Bibend v. Liverpool & London Fire & Life Insurance

By the Court, Cübbey, C. J.:

Wollstein & Hears, partners in the trade of merchants, made application to the firm of Wegener & Shoenbar to indorse for their accommodation their promissory notes, amounting to fifteen thousand dollars, whereupon the latter firm consented to do so on condition that the stock in trade of the former firm should be insured through the agency of Wegener & Shoenbar, who should hold the policies, when effected, as collateral security for their liability as such indorsers, and also for any amount in which Wollstein & Hears should become indebted to them. To this Wollstein & Hears agreed, and thereupon Wegener & Shoenbar procured three policies of insurance to be issued to Wollstein & Hears, amounting in all to the sum of twelve thousand dollars, and paid the premium on the same, charging what they so paid to Wollstein & Hears. These policies were thereafter held by Wegener & Shoenbar as security for their indorsements of the notes of Wollstein & Hears for the sum first named and for any further sum for which the last mentioned firm should become indebted to Wegener & Shoenbar. Shortly after this, Wollstein & Hears became indebted to Wegener & Shoenbar in the sum of thirteen thousand five hundred dollars, for mei’chandise. The parties had a settlement in June, 1863, when Wollstein & Hears made and delivered their promissory notes in the sum of nine thousand four hundred and forty-six dollars and sixty-nine cents to Wegener & Shoenbar, when it was again agreed between the parties that Wegener & Shoenbar should continue to hold the policies of insurance as security for the payment of the last mentioned notes and any further indebtedness that might accrue from Wollstein & Hears to Wegener & Shoenbar, and that in case of loss of the property insured by fire, Wegener & Shoenbar should collect the money from the insurance companies and apply it to the payment of such indebtedness. On the 11th of September, 1863, Wollstein & Hears paid two thousand dollars on account, and then for the balance of their indebtedness made and delivered to Wegener & Shoenbar new notes in the sum of seven thousand four hundred and forty-six dollars and sixty-nine cents, bearing interest at one and a half per cent per month from that day, and renewed their agreement last made in regard to the policies of insurance and collecting the insurance money in case of loss, applying it in payment of the amount due them.

On the 31st of October, 1863, Wegener & Shoenbar failed in business, at which time they were indebted to the plaintiff in thirty thousand dollars; and in part payment thereof they assigned and delivered to him the last named notes, and their interest in said policies of insurance, which he thereafter continued to hold in his possession. On the 14th of December of the same year the property insured was destroyed by fire, in consequence of which Wollstein & Hears became insolvent, and on the 6th of January thereafter executed and delivered to the plaintiff an absolute assignment for a consideration expressed in the deed of assignment of said policies of insurance so held by him, and all claims which they had or held .thereunder, and on the 16th day of February following the plaintiff gave the insurance companies notice of the circumstances under which he held the policies.

At the time of the loss of the property of Wollstein & Hears by fire they were indebted to the defendants, Howard, Goewy & Co., in the sum of twelve thousand two hundred and twenty-seven dollars and seven cents, and to.certain other creditors, whose claims in the aggregate amounted to eleven thousand and twenty-four dollars, who on the next day assigned their respective claims to Howard, Goewy & Co., for the purpose of collecting them and paying over the proceeds to such assigning creditors ; and on the same day Wollstein & Hears executed to Howard, Goewy & Co. a formal written assignment of said policies, and their demands against the insurance companies which had accrued on account of the loss by fire of the insured property, as security for the sum due from them to Howard, Goewy & Co. in their own right, and as assignees of said other creditors of Wollstein & Hears.

One of the policies was issued by the Liverpool and London Fire and Life Insurance Company, and was in the sum of six thousand five hundred dollars. Another of the policies was issued by the North British and Hercantile Insurance Company, and was in the sum of two thousand five hundred dollars; and still another of the policies was issued by the Imperial Insurance Company, and was in the sum of three thousand dollars.

Soon after Wollstein & Hears had executed to the plaintiff an absolute assignment of the policies of insurance, he gave the Liverpool and London Fire and Life Insurance Company notice of the assignment to him, and demanded of such company the sum of money secured by its policy. Before then the loss had been ascertained and adjusted and the company had agreed to pay on demand the amount to whomsoever it was due. At that time the company had received notice of the claim of Howard, Goewy & Co., and therefore refused to comply with the plaintiff’s demand until it should be settled as to which of the claimants the money was due. The plaintiff brought his action against the first named insurance company to recover the amount due for the loss, with interest, and against Howard, Goewy & Co. for the purpose of obtaining a decree declaring their claim null and void, and to enjoin them from asserting or prosecuting the same.

