37 F. 524 | U.S. Circuit Court for the Southern District of Georgia | 1889
The plaintiff has brought seven actions upon as many insurance policies against the companies issuing them. The actions are on trial (the issues in each case being the same) before the same jury. Before submitting evidence, the plaintiff has made a motion to strike certain pleas of the .defendants, ivhich are as follows:
“And for further plea the defendants sa.y they are not indebted, etc., because the insured, Fried & Hecht, without the consent of defendants, alienated the property insured on the 27th day of November, 1886; for that on that day the said Fried & Hecht signed, sealed, and delivered to M. Nussbaum & Co. a deed, a copy of which is hereto attached, by which they conveyed to M. Nussbaum & Co. the title to said property, and thereby voided the said policy of insurance.”
The plaintiff moves that the third ground of the plea be stricken also, because, as therein stated, it is, conditioned in the policy that, if any change takes place in the title of the property insured without the consent of the defendant, “whether by sale, transfer, or conveyance,” said policy shall be void, and that such change in the title did take place by the deed before mentioned. The deed referred to is set out in full as an exhibit to the plea, and is in the following language:
“State of Georgia, Bibb County. This indenture, made the 27th day of November, 1886, between Fried & Hecht, a firm composed of Joseph Fried and Iiobert Hecht, of the county of Bibb, of the one part, and M. Nussbaum*525 & Co., a firm composed of M. Xussbaum and Jacob R. Fried, of the county of Bibb, of tile other part: Witnesseth that the said Fried & Hecht, for and in consideration of the sum of eight thousand dollars in hand paid at and before the sealing and delivery of these presents, the receipt whereof is hereby acknowledged, have granted, bargained, sold, aliened, conveyed, and confirmed,' and by these presents do grant, bargain, sell, alien, convey, and confirm, unto the said M. Xussbaum & Co., their heirs and assigns, all that stock of merchandise contained in the store-house Number 103 Cherry street, in the city of Macon, said state and county, now occupied by said Fried & Hecht, said stock of merchandise consisting principally of fancy goods, crockery, glassware, tinware, wood and willow ware, notions, toys, etc., and every other species of personal property in said store-house, including furniture and office fixtures; also all property that may be hereafter placed in said store-house, whether differing specifically from said stock now on hand or not, and to which this deed is to attach. This deed is to attach on said stock for what is now due to the said M. Xussbaum & Co., and for all future purchases and advances, and any other indebtedness which may be incurred by said Fried & Hecht. This deed is to follow said stock of goods to any building to which they may be removed; also all notes, books, and accounts now on hand, and all future notes and accounts made by customers of said Fried & Hecht. This conveyance is intended to operate as provided in sections 1969, 1970, and 1971 of the Code? of 1882, in regard to the sales of property to secure debts and to pass the title of the property described into the said M. Xussbaum & Co., the debt hereby secured being one note, dated Macon, Ga., November 27, 1886, and due one day after date, for the sum of eight thousand dollars; and the said Fried & Hecht hereby agrees that if the debt to secure which this deed is made is not promptly paid at maturity, according to the tenor and effect of the said note made at the execution hereof, then the said M. Xussbaum & Co., his agent or legal representative, may, and-by these presents are authorized to, sell at public outcry, before the court-house door in the county of Bibb, to the highest ladder for cash, all of saul property, or a sufficiency thereof to pay said indebtedness, with the interest thereon, and the expenses of the proceeding, including fees of attorneys, if incurred, not to exceed ten per cent., after advertising the time, place, and terms of sale in the Telegraph, a newspaper published in Macon, Ga., once a week for four weeks; and the said M. Nussbauni <fc Co., his agent or legal representative, may make to the purchaser or purchasers of said property good and sufficient titles in fee-simple to the same, thereby divesting out of the said Fried & Hecht all right and equity that they may have in and to said property, and vesting the same in the purchaser or purchasers aforesaid. The proceeds of said sale are to be applied, first, to the payment of the said debt and interest, and the expenses of this proceeding; the remainder, if any, paid to the said Cried & Hecht. The said M. Xussbauin & Co., his agent or legal representative, shall be authorized to proceed immediately to put the purchaser or purchasers in possession; the said Fried & Hecht covenanting and agreeing to surrender the same without let or hinderance of any kind.
“In witness whereof, the said Fried & Hecht, and their wives, who hereby consent to the execution of this deed, have hereunto set their hands, and affixed their seals, and delivered these presents, the day and year first above written. Joseph Fried. [l. s."
“Robert Hecht. [l. s.'
“Fried & Hecht. [l. s.°
“Signed, sealed, and delivered in the presence of
“T. W. Glover.
“ J. T. Rodgers, Xot. Pub. Bibb Co., Ga.
“Recorded, Dec. 1, 1887.”
“Or if the property be sold or transferred, or any change take place in title or possession, whether by legal process or judicial.decree, or voluntary transfer or conveyance, this policy shall be void, any custom or usage of trade or manufacture to the contrary notwithstanding.”
