Case Name: Levi Sherman vs. Dr. Samuel Fair
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1844-05
Citations: 2 Speers 647
Docket Number: 
Parties: Levi Sherman vs. Dr. Samuel Fair.
Judges: Wardlaw and Frost, JJV] Upon the grounds of appeal which have been presented, we concur in the result.
Reporter: South Carolina Law Reports
Volume: 29
Pages: 647–649

Head Matter:
Levi Sherman vs. Dr. Samuel Fair.
I. A mortgaged to B two houses and lots. Out of A’s funds B had them insured. Afterwards, under a decree of foreclosure of the mortgage, one of the houses and lots was sold, and purchased by C. On the back of the policy, with B’s consent, the agent of the insurance company consented that so much of the policy as related to the house and lot purchased by G, should be transferred to him. After the sale under the mortgage, C, by the acceptance of the underwriters, by their agent, became one of the insured, and was held liable to pay back to A so much of the premium paid by him as applied to the house purchased by C, and as covered the time the policy still had to run. No formal assignment, either by A or B, was essential.
Before O’Neall, J. Richland, Spring Term. 1844.
The plaintiff mortgaged two houses and lots to the Commercial Bank; out of his funds the bank had them insured. Afterwards, under a decree of foreclosure of the mortgage, one of the houses and lots was sold to and purchased by the defendant. On the back of the policy, the agent of the insurance company consented that so much of the policy as related to the house and lot purchased by the defendant, should be transferred to him. There was no formal assignment of the policy by the bank to the defendant. Indeed none could be made, as the policy extended to another house, not bought by the defendant.
The plaintiff sued for so much of the premium paid by him as applied to the house purchased by the defendant, and as covered the time which the policy still had to run. The plaintiff had a decree.
The defendant moved the Court of Appeals to reverse the decree of his Honor, upon the grounds following :
1. Because there was no assignment of the policy of insurance in question to the defendant, and the insurance company, therefore, was never liable to him under it.
2. Because his Honor erred in deciding that the permission to assign, endorsed on the back of the policy, with the consent of the bank, was equivalent to an assignment to the defendant, and entitled him to sue the company on the policy, in case of loss.
3. Because, if there were an assignment of the policy by the bank, it took place after the bank had parted with its insurable interest in the property, when it had nothing in the policy to assign, and the assignment of it, therefore, was a nullity.
Tradeioell & Bryce, for the motion,
cited 1 Phillips on Insurance, 36 ; 16 Wend. 385.
Spain, contra,
cited 1 Phillips on Insurance, 727; 2 McMullan, 237.

Opinion:
Curia, per
Richardson, J.
The policy of insurance was made by the Augusta Insurance and Banking Company, to the Commercial Bank, (mortgagees,) on two houses of Levi Sherman, the plaintiff; the premium of sixty dollars was paid out of the money of the plaintiff. There can be no doubt that the policy insured the two bouses against fire, for the security both of the plaintiff and the bank. In the language of the policy, they were the insured. After the purchase of one of the houses byBr. Fair, he stood in the place of both the bank and of Levi Sherman, as to that house; but both by well established decisions, (see Fire Insurance Company vs. Tyler, 16 Wend. 385, and Lynch vs. Dayrell,) and by the condition expressed in the policy, that instrument is not assignable, unless by the consent of the underwriters. The following endorsement was, therefore, made upon the policy by the agent of the underwriters ; (see 3 Stephens's Nisi Prius, page 2087, and the cases collected,) "So much of the within insurance as relates to the two story frame and shingle residence occupied by L. Sherman, situated corner of Plain and Walnut streets, is this day transferred to Dr. Samuel Fair, who has become the purchaser of said property. W. W. Eaton, agent. Columbia, December 15th, 1842." This indorsement was made with the consent of the bank, and the only question made by the appeal is then presented. Does such indorsement assign and transfer to Dr. Fair such an interest and right in law to recover of the under-writers, as before his purchase belonged to Levi Sherman and the Com mercial Batik 1 I cannot, perceive any reason for doubt; as before the purchase by Dr. Fair, the Commercial Bank held the policy for the insured, that is, for the bank itself, as mortgagee, and for Levi Sherman, as owner of the two houses; so, after the sale to Dr. Fair, and the acceptance of the underwriters, by their agent, of the assignment and interest of Dr. Fair, he became one of the insured, by the acknowledgment of the under-writers, who were, alone interested in the risk they continued to take upon themselves in virtue of the original premium ; and no formal assignment by the bank or Levi Sherman is, I apprehend, either customary or essential. The assignment, to use that term, is of the right to recover, in case of loss, against the under-writers, and this is effected by their placing Dr. Fair's newly acquired interest in the house purchased, within the policy of insurance. The effect is precisely as if Fair had paid his own premium, and taken out his own policy. The proper question on the merits of the case was decided on the circuit, i. e. that Dr. Fair was bound now to pay it back to Sherman.
'i he motion is, therefore, dismissed.
Wardlaw and Frost, JJV] Upon the grounds of appeal which have been presented, we concur in the result.