Court Opinion

ID: 9643216
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:22:29.136972+00
Date Added: 2024-06-11T18:10:57.413658
License: Public Domain

RUDKIN, Circuit Judge
(after stating the facts as above).  The power of the court below to withdraw the ease'from the jury and enter judgments on the merits in favor of the defendants in error is the first question discussed by counsel. That no such power exists in a federal court is, we think, settled by the decision of the Supreme Court in Slocum v. New York Life Ins. Co., 228 U. S. 364, 33 Sup. Ct. 523, 57 L. Ed. 879, Ann. Cas. 1914D, 1029. But it does not follow from this- that the judgments should be reversed.
Section 408, 1 Rem. Comp. Stat. of Wash. 1922, provides:
“An action may be dismissed, or a judgment of nonsuit entered, in the following cases:
“ * * * 8. By the court, upon motion of the defendant, when, upon the trial, the plaintiff fails to prove a sufficient cause for the jury.”
This section establishes a practice or mode of procedure which the federal courts are required to follow under the Conformity Act' (Comp. St. § 1537). Central Transp. Co. v. Pullman’s Palace Car Co., 139 U. S. 24-38, 11 Sup. Ct. 478, 35 L. Ed. 55; Coughran v. Bigelow, 164 U. S. 301, 17 Sup. Ct. 117, 41 L. Ed. 442. It was therefore the duty of the court below to dismiss the actions or enter judgments of nonsuit, if, upon the trial, the plaintiffs in error failed to prove a cause sufficient for the jury) and if proper orders were not prepared or submitted , to the court it was the plain duty of the plaintiffs in error to raise the objection at that time, instead of approving the judgments or orders as to form. Furthermore, no motion to modify the judgments was made in the court below, the plaintiffs in error insisting at all times that the ease should have gone to the jury upon the facts. For these reasons we are of opinion that the plaintiffs in error are now estopped to question the form of the judgments, but no harm can result from their modification to conform to the- correct practice in such cases. What, if any, benefit the plaintiffs in error can derive from the modification we need not inquire.
It is next contended that the defendants in error are estopped to’claim a forfeiture because of the foreclosure proceedings. This contention is based upon several grounds:
(1) Because the defendants in error had knowledge of the execution of the mortgage, and that it was subject to foreclosure, at the time of the issuance of the policies, and also had knowledge of the commencement of the foreclosure proceedings, after the same were commenced.
(2) That the plaintiffs in error had no such knowledge at or before the foreclosure proceedings were commenced.
(3) That the mortgage clauses or riders authorized the foreclosure, and the defendants in error are therefore estopped to claim a forfeiture by reason thereof.
(4) That the plaintiffs in error made proofs of loss and incurred expenses by reason of the examination held and conducted by the adjuster.
We will consider these several contentions in the order named. But, before considering them, it might be well to state that there is nothing new or peculiar about a contract of insurance. As said by the Supreme Court in Imperial Fire Ins. Co. v. Coos *907County, 151 U. S. 452, 14 Sup. Ct. 379, 38 L. Ed. 231:
“The terms of the policy constitute the measure of the insurer’s liability, and, in order to recover, the assured must show himself within those terms, and if it appears that the contract has been terminated by the violation on the part of the assured of its conditions, then there caá he no right of recovery. The compliance of the assured with the terms of the contract is a condition precedent to the right of recovery. If the assured has violated or failed, to perform the conditions of the contract, and such violation or want of performance has not been waived by the insurer, then the assured cannot recover. It is immaterial to consider the reasons for the conditions or provisions on which the contract in made to terminate, or any other provision of the policy which has been accepted and agreed upon. It is enough that the parties have made certain terms, conditions on which their contract shall continue or terminate. The courts may not make a contract for the parties. Their function and duty consist simply in enforcing and carrying out the one actually made. * * *
“It is entirely competent for the parties to stipulate, as they did in this case, ‘that this policy should be void and of no effect, if, without notice to the company, and permission therefor indorsed hereon, * * * the premises shall be used or occupied so as to increase the risk, or cease to he used or occupied for the purposes stated herein, * * * or the risk be increased by any means within the knowledge or control of the assured. * * * ’ These provisions are not unreasonable. * * * These terms and conditions of the policy present no ambiguity whatever. The several conditions are separate and distinct, and wholly independent of each other.”
