Court Opinion

ID: 6126617
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:32:49.171996+00
Date Added: 2024-06-11T08:34:19.329123
License: Public Domain

Brady, J.
(dissenting):
In September, 1877, Charles E. Heuberer was, and continues to be a grain warehouseman and miller, conducting his business at the Pacific Mills, so called, in the city of Brooklyn. He was not strictly a warehouseman, but had on storage at his mills, either received from others or owned by himself, a large quantity of corn, oats and other cereals. On the 5th of September, 1877, the defendant issued to him a policy of insurance, which is the subject of this action. It was for the sum of $5,000, and for “ merchandise, hazardous and extra hazardous, his own or held by him in trust or on commission, or sold but not delivered, contained in the brick building known as the Pacific stores,” etc. The conditions of the policy in the printed part seem to be the usual ones. The chief of them having any bearing upon the question considered in this case provides that if any change takes place in the title or possession of the property, whether by sale, transfer or conveyance, legal process or judicial decree, or if the assured is not the sole, absolute and unconditional owner of the property insured, then in such case the policy shall be void.
On the 16th of May, 1878, Heuberer applied to the plaintiffs for a loan of $5,000 on 10,000 bushels of grain in his mill in Brooklyn and the loan was made. He gave to them a paper of which the following is a copy :
“ No. 117. Charles E. Heuberer,
“Steam Elevator and Grain "Warehouse,
“ Pacific Stores, 30 to 38 Columbia Street,
“ Brooklyn, May 16th, 1878.
“ Bush, gross, bush, screenings, bush. nett.
“ Received on storage from.................. in Pacific stores, for account Messrs. Hoyt & Go., ten thousand bushels corn, to be *423made into corn meal, deliverable to their order, on payment of the charges accrued thereon, and in accordance with the marginal note hereto.
“CHAS. E. HEUBERER.”
“ Ten thousand, bushels corn, to be made into corn meal.”
(Written across the face in red inlc) “ Not negotiable.”
“ The annexed receipt may be transferred by indorsement (unless the words ‘ not negotiable ’ be written or stamped on the face thereof), and any person to whom the same may be so transferred will be deemed and taken to be the owner of the property herein specified, and no property can be delivered except on the surrender and cancellation thereof. Vide sections 6 and 8 of the act to prevent the issue of false receipts, and to punish fraudulent transfers of property.”
“Entered folio____”
The transaction was made upon the exchange and no time was fixed for the repayment of the money, and no agreement of any sort witli reference to this subject was made between the parties.
Heuberer, upon the same day, assigned and delivered to the plaintiffs the policy of insurance in suit, which was presented to the company’s agent and the consent signed, as follows : “ This property having been purchased by Jesse Hoyt & Co., the Hartford Eire Insurance Company consent that the interest of Charles E. Heuberer in the within policy may be assigned to said.purchaser, subject, nevertheless, to all the terms and conditions therein referred to.”
Upon the 11th of September, 1878, the policy was continued for one year, to September 9, 1879, the renewal premium being paid by Heuberer. Upon the 4th of December, 1878, a fire occurred which entirely consumed the mill, and much more than 10,000 bushels of corn. The plaintiffs gave notice of the fire and loss, and upon the 24th of December, made formal proofs under oath.
In the proofs thus furnished the plaintiffs alleged that the property insured consisted of 10,000 bushels of corn, No. 2, which belonged to them solely, and had so belonged since the 16th of Mgy, 1878, besides whom no other person had any interest whatever in the property, or in any part of it. The defendant having declined to pay, the plaintiffs brought this action, alleging that *424Iieuberer, the assured, sold, assigned and transferred to them the merchandise insured, as already stated.
Upon the conclusion of the plaintiffs’ case, the salient features of which have been stated, the complaint was dismissed upon the following grounds:
First. That it appeared by the proof that the plaintiff's had at the time of the ffre no insurable interest in any of the property which was injured by the fire.
Second. That the policy, according to its terms, did not attach to any property in which the plaintiffs, under their arrangement with Mr. Iieuberer, had an interest.
Third. That such an interest as the plaintiffs may have had in the property which was injured by the fire was not insured or covered by the terms of the policy.
Fourth. That the facts proved or given in evidence did not constitute, in their most favorable light for the plaintiffs, a cause of action in their favor.
