Case Name: J. A. WATSON and L. D. IVEY v. THE NORTH CAROLINA HOME INSURANCE COMPANY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1912-10-23
Citations: 159 N.C. 638
Docket Number: 
Parties: J. A. WATSON and L. D. IVEY v. THE NORTH CAROLINA HOME INSURANCE COMPANY.
Judges: Justice Hoke took no part in the decision of this case.
Reporter: North Carolina Reports
Volume: 159
Pages: 638–640

Head Matter:
J. A. WATSON and L. D. IVEY v. THE NORTH CAROLINA HOME INSURANCE COMPANY.
(Filed 23 October, 1912.)
Insurance, Fire — Policies—Change of Title — Interest—Mortgages— Contracts.
According to tlie valid provisions of our standard fire insurance policies, a mortgage on property covered by a policy made subsequent to its date of v issue is such a change of interest or title in the property as will release the insurer from all liability for damages thereafter incurred. Revisal, sec. 4760.
Appeal by defendant from Whecübee, J., at October Term, 1911, of CUMBERLAND.
Tbe facts are sufficiently stated in tbe opinion of tbe Court by Mr. Justice Brown.
Civil action. From a judgment for tbe plaintiff, tbe defendant appealed.
Lockhart & Dunlap for plaintiff.
Winston & Biggs for defendant.

Opinion:
Brown, J.
Plaintiffs sue to recover upon a standard policy of insurance on tbe bouse of plaintiff Ivey issued 19 March, 1908, tbe same having been destroyed by fire 28 September, 1910. Tbe defendant pleads such a change in tbe interest and title of tbe insured in tbe property subsequent to the policy as avoids it.
It is admitted that Ivey executed a mortgage to a certain bank for $1,500 on this property on 2 February, 1909, and another mortgage thereon 12 June, 1909, to' plaintiff 'Watson, and on 23 February, 1910, for a recited consideration of $2,260, be executed a deed in fee to 'Watson.
It is stated in tbe case that while tbe mortgages are yet uncaneeled, nothing is now due on them, and that tbe deed, although absolute on its face, was in effect given as security for the indebtedness then due by Ivey to "Watson.
The policy sued on is standard in form (Eevisal, 4160) and contains tbe usual provision forfeiting tbe policy in case of a change in tbe interest or title of tbe insured in the property without tbe consent of the company.
We do not think this case is governed by Jordan v. Insurance Co., 151 N. C., 343. In that case we passed on the title of the insured at the date of tbe contract, and held that an equitable ownership, such as a vendee in possession, constituted sole ownership and fulfilled the terms of tbe policy. In this case the title of the insured at date of tbe contract is not in question; but it is the subsequent change in such title and interests that, it is contended, avoids tbe policy according to its terms.
It must be admitted that- tbe execution of mortgages upon the property for $2,260, subsequent to tbe policy, greatly decreased the interest of tbe insured in it, and increased tbe hazard to the insurer. That such a change in the interest and title of the insured forfeits the policy has been repeatedly and consistently held by this Court.
This was first held in Sossaman v. Insurance Co., 78 N. C., 147, in which, after referring to the adverse view in other States, Judge Rodman says: "A different view has been commonly taken in this and in other States. But we were referred to no case in which it was held that giving a mortgage did not work forfeiture where the terms of the condition were as comprehensive as they are in this case.'' That policy contained a provision similar to the one in the case at bar.
At the same term at which the Jordan case was decided we said, in Modlin v. Insurance Co., 151 N. C., 41, that "It is well settled by the decisions of this Court — differing from the courts of some of the States — that the giving of a mortgage effects such a change of title and interest of the assured as avoids the policy when not assented to by the assured in the manner prescribed by the policy." Many other cases hold that in this, as well as other States, the common law prevails, and a mortgage deed passes the legal title at once, defeasible by the subsequent performance of its conditions. Biggs v. Insurance Co., 88 N. C., 141; Gerringer v. Insurance Co., 133 N. C., 407; Hayes v. Insurance Co., 132 N. C., 702; Mordecai's Law Lectures, 534.
In referring to this principle of law in Weddington v. Insurance Co., 141 N. C., 234, Mr. Justice Walicer says: "The validity of a provision in a policy of insurance against the creating of encumbrances without the consent of the insurer can hardly be contested at this late day. It has now become the settled doctrine of the courts that the facts in regard to title, ownership, encumbrances, and possession of the insured property are all important to be known by the insurer, as the character of the hazard is often affected by these circumstances."
It is useless to multiply authorities upon this subject.
The judgment of the Superior Court is reversed, and upon the case agreed, judgment will he entered for the defendant.
Reversed.
Justice Hoke took no part in the decision of this case.