It is universally recognized in insurance law that to lessen the interest of the insured in the subject of the insurance is to increase the hazard; that the hazard is increased by a mortgage of the property insured, and still further increased by the commencement of proceedings to f'oi'eclose. The right of insurance companies to protect themselves against any of those contingencies by contract is everywhere recognized, and it is the plain duty of the courts to enforce the contract as made.
The fact that the defendants in error had notice of the existence of the mortgage, or that it was subject to foreclosure, or that foreclosure proceedings had actually been commenced, constituted no defense to the actions. Thus, in Kentucky Vermillion M. & C. Co. v. Norwich U. F. Ins. Soc., 146 Fed. 695, 77 C. C. A. 121, the policy provided that it should become void, if the property insured remained idle for more than 30 days at any one time, unless the insured gave notice to the company and obtained permission to leave it idle for a longer period, by having the extension indorsed on the policy. The plaintiff offered to prove at the trial that the company had notice and knowledge that the property was idle during the life of the policy, hut this court held that such proof was of no avail; that a waiver could not be inferred from mere silence or inaction on the part of the insured; and that it might wait until a claim was made under the policy and then claim a forfeiture by way of defense. See, also, Moller v. Niagara Fire Ins. Co., 54 Wash. 439, 103 Pac. 449, 24 L. R. A. (N. S.) 807, 132 Am. St. Rep. 1115. The plaintiffs in error had notice of the foreclosure proceedings long before the property was damaged or destroyed, and it was not incumbent upon the defendants in error to prove that they had such notice at or before the time the foreclosure proceedings were actually commenced. Delaware Ins. Co. v. Greer, 120 Fed. 916, 57 C. C. A. 188, 61 L. R. A. 137.
The riders or mortgage clauses created new and independent contracts between the insurance companies and the mortgagee. By such contracts the companies waived the stipulation against foreclosure in favor of the mortgagee only. There was no change or modification of the contracts as to the mortgagors, and no waiver, and we are at a loss to know why the waiver in favor of the mortgagee should now inure to the benefit of the mortgagors, or create an estoppel in their 'favor. As said by the court in Syndicate Ins. Co. v. Bohn, 65 Fed. 165, 178, 12 C. C. A. 531, 546 (27 L. R. A. 614):
“Our conclusion is that the effect of the union mortgage clause, when attached to a policy of insurance running to the mortgagor, is to make a new and separate contract between the mortgagee and the insurance company, and to effect a separate insurance of the interest of the mortgagee, dependent for its validity solely upon the course of action of the insurance company and the mortgagee, and unaffected by any act or neglect of the mortgagor, of which the mortgagee is ignorant, whether such act or neglect was done or permitted prior or subsequent to the issue of the mortgage clause.”
*908In that case actions on the policy were brought by both the mortgagor and the mortgagee. The judgment in favor of the mortgagee was affirmed, but the judgment in favor of the mortgagor was reversed. See, also, Hastings v. Westchester Fire Ins. Co., 73 N. Y. 141; Reed v. Firemen’s Ins. Co., 81 N. J. Law, 523, 80 Atl. 462, 35 L. R. A. (N. S.) 343; Glen Falls Ins. Co. v. Porter, 44 Fla. 568, 33 South. 473; Bacot v. Phenix Ins. Co., 96 Miss. 223, 50 South. 729, 25 L. R. A. (N. S.) 1226, Ann. Cas. 1912B, 262; and Allen v. Watertown Ins. Co., 132 Mass. 480.
The claim that defendants in error are estopped because the plaintiffs in error furnished proofs of loss and incurred expense in attending the examination conducted by the adjuster is without merit. The proofs of loss were furnished voluntarily, and the parties expressly stipulated in the policies and by later agreement that there should be no waiver or forfeiture by any requirement, act, or proceeding on the part of the insurance companies relating to the appraisal, or any examination provided for in the contract. That this agreement was valid, see Manheim v. Standard Fire Ins. Co., 84 Wash. 16, 145 Pac. 992.
It is lastly contended that the clause maldng the commencement of foreclosure proceedings ground for forfeiture is against public poEey and void, because the plaintiffs in error thereby bargained away in advance the right to resort to the courts for the protection of their rights. There is no merit in this contention. The foreclosure proceeding was one of the contingencies upon which the policies should terminate and become void, and the right of the companies to so stipulate is not only recognized, but is expressly authorized by law. Such a stipulation does not offend against any rule of public poEey.
Upon full consideration we find no error in the record, except in the form of the judgments rendered. These will be so modified as to dismiss the actions without prejudice. As thus modified, the judgments are affirmed.