Coleman v. Phoenix Insurance

Green, J.:

There is but a single question presented on this appeal,' and that is, whether, within the terms of the policy, the execution and delivery by the plaintiff of the chattel mortgage vitiated and rendered void the entire policy.

It is conceded that this ’ is' what is designated as an “ open ” or “ floating ” policy. It did not by its terms cover any specific property, but only such property as at the time of the fire shonld.answer. the description ■ and provision of the policy. The intent and purpose of the contract was, that during its life the assured might deal with .his-property as he saw fit. .It appears that the plaintiff sold a large quantity of this barley in the period intervening the time of the issuance of this policy and the fire. The defendant knew this, yet it makes no objection to the payment of the loss by reason of 'that fact, notwithstanding -the contract-contained this provision with respect to such disposition of the property,'“ this entire policy,, unless otherwise provided by agreement, indorsed .hereon or added hereto, shall be void * * * if any change, other than- by the death of an insured take place in. the interest, title or possession of the subject of insurance, * * ‘ " whether by legal process or judgment-, or iy volunta/ry act of the insured or otherwise.” There was no agreement indorsed or added to this policy consenting that the assured might dispose of any of that property.

If this policy, therefore, is to be construed by the same rules as policies upon specifically described property in being at the time the policy is issued, then the sale and delivery of a. large quantity of ■this malt, which was in the malt house at the time the policy was executed, vitiated this policy, for, by the. voluntary act of the assured, there was a change in the interest and title of the assured •in the subject of insurance. Such a contention is not made* find if made would not prevail, for it would be opposed to the settled rule of construction applicable to policies of this nature.

* The intent of the parties to this contract was that the business should proceed and' not be suspended; that property might be purchased and sold or disposed of by the assured in such manner as he Plight deem necessary or desirable, and- that the company should, in case of loss, be liable only for such property as should answer the description and provisions of the policy.

The “ subject of insurance” is determined by what is destroyed and which answers the description and conditions of. the policy. (Hoopers. The H. R. F, Ins. Co., 17 N. Y. 424 ; Wolfe v. Security F. Ins. Co., 39 id. 49.)

Guided by this rule, let us inquire what, under the terms of this policy, was the “ subject of insurance ” at the .time of the loss. It Was not that malt which had béen sold by plaintiff, for by his own act he released the insurers from any liability or risk under the policy on account of any damage to such property, and had removed it from the provisions of the contract. If, just previous to the fire, he had sold all of this malt and barley, the company would not have been liable under this contract, for there would then have been no property answering the description and provisions of the policy.

The property covered by the chattel mortgage was not the “ subject of insurance ” at the time of the fire, for plaintiff had by his own voluntary act removed that property also from the provisions of the policy. If that property had alone been destroyed by fire after the execution of the chattel mortgage by plaintiff, he could have no more compelled the company to pay for the loss on that malt than for that which he sold previous to the fire.

If this chattel mortgage had covered the: entire property destroyed, defendant would, not have been liable, as there would have been at the time of the fire no property answering the description and conditions of the policy. And this condition would have been brought about by plaintiff’s own act. The terms of the policy aré such as obviously secured to plaintiff the free use of the property in the malt house and a right to deal with all, or a portion, of it as he saw' fit, during the life of this. contract. When, however, he exercised that right and dealt with the property by sale or mortgage, from that moment the property sold or mortgaged ceased to be covered by this policy of insurance, for, from that moment, it failed to answer the description and conditions of the policy and ceased to be the “ subject of insurance.” The defendant was not prejudiced by plaintiff executing this chattel mortgage upon the 300 bushels of malt. It was not liable for any loss that might occur to the property so mortgaged. The subject of insurance was unchanged by this act of plaintiff; the risk was. the same. It in no way affected the claim under the policy in the event of a fire, for the reason that the company would be liable only for loss to the “ subject of insurance,” to be determined at the time of a loss by what is destroyed and which answers the description and conditions of the policy. It has contracted to insure such property, and it should be willing to fulfill its contract. The plaintiff has demanded only that, and his demand being reasonable and in accordance with the settled principles of law should be granted and enforced.

The motion for new trial should be denied, and judgment ordered for plaintiff upon the verdict, with costs of the action and of this motion.

All. concurred, except Adams, J., not sitting.

Motion denied, with costs.