Phoenix Insurance Company v. Hamilton - 81 U.S. 504 (1871)
U.S. Supreme Court
Phoenix Insurance Company v. Hamilton, 81 U.S. 14 Wall. 504 504 (1871)
Phoenix Insurance Company v. Hamilton
81 U.S. (14 Wall.) 504
1. Insurance may be effected in the name of a nominal partnership where the business is carried on by and for the use of one of the partners, especially when the property insured (grain) is held by the parties insured on commission only, and in the policy is described "as held by them in trust or on commission, or sold and not delivered."
2. In case of an insurance thus effected, where no representations are made with regard to the persons who compose the firm, there is no misrepresentation on that subject which avoids the policy.
3. And where the firm has no actual care or custody of the property insured (grain), but so far as regards its preservation from fire, it is entirely in the control of the other parties, and is so understood to he by the company making the insurance; the omission to inform the insurance company of an agreement of dissolution previously made cannot be considered a concealment which will avoid the policy.
Hamilton and Cook were partners in the grain commission
business, at Toledo, Ohio, and kept their consignments of grain in store in an elevator at that place belonging to the Michigan Southern Railroad Company, whose servants had the entire charge and care of it. Hamilton retired from the firm in July, 1867, but no notice of the dissolution was given, and by common agreement Cook was allowed to carry on the business in the partnership name until the end of the year. During this term, insurance to the amount of $10,000 was effected with the Phoenix Insurance Company of Brooklyn, through their agent, in the name of the firm, Hamilton & Cook, against loss or damage by fire on the "grain in store, their own, or held by them in trust or on commission, or sold and not delivered," this being the usual method of taking insurance among commission merchants in Toledo. Al loss occurred on the 21st of December, whilst the policy was running, and the insurance company declining to pay it, Hamilton & Cook sued them. The defense set up was:
1st. Want of insurable interest in Hamilton, and
2d. Misrepresentation and concealment with regard to the interest.
The plaintiffs, on the trial, waived any claim for grain belonging to themselves individually and asked a verdict but for the value of the grain which was received on commission, asking to recover this amount for the use and benefit of the owners.
At the request of the plaintiffs' counsel, the court charged that if no representations were made with regard to the individuals who composed the firm of Hamilton & Cook, there was no misrepresentation which could avoid the policy; and that if Hamilton & Cook had no actual care or custody of the grain, but that so far as regarded its preservation from fire, it was entirely in the control of the railroad company, and so understood by the company's agent when the policy was effected, the omission to inform the defendant of the agreement of dissolution could not be considered a concealment which would avoid the policy. Verdict and judgment
went accordingly for the plaintiffs, and the case now came here on exceptions to the charge of the court.