It is found by the District Court that at the time this action was commenced, like actions were commenced against each of the other insurance companies named, together with the defendants Howard, Goewy & Co., and that the plaintiff and Howard, Goewy & Co. had entered into a stipulation, in each of said actions, that if it should be found that the plaintiff was entitled to recover one portion of the aggregate sum of the insurance money, and Howard, Goewy & Co. another portion of the same, that in that case .the amount so found due the plaintiff should be apportioned between or among all said insurance companies, and that judgment should be entered accordingly. From this stipulation we infer that the insurance companies other than the one which is defendant in this action, were respectively in the same condition as was the Liverpool and London Fire and Life Insurance Company, with respect to the claim of the plaintiff and that of Howard, Goewy & Co., and were at the time and still are ready to pay the amount due by their respective policies to whichever of the contending parties the sum maybe found to be due. The matters in issue were tried by the Court, and as a conclusion of law from the facts found as above stated, the Court decided “ that the plaintiff is entitled to a judgment against the said defendant, the Liverpool and London Fire and Life Insurance Company, for the sum of four thousand eight hundred and forty-six dollars and thirty-nine cents, with his costs to be taxed; and in favor of the defendants, Charles W. Howard, James M. Goewy, John H. Hough and Frank B. Reynolds, constituting the firm of Howard, Goewy & Co., for the remainder of said sum of six thousand five hundred dollars, so found due from the defendant, the Liverpool and London Fire and Life Insurance Company.” Judgment was thereupon entered in accordance with the decision of the Court, and from so much of the judgment as was in favor of the plaintiff, and also from so much thereof as adjudged that the plaintiff have and recover from the insurance company any sum of money whatever, the defendants, Howard, Goewy & Co., have appealed.

The appellants insist that the judgment is erroneous on two grounds: First, because a portion of the insurance money is adjudged to be due the plaintiff; and, second, because the judgment for the portion of the insurance money adjudged to be due the defendants, Howard, Goewy & Co„ bears interest only from the date of the judgment.

I. The first cause of error alleged involves the consideration in the first place of the character of the agreement between the firms of Wollstein & Hears on the one part, and Wegener & Shoenbar on the other, relating to the insurance to be effected and the assignment of the policies that might be obtained as collateral security to Wegener & Shoenbar; and in the second place, whether such transaction, if valid and effectual in other respects, was void as against public policy.

Assignment of a policy of insurance as collateral security.

The policies were issued to Wollstein & Hears. It was their property which was insured, and they were the persons assured against the loss, which it was in contemplation might happen by the destruction of the property by fire. By the original agreement between these firms the policies of insurance were to be held by Wegener & Shoenbar for a particular purpose, and the agreement was renewed at each settlement subsequently had between them. So long as Wegener & Shoenbar retained possession of the policies under the agreement subsisting, they had right to them as evidence of the agreement between the parties; which agreement was in effect that the insurance money, in the event that the sum should become due by reason of the destruction of the insured property by fire, should thereupon become assigned to Wegener & Shoenbar as security for whatever might be due them from Wollstein & Hears.

Courts of equity are in the habit of giving effect to assignments of trusts and possibilities of trusts, and contingent interests and expectances, whether they are in real estate or in personal property, as well as to assignments of dioses in action. Contingent rights and interests are not ordinarily assignable at law, but they are in equity. Assignments of such rights and interests, in being, are upheld and enforced by Courts of equity. And more than this, these Courts support and give effect to assignments of “ things which have no present actual or potential existence, but rest in mere possibility; not indeed as a present positive transfer, operative in presentí, for that can only be done of a thing in esse, but as a present contract, to take effect and attach as soon as the thing comes in esse.” (2 Story’s Eq., Sec. 1,040 ; Mitchell v. Winslow, 2 Story, 638, 644.) In Mitchell v. Winslow, Mr. Justice Story cites many authorities supporting this doctrine, and refers particularly to the opinion of Vice Chancellor Wigram, in Langton v. Horton, 1 Hare, 549, as exceedingly cogent in its reasoning and satisfactory in its conclusions, and he then says: “It seems to me a clear result of all the authorities that wherever the parties, by their contract, intend to create a positive lien or charge, either upon real or" personal property, whether then owned by the assignor or contractor, or not, or if personal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular property, as soon as the assignor or contractor acquires a title thereto, against the latter, and all persons. asserting a claim thereto, under him, either voluntarily, or with notice, or in bankruptcy.” The case of Field v. Mayor of New York, 2 Selden, 186, is in support of the cases already mentioned, and is referred to in Pierce v. Robinson, 13 Cal. 123, as declaring the settled doctrine of equity on the subject. Macomber v. Parker, 14 Pick. 497, is an authority proceeding upon the same principle. In that case, a brickmaker had stipulated with the lessees of a brickyard, in which he manufactured bricks, that they should retain the bricks to be made there, as security for their advances to him. The Court held the agreement to be one for the pledging of the bricks as they should. be made, and that, although there cannot be a pledge, technically speaking, of a thing not in existence, there may be an hypothecation of it, so that as soon as the thing is produced the lien attaches to it; and that in that case the bricks became pledged as fast as they were manufactured; and the Court further held that the pledgee could- maintain an action at law for the' recovery of the possession of the bricks against the defendant, who, as an officer, had seized and taken them under a writ of attachment, issued in an action by a creditor of the pledgor against him. (Story on Bail, Sec. 294; 2 Story’s Eq., Sec. 1,055.)

