Court Opinion

ID: 3404307
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:17:42.547429+00
Date Added: 2024-06-11T13:44:32.355393
License: Public Domain

I concur in the judgment of affirmance, and in all except what is contained in paragraph 1 of the opinion. I concur in the conclusion that the policy was not voided because of the existence of an incumbrance of $58 on one of the many articles of personal property claimed to be covered by the policy.
While it is provided in the policy that the entire policy shall be void "if the interest of the insured be other than unconditional and sole ownership," and while it has been held by the Supreme Court, in answer to a certified question in this case that under this clause the entire policy is void if the insured does not hold title to "a part of the property insured," it is provided in another provision of the policy, which the Supreme Court did not have in mind when it answered this question, that "Unless otherwise provided by agreement in writing added hereto this company shall not be liable for loss or damage to any property insured hereunder while incumbered by a chattel mortgage and during the time of such incumbrance this company shall be liable only for loss or damage to any other property insured hereunder."
The Supreme Court, in answer to the certified questions, did not hold in either answer that the so-called conditional bill of sale, or retention-of-title contract, or chattel mortgage, in this case constituted a violation of the "unconditional and sole-ownership" clause of the policy. The Supreme Court merely held that this policy constituted an entire contract; and that if the sole and unconditional ownership clause was violated as to a specific piece of property insured under the contract, the entire policy was void.
Both of the clauses of the policy above referred to must be construed together and as qualifying each other. While one clause *Page 195 
provides that if the interest of the insured be other than "unconditional and sole ownership," which properly construed means that if the interest of the insured in the property covered or insured by the policy is otherwise than unconditional and sole ownership, the "entire" policy, meaning the policy as covering all the property, is void, the other clause of the policy lifts from its coverage any "property insured hereunder while incumbered by a chattel mortgage." Construing these two clauses together, they mean that the property which is incumbered by a chattel mortgage is not insured or covered by the policy, but that only property not so incumbered, if described as insured in the policy, is "covered." Of course the first clause which provides for a voidance of the policy if the interest of the insured be other than "unconditional and sole ownership," means the interest of the insured in property insured under the policy. If a part of the property, otherwise insured, is lifted from the coverage of the policy because such property is incumbered with a chattel mortgage, such property is not insured under the policy, and this incumbrance on the property can not render the entire policy void.
The particular instrument which it is contended is an incumbrance on a portion of the property mentioned in the policy purports on its face to have been executed on September 3, 1937, in the County of Fulton, State of Georgia, and is signed by "Georgia Tire  Rubber Co., by A. J. Stuart, 800 DeKalb Ave., Atlanta, Ga." It appears from this instrument that the person executing it purchased from "Chandler Machinery Company" certain personal property described therein, the same being an air compressor, motor, and other personal property. The instrument recites the receipt of the property by the purchaser; that the purchaser has contracted to buy the property for a recited purchase price; that a portion of the purchase price has been paid; that the purchaser has executed described monthly notes payable to the Chandler Machinery Company. The instrument further provides that the title to the property shall remain in the seller, Chandler Machinery Company, until the notes or any renewals thereof are paid; that if the property is lost, damaged, or destroyed, the purchaser shall not be entitled to an abatement of the purchase price; that, on default in the payment of any one of the notes referred to, the other notes, at the seller's option, shall become due and "collectible;" that the *Page 196 
seller may, on a failure of the purchaser to make any payment due under the contract, enter on the premises where the property is located and repossess the property, and shall retain as rent and liquidated damages any money which may have already been paid by the purchaser under the terms of the contract, but that this right to repossess the property on the condition named shall not "interfere with any other remedy at law which the said Chandler Machinery Company may have, but to be cumulative only."
Whatever may be the character of this instrument, whether it is a conditional sale or otherwise, it is more than a mere sale of the property on condition that the purchaser pay the agreed purchase price. It provides that the notes given in accordance with its terms are, when unpaid, "collectible." There is also retained to the seller some remedy other than the mere repossession of the property on failure of the purchaser to pay. The instrument contains a right in the seller to force the collection of the purchase money recited therein. It does not permit the purchaser to refuse to complete the sale, and refuse to purchase the property by a failure or refusal to pay the recited purchase money. The instrument is therefore more than a mere conditional sale. It is one in the nature of a security for the payment of the purchase money of the property. Whatever may be the denomination of this instrument in jurisdictions other than Georgia, whether it is a conditional bill of sale, a mortgage, or otherwise, under the Georgia law this instrument is not a mortgage. It is an instrument which is denominated as a conditional-sale contract or a retention-title contract. Under the Georgia law a mortgage passes no title from the debtor to the creditor, but only creates a lien on the property. Code § 67-101. Since, under this instrument, the title to the property is lodged in the seller who is the creditor, for the security of the debt, and is not in the purchaser who is the debtor, the creditor has title to the property as security for a debt, and does not have a mere lien thereon as in the case of a mortgage under the Georgia law.
