Case Name: The Sun Fire Office of London v. Clark et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1895-10-29
Citations: 53 Ohio St. 414
Docket Number: 
Parties: The Sun Fire Office of London v. Clark et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 53
Pages: 414–430

Head Matter:
The Sun Fire Office of London v. Clark et al.
Mortgage — Insurance policy — Deed absolute on its face is a mortgage, when — Effect of provision in policy as to change of interest in property — Additional insurance— Words “title,” “interest” and “possession” defined — Section 3643, Revised Statutes.
1. A deed, absolute on its face, but shown by a separate wi’itten agreement to be a security for the pex’fox’mance of a personal obligation of the grantor to the grantee, is a mortgage.
2. A policy of insurance containing a provision, that if any change take place in the title, interest or possession of the property insured, by sale, transfer or conveyance, without the consent of the insurer, the policy shall become void, is not invalidated by the making of a mortgage. The words ‘ ‘title’ ’ or ‘ ‘possession, ’ ’ as here used, mean an actual change in law and equity, and the word “interest” means a change in the insurable interest of the owner of the property, neither of which is affected by the execution of a mox'tgage.
3. Where a policy of insurance stipulates that it shall become void by the taking of additional insurance without the consent of the insurer, such stipulation is not within the provisions of section 3643, Revised Statutes, for the reason that additional insurance does, as a matter of law, increase the risk; and if taken without the consent of the insurer, invalidates the policy.
(Decided October 29, 1895.)
Error to the Circuit Court of Cuyahoga county.
The action below was upon a policy of insurance in the sum of $2,000, made and delivered by the Sun Fire Office of London to Ida A. Clark, to indemnify her against loss by fire on her dwelling house, and payable to George W. Pringle as his interest might appear, his interest being that of a mortgagee. The first defense of the answer admitted certain allegations, and then denied all the other averments of the petition. The questions, however, arise upon the second and third defenses in the answer and the issues made thereon. These defenses are as follows:
Second Defense.
“Further answering said petition, defendant, for a second defense says, that it is one of the express conditions and provisons of the policy of insurance so made by it, and a part thereof, that the same should become void, unless consent in writing was indorsed thereon by or on behalf of the defendant, if any change took place in the title, interest, location or possession of the property insured (except in case of succession by reason of the death of the insured), whether by sale, transfer or conveyance, in whole or in part, or by legal process or judicial decree; and defendant alleges that after the making of said policy, and by deed dated November 7, 1889, the plaintiff, Ida A. Clark, conveyed the premises, upon which stood the house by said policy insured, to one Clark A. Rhodes. Her husband, F. W. Clark, joined in said conveyance (which is recorded in volume 460, page-326, of Cuyahoga county records), without notice to or consent of this defendant, which was ignorant of the same until after the destruction of said house b'y fire. By which conveyance said policy became void and of no force and effect.”
Third Defense.
“Further answering said petition, defendant, for a third defense says, that it is one of the conditions of the policy of insurance so made by it, and a part thereof, that the same should become void, unless consent in writing was indorsed thereon, by or on behalf of the defendant, if the insured had, or should after the making- of the same, obtain any other policy or agreement for insurance, whether valid or not, on the property in said policy mentioned or any part thereof; and it alleges that on or about the 1st day of December, 1888, the plaintiff, Ida A. Clark, obtained a policy of insurance of the Springfield Fire and Marine Insurance Company on the same house insured by the said policy of defendant, to the amount of $2, - 000, and on the piano, household furniture and family wearing apparel- while therein contained to the amount of $500, without any notice to this defendant or its consent thereto, and the loss on ■said buildings was paid by said insurance company in pursuance of said policy; whereby said policy sued upon herein became and has been ever since, utterly void and of no effect whatever.”
