Court Opinion

ID: 3611368
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:55:26.677881+00
Date Added: 2024-06-11T14:24:12.566611
License: Public Domain

There is no dispute in regard to the cardinal facts: The defendant issued to the plaintiff a policy in the standard form of this state insuring the property burned, and other property, for the period of three years from November 14, 1916. The property burned December 14, 1916. At the time of the burning there were and had been since September 20, 1916, executed and filed chattel mortgages covering the insured property as security for the payment of a promissory note made by defendant and held by one Manson for eight hundred and fifty dollars. The defendant had not at any time until after the proofs of loss were filed knowledge or information of the existence of the chattel mortgages. The policy of insurance provided: "This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * if the subject of insurance be personal property and be or become incumbered by a chattel mortgage." There was not indorsed on or added to the policy an agreement *Page 206 
concerning the chattel mortgages. The receiving in evidence of the chattel mortgages and the note for the payment of which they were given as security was objected to by the plaintiff upon the ground that they were usurious and void. The plaintiff subsequently introduced evidence, which remained wholly uncontradicted, tending and sufficient to support a finding that they were usurious and the jury by the verdict so found. The ultimate decision of the trial justice was: "There was sufficient evidence to justify a finding that the mortgage was usurious, but not in my judgment to support a finding that the plaintiff had elected to treat the mortgage as void for usury before the issuance of the policy."
A contract of insurance is to be interpreted as are other contracts. The intention of the parties as gathered from the whole instrument must prevail. If the language used by the parties has a plain meaning, unaffected by that of other clauses or provisions of their contract, the ordinary effect must be given it. The established rules of interpretation are aids in ascertaining the intention. The parties in the instant case stipulated that if the insured property was incumbered by a chattel mortgage at the issuance of the policy the policy should be void. Such is the practical effect and operation of the stipulation under the facts of the case. Whether or not the property was incumbered by the chattel mortgages is the ultimate and determinative question we are to answer. If it was not the plaintiff might lawfully regard the instruments as effectless and mere nothings. The difference between a chattel mortgage in mere words and a valid, effectual incumbering by a chattel mortgage is indicated by the stipulation; it is the difference between the impotent instrument and the object sought by it. In this state a chattel mortgage incumbers property only by effecting a present transfer to the mortgagee of the property mortgaged by it, defeasible by the payment of the sum *Page 207 
it is given to secure. (Barrett Manufacturing Co. v. VanRonk, 212 N.Y. 90.) A void chattel mortgage does not and cannot transfer or incumber the property described in it. An invalid transfer is no transfer. It is merely the form or semblance, without reality, of a transfer. If the mortgages were invalid they would not by legal intendment avoid the policy. The defendant seeking to avoid the policy on the ground that the property was incumbered by the mortgages was bound to show they were, as against the insured, mortgages in reality as well as in appearance. Judicial decisions uniformly so hold. (WatertownFire Ins. Co. v. Grover  Baker Sewing Machine Co., 41 Mich. 131;Rowland v. Home Ins. Co. of New York, 82 Kans. 220;Fitchener  Co. v. Fidelity Mutual Fire Assn., 103 Iowa 276,282; Forward v. Continental Ins. Co., 142 N.Y. 382, 390;Weigen v. Council Bluffs Ins. Co., 104 Iowa 410;Continental Ins. Co. v. Vanlue, 126 Ind. 410; Hanscom v.Home Insurance Co., 90 Me. 333, 349; Smith v. N.F. Ins.Co., 60 Vt. 682; Town of Clinton v. Town of Westbrook,38 Conn. 9; Downey v. National Fire Ins. Co. of Hartford, Conn.,77 W. Va. 386; Smith v. Stanton, 15 Vt. 685; GilchristTransportation Co. v. Phenix Insurance Co., 170 Fed. Rep. 279, 282; Neafie v. Woodcock, 15 App. Div. 618, 621.) The same rule has been applied to stipulations relating to title in or change of title from the insured. (Merrill v. AgriculturalIns. Co., 73 N.Y. 452; Lycoming F. Ins. Co. v. Jackson,83 Ill. 302; Niagara Fire Ins. Co. v. Scammon, 144 Ill. 490;Kitterlin v. Milwaukee Mechanic's Mut. Ins. Co., 134 Ill. 647;Steinmeyer v. Steinmeyer, 64 S.C. 413; Whiteside v.LaFayette Fire Ins. Co., 143 La. 675.) The like rule is applied to analogous stipulations (Thomas v. Builders' M.F. Ins. Co.,119 Mass. 121; Clark v. New England Mutual Fire Ins. Co., 6 Cush. 342; Jersey City Ins. Co. v. Nichol, 35 N.J. Eq. 291;Knight v. Eureka Fire  Marine Ins. Co., 26 Ohio St. 664;Fireman's Ins. Co. of Dayton v. Holt, 35 Ohio St. 189;Sweeting v. *Page 208 Mutual Fire Ins. Co., 83 Md. 63; Lindley v. Union F.M.F.Ins. Co., 65 Me. 368; Gale v. Belknap County Ins. Co.,41 N.H. 170; Behrens v. Germania Fire Ins. Co., 64 Iowa 19;Equitable Fire  Accident Office, Limited, v. Ching Wo Hong,
1907, A.C. 96), though with exceptions or limitations in some jurisdictions. (Bigler v. New York Central Ins. Co., 22 N.Y. 402;Landers v. Watertown Fire Ins. Co., 86 N.Y. 414; Funke
v. Minnesota Farmers' Mutual Fire Ins. Assn., 29 Minn. 347;Slobodisky v. Phenix Ins. Co. of Hartford, 52 Neb. 395;Stevenson v. Phoenix Ins. Co., 83 Ky. 7; Royal Ins. Co. v.McCrea, Maury  Co., 8 Lea [Tenn.], 531.)
