48 A. 85 | Md. | 1900
On the 18th day of February, 1899, Caroline S. Houghton and her husband entered into an agreement with Charles E. Savage by which they agreed to sell and convey to him or his assigns, upon written notice of the acceptance of the agreement within sixty days from its date, certain property in the city of Baltimore for the sum of fifty thousand dollars. It was agreed that the purchaser should pay the purchase-money within ninety days after the notification of the acceptance and two hundred dollars, paid when the agreement was made, was to be credited on the amount. Within the sixty days (on April 14th), Savage assigned his option to the appellant and notified Mr. and Mrs. Houghton of his acceptance and assignment, to which they gave their assent. On the 11th day of May, 1899, *83 some of the improvements on the property were destroyed by fire, having been insured in eight companies prior to the execution of the agreement. At the time of the fire the Houghtons were still in possession of the property, none of the purchase-money, except the two hundred dollars, had been paid, and the deed had not been executed, but on the 27th of June, 1899, the balance was paid and a deed was executed and delivered. At that time the Houghtons and the appellant entered into an agreement that the payment of the purchase-money and acceptance of the deed should not waive any right appellant might have to any moneys to be thereafter collected from insurance companies under the policies covering the property destroyed.
Proofs of loss were duly furnished by Mrs. Houghton, and the eight companies were about to pay her the amounts ascertained to be due by them respectively, when the appellant notified them of its claim to the amounts due. The Westchester Fire Insurance Company, of New York, paid the amount due by it to Mrs. Houghton. The Norwich Union Fire Insurance Society, of England; the Howard Fire Insurance Company, of Baltimore City; the Commerce Insurance Company, of Albany, New York; the Royal Exchange Assurance, of London, and the Pacific Fire Insurance Company, of New York City, filed bills of interpleader offering to pay the amounts due by them to the party entitled thereto, and the German American Insurance Company, of New York, and the Merchants' and Manufacturers' Fire Insurance Company, of Baltimore City, denied all liability for reasons, some of which will hereafter be stated. The appellant filed a bill in equity against the Houghtons and the several insurance companies, praying that the companies be enjoined from paying the amounts to Mrs. Houghton, and that she be enjoined from collecting them; that Mrs. Houghton and the Westchester Company be required to account for the amount paid by that company to her; that the companies discover and set forth in detail all sums of money due under said policies issued by them; that the said companies be required to pay to the plaintiff the amounts due by *84 them; that Mrs. Houghton be required to bring into Court the policies to be delivered to the companies upon payment of the money to the plaintiff and for further relief. The Houghtons demurred to the bill, and the demurrer having been overruled, answered, claiming the money was due Mrs. Houghton. The Westchester Company admitted payment to Mrs. Houghton and denied any liability to the plaintiff; the five companies mentioned above alleged that they had filed bills of interpleader which were still pending, and the other two denied any liability. The Palatine Insurance Company, Limited, of Manchester, England, filed a petition asking to be made a party, as it had assumed the obligations and liabilities incident to and growing out of certain policies issued by the Merchants' and Manufacturers' Insurance Company, of Baltimore, and it was so ordered. Testimony was taken, and after hearing the bill of complaint was dismissed, the learned Judge who heard the case being of the opinion that the plaintiff had no claim to the funds arising from the policies of insurance.
The facts we have stated, and others that will be hereafter referred to present several questions for our consideration. The points raised by the demurrer to the bill filed by the Houghtons were not pressed in this Court, and we understand it to be the desire of all parties to have their rights determined in this cause. We are not informed by the record of the condition of the cases in which bills of interpleader have been filed, but as those companies could, if they saw proper, waive such defenses as the two contending companies have interposed, and pay the proportion of the insurance claimed from them to the vendor or vendee, as may be determined, and as we understand that to be the position taken by them, we will first consider the questions between the appellant and Mrs. Houghton.
