MANCHESTER FIRE ASSUR. CO. v. ABRAMS, 89 F. 932

GILBERT, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The assignments of error principally relied upon by the plaintiff in error are: That the court erred iu instructing the jury as follows : “Fur flier than that, I will say that a-man is the sole owner of property when he has it in his possession, and has an unconditional right to the possession of- it, and the unconditional right to sell and dispose of it for his own benefit, and to appropriate and retain the entire proceeds of the sale of it, if he sees fit to sell it.

When the conditions are such that he has got the property, and got a right to sell it, and to take the money, and appropriate it to his own use, then it is his entirely and unconditionally.” —And that the court erred in refusing to give the following instruction, which was requested by the plaintiff in error: “There has been introduced in evidence before you a certain contract between the plaintiff and one Bulson, under which the hay, the subject of the insurance, was produced; and I charge you that, under the terms of this contract, the hay, when harvested, became and was the joint property of Abrams and Bulson, Abrams owning an undivided two-thirds, and Bulson owning an undivided one-third, thereof, and that under said contract the interest of the plaintiff, Abrams, in said hay was not that of unconditional and sole ownership.” Upon the evidence disclosed in the record, we do not think that the circuit court erred in ruling that the interest of the defendant in error in the property insured was, at the time of the insurance and the loss, not less than unconditional and sole ownership.

The hay had been produced upon his farm at his expense, by the labor of himself and his sons, assisted by Bulson. He had the possession of all the hay, and the right to sell and dispose of the same in any way in which he might see fit, without the consent of Bulson, and to apply the proceeds to his own use. The only restriction upon his absolute right to the proceeds was that, in case one-third of the amount realized upon a sale of the hay should be more than sufficient to reimburse him for his outlay and expenses, the residue of that third was to go to Bulson. The interest of Bulson was a contingent one only.

He was in the attitude of any laborer who should undertake to work on a farm under an agreement that, in case the farm products to which his labor contributed should be sold for more than a certain figure, he should receive the overplus for his wages. In such a case the laborer has no title to any portion of the crop which is produced. He is a laborer for hire, whose wages are contingent upon the amount to be realized upon sale of the property. When the property is sold, and it appears that, out of the moneys received therefor, a certain sum is due him, his employer becomes his debtor to that amount.

It is not disputed in the testimony that the advances made by the defendant in error in pursuance of his oral agreement with Bulson very considerably exceeded" the value of one-third of all the crops. This was true, not only at the time when the policy was taken out, but continuously thereafter.

But if, upon any construction of the evidence, it can be said that the defendant in error was not stricti juris the owner of the hay, it, nevertheless, clearly appears that substantially and in contemplation of the law, as interpreted by the decisions of the courts, he was the owner, and, as such, entitled to insure the property as his own.

It has been uniformly held, notwithstanding the stipulation that the policy shall be- void if the interest of the insured be less than that of a fee-simple title to the land whereon the insured property is situated, that the stipulation is complied with if it appear that the insured is substantially or equitably the owner of the property, and entitled to the benefits of the samé, although the title may be in another, and the insured may hold the property upon a bond for a deed only, or upon a contract for a conveyance upon which only a portion of the purchase price has been paid. Baker v.

Insurance Co. (Or.) 48 Pac. 699; Hall v. Insurance Co. (Mich.) 53 N. W. 727; Hough v. Insurance Co., 29 Conn. 10; Insurance Co. v. Dyches, 56 Tex. 573; Insurance Co. v. Erb, 112 Pa. St. 149, 4 Atl. 8; Insurance Co. v. Staats, 102 Pa. St. 529; Insurance Co. v. Dunham, 117 Pa. St. 460, 12 Atl. 668; Dooly v. Insurance Co., 16 Wash. 155, 47 Pac. 507; Loventhal v. Insurance Co. (Ala.) 20 South. 419; Insurance Co. v. May (Tex. Civ. App.) 35 S. W. 829; Haider v. Insurance Co. (Minn.) 70 N. W. 805; Insurance Co. v. Brady (Tex. Civ. App.) 41 S. W. 513; Carey v. Insurance Co. (Pa.) 33 Atl. 185.

In the case last cited, it was held that a policy providing that the insured shall be the sole and unconditional owner of the property is not void, although the insured had not paid all the purchase money, had not obtained a deed, and had bought under a contract providing that failure to make payments when due should work a forfeiture of all rights thereunder. In Insurance Co. v.

Brady, supra, it was held that there was no breach of a similar warranty from the fact that the husband liad insured, as his own, furniture which belonged to Ms wife before their marriage, since, under the law of the state of Ms residence, the husband “lias the sole management and control of his wife’s sej>arate property.’! In Insurance Co. v. May, supra, the insured was in possession of land on winch she had erected improvements under a verbal contract with the owner to convey the same to her in fee simple upon payment of the price.

It was held that she was the unconditional owner of the property within the condition of a policy of insurance providing that the policy should be void if the interest of the insured he other than unconditional and sole ownership, or if the subject of the insurance be a building on ground not owned by the insured in fee simple. Said the supreme court of Pennsylvania, in Yost v. McKee, 36 Atl. 317: “The conditions of the policy are to he understood, not in their technical sense, hut as requiring that the insured he the actual and substantial owner.” The cases of Noyes v. Insurance Co., 54 N.

Y. 668, and Insurance Co. v. Pacaud, 150 Ill. 245, 37 N. E. 460, were very similar in their facts to the case at bar. In the Xoyes Case (.he plaintiffs had made an agreement with one Flournoy to operate a cotton plantation belonging to the latter. They were to furnish supplies and stock to (he amount of $10,000, and certain implements, if needed. Flournoy was to supervise the work on the plantation. The cotton crop was to he delivered to the plaintiffs at the river banks, to be transported to market, and sold.

