Court Opinion

ID: 6965306
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:46.302758+00
Date Added: 2024-06-11T16:08:35.269781
License: Public Domain

Subsequently, upon an application for a rehearing, the following supplemental opinion was filed: Wilkin, J.: Since filing the foregoing opinion, upon consideration of a petition on behalf of appellant for a rehearing, we have thought it proper to again examine the question as to whether the sale and conveyance by the United States Mortgage Company to Bees, and the deed to Babcock by the latter, so changed the title to the insured property as to exonerate appellant from liability under the condition in its policy against alienation; and for that purpose this rehearing was allowed. It is insisted that, in holding The Commercial Union Assurance Company v. Scammon, 126 Ill. 355, decisive of the foregoing question, proper regard is not paid to the distinction between clauses in policies of insurance, against a mere change of interest, and those which forbid any alienation, change or transfer of title. That there is a well defined distinction between the two classes of alienation clauses no one will deny, and it is further conceded that those against change of title are generally held to be the stronger of the two. See note to Morrison, Adm'r, v. Ins. Co., 59 Am. Dec. 304. The first branch of the opinion in The Commercial Union Assurance case undoubtedly proceeds upon the theory that the policy then in suit only prohibited a change of interest, but it was also there insisted, as it is here, that that policy forbade any change of title, and, therefore, the insurance had ceased before the loss occurred; and so the last branch of that opinion deals with the question of change of title, and not merely change of interest. We there distinctly held that the rule contended for by counsel for the appellant, based on the authority of Flanders on Fire Insurance, 406, and Wood on Fire Insurance, sec. 513, was inapplicable where the sale, though only voidable, was made without the consent of the owner, he continuing in possession of the insured property and asserting his title thereto until he obtained a decree of court avoiding the sale. This we can make no clearer than is done by the foregoing opinion of Justice Baker. Hence we have found it necessary, in deciding this case, to address ourselves to a reconsideration of the decision in that, and having done so, feel reassured of the correctness of the conclusion there announced. Although the sale in question was only voidable in its inception, still, when it was set aside by the decree of a court of competent jurisdiction, at the instance of the insured, it became void. Bishop in his work on Contracts, sec. 611, says: “ A contract is void when it is without any legal effect, voidable when it has some effect, but is liable to be made void by one of the parties or a third person.” These definitions are applicable to sales or other acts which may be void or voidable, as well as to contracts, and applied to this case, the sale and deeds to Bees and Babcock, which were voidable at the instance of Scammon, became absolutely void as to him when set aside. It becomes important then, under the contention of appellant’s counsel, to determine at what date they shall be deemed to have become void, because from that time forward Scammon’s title was as complete as though no sale or conveyances had been made; and it is well settled that, although he may have been temporarily divested of his title, still, if he had regained it at the time the loss occurred, there was no breach of the condition prohibiting a change of title which would defeat the insurance. Lane v. Maine Mire Ins. Co., 12 Me. 44 (28 Am. Dec. 150). The rule laid down by Mr. Wood, to the effect that a sale which “is merely voidable is an alienation that defeats a recovery for a loss occurring before the sale has been set aside,” seems to proceed upon the theory that such a sale, as between the insurer and insured, must be deemed valid to the date of the decree declaring it void. Certainly, that theory is not correct when applied to an involuntary sale like the one here relied upon by appellant. If it is, the insurance company can take advantage of the illegal act of a third party, to avoid its liability, when the insured has been guilty of no wrong or negligence whatever. In view of the decree setting the sale aside, Scammon must be held to have acted with proper diligence in asserting his right to avoid the illegal and voidable act of the mortgage company in its attempt to deprive him of his property; and to say that, because that property was destroyed before he could succeed in obtaining his decree, therefore. appellant shall be relieved from all liability on its policy, would be unjust and unreasonable in the extreme. Suppose that sale did enable Babcock to get other insurance, and that one of the objects in inserting the clause against change of title was to prevent the obtaining of other insurance, Scammon was in no way to blame for that result. He did all the law required him to do, to have the illegal title declared void. It was not his fault that in the meantime other insurance was obtained. Suppose the loss had occurred immediately after the sale, would it have been contended that the rule above quoted from Wood could have been invoked to defeat the insurance ? We entertain no doubt that, as between these parties, said sale and conveyances, upon the decree setting them aside, became void from the beginning, and left Scammon’s title as absolute, at the time of the loss, as though no sale had been made. But, even if it could be said that the sale should be treated as a transaction to which Scammon was a party, in the nature of a voidable agreement between parties, we think the voidable title became void, as of a date prior to the loss here sued for. In Bispham’s Principles of Equity, sec. 472, it is said : “ A transaction which is capable of being rescinded, on the ground of fraud, is to be treated as good until rescinded, and not as bad until confirmed.” The author then goes on to say : “Mr. Willish, in his argument in Oaks v. Turquand, before the House of Lords, put the following inquiry: ‘ When you say that an agreement is voidable and not void, and when the complainant endeavors to insist upon his right to treat it as void, is the agreement to be taken as valid until rescinded, or when rescinded, to be taken to have been void from the first ? ’ And this inquiry was answered by the tribunal to which it was addressed, to the effect that the agreement was to be taken as subsisting until rescinded; but with this important qualification, that it was not to be considered as rescinded only as of the date of the decree of the court setting the transaction aside, but as of the date of the unequivocal, open declaration of the injured party, that he demanded a rescission, followed, upon refusal, by a prompt application to the courts.” Before the fire Scammon informed Babcock that his claim of title to the insured premises was illegal, and would not be recognized by him, and he also notified both Babcock and his attorney that he would take steps to set aside said title. He remained in possession of the property, in defiance of Babcock’s claim of ownership, until he succeeded in obtaining a decree sustaining his claim, and overthrowing that of Babcock. The latter’s title then at most became void from the time of these open and unequivocal declarations and acts of the insured. Especially is the fact that the insured remained in possession of the insured property until after the loss, claiming title thereto, an important element in the case, in determining when the voidable sale should be treated as becoming, void, between the parties to this suit. There is no view of the question under consideration consistent with reason and justice, which will permit appellant to take advantage of that illegal and unauthorized sale, to avoid liability upon its contract of insurance. Being satisfied that all other questions raised on this record were properly disposed of on the former hearing, the judgment of the Appellate Court will again be affirmed. Judgment affirmed*    The Commercial Union Assurance Company v. Arianna E. Scammon. Appeal from the Appellate Court for the First District. Per Curiam: The conditions in the policy on which this action was brought are identical with those in the one sued on in Commercial Union Assurance Co. v. Scammon, 126 III. 355. The substantial grounds upon which a reversal of the judgment below is urged upon this record were considered and decided adversely to the contention of counsel for appellant in the above-mentioned case, and that of Niagara Fire Ins. Co. v. Arianna E. Scammon, Ex., in which a final opinion has been filed at the present term. On the authority of those cases the judgment of the Appellate Court will be affirmed. Judgment affirmed.