1. Leaving out of view, for the present, the effect of the testimony in relation to the interviews of the president of the appellant company and Ira Houghton, the first inquiry to be made is: As between the appellant and Mrs. Houghton, who is entitled to such of the proceeds of the insurance policies as *85
has been or will be collected? There is nothing in the record to suggest that the property enhanced in value between February 18, 1899, the date of the agreement, and May the 11th, 1899, the time of the fire. Nor is there anything from which we can infer that the price named in the agreement was not the full value of the property sold. Therefore no equities of that character are suggested, even if they could be considered. As the purchase-money was paid in full, it is manifest that any amount Mrs. Houghton might receive from the insurance companies would be that much more than, by the terms of the agreement, she could have expected to get out of the property. On the 14th of April, the total moneyed interest she had in the property was fifty thousand dollars, less the two hundred dollars already paid, as by her agreement she had parted with all interest she had in it on payment of that sum. It is true she had an insurable interest in the property until the purchase-money was paid, but that was all she had in equity, and as this is a case in equity we must determine it from that standpoint, and it is unnecessary to discuss the rights of the parties as viewed by courts of law. When she took out the policies, she was the sole owner of the property, but when the option was accepted her estate was divided into a legal and an equitable one. From that time she held the title as trustee for the appellant, under an obligation to convey it to it, upon payment of the purchase-money. Under a contract of this kind, in equity, "the vendee is in fact considered as the owner of the land, and although the vendor may still retain the title, he holds it as a trustee for the vendee, to whom all the beneficial interest has passed, with a lien on the estate as security for any unpaid portion of the purchase-money." McRae
v. McRae,
After a contract of sale is made, the vendor's interest is not real estate, and in case of his death the unpaid purchase-money is personal property and goes to his personal representatives.Hall v. Jones,
Without reference to the authorities it would seem to be manifestly just and equitable that when a Court of equity is called upon to determine to which of the two parties a fund is to be paid, resulting from the destruction of a property in which both were interested, but the one has received payment from the other of all the interest she had, while the other is to be the sufferer by reason of the destruction of the property, that it should be awarded to the latter. If that be not so, the one would receive more than the contract contemplated, while the other would receive less. For example, if the value of the property, worth, at the time of the sale, fifty thousand dollars, has been lessened by the fire to the extent of fifteen thousand dollars, the vendor would get sixty-five thousand dollars, and the vendee would get a property worth only thirty-five thousand dollars — the one thus getting thirty per cent more and the other thirty per cent less than they originally contracted for, under Mrs. Houghton's contention.
Such results would not only encourage carelessness in the use of property by vendors, but would materially increase the danger of incendiarism. The policy in the record, which we understand to be a copy of the others and is what is called a "standard policy," gives the insurance company the option of repairing, replacing or rebuilding the property destroyed instead of paying the money. If that was done then the purchaser, and not the vendor, would necessarily get the benefit of it, and while it is correct to say that a fire insurance policy is a personal contract of indemnity, the subject matter of the insurance is the property and the indemnity is against loss by fire as to that and nothing else. When the insurance was taken, Mrs. Houghton owned the property, and the policies were never changed so as to only insure the debt she had against the property, and as the indebtedness to her is extinguished and all her personal interest in the property is gone, she must hold any money she has received, or may yet receive, *88 in the only other way she could hold it, namely, as trustee for the vendee. It must be remembered we are not now considering the question between her and the insurer, but between her and the owner of the property insured. As she no longer had any interest of her own in that property for which she can receive indemnity, it must be assumed that she took it for her cestui que trust.
But we are not without authorities on the identical question. In Brewer v. Herbert, supra, this Court said on page 313, in speaking of a policy the vendor had permitted to lapse after the sale but before the fire, "If the policy had existed at the time of the loss, the vendor could have recovered from the insurance company, but being trustee of the premises for the vendee, he would be bound in equity to account to the latter for the money so received." That cannot properly be said to be an obiterdictum, for it was said in considering the effect of the failure of the vendor, to continue in force a policy on the property, on his right to specific performance of the contract. Even if it could not be regarded as the judgment of the whole Court, it would be entitled to great consideration, as the opinion of the learned jurist who delivered it, but he was not announcing a principle that others have refused to adopt or follow. In Joyceon Insurance, section 3525, it is said: "If property is destroyed between the time of effecting the contract for the sale and delivery of the deed, the proceeds of an insurance policy upon such property belongs to the vendor as between him and the company, but the former is held to act as trustee for the vendee and must therefore account to his cestui que trust in equity." To the same effect are the cases of Insurance Company v.Updegraff, 21 Pa. St. 513; Reed v. Lukens, 44 ib. 200;Hill v. Insurance Company, 59 ib. 474; Purcell v.Grosser, 109 ib. 617; Gilbert v. Port,
In Rayner v. Preston, L.R. 18 Ch. Div. 1, a contrary view was adopted by two out of the three Lords Justices who sat. One of them expressly repudiated the doctrine that a vendor was under such circumstances as we have referred to, a trustee *89
