Case Name: Washington Insurance Company v. William H. Hayes
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1867-12
Citations: 17 Ohio St. 432
Docket Number: 
Parties: Washington Insurance Company v. William H. Hayes.
Judges: White, Welch, Brinkerhoee, and Scott, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 17
Pages: 398–404

Head Matter:
Washington Insurance Company v. William H. Hayes.
Where a fire insurance policy contains a provision, that, if another insurance shall be made on the property thereby insured, not consented to in writing thereon, or if the property shall be sold, the policy shall be void : Meld — •
1. That if the property so insured, was, at the time the policy was made, under a mortgage, and the policy, with the assent of the company making the same, was assigned to the mortgagee, the delivery of the possession and control of the property to the mortgagee subsequent to the date of the policy, is not such a sale as will invalidate the policy.
2. That if a stock of goods insured by such policy be removed to another place and merged in another stock of goods insured in other companies by policies covering accruing stocks, such policies will include the goods of the former stock, and such new insurance thereon will invalidate the former policy, unless it be effected by consent, in accordance with the terms of the policy.
Error to tbe court of common pleas of Cuyaboga county. Ee•served in tbe district court.
Edward Pbinney owned a store and stock of goods at Sbaron, Medina county, Obio, and on September 24, 1859, obtained an inrance on tbem for one year, in tbe Manhattan Insurance Company, for $2,000, and in tbe Humboldt Insurance Company for tbe same sum.
January 9,1860, Phinney gave to Palmer & Wallace, as assignees, a chattel• mortgage on the Sharon stock of goods, and also upon another stock of goods he owned in a store at Ghent, Summit county, Ohio; and on the same day assigned to them the Manhattan policy; also, on the 17th day of the same month, he assigned to them the Humboldt policy, both as collateral security.
On said 9th day of January, Phinney gave to William H. Hayes a chattel mortgage on both of said stocks of goods.
^January 20, 1860, Phinney obtained an insurance on the stock of Goods at Ghent, in the Washington Insurance Company of New York, for $1,500, in which policy was the following provision :
“And provided further, that if any other insurance has been or •shall hereafter be made upon the said property not consented to in writing herein, or if the said property shall be sold or conveyed, • • • in every such case this policy shall be null and void.”
January 28, 1860, Phinney assigned the Washington company policy to Hayes, with the assent of the company’s agent.
In the following February, all the goods in both stocks were delivered over to the mortgagees; and their agent, R. Hilliard, took the sole custody and possession of them.
March 2,1860, the goods in the store at Ghent were removed to the store at Sharon, under a written permission of the Washington company, as follows: “ Permission given for the removal of the within-described stock of goods, to the amount of $1,500, to the ■one and a half story building at Sharon Centre.”
The stock at Sharon was the same kind and quality as the goods taken from Ghent, and both stocks were mixed together, treated as one stock, and sold from, indiscriminately, until May 7,1860, when the store at Sharon, and nearly all the goods remaining therein, were destroyed by fire.
Preliminary proofs of the loss were made, but the company refused to pay therefor, and a suit was brought in the common -pleas of Cuyahoga county, and judgment rendered against the company.
A bill of exceptions was taken, from which the foregoing facts appear, together with others stated, so far as material, in the opinion of the court.
A petition in error was filed by the company in the district court, where the case was reserved for decision in this court.
M. S. Keith, for plaintiff in error:
1. I do not claim that where the assured simply mortgages the property, it is such an alienation or conveyance as to render *the policy void; but I do claim that where the assured, the person with whom the company contracted, not only mortgages the property, but delivers to a stranger the possession and exclusive •care and control of it, he does all that a person can do to effect a sale.
The nature of a contract of insurance is such that the insurer-must rely, in a considerable degree, upon the character of the assured, and upon his prudence and care in the management of his-property. If the assured can mortgage and part with the entire possession and control of the property to whom he pleases, he can thus introduce any stranger to the contract, whether as prudent and careful a man as he or not. He may thus put it in the possession and care of a man in whose hands the insurer would not insure at any rate of insurance.