In virtue of the finding of the jury the note and mortgages were usurious and were, therefore, as a matter of law void. (Sabine v. Paine, 223 N.Y. 401.) They were not effectual or enforcible contracts at or subsequent to the issuance of the policy. They did not at any time incumber the insured property. Such quality or characteristic is the creation of the statute: "All bonds, bills, notes, assurances, conveyances, all other contracts or securities whatsoever, except * * * whereupon or whereby there shall be reserved or taken, or secured or agreed to be reserved or taken, any greater sum, or greater value, for the loan or forbearance of any money, goods or other things in action, than is above prescribed, shall be void. Whenever it shall satisfactorily appear by the admissions of the defendant, or by proof, that any bond, bill, note, assurance, pledge, conveyance, contract, security or any evidence of debt has been taken or received in violation of the foregoing provisions, the court shall declare the same to be void, and enjoin any prosecution thereon, and order the same to be surrendered and cancelled." (General Business Law [Cons. Laws, chapter 20], §§ 370, 371, 373.) It is true that the term "void" is often used in statutes, contracts and judicial opinions when the term "voidable" would be more accurate and correct. Indiscriminate use has *Page 209 
in a considerable extent destroyed the real though not broad difference in their meanings. A void contract or act, in law, is from its inception null — a nothing — it cannot be ratified or confirmed and cannot be the subject of disaffirmance or election. Such quality or character, however, need not exist as to all persons or for all purposes; it may be void or a mere nullity as to some persons and for some purposes only. (State v.Richmond, 26 N.H. 232; Blinn v. Schwarz, 177 N.Y. 252;Meridian Life Ins. Co. v. Dean, 182 Ala. 127.) Things which are without validity until confirmed are also often said to be void. A contract or act which may be avoided or rendered null at the pleasure or choice of a party thereto is voidable, but not void until so rendered. In any given case we must ascertain the intent of the law which condemns the vitiating act. The effect the forbidden act may have on the contract depends upon the intent of the law which inhibits the act. It is a general rule of interpretation that contracts declared in terms void by statute because interdicted by law or by public policy are, in the correct and true meaning of the word, void. Such results may follow, in virtue of the legislative intent, without the statutory declaration. (Laun v. Pacific Mutual Life Ins. Co.,131 Wis. 555; Taenzer  Co. v. Chicago, Rock Island  P. Ry.Co., 191 Fed. Rep. 543; Moss v. Cohen, 158 N.Y. 240;Village of Fort Edward v. Fish, 156 N.Y. 363; Swing v.Dayton, 124 App. Div. 58; affd., on opinion below, 196 N.Y. 503;Wilson v. Cook, 256 Ill. 460; Schurtz v. City ofGrand Rapids, 199 Mich. 20; Ramsay v. Crevlin,
254 Fed. Rep. 813.) Our decisions heretofore made declare beyond the need of further consideration or discussion that the statutes relating to usury enact that usurious contracts are void and not merely voidable. In Sabine v. Paine (223 N.Y. 401, 404), in which the question presented to us was, is an usurious promissory note *Page 210 
enforcible by a holder in due course, we decided that it was not, and said: "An instrument which a statute, expressly or through necessary implication, declares void, strictly speaking, is asimulacrum only. It is without legal efficacy. It cannot obligate a party or support a right. * * * The court is, under its (the statute's) command, to declare it void, enjoin prosecution of it and order it to be surrendered and cancelled, whenever satisfactory proof of its usurious character appears. It is a pretense and ineffectual as a source of obligation or of right."
The judgments should be reversed, the verdict reinstated and judgment rendered upon it for the plaintiff, with costs in all the courts.
HISCOCK, Ch. J., McLAUGHLIN and ANDREWS, JJ., concur with POUND, J.; HOGAN and ELKUS, JJ., concur with COLLIN, J.
Judgment affirmed.