite perform- of his adverse agent of acts, managing ance of those as the beneficiary riders, still face As- the immanent doctrines of the Northern CO. v. VIRGINIAN RY. CHAMBERS.* knowledge not that surance Case that provisions of of the insurers and that definite SAME v. FITZGERALD. character of the waiver the contracts as to the SAME v. HYLTON. as a such as we have carrier of information Nos. 3014-3016. importance as honored, must be it is of no question is not de- these records stand. The Appeals, Circuit Court of Fourth Circuit. cided Bracken knew or intended what Dec. 1930. both. It is the matter of what Rehearing Denied Jan. 1931. purpose insurers had of riders that They convey counts. no hint of a chattel mortgage, proof there is not a scintilla anything the insurers about it knew whatever. As of the riders is ambiguity, without sufficient and reasonable perform well known far different office practice, in insurance it does suffice to long- put inquiry, insurers on even if 5, may period, September est June 24 inquiry considered a reasonable time for such particular companies. proof pleading or even There three knew of the any one slightest mortgage, or had the hint in the insured interested hank was proof any way; pleading is there nor hy phraseology to was intended that it any insurer, or information to convey such rider work the waiver of the de have the insured, of the contract. feasance clause answer, Scott, knew, by the character of the that the rider defense would made inadequate serve the for which now holds is suf of this court opportunity, had his which is not ficient. He yet if he has lost, to reform the contract qualifications which proof with the essential possible equity, make reformation would place here, ex there is no debito wherefore justiciae, him, even if that relieve justifiable straight at law. in these actions- urged Ap Respectfully courts, .even slow, Courts, especially pellate should he granted *Certiorari 51 S. Ct. 75 L. Ed. —. tel notes Bracken which deserves signed consideration sought amounts,” when is various dates him- considering that explanation, more reasonable Having taken by both. wife, or self, by bis responsible been chosen to hold two he had policies for Union Norwich Sun out the days had positions, is that he some 14, five on June $11,500 aggregate of cor- thereby, for these omissions are mortgage, serve the chattel bank gave the later he However,, noted the circumstances days related. after their or ten days later still and five effect, sug- appear to have the do to me Union Norwich Sun issue, the majority, to of no con- gested by the render rider loss- carry the caused to were customary “in- sequence the absence of Home me July took out Then, 6, he clause. phrase. terest” once, at- which, $8,000 on policy for writing agent Bracken, the rider. tached athwart matter however so stand One does $19,500, at the policies for three greatly plain as to weaken situation mortgagee chattel cashier time destroying same one inference tiff’s ease $3,500 last August 14 the bank. helpful, otherwise 1926, During the season out. obliga taken duality representative Bracken’s on commis- were purchases principal attaching Scott’s the riders. when he acted tions McMurdy. August 28 all of activity a Mr. incompatible. sion His These were then Saturday out. taken McMurdy wool was increasing through the the moral hazard again wool was 2, afternoon, September some advantage mortgage was for the building for burned bought and correspondingly stored principal, and, his bank morning Monday, early McMurdy. In the principals. disadvantage his insurance All of Scott’s fire occurred. September impossi incompatible duality makes it This Cumberland, where destroyed. were records of his attribute to the insurers act ble to mort- the chattel occurred, and where fire bank or the insured which favored either the lived, executed, where Bracken gage Mulrooney Royal In through v. the'bank. 1,000 popula- village of less than was a small Company, (9 C. C. 163 F. surance Bracken had census. Company Capitol tion shown Arispe Mercantile v. A.); during period storage place Iowa, 272, been at the Company, 133 110 N. (the to see Mr. Scott times “several (N. involved annota S.) 9 L. R. A. W. The chattel insured) on business.” Surety 93; Ann. American tions, 12 Cas. nor neither filed veri- 19 was June Pauly, executed 170 U. 18 S. Ct. Company at all times insufficient it was fied, wherefore Indemnity 977; 42 L. Ed. Aetna Com intervening bank from Bracken’s protect Schroeder, 12 N. 95 N. W. D. pany of Scott. Consequently may charged creditors not be 436. they, through their against the insurers from these facts save >noinferences I draw produced and attached the riders. We agent, losing and involved cir- Scott was (1) that therefore, it, nothing as I look at have, time; (2) during the entire cumstances judgment to serve our effect record obvious was more or less his condition stipulations riders, inhibiting save the Brack- community, especially known to small contracts, waiving provisions for very large agent creditor, en, the active wording of al stipulations, and the those through bank; (3) latter, Brack- leged waiver. protecting en, an acute interest its is, aggregate, large loans; sup- and, in for me see how numerous difficult n (4) being majority position is found in the Bracken, at the same time'in port money I do loaning protecting appear” cases. business “as interest three issuing any question loans, insurance whatever but that and an. entertain right- policies, presumably knew both how and Brooks Cases critical our Marshall go beyond them, protect fully his bank the insurance decided. But to

Case Details

Case Name: Home Ins. Co. of New York v. Scott

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Dec 12, 1930

Citation: 46 F.2d 10

Docket Number: 5275-5279

Court Abbreviation: 6th Cir.