I claim, therefore, that the plaintiff’s policy was void by reason of his alienation. Ang. on Ins. 233, see. 197; 237, sec. 202; 239, sec. 204; Gilbert v. Phœnix Ins. Co., 36 Barb. 372; Western Ins. Co. v. Ricker, 10 Mich. 279; Indiana Mutual Fire Ins. Co. v. Coquillard, 2 Carter, 645; Indiana Mutual Fire Ins. Co. v. McCullough, 8 Blackf. 50; Dreber v. Ætna Ins. Co., 18 Mo. 128.
2. I think it will not be denied that the Humboldt and Manhattan policies covered all accruing stock at the Sharon store during the year they were in force. I claim the goods removed from Ghent to Sharon, and mixed with the Sharon stock, were accruing-stock at Sharon, and the moment they went into the Sharon store and were mixed with the Sharon stock, they became insured by the Humboldt and Manhattan companies.
Suppose the Ghent stock had not been insured at all, and while not insured had been transferred from the Ghent to the Sharon store and mixed with the Sharon stock, as these were, precisely the-same as goods brought from New York or any other place: in such case it wouíd not be denied that the Humboldt and Manhattan policies seized upon and insured them as accruing stock at Sharon.
In what respect, then, is it changed by the fact that the Ghent stock was previously insured in the plaintiff’s company.
This, I claim, was a double insurance, and made the plaintiff’s-policy void.
*The permission to remove the Ghent stock was to remove it to the one and a half story building at Sharon. No permission, was given to mix it with another stock; nor is there any evidence-to show that plaintiff knew it was to be so mixed, or that there was any other stock there, or that the Humbolt and Manhattan policies were in existence, or that the possession and control of the goods were to be changed.
Prentiss & Baldwin, for defendant in error:
As to the refusals to charge the jury as requested—
1. The first request is based on the idea that “transferring the possession and control ” of property subject to a chattel mortgage to the mortgagee is an ’■‘•alienation” which “renders the policy void.” The mortgages were on this property when this policy was made. The provision, and the only one relating to alienation in the policy is, “ if the property shall be sold and conveyed.” The plaintiff made this policy with a perfect understanding as to the situation of the title to the property, and put on the policy a consent to the assignment of it to defendant, and on the same page is-the assignment itself, long before the removal of the goods or the-fire. There has been n,o “ sale and conveyance ” since. Nothing: that savors of alienation. Unless the plaintiff can maintain the proposition that a mortgagee holding a mortgage with the consent of the insurer, and an assignment of the policy with like consent, afterward being vested with the possession and control, is of itself a sale and conveyance, the common pleas were most clearly right in refusing the request.
2. The idea contained in the second request is, that because the Ghent stock was, by permission of the insurer, removed to the Sharon store, it must have become merged in the Sharon stock, and so lost its identity, and ceased to be the property insured. “ It is a. poor rule that will not work both ways.” In this new application of the recondite doctrine of merger, as the larger interest drowns-. the lesser, the Sharon stock must have become merged in the Ghent. The policies, doubtless, covered a changing stock, that is, one that changed in the natural course of business by ordinary addition or diminution, by purchases and sales. That was Uot this case. Here were *two old stocks put together, separately insured. The separate insurances on the respective old stocks remained, and were not affected at all by the change of location of one; and in giving permission for this change, the plaintiff in effect said this. Stacey v. Franklin Insurance Company, 2 Watts & Serg. 506, 547.

Opinion:
Day, C. J.
The principal questions presented for our consideration in this case arise upon exceptions taken to the refusal of the court to charge the jury as requested by the plaintiff in error.
One proposition that the court refused to give in its instructions to the jury was as follows: " That if, from the evidence, the jury find that Edward Phinney, while the owner of the Ghent stock, mortgaged it to any person, and, subsequent to the date of the policy made by the Washington Insurance Company on the Ghent stock, transferred the possession and control of the same to the mortgagees, it was such an alienation of the stock as rendered the policy issued by said company thereon void, under the stipulations therein contained."