To these defenses the plaintiff replied as follows:
First, denying the averments of the second defense, she averred: “That at the time .mentioned she and her husband mortgaged said property to said Clark A. Rhodes, the instrument being in form only, a deed, and that at the time of said fire said mortgage had not become absolute, nor was the debt secured thereby due and payable. She further avers that she immediately gave notice of such mortgage to said company both to the agent through whom said policy was issued, to the general agent of said defendant in Cleveland, Ohio, and to the company itself, and received from none of these persons or from said defendant any intimation that said policy would be forfeited on account of said mortgage, and on account thereof she did not as she might and would otherwise have done, procure other insurance in place of the policy referred to in said petition.
■ “Replying to the third defense contained in said answer, this plaintiff says, that immediately upon obtaining the policy of insurance mentioned in said third defense, she notified said defendant of said insurance, who consented thereto.”
The case was tried to a jury, evidence was offered by both parties upon the issues joined as appears from a bill of exceptions taken and made a part of the record. At the close of the evidence the court instructed the jury as follows:
“Under the construction which I have placed upon section 3643, of the Revised Statutes of Ohio, and the pleadings and proof in the case, I deem it my duty to direct the jury to return a verdict for plaintiff for the amount of the policy and interest from March 12,1890. ”
Exception was taken to the ruling of the court; a motion was made for a new trial and overruled, and judgment entered on the verdict, which was affirmed by the circuit court. The ruling of the court is assigned for error here. •
II O. Banney,'and O. W. Fuller, for plaintiff in error.
1st. Were the defenses set up by the defendant below, if established, sufficient in law in the absence of any controlling statute to the contrary?
2d. If these defenses, if established by the evidence, are otherwise good, are they taken away by the effect if section 3643, Revised Statutes, commonly known as the Howland law?
If this court should find from the evidence that there was in reality an absolute conveyance in fee, there could then be no question but that defendant in error must fail to recover. Insurance Co. v. Archer, 36 Ohio St., 612. But even if in the view of the court it should be merely a, mortgage, we believe the authorities support the position that under the peculiar wording of the provision in this policy, there would still be a forfeiture of the policy.
A mortgage is an alteration of ownership within • the meaning of the policy which inhibits an alteration of. ownership upon penalty of forfeiture. Edmunds v. Insurance Co., 1 Allen, Mass., 311. And so it is a violation of the provision against sale or alienation in whole or in part.» Abbot v. Hampden Mutual Fire Ins. Co., 30 Me., 414.
An insurable interest may exist independent of the title to the property. May on Insurance, section 271; Hitchcock v. Insurance Co., 26 N. Y., 68; Savage v. Insurance Co., 52 N. Y., 502.
The breach of the condition with reference to additional insurance as set up in plaintiff in error’s third defense, if sustained by the evidence, would, beyond question, under the authorities, constitute a good defense to this action, and as there was evidence on both sides as ■ to whether or not there was a breach of this condition, it was a question for the determination of the jury. Insurance Co. v. Leslie, 47 Ohio St., 415; Jeffries. Life Insurance Co., 22 Wall., 47; Phoenix Insurance Co. v. Railway Co., 28 Ohio St., 69.
Where there is possible ambiguity, and the intention of the legislature cannot with absolute certainty be determined from the language of the act, we are compelled to have recourse to rules of construction which the courts have said must apply in such cases. Insurance Co. v. Wells, 42 Ohio St., 519; Insurance Co. v. Leslie, 47 Ohio St., 409; Riley v. Insurance Co., 43 Wis., 449; Sleeper v. Insurance Co., 56 N. H., 401; 64 Texas, 582; Brigel v. Starbuck, 34 Ohio St., 284; Woodward v. Railway Co., 10 Ohio St., 121; Shultz v. Cambridge, 38 Ohio St., 659; 39 Ohio St., 312; Myer v. Seaberger, 45 Ohio St., 234; Insurance Co. v. Webster, 7 C. C. Rep., 511; Insurance Co. v. Railway Co., 28 Ohio St., 69; Savage v. Howard, 52 N. Y., 505.
White, Johnson & McGaslin, for defendants in error.
