Roberts v. American Alliance Insurance

192 S.E. 873, 212 N.C. 1, 113 A.L.R. 310, 1937 N.C. LEXIS 217

• Court: Supreme Court of North Carolina
• Decided: September 22, 1937
• Status: Published

Opinion

Stacy, O. J.

Tbe policy in suit is in tbe standard form as prescribed by C. S., 6437. Tbe requirement of “unconditional and sole ownership” is statutory, Black v. Ins. Co., 148 N. C., 169, 61 S. E., 672, 21 L. R. A. (N. S.), 578, as well as contractual. Weddington v. Ins. Co., 141 N. C., 234, 54 S. E., 271. Its validity is not mooted on tbe present record. Johnson v. Ins. Co., 201 N. C., 362, 160 S. E., 454; Hardin v. Ins. Co., 189 N. C., 423, 127 S. E., 353; Roper v. Ins. Co., 161 N. C., 151, 76 S. E., 869; Bank v. Ins. Co., 187 N. C., 97, 121 S. E., 37; McIntosh v. Ins. Co., 152 N. C., 50, 67 S. E., 45; Hayes v. Ins. Co., 132 N. C., 702, 44 S. E., 404.

Is plaintiff’s interest or ownership in tbe property sole and unconditional within the meaning of the policy? We think the trial court correctly answered the question in the affirmative. Kenton Ins. Co. v. Wigginton, 89 Ky., 330, 7 L. R. A., 81.

Plaintiff is in the exclusive use and enjoyment of the property under claim of right. Modlin v. Ins. Co., 151 N. C., 35, 65 S. E., 605. His title to the part allotted to him in partition is good as against his brother (Collier v. Paper Corp., 172 N. C., 74, 89 S. E., 1006), unless the statute of frauds be invoked or relied upon as a defense, and a stranger to the transaction, such as the defendant, can take no advantage of the statute. Cowell v. Ins. Co., 126 N. C., 684, 36 S. E., 184; 26 C. J., 173. Hence, in the present action, as against the defendant, it is proper to say he is the sole and unconditional owner thereof. Such was the plaintiff’s understanding when he took out the insurance, and he alone has suffered loss by the destruction of the property. Valenti v. Imperial Assur. Co., 176 Atl., 413. It is not thought that he must show title absolutely good against the world. Crider v. Simmons, 96 S. W. (2d), 471. It is enough if his interest be sole and unconditional in the generally accepted sense. Bardwell v. Com. Union Assur. Co., 105 Vt., 106, 163 Atl., 633. The plaintiff had no misgivings as to his complete ownership in the property when applying for the insurance, and his failure to express a doubt when none existed in his own mind ought not to be held against him. The defendant assumed the risk which it intended. It has not been misled, and its rights have in no way been affected by the matter now presented. Atlas Fire Ins. Co. v. Malone, 99 Ark., 428.

It is held by courts of recognized authority, and our own decisions point in the same direction, that where one is in the exclusive use and enjoyment of the entire estate, under claim of right, without assertion of adverse title by another, his interest is properly described as sole and unconditional ownership, within the meaning of a policy of insurance containing such provision, although his title may be defective in some particular. Modlin v. Ins. Co., supra; Jordan v. Ins. Co., 151 N. C., 341, 66 S. E., 206; Lancaster v. Ins. Co., 153 N. C., 285, 69 S. E., 214; Western Assur. Co. v. Hughes, 179 Okla., 264, 66 Pac. (2d), 1056; 14 R. C. L., 1052, et seq. See annotation, L. R. A., 1918 E, 375.

In Hankins v. Williamsburg City Fire Ins. Co., 96 Kan., 706, 153 Pac., 491, L. R. A., 1918 E, 373, Ann. Cas., 1918 C, 135, it was held (as stated in syllabus, which accurately digests opinion) : “A fire insurance policy upon a building, containing a stipulation that the policy ‘shall be void ... if the interest of the insured be other than unconditional and sole ownership,’ is not invalidated because of an outstanding naked legal title in another where the insured has the equitable title, the entire beneficial ownership of the property, and is in undisputed possession of the same.”

Again, in American Basket Co. v. Farmville Ins. Co., 1 Fed. Cas. No. 290, p. 618, it appeared that the beneficial title was in the insured, a foreign corporation, but that the legal title was carried in the name of one of its officers because of a statute forbidding the ownership of realty by a foreign corporation: Held, the requirement of “entire, unqualified, and sole” ownership for insured’s “own use and benefit” satisfied, notwithstanding naked legal title in another.