for the vendee, and the other admitted that he was in a qualified sense, but said he could not be trustee of the money recovered. LORD JUSTICE JAMES recorded his dissent in a vigorous and convincing opinion which, as to the relation of the parties being that of trustee and cestui que trust, is in accord with our own decisions as well as the great weight of authority in this country. The case of Carpenter v. P.W. Insurance Co., 16 Peters, 496, relied on by the solicitors for Mrs. Houghton, does not militate against the contention of the appellant. There a mortgagee obtained insurance to secure his debt and nothing more. In Callahan v. Linthicum,
2. The next question is, what is the effect of the testimony in reference to the conversations between Mr. Skinner, the president of the appellant, and Mr. Ira Houghton, the agent of his mother, the vendor? The substance of them is that after the option was accepted and before the fire Mr. Houghton asked Mr. Skinner if he would take these policies of insurance and he replied that he would not, that he intended to tear the buildings down. Mr. Houghton also testified that he said to Mr. Skinner "We have insurance on that property, shall I figure the adjustment up and the rebates of the premium?" to which he replied "No, you cancel the insurance because I will not use it;" and then he (Houghton) said, "Well, I will keep it insured for mother's interest until the sale has been consumated," and Mr. Skinner said "that was right." This evidence was admitted subject to exceptions and the Judge refused to strike it out. We do not deem it necessary to discuss its admissibility, as under the circumstances we do not think it affects the result between the vendor and purchaser. In answer to the question whether he meant to say that the conversation never occurred, as related by Mr. Houghton, Mr. Skinner said "I shouldn't like to say that Mr. *91 Houghton was telling what is not so, but I have no recollection of that conversation and it certainly would be something that would impress itself upon my mind if it had occurred." Again, he said, "I do not recollect any such conversation having occurred; the only time that insurance was ever mentioned to me to the best of my knowledge was on our property at the place." If Mr. Skinner had understood the arrangement as Mr. Houghton did, it would, as he said, certainly have impressed itself upon his mind, yet he swears positively that he has no recollection of such conversation and his testimony amounts to a denial of that of Mr. Houghton — although couched in polite language, it is sufficiently positive.
The policies were not altered and the companies were not notified of any change, but the insurance was continued as formerly. In order to justify the Court in reaching the conclusion that it was agreed between Mr. Houghton and Mr. Skinner that the appellant should no longer have any benefit of the insurance, it would require proof of a more convincing character than the above. It is true Mrs. Houghton could have cancelled the policies without the consent of the appellant, but it would not only be unreasonable to suppose that she had any idea of doing so before the purchase-money was paid, but in point of fact she did not do so. On the day of the fire they embodied the same terms, covered the same property and in terms insured the same interest as they did the day the option was accepted, and for reasons we have given above, as between the appellant and Mrs. Houghton, the money is justly due the former who sustained the loss and not the latter who has suffered no injury. Mr. Skinner's statement that he did not intend to carry insurance, as he would tear the buildings down, could of course only apply to the time when he got possession of the property and does not deprive the appellant of its right to the insurance money any more than the expectation of any owner of removing improvements would prevent recovery if a fire occurred before such removal. It might, under some circumstances, reflect upon the value of the property insured, but it would be of no avail, as a bar to the action, *92 for an insurance company, much less for one occupying the position Mrs. Houghton does, to prove that the owner of insured property destroyed by fire had previously announced his intention of tearing it down.
We are, therefore, of the opinion that as between these two parties, the appellant is entitled to any money received from the proceeds of insurance policies on the property. The insurance companies could waive any right they may have to take advantage of any change in the property, contrary to the provisions of the policies or other rights, and in the absence of fraud or other good reason it is commendable when they do not permit innocent parties to suffer loss through a misapprehension of their rights or duties under the terms of the policies. As our understanding is that six of the companies have waived the defenses set up by the others, we have thus considered the rights of the vendor and purchaser to the fund.
3. We now come to the defenses made by the German American Fire Insurance Company, of New York, and the Merchants' and Manufacturers' Fire Insurance Company, of Baltimore. The policies contain amongst others the following provision: "This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * * * * if any change, other than by the death of an assured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment, or by voluntary act of the insured or otherwise." It is claimed that the contract of sale avoided the policies under that provision. Other defenses were made, but under the view we take of this provision it will be unnecessary to discuss them. We have determined above that the effect of the contract of sale,after the option was accepted, was to vest the beneficial interest in the property in the purchaser. It is true that such effect is only given to a contract of that character in a Court of equity, but can we give the appellant the benefit of such equitable doctrine and refuse to grant it to other parties to this cause? The appellant is now asking the aid of a Court of equity to *93 enforce what it claims to be its rights, and it would, indeed, present a unique case if we should ascertain the status of the property to give the appellant any standing in Court and then decline to recognize that status in considering the defenses set up by these companies. It must be certain that the appellant can have no remedy against them, unless it is worked out through Mrs. Houghton, and it has no claim against her excepting by the application of the equitable principles we have adopted above. It cannot be permissible for us, in this case, to leave out of consideration the fact, which we have before us, that the appellant at the time of the fire did have the beneficial interest in the property insured, by virtue of the contract of sale (which we have determined at its instance), and we must, therefore, bear in mind that fact when we inquire into the effect of this provision in the policy, to see whether there was such a change in the interest, title or possession of the subject of insurance as made the policies void.