The insurance policy under consideration here is on personal property located in North Carolina. The policy purports to have been issued in North Carolina. It is to be construed according to the laws of North Carolina, and the rights of the parties are determinable under the laws of that State. Whether or not the applicable *Page 197 
law of that State has been pleaded in the present case, which is a suit on this policy in a court in the State of Georgia, is immaterial, since it is conceded in the briefs by counsel for both sides that the policy must be construed in accordance with the laws of North Carolina. The defendant, by plea as amended, raises the question as to the invalidity of the policy by reason of the existence of this conditional bill of sale on a portion of the insured property. The court sustained the demurrer to the plea as amended, and there is presented for determination the correctness of this ruling. As respects the matter under these pleadings the defendant can not complain of any failure of the plaintiffs to plead the North Carolina law. It appears on the face of the policy that the policy is a North Carolina contract. It follows that the North Carolina law is the applicable law in determining the meaning of this contract. Counsel for the defendant concede that the policy should be construed in accordance with North Carolina law.
It is proper therefore, in determining what is a "chattel mortgage," as used in this policy in the clause which provides that the company shall not be liable for damages to property insured under the policy while the property is "incumbered by a chattel mortgage," to look to the laws of North Carolina for a determination of the nature of the instrument in question which was executed in Georgia, under the laws of Georgia, on the sale of personal property by the Chandler Machinery Company to Georgia Tire  Rubber Company. It is insisted by counsel for plaintiff in error in their brief as follows: "The contract [meaning the policy of fire insurance involved in this case] will, of course, be construed in accordance with the law of North Carolina. Two cases seem to us to settle the law of that State on this point." Counsel then cite and rely on the cases of Weddington v.
Piedmont Fire Insurance Co., 141 N.C. 234 (54 S.E. 271, 8 Ann. Cas. 497), and Lancaster v. Southern Ins. Co., 153 N.C. 285
(69 S.E. 214, 138 Am. St. R. 665). I can not concur with counsel that either of these cases sustains their contention. In the Lancaster case the court had under consideration a contract respecting the sale of personal property similar in every essential element to the sale contract here under consideration. Under the contract before the North Carolina court in that case the vendor of personal property had sold it and delivered possession to the purchaser, had taken notes for the *Page 198 
purchase money, had retained title as security, and the contract had been properly registered according to law. The court recited that, under the law of North Carolina, under such contract of sale of personalty as there described a loss by fire or by other adventitious cause fell on the purchaser. The court held: "The claim of the vendor, in this instance, was only an incumbrance in the nature of a chattel mortgage to secure the purchase money, and, on the facts, the stipulation as to the nonexistence of such an incumbrance has been violated." The policy in that case, as does not the policy in the case now before this court, provided that the entire policy should be void if the interest of the insured was other than "unconditional and sole ownership," or "if the subject of the insurance be personal property and be or become incumbered by a chattel mortgage." Under the provisions of the policy in that case, the existence on the property insured of a "chattel mortgage" voided the entire policy. Whereas, under the provisions of the policy in the case now before this court theentire policy is not voided by the existence of a chattel mortgage on a portion of the property.
Whether or not the rights of the parties under the sale contract of personal property located in Georgia, between Chandler Machinery Company as seller and Georgia Tire  Rubber Company as purchaser, which was executed in Georgia, are, where the property has been moved into North Carolina, as in this case, determinable under the laws of Georgia or under the laws of North Carolina, there is no question here presented as to the rights of the parties under this sale contract. The question is as to the nature and character of this instrument; whether or not, under the laws of North Carolina, it constitutes a "chattel mortgage" in the sense in which the term "chattel mortgage" is used in the insurance policy in this case, the construction of which is to be governed and determined by the laws of North Carolina. Under the laws of North Carolina, as was held in the Lancaster case, this conditional-sale agreement which was executed in Georgia was achattel mortgage. Therefore, if such sale agreement, which was executed in Georgia on property located in Georgia but which was afterwards carried into North Carolina, possessed any validity in North Carolina, and in any way affected the property described in the agreement after the property had been carried into North Carolina, *Page 199 
it was only an incumbrance on the property constituting, as defined by the courts of North Carolina, a "chattel mortgage" on only a portion of the property mentioned in the policy, and, under the terms of the policy, by reason of this incumbrance on this particular piece of property, the coverage of the policy was lifted from this particular property only. There is no provision of the policy which, by virtue of the existence of such incumbrance on a portion of the property, voids the entire policy, but the policy states that all other property except such as is incumbered by the chattel mortgage is covered by the policy.