I. The owner of the fee of unencumbered property has an insurable interest therein to the extent of its full value. If, after giving a mortgage on the property to secure a debt, on which he is personally liable, he has an insurable interest to less than the full value, then the mortgage has, changed his insurable interest. If, on the other liand, his'insurable interest does still extend to the full value of the insured premises, then it is clear the mortgage has not changed his insurable interest. Now it is well settled that the insurable interest of the owner of property mortgaged to secure a debt on which the owner is personally liable, extends to the full value of the mortgaged property, and this even though the property is mortgaged to its full value. Insurance Co. v. Stinson, 103 U. S., 25; Guest v. Insurance Co., 66 Mich., 98 ; 11 Am. & Eng. Ency., 314, note 11; 315, note 2; Higginson v. Dall, 13 Mass., 96, French v. Rogers, 16 N. H., 177 and cases cited ; Gordon v. Mass. F. M. & Ins. Co. 2 Pick., 239; Strong v. Insurance Co., 10 Pick., 40; Carpenter v. Insurance Co., 16 Pet., 495; Buffalo Steam Engine Works v. Insurance Co., 17 N. Y., 401.
We shall now proceed to cite additional authorities establishing the following three propositions :
1. The subsequent giving of a mortgage, unaccompanied by possession does not operate as a change, alteration or transfer of interest in insured property, within the meaning' of a condition in the policy prohibiting change, alteration or transfer of interest or title.
2. Nor does it operate as a change, alteration or transfer.of title in the meaning of such a condition in the policy.
3. In the' application of the last two propositions it is immaterial what is the form of the instrument, whether a deed absolute on its face, but shown by parol or written defeasance to be only a mortgage ; or a trust deed to secure a debt; or an instrument in form of a mortgage. Jecko v. Insurance Co., 7 Mo. App., 308; Judges. Insurance Co., 152 Mass., 521; Dolliver v. Insurance Co., 128 Mass., 315; Kronk v. Insurance Co., 91 Pa. St., 300; Insurance Co. v. Kelly, 32 Md., 421; Insurance Co. v. Beck, 43 Md., 358; Ellis v. Insurance Co., 32 Fed. Rep., 646; Van Dusen v. Insurance Co., 1 Robt., 55; Fernandez v. Insurance Co., 3 Robt., 457; Hitchcock v. Insurance Co., 26 N. Y., 68; Bates v. Insurance, Co., 1 Cin. Sup. Ct., 523; Insurance Co. v. Feagin Bros., 62 Ga., 515; Wood v. Insurance Co., 78 Hun., 109; Hammel v. Insurance Co., 54 Wis., 72; Grable, Trustee, v. Insurance Co., 32 Nev., 645; Taylor v. Insurance Co., 49 N. W., 994; Quarrier, Trustee, v. Insurance Co., 10 W. Va., 507; Bryan v. Insurance Co., 145 Mass., 389; 1 Biddle on Insurance, section 213 ; Barry v. Insurance Co., 110 N. Y., 1; Smith v. Insurance Co., 50 Me., 96 ; Friezen v. Insurance Co., 30 Fed. Rep., 352; S. C., 15 Ins. J., 513; Carson v. Insurance Co., 39 Am. Rep., 584; S. C., 14 Vroom, 300, Insurance Co. v. Spankneble, 52 Ill., 53; Insurance Co. v. Walsh, 54 Ill., 164; Insurance Co. v. Eddy, 55 Ill., 213; Loy v. Insurance Co., 24 Minn., 315; Hanover Insurance Co. v. Connor, 20 Bradw., 297; Insurance Co. v. Lasher Stocking Co., 66 Vt., 439; Insurance Co. v. Barwick, 36 Neb., 224; Shepherd v. Insurance Co., 38 N. H., 232 ; Byres v. Insurance Co., 35 Ohio St., 606; Insurance Co. v. Haven, 95 U. S., 242; Hill v. Cumberland, Valley Mutual Protection Co., 59 Pa. St., 474; Masters v. Insurance Co., 11 Barb., 624.