This proposition is consistent with the facts in the case, that the policy was made subsequent to the mortgage, and that the goods were delivered, pursuant to the mortgage, after the date of the policy. The delivery of the possession of the stock to the mortgagee upon a mortgage made before the insurance was effected, would not literally come within the stipulation contained in the policy, that, if the propei'ty "shall be sold and conveyed," the policy shall bo void. It is to be presumed that the company knew that the property had then been conditionally sold, when the policy containing .a provision against future alienation was made.
The question made by the proposition was, whether the policy was invalidated by the surrender of the possession of the goods after the insurance was procured, upon a conveyance thereof executed previous to the insurance. As applicable to this case, in the light of the facts exhibited by the bill of exceptions, it is apparent that this was the real question made.
It appears that the policy was rhade subsequent to the *mortgage; that the policy was assigned to the mortgagee with the assent of the company; and that after the goods were delivered to the mortgagee, the company gave written permission for their removal from Ghent to Sharon, where they were burned. In a case like this, we think the court might well hold, that the transfer of the possession and control of the stock to the mortgagee was not, of itself, such a sale and conveyance of the property as would in validate the policy. There was, therefore, no error in refusing to charge the jury as requested in the foregoing proposition.
The plaintiff in error further asked the court to charge the jury: " That if, from the evidence, the jury find that the stock of goods in the Sharon store was insured by policies of insurance binding and valid at the time the Ghent stock was removed to the Sharon store, and expiring at a future date, and that the Ghent stock was merged with the Sharon stock and both sold from promiscuously, said insurance would cover the Ghent stock after it was so merged; and if the defendant had no notice, it would render its policy on the Ghent stock void."
It is conceded that each of the policies procured by Phinney p'overed all such changes as the stock underwent in the natural course of business by ordinary purchases and sales. It is claimed, however, that the bringing together two old stocks would not come within the rule. This precise point is decided adversely to the defendant in error, in the case of Walton v. The Louisiana Ins. Co., 2 Rob. 563.
The evidence showed that when the Ghent stock of goods was removed to the Sharon store, they were put upon the shelves and mixed with the Sharon stock, and, from that time, the goods were sold promiscuously and treated as one stock. It is difficult to see why the goods removed from Ghent and mixed with the Sharon stock, were not accruing stock at the Sharon store the same as other goods brought there for sale from New York or any other place. If they were such accruing stock, they were undoubtedly embraced in the Humboldt and Manhattan policies, insuring the Sharon stock.
It does not appear that the Washington Insurance Company *was notified that the Sharon stock was insured in another company, nor that it in any manner consented that the Ghent stock should be covered by an insurance in another company.
The policy on which the action was brought contained a prolusion " that if any other insurance has been or shall hereafter be made upon the said property not consented to in writing herein, • • • i this policy shall be null and void."
It would seem to be clear, therefore, that if the stock of goods insured by the plaintiff in error were removed to and merged in the other stock while it was insured in other companies, the insurance on the latter stock would cover the goods in the other; and that if such insurance was affected without the assent of the-plaintiff in error, its policy, by the terms thereof, was void.
Hut this is substantially what the plaintiff in error asked the-court to charge the jury. We think, therefore, that the court erred in refusing this request of the plaintiff in error.
It is unnecessary to notice the remaining propositions that the court refused to -give to the jury as requested by the plaintiff in. error, for the reason that they are made to depend so much on the-two we have considered, it does not seem to be essential.
As to the error alleged in overruling the demurrer to the petition, it only need be said here, that we think the demurrer was-properly overruled; but, as the questions involved arose chiefly upon the construction to be given to the facts stated in the petition, or were such as were cured by the pleading of the plaintiff' in error, a more extended report is not deemed necessary.
Judgment reversed, and cause remanded.
White, Welch, Brinkerhoee, and Scott, JJ., concurred.