The defendant, in confirmation of the views expressed in the grounds upon which the motion was made to dismiss the complaint, insists that the receipt was insufficient to vest an absolute title to the corn in the plaintiffs, and, not being absolute owners of the property burned, they were not entitled, under the pleadings, under proof of loss or under the policy, to the recovery of the amount claimed.
We do not deem it necessary to follow the discussion presented upon the briefs as to the character of the paper called a receipt, in connection with the statute of 1858 in reference to warehouse receipts, nor do we deem it necessary to consider, in that connection, the proof of custom given upon the trial relating to such an instrument, for the reason that the evidence distinctly establishes, as a legal result, that it was given, not as an absolute transfer of the property mentioned in it, but as collateral security for the payment of an advance or loan, and that the plaintiffs’ title to the corn was a defeasible one, which, they not having parted from, it might be destroyed at any time by the payment of the advance. Assuming that the delivery of such a paper, under the custom determining its effect, would be an absolute transfer of the merchandise described in the absence of any fact limiting its effect, as soon as *425the evidence established that it was in fact, notwithstanding the custom, delivered as security for the payment of an advance, the signer still retaining an interest in the property; therefore the custom itself was overcome by the intention of the parties, which was that the custom itself should not prevail.
A bill of sale absolute on its face, that is, transferring property to be held as -security for the payment of a debt, is in character and effect a mortgage, and is to be so regarded. In such a case the mortgagee acquires only a lien upon the assign’s property. (Smith v. Beattie, 31 N. Y., 542; Leitch v. Hollister, 4 id., 211.) The interest of a mortgagee is not that of an owner. (Savage v. Ins. Co., 52 N. Y., 507; Perry v. Ins. Co., 61 id., 214. See also on this subject, and particularly applicable to the facts affecting the character of the transaction, Yenni v. McNamee, 45 N. Y., 614.)
This case substantially decides that such a transaction as that detailed herein, notwithstanding it is accompanied by the receipt mentioned, does not confer the absolute ownership of the property upon the person to whom it is given, and this result, namely, that the plaintiffs were not the absolute and unconditional owners of the property insured, rendered it impossible for them to recover, unless the i-iglit springs out of some other phase of the case. (Savage v. Ins. Co.; Perry v. Ins. Co., supra.)
The claim of the plaintiffs was based upon the proposition that they were the absolute owners of the property, because they so asserted in their proofs of loss and reiterated that allegation in their complaint. We do not discover in examining the case any answer to the result stated. The facts and circumstances and the authorities bearing upon the question seem to lead to no other conclusion than that the plaintiffs were not absolute owners within the terms of the policy, and which therefore as to them, in that aspect, was void.
The learned counsel for the respondent lays great stress upon the custom which was established in reference to the delivery of receipts such as were given to the plaintiffs in this case, but, as already suggested, the receipt fails m accomplishing the purpose which he insists was its design, in consequence of the proof to which reference has been made; that in fact it was delivered as collateral security. He thinks also, if the court is persuaded that the plaintiffs were not absolute owners, that nevertheless the defendant will
54 *426not be permitted, to escape from tbe obligations of tbe policy and npon the proposition that’ the clause in it, namely, held by him in trust, or on commission, or sold bur not delivered, would be sufficient to enable the plaintiffs to recover.
There would be great force in this suggestion were it not for the clause indorsed on the policy that it is not assignable for the purpose of collateral security, but in all such cases should be made payable, etc., by indorsements on its face. And this clause is in entire harmony with the general condition of the policy already considered, requiring that the assured should be the sole, absolute and unconditional owner of the property insured. The effect of this clause is such as to render it unnecessary to consider what relations other than debtor and creditor were created by the contract between Heuberer and the plaintiffs, as they cannot prevail against the rights of the defendant secured by the terms of the policy.
The learned counsel for the respondent also presents for consideration the proposition that Heuberer had an insurable interest of which the plaintiffs can avail themselves in this action; but the difficulty in sustaining it which at once*presents itself is, that nothing of that kind was assignable by the terms of the policy. It contemplates an actual and absolute change of ownership, and such an effect was supposed to have been accomplished by the receipt which was given to the plaintiffs by Heuberer. As already suggested, such was regarded as the legal result of the delivery of that receipt by the plaintiffs, who in their proofs of loss and in their complaint, asserted an absolute and unconditional title to the property covered by the policy.
The right of the plaintiffs to recover has been successfully assailed and the judgment must be reversed and new trial ordered, with costs to abide event.
Judgment and order affirmed, with costs.