Court Opinion

ID: 8741363
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:49:35.637208+00
Date Added: 2024-06-11T17:00:25.231292
License: Public Domain

ROGERS, District Judge
(after stating tbe facts as above). It is not contended that tbe “loss-payable clause” contained in tbe policy gave tbe bank any right to tbe money. Tbe contention, if made, could not be upheld, because the bank bad no insurable interest in tbe property covered by tbe policy. In re Lumber Co. (D. C.) 92 Fed. 586; Insurance Co. v. Chase, 5 Wall. 512, 18 L. Ed. 524. The contention of tbe bank is that tbe insurance policy was pledged to it to secure its indebtedness. Tbe testimony on this point is in irreconcilable conflict.- Tbe referee in bankruptcy found that the policy bad not been pledged. ' It may be doubted whether tbe weight of tbe testimony sustains tbe finding, but this much must be said: Tbe referee took this testimony, and it is altogether probable be is personally acquainted with the parties testifying, and therefore better situated to test their credibility than tbe court. His findings of fact, therefore, should not be disturbed, unless tbe court is clearly satisfied that tbe same are erroneous. I do not think it necessary, however, for tbe court to decide that question at all, find I express no opinion in regard thereto. By tbe very terms of tbe policy itself it is provided “that tbe entire policy shall be void if any change other than* by tbe death of tbe insured tabes place in tbe interest, title, or possession of tbe subject of insurance, whether by legal process or judgment, or by tbe voluntary act of tbe insured or otherwise, or if tbe policy be assigned before a loss.” Tbe subject of insurance in this case did change bands before tbe loss. If, therefore, tbe loss bad occurred after tbe subject of insurance changed bands, and before tbe assignment of tbe policy to tbe receiver, neither tbe bank nor *685the insured could Raye recovered anything against the company. Hie pledge of the policy, therefore (if there was a pledge at all), became no pledge, because there was no living policy the very moment the property passed from the possession of the insured into the hands of the receiver. Moreover, before a loss, this policy was assigned by the insured to the receiver.
May, Ins. § 276a, states:
“If partnership property is put into the hands of a receiver before loss, the transfer is an alienation that voids the policy. The same is true of an assignment in bankruptcy.”
“The assignment of a policy as collateral security voids a policy which stipulates against an assignment in whole, or of any interest in it, under penalty of forfeiture.” Id. § 330.
If, therefore, the insured in this case had assigned this policy to the receiver without the assent of the insurer's, .the policy itself would have been absolutely void, and no recovery could have been had at all, either by the pledgee or the assignee. But in this case it appears that the assignment by the insured "to the receiver was with the consent and approval of the insurers. Hamilton, McMillion & Co., as owners of the property covered by the policy, assigned the interest of that firm to W. K. White, receiver, subject to the consent of the ^National Fire Insurance Company of Hartford, and at the same time the jSTaüonal Fire Insurance Company of Hartford consented that the interest of Hamilton, McMillion & Go. as owners of the property covered by the policy be assigned to White as receiver.
May, Ins. § 276, states:
“If the original insured, by the consent of the insurers, assigns the policy, and the assignees agree that the insurers pay all assessments which shall thereafter be made upon the policy, and that the property insured shall remain subject to the same lien as before, the legal effect of the transaction is to create a new, substantive, and distinct contract with the assignees. It is substantially the same as if the policy had been issued to them.”
That is precisely what was done in this case. True, there were no assessments to be made. The bank had taken out the policy and paid the premium. The policy, by the written consent of the insured and the insurers, was assigned to the receiver, and the receiver paid the bank the premium which rr had advanced. This became a new and substantive contract between (he insurance company and the receiver. If, therefore, the insurance policy, as it originally stood, had been pledged to the bank, it no longer remained a pledge after the new contract was entered into, because the policy no longer was a contract between the original parties thereto, but a new and substantive contract between the insurance company and the receiver. The receiver, of course, without the authority of the court, would have no authority to pledge the insurance policy to the bank or to any other person, and he could not, of course, have the sanction of the court in pledging the policy to secure a past indebtedness to one creditor. However that may be, there is no evidence whatever that the receiver at the time he paid the premium, or at the time the assignment was made, knew that any pledge of the policy had been made to the bank, or attemp ted himself to make any pledge thereof to the bank. The mere fact, if it be true, that the bankrupts, prior to the .filing of the petition, had *686deposited the policy as a pledge with the bank to secure its indebtedness, could not enable the bank to hold the policy as a pledge after the insurance company had entered into the new contract with the receiver. No contract between the. insured and the bank could in any wise affect the power and authority of the insurance conqniny to cancel the policy and to make a new contract with the receiver. Hie effect of what was done in this case was to make a new contract between the insurance company and the receiver, thereby, in legal effect, canceling the original policy between the insurance company and the insured, and the making of a new contract as between the insurance company and the receiver.
The law is settled that the receiver had the right to take out insurance upon the property which came to his hands. Insurance Co. v. Chase, 5 Wall. 512, 18 L. Ed. 524; Thompson v. Insurance Co., 136 U. S. 294, 10 Sup. Ct. 1019, 34 L. Ed. 408. It is equally well settled that he had no authority whatever to pay the premium to the bank upon a policy which had become forfeited by the action of the court in taking the property out of the hands of the bankrupts, and placing it in the hands of the receiver. The bank, having advanced the money, of course had a claim against the bankrupt’s estate that it might prove as any other creditor, but it was -not entitled to be paid by the receiver or to receive a preference. For the reasons stated, I am of the opinion that the action of the referee should be affirmed, and the relief sought by the bank denied.