In disposing of the case, the following pertinent animadversions were made on the subject: “Policies of insurance, like all other written contracts, must be construed and enforced according to their terms. If they convey a plain, practical meaning, that meaning must be carried into effect. Policies of insurance differ somewhat from other contracts, however, in respect to the rules of construction to be applied to them. They are unipartite. They are in the -form of receipts from insurers to the insured, embodying covenants to compensate for losses described. They are signed by the insurer only. In general, the insured never sees the policy until after he contracts and pays his premium, and he then most frequently receives it from a distance, when it is too late for him to obtain explanations or modifications of the policy sent him. The policy, too, is generally filled with conditions inserted by persons skilled in the learning of the insurance law and acting in the exclusive interest of the insurance company. Out of these circumstances the principle has grown up in the courts that these policies must be construed liberally in respect to the persons insured, and strictly with respect to the insurance company. See Insurance Co. v. Wilkinson, 13 Wall. (80 U. S.), 232.

“Another rule of the law in regard to fire insurance is to discourage wager policies; that is to say, policies taken by persons who have no interest in the property insured, and in which such persons merely bet that the property will not be burned. Such insurances are contrary to public policy and promote fires. The law will, therefore, give force to all provisions in policies of fire insurance which require that the person who takes out the policy shall have an interest in the property, and shall disclose that interest with precision in his ‘application’ for insurance. That is the purpose of the law, and is the object sought to be subserved by the insertion of clauses voiding them in cases Avhere deception is practiced in regard to the real ownership of the property insured; and terminating them whenever, during the period of insurance, the person holding a policy ceases to own the property, and it becomes thereby a wager policy. Therefore, clauses in policies requiring a truthful statement of the interest of the applicant for insurance, and forbidding changes of ownership during the period of insurance, are to be construed not technically to the prejudice of the policyholder, but rationally and fairly to protect tbe insurance company from tbe extraordinary risks, and from tbe certain and numerous losses wbicb would fall upon tbem from insurance of property not actually owned by tbe persons insured.

“In tbe case under trial there are two questions, wbicb bave formed tbe subject of contention between counsel, and upon wbicb instructions are asked of tbe court.

“1. Tbe first is, wbetber plaintiffs’ right to recover is defeated by tbe fact that tbe record-title could not be held by tbe plaintiffs under tbe laws of Delaware, and was therefore vested in Mr. Orrin E. North, if not made known to tbe defendant or its agent at tbe time of tbe insurance (issuance) of -the policy, considered in connection with tbe statement in tbe application for insurance that tbe title was fin tbe name of’ tbe plaintiffs. I am of opinion that it is not defeated by that fact if tbe plaintiffs were tbe ‘entire, unqualified, and sole owners’ of tbe property insured ‘for their own use and benefit.’ I do not think that tbe fact of tbe record-title being in Mr. North of itself defeats their right to recover, unless their statement in tbe application was made to deceive and mislead tbe insurance company. Tbe evil sought to be avoided by those provisions of tbe policy requiring a correct statement of tbe plaintiffs’ interest in tbe property was tbe insurance of property not owned by tbe bolder of tbe policy, tbe destruction of wbicb would not cause a loss to that bolder equal to tbe value of the property destroyed. If tbe plaintiffs in tbe ease at bar were tbe owne.rs of tbe entire beneficial interest in tbe property at tbe taking out of tbe policy, and would bave been losers to tbe full extent of its value if it bad been destroyed, then this ownership fulfilled every purpose which tbe provisions of tbe policy in regard to a disclosure of interest were designed to secure, and, in tbe absence of fraud or fraudulent misrepresentation, a merely technical difference in tbe title, set out in tbe application, ought not in equity and good conscience to defeat tbe plaintiffs, if they are otherwise entitled to recover.”

To like effect is the decision in McCoy v. Iowa State Ins. Co., 107 Ia., 80, 77 N. W., 529, where it was held that since tbe condition referred to tbe interest of tbe insured and not to bis title, tbe fact' that tbe naked legal title was in another would not invalidate tbe policy, tbe insured being tbe beneficial owner at tbe time of tbe issuance of tbe policy.

On tbe whole, it is concluded that tbe correct result was reached in tbe court below. Tbe verdict and judgment will be upheld.

No error.