Parol-assignment of a policy of insurance and delivery of policy.

We deem it unnecessary to refer to other decisions on the subject, as the doctrine laid down in the authorities cited seems to be well settled. But in relation to the contract between these firms, an objection is made on the part of the appellants touching the question of its validity, under the Statute of Frauds. The contract was not reduced to writing when it was made, nor had it been when the fire occurred, at which point of time, if at any time, it took effect as an assignment of the insurance money, as security for the debt due from the assured to the plaintiff. The section of the statute on which the appellants rely provides- that every contract for the sale of any goods, chattels or things in action, for the price of two hundred dollars or over, shall be void, unless in writing, etc. This section has no reference or application, in our judgment, to a contract of the nature of the one in question. It relates to absolute sales and transfers of personal property and choses in action. The plaintiff had the rightful possession of the policies of insurance when the loss by fire happened, :at which time the insurance companies became indebted to the assured. The moneys due on the policies became assigned go instanti with the destruction of the property, as security for the debt due the plaintiff. Having the possession of the policies when the fire occurred, the plaintiff had a vested interest in them and in the insurance fund, of which he could not be deprived by Wollstein & Hears, except by payment of the sum due him; and if the assignment which then became consummate could be held to amount to a sale of choses in action under the section of the statute referred to, it stood supported by the conditions of that section declared to be essential to its validity.

It has been held, says Judge Willard, that delivery, for a valuable consideration, of a chose in action, without writing is a sufficient transfer. “ Thus, a judgment of a Court of record, a bond or covenant, and a mortgage of real estate, may be assigned- orally, by mere delivery, without any instrument in writing declaring the transfer.” (Willard’s Eq. Juris. 462.) He further says: “ There are cases in which something short of an actual transfer and delivery of a chose in action, will operate as an equitable assignment of the whole, or some part of it. Ho particular form of words is necessary for this purpose. Any language which indicates a clear intention to appropriate the fund will effectuate the object.” We are of the opinion the statute does not affect in any manner the assignment which became consummate by the loss by fire of the insured property, and further we are of the opinion that the plaintiff, who succeeded to all the rights and interests of Wegener & Shoenbar in the premises, became entitled, upon the happening of the loss, to so much of the money which thereby became due from 'the insurance companies as was sufficient for the payment of the sums due him upon the notes assigned, provided the transaction between these firms relating to the insurance was not void as contravening public policy; we therefore proceed to consider the question on which the appellants chiefly rely.

Assignment of policy of insurance to one having no interest in property insured.

The appellants maintain that the insurance could not be assigned except upon the transmission of some interest in the property insured, and then only with the consent of the insurers ; which consent in such cases, from the time it may be given, operates as a contract on the part of the insurers to the assignee, having an interest in the subject of the insurance, according to the terms of the policy. Upon this subject there is no room for controversy. The doctrine is that the assured must have an interest in the thing insured at the time the insurers become bound to him by the contract or policy of insurance. According to Lord Chancellor King, in Lynch v. Dalzell, 4 Brown, 431, and Lord Chancellor Hardwick, in Sadlers’ Co. v. Babcock, 2 Atk. 554, an insurance against fire without an interest by the assured in the property lost, at the time of insuring, was void at common law; and the reason assigned by elementary writers in support of this doctrine is, because of the temptations which would, by an opposite rule, be held out to the commission of arson, (3 Kent’s Com. 171; Ellis on Insurance, 21;) and in order to entitle the party assured to recover, he must have had an interest in the property insured at the time of the loss; for if he has no interest therein at the time of its destruction, he is not damnified, and therefore cannot be entitled to recover. (Howard v. The Albany Insurance Co. 3 Denio, 303 ; Murdock v. The Chenango County Mutual Insurance Co. 2 Coms. 216.)