No precisely similar provision in a policy of insurance has heretofore been before this Court. In Kelly's case,
The policies before us contain provisions, in addition to what we have already stated, that they should be void "if the interest of the insured in the property be not truly stated therein," and "unless otherwise provided by agreement and indorsed hereon or added thereto * * * if the interest of the insured be other than unconditional and sole ownership." There is no endorsement to the contrary and therefore it was represented to the companies that the interest of *95 the insured was "unconditional and sole ownership" when the policies were issued, and under the other provision any change in the interest held when the insurance was taken would invalidate the policy. It would certainly be placing a very liberal construction on these provisions, in favor of the assured, to say that after April 14, 1899, the interest of Mrs. Houghton was still an unconditional and sole ownership. She and her husband were then bound under their hands and seals to give the appellant a good and merchantable fee-simple title to the property within ninety days from April 14th. She was not then the sole owner, as the appellant then owned the equitable estate in the property and any loss by fire would be sustained by it. In equity it was regarded as the owner. There are a number of cases cited in note to 13 Ency. of Law (2nd ed.) 234, deciding that one who is in possession of real property under a contract to purchase, and not in default in the payment, is in equity the owner of the land and hence is entitled to insure as "sole and unconditional owner," and on page 235 of the same volume it is said "a vendor in a land contract who has admitted the vendee into possession is not sole and unconditional owner, although he retains the legal title." We do not understand why the possession of the vendee should make any difference in determining whether the vendor is the sole and unconditional owner. If the vendor conveys by deed all his interest and takes a mortgage for the purchase-money, but remains in possession, he would not be the sole and unconditional owner. And if he has done an act which vests another with such an estate as to make him sustain the loss, if destroyed or injured by fire, and cause him to be regarded in equity as the owner, as has been done here, how can it be said that the interest of the vendor is still that of unconditional and sole ownership?
The cases referred to under the first branch of this case, show that the purchaser is the owner, and there are many decisions to the effect that he is within the meaning of such provisions in policies the "sole owner." In Imperial Fire Ins. Co. v.Dunham, 117 Pa. St. 460, the principle is well stated and *96
many authorities are cited. In Clay Fire and Marine Ins. Co. v.Huron Salt and Lumber Company,
In Gibbs v. Philadelphia Fire Insurance Company,
4. There can be no recovery against the Westchester Fire Insurance Company, of New York, by the appellant. Under its own theory Mrs. Houghton had the power, as trustee, to collect the insurance money, and hence that company cannot be held responsible for paying it over to her.
The decree will be affirmed, in so far as it dismisses the bill against the Westchester Fire Insurance Company, of New York; the German Fire Insurance Company, of New York; the Merchants' and Manufacturers' Fire Insurance Company, of Baltimore City, and the Palatine Insurance Company, Limited, of Manchester, England, but it will be reversed in so far as it is dismissed as against Mr. and Mrs. Houghton. As the other five insurance companies have come into Court and offered to pay the proper party, the bill will be retained as to them. The amounts due can be ascertained and the Court below can then pass a decree against the Houghtons, requiring them to pay over what the Westchester Company has paid and the amounts received of the five companies if paid to them. That can be paid into the Court below by the companies in this case, if they so desire, as all persons interested are parties to it, and have requested the Court to dispose of all the questions.
It is but proper that Mrs. Houghton should be allowed all costs and expenses incurred by her in securing any of the fund she has received, or will receive, on account of the insurance, and that the costs be paid out of the funds in her hands. This *98 may include reasonable commissions on the amount she receives, if the Court below is of the opinion she is entitled to them under the facts that may be presented to it, or are within its knowledge. There is not sufficient in the record to enable us to determine that.
Decree affirmed in part and reversed in part and causeremanded. Caroline S. Houghton to pay the costs out of theinsurance funds in her hands.
(Decided December 7, 1900.)