Bates v. Equitable Insurance Company - 77 U.S. 33 (1869)
U.S. Supreme Court
Bates v. Equitable Insurance Company, 77 U.S. 10 Wall. 33 33 (1869)
Bates v. Equitable Insurance Company
77 U.S. (10 Wall.) 33
1. A policy of insurance contained the usual covenant that if the property was sold the insurance ceased unless the consent of the insurer was given in writing to the sale.
Held, that an endorsement on the policy by the assured "Payable in case of loss to E. C. Bates" (the plaintiff ), and under this, the endorsement by the insurer that "Consent is hereby given to the above endorsement," did not imply either a knowledge or consent to the sale of the goods insured.
2. Such endorsements are entirely consistent with the property in the goods remaining in the assured, and mean no more than that the loss of the assured shall be paid to the third party.
3. If such third party had really purchased the goods before the loss, then the party assured sustained no loss and the policy covered none, and no action could be sustained on it.
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 endorsement on this policy."
Philbrick, the party insured, sold the goods during the life of the policy to one Edward C. Bates, and endorsed on the policy,
"Payable in case of loss to E. C. Bates."
"W. D. PHILBRICK"
The policy, with this endorsement, was sent by a policy broker to the insurance company, and one Frederick W. Arnold, the secretary of the company, placed under the above endorsement these words:
"Consent is hereby given to the above endorsement. EQUITABLE INSURANCE COMPANY."
"FRED. W. ARNOLD, Secretary"
The goods having been destroyed by fire after the sale and the endorsement 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 defense 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 endorsement 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.