While in the Lancaster case it was stated in a well-considered portion of the opinion that the conditional-sale agreement therein referred to, the contents of which have been stated above, was not such an instrument as rendered the interest of the insured in the property insured and covered by this conditional-sale contract, other than "unconditional and sole ownership," this seems to be obiter. The conclusion of that court, however, may safely be relied on as authoritative of the law of North Carolina in this respect. The court, in the opinion in that case, further stated as follows: "In North Carolina, however, it is established in a case like the present, that when a bargainor sells goods, taking notes for the purchase-price, retaining the title as security for the purchase money, and delivers possession, that if the goods are destroyed by fire, the obligation to pay the notes is absolute and the loss must fall on the vendee. Tufts v. Griffin, 107 N.C. p. 47 [12 S.E. 68, 10 L.R.A. 526, 22 Am. St. R. 863]. From this we think it follows that . . the vendee under the fact existent here, is the unconditional and sole owner of the goods, within the meaning of the contract and there has been no breach of same in this respect. Such a stipulation refers to the `quality of an estate, and that it is not held jointly with others.'" See Roberts v.
American Alliance Co., 212 N.C. 1 (192 S.E. 873, 113 A.L.R. 310).
Weddington v. Piedmont Fire Insurance Co., supra, relied on by counsel for the plaintiff in error, is authority for the proposition that where personal property insured under a fire policy is incumbered by a chattel mortgage the policy is void where the policy contains an express provision that it is void, unless otherwise provided by agreement or indorsement, if the property becomes incumbered with a chattel mortgage. There is no such provision in the policy *Page 200 
in the case now before this court. Under the provisions of the policy in this case only the particular piece of property incumbered with a chattel mortgage is lifted from the coverage of the policy and the insurance on such property is, by reason of such incumbrance, void.
It is insisted by counsel for the defendants in error in the case now before this court that the sale contract involved in this case, which was executed in Georgia on personal property at the time within this State, which property was afterward carried into North Carolina, had no force and effect as a valid contract in North Carolina, and therefore constituted no incumbrance upon the property, by reason of the alleged fact that the contract had not been recorded in North Carolina as required by the statute of that State for the recordation of contracts of this character. In support of counsel's contention reliance is had on Brem v.
Lockhart, 93 N.C. 191. The case relied on seems to relate to the rights of purchasers from the conditional vendee where the conditional-sale or mortgage contract has not been recorded. It is immaterial whether or not this conditional-sale contract was valid, and whether or not under the laws of North Carolina it constituted an incumbrance on the property while the property was in North Carolina. If it were not valid, of course there was no incumbrance by mortgage which could in any way affect the insurance. If it were valid it, as above demonstrated, affected the insurance only in so far as respected the particular property referred to in the conditional-sale contract.
I am of the opinion that under the North Carolina law, the conditional-sale contract in this case on the personal property which was in North Carolina when it was destroyed by fire did not render the interest of the insured under the policy in this property, or in any of the property described as insured under the policy, other than "unconditional and sole ownership." I am also of the opinion that, under the North Carolina law, this conditional-sale contract, whatever it may be under the Georgia law, was a chattel mortgage on this property, and operated only to invalidate the insurance as respected the particular piece of property affected by this sale contract.
Whether or not the verdict, in so far as it found a sum for the loss of the property covered by this chattel mortgage, was excessive *Page 201 
it is not necessary to determine. No such insistence is made by counsel for the company, and the defense interposed by counsel for the company, in so far as the existence of this alleged incumbrance invalidated the insurance, was that it operated to invalidate the entire policy.
There is evidence tending to establish that A. J. Stuart and W. F. Humphries comprised Murphy Retreading Company, the insured under the policy. There is therefore no merit in the contention of the insurance company that by reason of Humphries' interest in any of the property insured the interest of the insured was other than "unconditional and sole ownership."
I am of the opinion that the court did not err in sustaining the demurrer to the plea as amended in which it was alleged that the incumbrance on a portion of the property invalidated the entire policy. I therefore concur in the judgment of affirmance.