Olyphant Lumber Co. ex rel. Mc-Gouldrick v. Peoples' Mutual Live Stock Insurance

Opinion by

Rice, P. J.,

One of the conditions of the policy in suit reads as follows : “ That the holder of this policy shall not transfer it to another without the consent of this company in writing and must immediately notify the company of the sale of any animal insured, and surrender the policy for cancellation. The company will not be liable for losses under policies otherwise transferred.” Section 7 of the by-laws of the association provides: “Each member shall abide by and conform to all the conditions and agreements named in his or her policy. A failure to do so shall cause a forfeiture of such policy.” It appears that on June 13,1893, the Olyphant Lumber Co. sold the horse insured to Patrick McGouldrick and at the same time delivered to him the policy of insurance with an assignment indorsed thereon. McGouldrick paid the purchase price and at once took the horse into his possession. On the following Saturday night the horse was taken sick, and died on the following day about noon. On the morning of this Sunday, McGouldrick mailed to the company the policy together with a check for one dollar for cost of transfer, and requested that the policy be transferred to him. He did not mention the fact that the horse was then sick, nor even that the horse had been bought by him. On the following day the general manager of the company wrote in reply that in order to have the assignment approved it would be necessary for the plaintiff to fill out the inclosed application for transfer, and have the horse examined by Dr. Helmer, and to forward with the application a letter from him as to the present condition and value of the horse. The letter proceeds : “When this is done, if the application is satisfactory to the company we will approve the assignment and forward you the policy, provided the same is attended to within the next ten days.” The check was returned with this letter.

A sale of property insured does not carry with it the policy of insurance. The policy is not an insurance of the specific thing without regard to the ownership, but is a special agreement of indemnity with the-person insuring against such loss or damage as he may sustain. When he parts with the title to, and possession of, the property and has no further interest in it, he can sustain no loss or damage by its destruction, but the loss, if any, is that of his grantee. In the absence of an assignment the grantee cannot recover on the policy, because the insurer has no contract with him, and the grantor cannot recover because he has sustained no loss. It has been said that a transfer of the property, accompanied by an assignment of the policy is not a prolongation of the life of the contract, but a new contract with another person about the same subject-matter. But whether it be regarded as the one or the other, the insurer has a right to choose the persons with whom he will contract and a stipulation that the policy shall not be transferred to the grantee of the property insured without the consent of the insurer is but an exercise of that right, and is of undoubted validity. All this is true of fire insurance and is equally true of live stock insurance where the moral risk enters quite as largly into the consideration. It has been held in the case of a perpetual policjr — but under provisions very different from those under consideration — tljat the insurer may not refuse to consent to an assignment arbitrarily (Davidson v. Assurance Co., 176 Pa. 525), and it is argued in the present case that the company was bound to approve the assignment unless good reasons could be shown for refusing. So long as the insurer reserves the unqualified right to refuse to contract with a grantee of the property and to cancel the policy upon a sale thereof, it is difficult to see how a refusal to make a new contract with a particular person, or to prolong the life of the old, after the ownership of the property has changed can be set at nought as arbitrary. But there is no question of an arbitrary refusal in the present case, even if that question could arise in any case where the parties have expressly agreed that the consent of the insurer shall be essential to the validity of an assignment. To say nothing of the want of good faith in omitting to inform the company of the illness of the horse at the time it was made, the application for the transfer did not conform to the by-laws, and the company was perfectly justified in withholding its consent until an application conforming to its reasonable requirements should be presented. No such application was presented. The company never gave, or agreed to give, its consent, and did nothing to estop itself from denying the validity of the assignment on that ground. It follows that the assignee acquired no rights whatever against the defendant by virtue of the assignment. This conclusion is reached by an application of elementary principles; but if citation of authorities is necessary we need only refer to the case of Girard F. & M. Ins. Co. v. Hebard, 95 Pa. 45.

To meet this objection to recovery under the assignment, the plaintiff offered to show, that, as part of the contract of sale pursuant to which possession of the horse was delivered and the purchase money paid, it was agreed that if the company did not approve the transfer it was not to be a sale, and in that event the horse was to be returned, and the money repaid. It is argued that upon such a sale the title remained in the Lumber Co., and that a recovery could be had in its right, upon the principle that where an action is brought in the name of the legal party to the use of another, the latter need show no right in himself; it is enough if he show a right in the legal plaintiff.

It might he argued, plausibly, from the facts alleged in the plaintiff’s offers, that the vendors of the horse retained an insurable interest until the sale became absolute, either by reason of consent being given to the transfer of the policy or by reason of a waiver of the condition of sale by the vendee. But the question is, not whether the original holders of the policy retained an insurable interest in the horse, but whether they complied with their agreement with the company to give immediate notice of the sale, so that the latter might exercise its option to cancel the policy or to give consent to its transfer. For, it cannot reasonably be contended that where the policy holder has delivered the possession of the property insured to another person and has received the whole price, he is not bound to give such notice, if the sale be upon condition that the vendee may rescind it upon failure to obtain the insurer’s consent to the transfer of the policy. There-is, obviously, the same reason for giving notice in such a case as in the case of an unconditional sale. If, then, the original holders of the policy desired to retain and protect their interest in it after they had transferred the possession of the horse under a contract of sale, it was their duty to give immediate notice of the sale, to the insurer. This they did not do. Notice of the assignment of the policy was not notice of the sale of the horse, and it is not contended that any other notice of the sale was given. To say nothing of the vendee’s delay in forwarding notice of the assignment, until the horse was dying, if not dead, or of the want of good faith in withholding information of its condition at that time, the evidence shows that there was neither literal nor substantial compliance with the conditions of the policy.

As the case stood upon the admitted evidence, the judgment of nonsuit was properly entered, for the reasons given by the learned trial judge. And, if the offered evidence had been admitted, the plaintiff’s case must have failed because there was a failure, upon the part of the Lumber Co., to comply with the conditions of the policy, quoted at the outset of this opinion-judgment affirmed.