We think, therefore, it is clearly settled by the cases cited that the court was right in directing’ the jury to return a verdict for the plaintiff, so far as concerns any defense growing out of the mortgage to Rhodes.
II. "We now come to the second question, the construction of the so-called Howland law, or section 3643 of the Revised Statutes of Ohio. We may set the following well established rules govering the interpretation of statutes: “When the expression in a statute is special or particular, but the reason is general, the expression should be deemed general. ” When the words are not explicit, the intention is to be collected from the context, from the occasion and necessity of the law, from the mischief felt and the objects and the remedy in. view. Several acts in pari materia, and relating to the same subject, are to be taken together, and compared, in construction of them, because they are considered as having one object in view, and as acting upon one system. For the sure and true interpretation of all statutes, whether penal or beneficial, four things are to be considered: What was the common law before the act; what was the mischief against which the common law did not provide; what remedy the Parliament had provided for to cure the defect and the true reason of the remedy. It was held to be the duty of the judges to make such a construction as should repress the mischief and advance the remedy. 1 Kent Com., 464; Potter’s Dwarris, on Statutes, 184; 1 Black. Com., 87; 23 Am. & Eng. Ency. of Law, 414; Wilbur v. Payne, 1 Ohio, 251; Burgett v. Burgett, 1 Ohio, 469; Admx. of Tracy v. Admr. of Card, 2 Ohio St., 431; Slater v. Cave, 3 Ohio St., 85; Pollock v. Speidel, 27 Ohio St., 86; Hays v. Lewis, 28 Ohio St., 326; State v. Harmon, 31 Ohio St., 264; Gas Light Co. v. Avondale, 43 Ohio St,, 264; Cross v. Armstrong, 44 Ohio St., 613; Sawyer v. State, 45 Ohio St., 344; Houck v. State, 45 Ohio St., 439; Henry v. Trustees, 48 Ohio St., 674; Insurance Co. v. Webster, 7 O. C. C. Rep., 40; Delancy v. Insurance Co., 52 N. H., 581; White v. Insurance Co., 4 Dillon, 177; Emery v. Insurance Co., 52 Me., 322; Insurance Co. v. Curry, 13 Bush; Insurance Co. v. Rudwig, 80 Ky., 223; Wall v. Assurance Co., 32 Fed. Rep., 273; State v. Pugh, 43 Ohio St., 113; Moody v. Insurance Co., 32 W. L. B., 402; Insurance Co., v. Leslie, 47 Ohio St., 409.

Opinion:
Minshall, O. J.
1. The first question pre-1 sented arises on the second defense. The evi-j denee sustained the reply of the plaintiff to the[ effect that the instrument was simply a mortgage.!
A separate written instrument was gpven by Rhodes stating, that the conveyance was given to secure the payment of a promissory note to him, by Clark and wife, for $2,000, and his liability for them on an injunction bond; and expressly stipulated that the conveyance "was in the nature of a security " to him for the above purposes. Hence, it was simply a mortgage. It seems well settled m this state and elsewhere, that the making of a mortgage does not violate a provision in a policy of insurance, that any change in the title, interest or possession of the assured in the property, without the assent of the insurer, shall avoid the policy.
