Griffey v. . New York Cent. Ins. Co.

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] It may be conceded that the defendants notified the insured before the fire, of a desire to cancel the policy, but there is no evidence that any portion of the unearned premium was paid back; on the contrary, they only proposed to do this after the policy should be returned by the insured. They had no right to impose that condition, nor could they require the insured to take any step in the matter. The option to cancel was reserved, but to be exercised by "notice, and refunding a ratable proportion of the premium for the unexpired time" of the policy. What the defendants did was to ask the insured to return the policy for cancellation, promising in that case "to remit to them the return premium." This was not enough. Notice of cancellation and actual payment or tender of the sum due could alone suffice. (VanValkenburgh v. Lenox Fire Ins. Co., 51 N.Y. 465.) Under the provision of the policy requiring notice of loss to be "forthwith" given, it was enough for the insured to act in that matter with diligence and without unnecessary delay. It was therefore properly left to the jury to say whether in view of all the circumstances of the case, the notice actually given was sufficient. It was not instantaneous, but the delay was brief. Among other things, it appeared that the fire occurred on the thirtieth of August. The bank gave notice of it on the first of September, and on or before the fourth of September the assured also notified the defendants of the fire and loss. Even this delay was accounted for. Sunday intervened, and during the other days the assured was busy with the adjusters of different insurance companies concerned in the loss, and with matters connected with the fire. The jury might properly, in view of these and other things in evidence, find that the delay was not unreasonable. The question, at least, was for them.

The other point made for the appellant rests upon the claim against "assignment" of the policy. It entails a forfeiture, and must, therefore, receive a strict construction. Hence no other meaning can be given to the language used, than a most rigid and literal interpretation permits, and as the condition is a limitation of liability, it cannot be extended by interpretation so as to include a case not clearly within the words. (Rann v.Home Ins. Co., 59 N.Y. 387). So if the words are of doubtful meaning, or susceptible of two fair interpretations, they should be construed to uphold rather than avoid the policy. (Hoffman v. Ætna Ins. Co., 32 N.Y. 405.) In the first place it is apparent that nothing but an effectual assignment or transfer will come within its terms. In this sense the policy was not transferred. No interest in the insured property was conveyed, but it all remained as before. In case of loss, therefore, the transferee could not recover, not only because it had suffered no loss and was not a party to the contract, but because the transfer of the policy was not accompanied with any interest in the subject of insurance. The clause in question, although of several members, is in itself single, and is aimed against the sale, or transfer, or any change in title or possession of the insured property, and the assignment of the policy, which it prohibits, is in connection with the events which affect the ownership of the things insured. They must be construed together, otherwise the words relating to the policy would have no meaning. Without them the assignment would be inoperative for any purpose. It would not render the policy void, but it would be of no value. If the property was burned the underwriters would be under no obligation to pay any one — not the assignee, for the property destroyed did not belong to him, so he incurred no damage, nor the assured, for he had parted with the contract of indemnity.

But if we take the prohibition as applying to the policy disconnected from the property, it will not work the result claimed by the appellant. An assignment is a transfer or setting over of property, or of some right or interest therein, from one person to another, and unless in some way qualified, it is properly the transfer of one whole interest in an estate, or chattel, or other thing. In that sense the policy in question has not been "assigned." It with others was delivered to the creditor upon an agreement that the policies should stand as collateral security for certain claims held by it against the insured, and in case of loss to the property insured, they should "be payable" to the bank, as its "claim against the insured should appear." The assured did not part with the title. The transfer was not unconditional. They retained not only the whole insured property, but an interest in the policy. In any proceeding for its enforcement they would have been a necessary party (Simson v.Satterlee, 64 N.Y. 657; Johnson v. Hart, 3 Johns. Cas. 322;Conover v. Mut. Ins. Co., 1 N.Y. 290; Bard v. Poole,12 N.Y. 495; Whitney v. M'Kinney, 7 Johns. Ch. 144; Field v.Mayor, etc., 6 N.Y. 179), and upon payment of the debt, entitled to what they in fact have had — a redelivery of the policy. The agreement under which they transferred it did not profess to vary in any respect the contract of insurance. It was at most a mere appointment of the bank to receive, and a direction to the insurers to pay to it the loss when, if at all, it should accrue. In other words it was an appropriation beforehand, to the payment of specific debts, of a portion of the money which might become due, by reason of the cause insured against, and the plaintiffs had as much interest in the policy after its pledge to the bank, as they had before. The money for which the insurers might become liable was to be applied to their use. The bank held it in trust as bailee, and not as owner, and until by an act of the assured some person, other than themselves, should stand in that situation, the prohibition against assignment could not apply, and the policy remained valid to protect their interests. (Hitchcock v. NorthWestern Ins. Co., 26 N.Y. 68; Jackson v. Silvernail, 15 Johns. 277; Shearman v. Niagara F. Ins. Co., 2 Sweeny, 470;Lazarus v. Commonwealth Ins. Co., 5 Pick. 80.)

In Conover's Case (supra) the charter of defendant provided that whenever the insured property "shall be alienated by sale or otherwise, the policy shall thereupon be void," and it was held that the words did not embrace a mortgage, since it creates but a lien or security, and does not transfer the title; and inShearman's Case (supra) the same rule was held to apply to a clause forbidding a transfer of the policy. To take away the cause of action in one case, and to render void the policy in the other, equally requires a transfer or alienation of the entire insurable interest.

It seems indeed to be well settled that so long as the insured retains such an interest that he may be a sufferer by the loss, the policy remains valid to that extent.

The cases relied upon by the appellant do not seem inconsistent with this conclusion. In Smith v. Saratoga Co. Mut. F. Ins.Co. (1 Hill, 497), there was not only an express and literal assignment of the policy, but of "all rights and claims which might arise thereon." Savage v. Howard Ins. Co. (52 N.Y. 502) related to a change of title to the insured property. Ferree v.Oxford Ins. Co. (67 Penn. 373) differs from the case at bar in several particulars, but one is enough. There the court call attention to the condition which includes in words not only an assignment of the whole policy, "but of any interest in it," and also found in other parts of the policy an express intention to prohibit assignments made as collateral security. The one before us prohibits an assignment of the policy, that is, as we must construe it, an absolute assignment of the whole; the others forbid not only such an assignment, but an assignment of any interest. These various and differing limitations would be entirely useless if they were not intended by insurers to distinguish between acts of the insured in the disposition of the policy as a whole, and its transfer by way of pledge or mortgage for a special and temporary purpose. In many cases the distinction indicated by the papers referred to is material, and I see no ground upon which it can be disregarded in this instance. Similar words have been held by other courts insufficient to include a transfer by way of pledge or security, and we find no reason to differ from them. (Ellis v.Kreutzinger, 27 Mo. 311; W.F. Ins. Co. v. Kelly,32 Md. 421.) If there is difficulty in the question it is because the language chosen and employed by the insurers leave the matter in doubt, and to the benefit of that they are not entitled. (Herrman v. Mer. Ins. Co., 81 N.Y. 184.)

The judgment appealed from should be affirmed.

All concur, except EARL, J., dissenting.

Judgment affirmed.