The proceeds were to go, first, to reimburse the plaintiffs for their advances; the balance was to be divided equally between them and Flournoy. The cotton was insured by the plaintiffs. The policy contained the condition that, if the insured was not the sole and unconditional owner of the cotton, the policy should be void. A portion of the insured property was consumed by fire.

It was held that, as the plaintiffs had expended more than the whole crop was worth, Flournoy had no interest therein, within the sxfirit and meaning of the policy, and that the plaintiffs “were the sole and unconditional owners, and entitled .to recover the loss.” In the Pacaud Case it appeared that the plaintiffs had advanced money to the firm of Million & Bott to purchase grain, and that they held warehouse receipts of the firm for their advances. Insurance was obtained upon the grain as the property of J. H. Million, with the loss payable to the plaintiffs.

The policy, contained the condition that, if the interest of the assured be other than sole ownership, the policy should be void. The insurance company contended that the policy was void, for the reason that the property was owned by the firm of Million & Bott, and not by J. H. Million. It appeared that, while the grain business was carried on in the name of the firm, Bott had the charge of the business at the elevator. His interest in the firm was confined to one-half of the proceeds to be realized from the business.

The court said: “Under this arrangement, Bott cannot be regarded as a real owner of the title to one-half of the grain in the elevator at the time the policy issued. His liability with Million to Pacaud & Company to hold and ship the grain to them or their order, as provided in the warehouse receipts, and his right to share in the profits on payment of his salary, may be regarded as an insurable interest in the property, upon which he could take out a policy for his own benefit.

His interest in the property itself was not one which the plaintiffs were required to disclose when they took out a policy to protect their own interest.” It is earnestly contended by the plaintiff in error that the assured, by accepting a policy of insurance containing the stipulation that the same shall be void if the ownership of the assured is not unconditional and sole, has falsely represented to the insurance company that his ownership is sole and unconditional.

In the present case we have found that the assured was the sole and unconditional owner of the insured property, not only in fact, but in the sense in which these words have been interpreted by the decisions. ■ But if it were conceded that he was not such owner, and that Bulson owned one-third of the hay, we are still of the opinion that the policy would not thereby be avoided. The position contended for by the plaintiff in error, it is true, is not without the support of high authority. Insurance Co. v. Bohn, 12 C. C. A. 531, 65 Fed. 165; Mers v. Insurance Co., 68 Mo. 132; Insurance Co. v.

Boulden (Ala.) 11 South. 771; Collins v. Insurance Co. (Minn.) 46 N. W. 906; Weed v. Insurance Co., 116 N. Y. 106, 22 N. E. 229.

But sound reason as well as the weight of authority inclines us to the view that where the assured has an insurable interest in the property, and in good faith applies for insurance upon the same, and makes no actual misrepresentation or concealment of his interest therein, and the insurance company refrains from making inquiry concerning his interest, and issues a policy to him, and accepts and retains his premium, the company must be presumed to have knowledge of the condition of his title, and to assure the property with such knowledge. Insurance Co. v. Bohn (Neb.) 67 N. W. 774; Philadelphia Tool Co. v.

British American Assur. Co. (Pa. Sup.) 19 Atl. 77; Miotke v. Insurance Co. (Mich.) 71 N. W. 463; Yost v. McKee (Pa. Sup.) 36 Atl. 317; Insurance Co. v. Jackson, 83 Ill. 302; Hall v. Insurance Co. (Mich.) 53 N. W. 727; Savings Institution v. Kline (Neb.) 62 N. W. 857. Said the court in the case last cited: “The real contract of insurance is made before the policy is written, and the insured, by accepting the policy with such a condition as the one relied upon, cannot be deemed to have represented his title to be in fee simple, or not by leasehold.

How can it be said that, under such circumstances, there has been editor fraud or misrepresentation or concealment on the part of the insured? lie lias represented nothing. He has not been asked to represent anything.” Said the court in Insurance Co. v. Jackson, 83 Ill. 302: “The principal thing in an insurance Is that the insured has an insurable interest, and has ach'd in good faith. Under a statement that he is the owner, he is only bound to prove an insurable Interest, which is such a title as, if there should be a loss without'insurance, it would fall upon him.” In Philadelphia Tool Co. v.

British American Assur. Co., supra, it was said: “This policy was issued without any application or written request describing the interest of the assured in the building. No actual representation of any sort upon the subject, oral or written, is alleged to have been made by or on behalf of the assured. We ought to assume that a policy written under such circumstances was written upon the knowledge of the representative of the insurer, and was intended to cover, in good faith, the interest which the insured had in the buildings. Fraud is never to be presumed.” In Miotke v.

Insurance Co., supra, the court said: “The day has gone by in Michigan for successfully contending that the mere acceptance of a.policy containing a condition like this makes it conclusive against the holder who accepts it in ignorance of the clause, and whose title does not conform to the strict letter of the condition.” In the case at bar there can be no question that the defendant in error insured the property in good faith as bis own.- He was asked no questions concerning' his title.

The condition in the policy which it is claimed renders it void was one of the numerous printed conditions which the policy contained when it was delivered to him. The law does not favor forfeiture. The contract issued and prepared by the insurance company is made for its own protection, and must be construed most strongly against it. In any view which may be taken of the interest which the defendant in error had in the insured property, it cannot be denied that he was entitled to receive the total px'oceeds of the hay in case it was sold, and the total amount of the protection which was afforded by the policy.

He withheld no material fact from the insurer, and it cannot be said that the latter has been in any way prejudiced from want of knowledge of the facts concerning his title. We think the plaintiff in error cannot now be heard to dispute its liability under the insurance contract. The judgment will be affirmed.