The mortgag'e being- simply a security for the debt, is extinguished by its payment without any re-conveyance. The mortgage of itself does not make the mortgagee a freeholder, and a judgment recovered against him does not become a lien on the land, nor is it liable to the dower-rights of his wife. It has none of the incidents of a legal or equitable title. True, upon foreclosure and sale, the mortgagee may by purchase at the sale become the owner of the land; but this is a right he enjoys in common with all others. It is also true, that as between the mortgagor and mortgagee, the latter, on condition broken, is regarded as the legal, but not as the equitable owner. The mortgagor remains the equitable owner until the property is sold under the order of the court. Until then he may, by paying the debt, redeem the land. So that his insurable interest in the property remains the same — which is the interest meant by the use of the word in the language of the policy, where it occurs. If lost by fire he remains liable on the debt, and has, by reason of the loss, so much the less property with which to pay it. Hence, he has the same interest in its preservation after as before, making the mortgage; and the moral hazard of the insurer is not increased. Byers v. Insurance Co., 35 Ohio St., 606; Kronk v. Insurance Co., 91 Pa. St., 300; Insurance Co. v. Stinson, 103 U. S., 25, 29; Barry v. Insurance Co., 110 N. Y., 1; Judge v. Insurance Co., 132 Mass., 521; Bryan v. Insurance Co., 145 Mass., 389; Insurance Co. v. Spankneble, 52 Ill., 53; Insurance Co. v. Lawrence, 2 Peters Rep. 25; Jecko v. Insurance Co., 7 Mo. App., 308; Guest v. Insurance Co., 66 Mich., 98; May on Insurance, see. 272.
The general current of authority is in accordance with these cases; and while a different view has been taken by the courts of some of the states, it will be found that, as a rule, this has proceeded from the old conception that a mortgage is to be regarded as a conveyance; or from a more rigid adherence to the terms of the policy, in disregard of the rule that provisions imposing forfeitures should be strictly construed.
In giving effect to the language of any instrument, regard must be had to its purpose: A mere change in title, where the owner retains the same actual interest in the property — the same insurable interest — is not within the reason of the language employed. The object of the provision containing the language was to protect the insurer against a possible change in the owner's insurable interest in the property by a sale, transfer or conveyance, whereby the hazards of the contract into which he had entered might be increased without his consent. Hence, the generality of the language employed must be restrained to the reason and object of its use by the parties. To do otherwise would be to stick in the letter of the language employed by the parties to express their meaning, without regard to its. spirit. May on Insurance, sec. 273; Ayres v. Insurance Co., 17 Iowa, 176, 185.
Hence, so far as the second defense is concerned, the undisputed evidence shows that there was no error in the court directing a verdict for the plaintiff. The execution of the conveyance being simply a mortgage, did not affect the title nor interest of the mortgagor in the property, Barry v. Insurance Co., supra, and whether made with or without the consent of the company, is immaterial.
2. The principal question in the case arises upon the third defense — the taking' of additional insurance without the consent of the company. There was evidence tending to show that there was no consent; so that the correctness of the ruling cannot be affirmed, unless, as a matter of law, it was immaterial. _ And this, upon a construction given to section 3643, Revised Statutes, is what is claimed. It is not claimed but that before the statute, the facts stated would have constituted a defense to any recovery on the policy, but it is claimed that under this statute, the taking of additional insur anee -without the consent of the company, 'does not avoid the policy, unless it is averred and shown that it increased the risk. The court is of a different opinion, and think that the statute has no application to the case. It reads as follows :
"Section 3643. Any person, company, or association, hereafter insuring any building or structure against loss or damage by fire or lightning, by renewal of a policy heretofore issued, or otherwise, shall cause such building or structure to be-examined by an agent of the insurer, and a full description thereof to be made, and the insurable value thereof to be fixed by such agent; in the absence of any change increasing the risk without the consent of the insurers, and also of any intentional fraud on the part of the insured, in ease of total loss, the whole amount mentioned in the policy or renewal upon which the insurer receives a premium shall be paid, and in case of a partial loss the full amount of the partial loss shall be paid; and in case there are two or more policies upon the property, each policy shall contribute to the payment of the whole or the partial loss in proportion to the amount of the insurance mentioned in each policy; but in no case shall the insurer be required to pay more than the amount mentioned in its policy." This section has been considered by this court in a number of cases. Insurance Co. v. Leslie, 47. Ohio St., 413; Moody v. Insurance Co., 52 Ohio St., 12. It is not our purpose to question the soundness of either of these cases, when limited and applied to its facts. A careful reading of the statute will disclose, as we think, a simple purpose on the part of the legislature to limit it to such matters connected with the physical condition of .the property — its - value, structure and surround ings, as might have been discovered in the examination required to be made by the agent of the company, on an application by the owner for insurance, and not to include or extend to things that would require an examination of records, or anything else outside of the physical condition and situation of the property; certainly not, to a knowledge of things that then had no existence, and could not be divined from anything the examination required to be made by the agent, might disclose. As stated in the syllabus of Insurance Co. v. Leslie, it is "a condition or situation of the property at the time of the insurance which the examination the agent is required by the statute to make, should have reasonably discovered," that will not defeat a recovery on the policy. In other words, no exception can be taken by the company to anything within the purview of the examination, after issuing the policy; and if any change takes place in the condition of the property, increasing the risk, it must be set up as a defense by the company.
