Springfield Fire & Marine Insurance v. Chandler

Insurance; Encumbrance Clause; Automobiles. 1. A provision in a policy of insurance on an automobile, that if the property insured “be or become encumbered by a chattel mortgage,” the policy shall be void, is valid (following Dumas v. Northwestern Nat. Ins. Co. 12 App. D. C. 245, 40 L.R.A. 358) ; and if the insured so encumbered the automobile, the insurer has the right to insist that its liability under the policy became thereby terminated. (Following Hunt v. Springfield V. & M. Ins. Co. 20 App. D. C. 48.) 2. The purchaser of a chattel by absolute sale who, to enable the seller to discount the purchase money note, subsequently executes an instrument in form a contract of conditional sale, which is recorded in the maimer prescribed for chattel mortgages, thereby encumbers the property, within the meaning of a provision in an insurance policy that a subsequent encumbrance shall invalidate it.

Hearing on an appeal by the defendant from a judgment of the Supreme Court of the District of- Columbia, on verdict, in an action upon an insurance policy issued, by defendant on plaintiff’s automobile.' ■. The Court in the opinion stated the facts as follows: Appeal from a judgment for the plaintiff, Harris Ellis Chandlee, in the supreme court of the District in a suit upon a policy of insurance issued by the Springfield Eire & Marine Insurance Company, defendant, appellant here, to cover plaintiff’s automobile. On June 29, 1911, plaintiff purchased a Marion automobile from a Mr. Ebersole. He made a partial payment on the machine, and gave his note, dated June 29, 1911, for the balance, $650, payable in thirty days, and the car was delivered to him. Thereafter, on July 6, 1911, the policy here involved was issued by the defendant upon an application made about July 1st or 2d. In this policy it is provided, inter alia, that if the property insured “be or become encumbered by a chattel mortgage, * * * or if any change other than by the death of an assured take place in the interest., title, or possession of the subject of insurance,” the entire policy shall be void. On July 5, 1911, according to plaintiff’s testimony, Mr. Ebersole’s agent represented to plaintiff that if he would sign a paper which the agent submitted to him, it would be easier for Ebersole to discount said note of June 29th, and plaintiff, “as a personal courtesy to him (Ebersole) in order that he might be able to raise money on the note,” executed the paper and acknowledged the same before a notary public. This paper is in form a conditional contract of sale, in which it is set forth that the plaintiff has received of Ebersole one Marion automobile for which he agrees to pay $1,200, $500 upon the execution of the agreement, and the balance of $650 in monthly instalments of $50 each, title to the property to remain in Ebersole until all payments have been made. This instrument, on July 7th, was recorded in the same manner as a chattel mortgage (Code, sec. 547 [31 Stat. at L. 1275, chap. 854]), but defendant did not learn of it until after the fire. The policy of insurance, on July 8, 1911, was taken to the Providence Sayings Bank, where the note had been discounted. It bears an assignment to the bank under date of July 6, 1911, but plaintiff testified'he did not- actually execute this assignment until after the fire, which occurred on October 22, 1911. At the close of the evidence the defendant asked for a directed verdict, which was refused. 1. The plaintiff did not have title to the car. Minnix v. Smith Bros. etc. Co. 33 App. D. 0. 245. 2. The conditional sale was within the condition of the policy, and rendered it void. Dumas v. N. VV. Fire Ins. Co. 12 App. D. 0. 245, 255 — 60; Hunt v. Springfield Fire & Marine Insurance Co. 20 App. D. C. 48. 3. The ear was encumbered by a chattel mortgage. Hunt v. Springfield Ins. Go. 20 App. D. C. 50. 1. Plaintiff had title to the car. Minnix Co. v. Smith Bros. Typewriter Co. 33 App. D. C. 357-364, 365; Peabody v. Maguire, 79 Me. 572. 2. It was not the intention of Ebersole, the vendor, and plaintiff, that the former retain title to the car, notwithstanding the execution of the so-called chattel mortgage. The document itself does not purport to convey plaintiff’s title to the car to trustees with power of sale, or to convey the car “in trust to third persons with similar power of sale in case of the default of the mortgagor,” as contemplated by the case of Hunt v. Springfield Ins. Co. 20 App. D. O. 50. Therefore, we have plaintiff with title to this car and a paper which does not purport to convey it away to anyone. 3. A defendant cannot show breach of warranty or violation pf conditions, even where plaintiff has alleged fulfilment or compliance, without specially pleading the facts constituting the breach or condition relied on, whether constituting a breach of condition precedent or a violation of a promissory or subsequent condition. 19 Oye. 92G. 4. Where the provisions of a policy are ambiguous and susceptible of two constructions, the construction most favorable to the insured will be followed. Ins. Oo. v. Goos Go. 151 U. S. 452. 5. The paper writing relied upon by the appellant does not come within the meaning to be ascribed' to the language of the policy relied upon to establish a breach on the part of the plaintiff.