The insurance in this case was effected in the names of Wollstein & Hears, upon their property, and the premiums were paid by them. At the time of the fire the property belonged to them, and so did the policies of insurance. At that time the plaintiff held the policies, not as the owner of them by title absolute, but as evidence of his right under the contract entered into between the firms mentioned, to receive of the insurance companies the money due Wollstein & Hears by reason of the loss by fire, and to appropriate sufficient of it to the payment of the amount due on the notes assigned to him by Wegener & Shoenbar.

The subject to which the contract of these firms had reference was the money which might become due from the insurance companies in case of a loss of the property by fire. The' effect of the contract was not to transfer the title and property of Wollstein & Hears in the policies. They .had the power at any time to possess themselves of the policies by paying the amount due to Wegener & Shoenbar and relieving them from liability by reason of their indorsements, and they had the right, too, at the moment the plaintiff’s lien on the insurance money attached, to discharge it by payment of the notes which had been assigned to him. (Canfield v. Monger, 12 John. 346.) At that time the plaintiff had no more than an equitable lien on the fund created by the concurrence of the loss and the liability of the insurers to pay it. The agreement respecting the policies and the money which might become due in case the insured property was destroyed by fire, did not operate, as we have seen, to pass the policies as property to Wegener & Shoenbar, nor did it operate to pass to them in presentí any interest in the fund that subsequently became due by reason of the loss, because no such fund had existence at that time. But the agreement did operate by way of a contract in presentí, to take effect and attach as a lien upon the fund when and as soon as the circumstances of the loss and the insurers’ liability on account thereof might concur. (Mitchell v. Winslow, 2 Story, 639 ; Wright v. Wright, 1 Ves. 409, 411.) The fact that the title to the policies and to the insurance money when it, as a fund of indemnity for the loss, came in esse, remained in the parties insured; and the further fact that the ¡plaintiffs right in respect to it was that of a lien upon it merely .subject to be discharged, at the will of his debtors, answers ¡and obviates the objection that the contract and transaction between the firms of Wollstein & Hears of the one part and Wegener & Shoenbar of the other, was void as amounting to an assignment of the insurance to the latter firm, who had no insurable interest in the property insured.

At the time the appellants obtained their assignment from Wollstein & Hears, the plaintiff’s equitable lien had attached, and the appellants acquired a right to such balance of the insurance fund as was in excess of sufficient to pay the plaintiff. The assignment to them was as collateral security for debts due them from their assignors. They parted with nothing as a consideration therefor, and hence they do not occupy the position of purchasers in good faith for a valuable consideration, without notice of the prior rights and equities of the plaintiff. Their position as to the plaintiff is no better than Wollstein & Hears would have been had no assignment been made to the appellants. They were entitled to what remained of the fund after the plaintiff might be paid, and that was the extent of their interest therein.

When judgments should hear interest.

IT. The appellants complain that the judgment restrains the recovery of interest from the date of judgment. A judgment can properly bear interest only from the time it is pronounced. If there be interest due on the demand on which the action is brought, it should be included in the judgment when entered. The judgment for plaintiff against ' the insurance company is for four thousand eight hundred and forty-six dollars and thirty-nine cents, and this judgment is to bear interest at the rate of ten per cent per year from the date thereof, until paid. The judgment in favor of the appellants against the insurance company is for the balance of the principal sum due from such company, to wit: the sum of one thousand six hundred and fifty-three dollars and sixty-one cents, and is to bear interest at the rate of ten per cent a year from the date of the judgment until paid, following which is the alternative clause, “ or so much thereof as the said remainder of the said sum of six thousand five hundred dollars shall be sufficient to pay.” This clause seems to have been incorporated in the judgment because the balance or remainder of the principal sum due from the insurance company became reduced by the costs recovered by the plaintiff. The judgment, as an entirety, awards to the plaintiff the sum of four thousand eight hundred and forty-six dollars and thirty-nine cents, and also costs in the sum of one hundred and twenty-three dollars and fifty-one cents, and properly construed it awards to the appellants the remainder of the sum due from the insurance company, including the interest on the amount found due, or so much thereof as is necessary to pay this judgment. We think the plaintiff was entitled to the sum awarded him and also to the costs which he was compelled to pay in the prosecution of his suit. If the appellants had not contested the plaintiff’s claim he might have obtained his due before he was compelled to bring his action ; and but for the appellants’ claim it is fair to presume from the circumstances the insurance company would have paid the amount, as it was ready and willing to do. We think the rights of the parties were adjusted and the case was decided upon just and fair principles, and that the judgment should be affirmed, and it is accordingly so ordered.

Mr. Justice Shafter being disqualified, did not participate in the decision of the case.