The construction claimed for the statute by the defendant in error, is placed upon the generality of the words in the clause of the statute following that which directs the making of an examination by the agent of the company. This examination relates only to the physical condition of the property, and, therefore, by the ordinary rules of construction, the general languageimmediately following, should be limited to a change in such things as come within the purpose of the examination. So interpreted, they can mean no more than that, in the absence of any change in the physical condition of the property increasing the risk, the full amount of the insurance shall be paid, in case of a total loss. If it had been intended to enlarge the meaning so as to embrace other matters made material by the terms of the policy, more apt words could and, as we think, would have been used. The language would have been so introduced as not to be naturally restrained by the context to a more limited meaning-. Confining the meaning' of the language "in the absence of any chang'eincreasing the risk" to what precedes, gives effect to all that is claimed as the purpose of the legislature in enacting' the statute — the prevention of the evils connected with over insurance, by making companies liable for the full amount insured, after issuing a policy therefor and receiving premiums proportioned to the valuation of the property, made by their agents on an examination of the premises.
As confirming this view as to the construction of the statute, it is difficult to see how an issue of fact could be taken and tried on the question, whether the taking' of additional insurance, in a given case, did, or did not increase the risk. The fact must generally be the same in all cases, and therefore becomes a question of law, and cannot be changed by averment. Its importance to the insurer, and the reason for the insertion of a stipulation against additional insurance without his consent, is, doubtless, based upon the generally observed fact, that the care of an owner for the preservation of his property is in direct proportion to his interest in it. Therefore, an insurer having stipulated for protection against a lessening of the owner's interest in the property insured, without his consent, may he, in a particular case, be deprived of the benefit of the stipulation by an averment, that the plaintiff differs'from men in general, and would take the same care of his property whether his interest in it is much or little? Without stopping to inquire whether the legislature might establish such a ground of defense, the absurdity of such an issue is good reason for saying, that such an intention cannot be inferred from the mere generality of the words used in this section of the statutes. It would involve an inquiry somewhat novel in courts. The reception of evidence to prove that a man is as good as his fellows in general, is not unusual, but, to prove that he is better and more to be trusted, is seldom if ever gone into. It would be difficult, if not impossible, for a jury to return a'verdict after the most exhaustive inquiry. As a rule, sel- fishness is at the bottpm of all human conduct. If you would know what a man would be likely to do in a given case, learn what it is to his interest to do. In the absence of any interest, he is likely to do nothing.
The conclusions reached do not trench upon what was decided in either of the preceding cases. In Insurance Co. v. Leslie the answer averred that the property was unoccupied at the issuing of the policy, which was contrary to the representation of the insured. The fact that it was vacant could readily have been discovered by an examination; and the court held that there was no fraud in the representation if made; for if the examination required by the statute had been made, the fact that it was not occupied would have appeared. In Moody v. Insurance Co., it was averred that the property became vacant after the issuance of the policy without the consent of the company, but the answer did not aver that it increased the risk. Occupancy in any case may be determined by an examination of the property. It is a physical fact open to view; and so within the general language of the statute when restrained to the meaning disclosed by its context. A change in this regard does not, by the statute, invalidate the policy unless it increase the risk, which must be averred, and proved if denied. This is what, as we understand it was decided on the subject before us, in the case just referred to.
Judgment reversed, and cause remanded for a new trial.