The defendant insists—First, that the deed was an alienation of the property insured; second, that, even if it should not be such an “alienation” as would void the policy, it is, under the peculiar terms of the policy, such a change in the title, by voluntary transfer and conveyance as will have that effect. The question presented by the motion has been debated by the counsel for either party with unusual clearness, brevity, and precision of statement. It is of vital importance, for if the pleas are sustained the actions will of course he defeated. It will be conducive, perhaps, to logical method, on account of the character of the pleas, to consider first, the argument of defendant’s counsel, for in fact they assume the initiative, although formal motion was made by plaintiffs. • It is insisted that the deed set out in the plea is a distinct and undeniable violation of section 2807 of the Code of Georgia. This provides that “an alienation of the property insured, and a transfer of the policy, without the consent of the insurer, voids- it; hut the mere hypothecation of the policy or creating a lien on the property does not void.” It is insisted that, since the deed in express terms conforms to section 1969 of the Code of Georgia, that it passed the legal title, and was an absolute conveyance. The section last quoted is a statute, intended to give a prime and first right to the debt-paying value of the property so conveyed, to the grantee of the instrument executed under its provisions. Section 1969a provides:
“Whenever any person in this state conveys any real property by deed to secure any debt to any person loaning or advancing said vendor any money, or to secure any other debt, and shall take a bond for titles back to said vendor upon the payment of such debt or debts, or shall in like manner convey any personal property by bill of sale, and take an obligation binding the person to whom said property was conveyed to reconvey said property upon the payment of said debt or debts, such conveyance of real or personal property shall pass the title of said property to the vendee, and shall be held by the courts of this state to be an absolute conveyance, with the right reserved by the vendor to have said property reconveyed to him upon the payment of the debt or debts intended to be secured agreeable to the terms of the contract, and not a mortgage. ”
It is important, also, to consider another part of the same act—section 1971 of the Code. It is as follows:
“The vendor’s right to a reconveyance of the property upon his complying with the contract shall not be affected by any liens, incumbrances, or rights which would otherwise attach to the property by virtue.of the title being in the vendee, but the right of the vendor to a reconveyance shall be absolute and permanent upon his complying with his contract with the vendee, according to the terms.”
Upon these facts the appellate court held “that, while the legal title passed, it passed to a trustee, partly for the use of the assured, in fact to secure a debt of his, and with the express feature to account to him for the balance. While ejectment might have been maintained upon the deed, still the equitable title, the real title, and the possession with rents and profits remained in the assured, who still held an insurable interest. “ The spiril and reason of the law in respect to insurance,” said the court,
Can it be doubted that Fried & Hecht had the right to redeem these goods by the payment of their debt to Nussbaums. The converse, indeed, in the absence of special stipulations as to what alienations or changes in. the title shall invalidate the policy, so long as any interest remains in the assured; that is, so long as he retains an insurable interest ■therein the polioyds operative to protect that interest. 1 Wood, Ins. 701, and authorities cited. Again, it is evident that the destruction by fire of the property transferred to Nussbaum would in no sense release Fried & Hecht from the payment of the debt which it had been transferred to secure; and since, in that event, they would be deprived of the right to credit its value upon their debt, the measure of their loss would have been the value of the property itself; otherwise it would have gone to his credit. 1 Wood, Ins. 701. Certainly this was an insurable interest. Insurance being a contract of personal indemnity, no person can either enter or remain in a contract to insure property in which he personally has no interest; but as long as his interest, legal or equitable, is of a character that, in case of injury, he would sustain a pecuniary loss, the contract is valid. In the case of a pledge to a creditor the assured’s rights are not lost until the full title vests in the purchaser, without any right of redemption on the part of the assured or his creditors. Strong v. Insurance Co., 10 Pick. 40; Bragg v. Insurance Co., 25 N. H. 289. Here the title passed, but the right of redemption is not only expressly reserved by the conveyance, but by operation of law. We hold, therefore, that there was no such alienation as avoided the insurance.
Now, does the stipulation of the policy against anj' change in title or' transfer have that effect? Many cases v'ere cited by counsel for the defendant to show that it had. In Iron Co. v. Assurance Co., 46 Wis. 23, 1 N. W. Rep. 9, it w'as held that a conveyance of the fee and taking back a mortgage for the purchase money is sufficient to put an end to the policy. In Insurance Co. v. Allen, 43 N. Y. 389, where the assured was simply a mortgagee, the transfer of the property mortgaged avoided the insurance. In Savage v. Insurance Co., 52 N. Y. 502, the insured sold and took back a mortgage for the purchase money. In Adams v. Insurance Co., 3 Benn. Fire Ins. Cas. 30, a case from Maine, it was held,
It is the duty of the court, wherever proper, to assist and protect the great and beneficent mission of insurance. On the other hand, forfeitures are not favored by the law, and in the language of the supreme court of Georgia, in Insurance Co. v. Coleman, 58 Ga. 254, “insurance is business, and not elaborate and expensive trifling. Of course, what is in any degree material should be allowed its due effect, but the absolutely immaterial should count for nothing.” In conclusion it would seem that if a debtor was debarred from making a lawful pledge of his assets to secure a creditor by a threatened avoidance of insurance, it might have a