Bates v. Equitable Insurance Company

ERROR to the Circuit Court for Rhode Island; the case being this:

W. D. Philbrick being the owner of certain goods, got them insured by the Equitable Insurance Company of Providence. The policy contained a clause that if the property insured should be sold or conveyed, or if the policy should be assigned without the consent of the company, the risk should cease and the policy become void. It contained also provisions such as are cited below:

'And this company agree, that if the assured shall sell the aforesaid property, or any part thereof, before the expiration of this policy, a proportion of the premium received shall be repaid, upon receiving notice of such sale before a loss happens;. . . or this policy may be continued for the benefit of such purchaser, if this company give their consent thereto, to be evidenced by a certificate of the fact, or by indorsement on this policy.'

Philbrick, the party insured, sold the goods during the life of the policy to one Edward C. Bates, and indorsed on the policy,

'Payable, in case of loss, to E. C. Bates.

'W. D. PHILBRICK.'

The policy, with this indorsement, was sent by a policybroker to the insurance company, and one Frederick W. Arnold, the secretary of the company, placed under the above indorsement these words:

'Consent is hereby given to the above indorsement. EQUITABLE INSURANCE COMPANY.

'FRED. W. ARNOLD, Secretary.'

The goods having been destroyed by fire after the sale, and the indorsement by Arnold in behalf of the company, Bates, the owner of them, brought assumpsit on the policy. The company refused to pay on the ground that Philbrick had ceased to be owner before the loss occurred, and that the company had never consented to any change of ownership in the property. And the question was whether on the facts, this defence ought to be sustained.

Arnold, the secretary of the company, swore that he had no knowledge of the sale, nor was there any evidence that any officer of the company had notice of it, unless it was to be implied from the request to give their consent to the indorsement made by Philbrick, and the consent so given.

The court below was of the opinion that on the case stated the plaintiff could not recover, and judgment having been entered accordingly, the record was brought here.

Mr. Goodrich, for the plaintiff in error:

The indorsement by Philbrick being absolute without reservation, and accompanied by delivery of the policy, is an assignment of his entire interest both in the instrument and in the property insured. The words are capable of this construction. It is indeed their natural construction. The indorsement on the policy operated like an indorsement on a note. It carries all the indorser's interest in the subject-matter. There is no proof that Philbrick did not intend to sell the property, and no ground, therefore, on which the defendants can restrain the practicable and natural interpretation. The certificate of the company which is found on this policy, and under Philbrick's assignment, is just such a certificate as the policy provides that the company shall give when 'the policy is to be continued for the benefit of the purchaser,' but such as it does not provide or contemplate shall be given in any other case. The company have therefore interpreted in the sense in which we say it was made, this indorsement of Philbrick's.

Messrs. W. H. Potter and A. H. Brown, contra.

Mr. Justice MILLER delivered the opinion of the court.