A policy of insurance provided that it should be void if the
interest of the insured was other than the unconditional and sole
ownership or if the property were encumbered by a chattel mortgage.
It was in fact subject to certain trust deeds which the insured
claimed after loss were different instruments in law.
Held
that:
A deed of trust and a chattel mortgage with power of sale are
practically one and the same instrument as understood in the
District of Columbia. The rule that, in case of attempted
forfeiture, if the policy be fairly susceptible of two
constructions, the one will be adopted which is more favorable to
the insured was inapplicable to this case.
The contract of an insurance company is a personal one with the
assured, and it is not bound to accept any other person to whom the
latter may transfer the property.
This was an action to recover on a policy of insurance upon
household furniture and ornaments.
Defense: that it was provided that the policy should be
Page 196 U. S. 48
void if the interest of the insured was other than the
unconditional and sole ownership of the property insured, or if the
"said property should be or become encumbered by a chattel
mortgage," when in fact it was subject, at the time the policy was
written, to three trust deeds to secure the payment of various sums
of money. Plaintiff demurred to the pleas setting up this defense.
The court overruled the demurrer, entered judgment for the
defendant, which was affirmed by the Court of Appeals. 20 D.C.App.
48.
MR. JUSTICE BROWN delivered the opinion of the Court.
The sole question presented by the record in this case is
whether the provision in the policy for the unconditional ownership
of the property by the plaintiff, and for the nonexistence of any
chattel mortgage thereon, was broken by certain trust deeds to
secure the payment of money in each case.
Plaintiff relies upon the familiar principle of law that the
Page 196 U. S. 49
conditions of a policy of insurance, prepared as they are by the
company and virtually thrust upon the insured, frequently without
his knowledge, must be construed strictly, and, while the legal
effect of a chattel mortgage and of a deed of trust to secure the
payment of money may be practically the same, they are in law
different instruments, and that a condition against one is not
broken by the existence of the other. We recognize the rule laid
down by this Court in
Thompson v. Phenix Insurance
Company, 136 U. S. 287,
that in case of attempted forfeiture, if the policy be fairly
susceptible of two constructions, the one will be adopted which is
more favorable to the insured. This rule was reiterated in
McMaster v. New York Insurance Company, 183 U. S.
25, but we cannot recognize it as applicable to this
case.
A deed of trust and chattel mortgage with power of sale are
practically one and the same instrument as understood in this
District. In the language of Mr. Justice Morris, in speaking of
mortgages of real estate in
Middleton v. Parke, 3 App.D.C.
149:
"The deed of trust is the only form of mortgage that has been in
general use in the District of Columbia for many years. The common
law mortgage is practically unknown with us, and everyone
understands that, when a mortgage of real estate here is spoken of,
the deed of trust is what is intended. . . . The deed of trust is
here used as the equivalent of a mortgage, and so the term is
universally used by the community. Indeed, while a mortgage is not
necessarily, perhaps, a deed of trust, a deed of trust to secure
the loan of money is necessarily a mortgage."
It was said by this Court in
Shillaber v. Robinson,
97 U. S. 68,
97 U. S. 78,
that
"if there is a power of sale, whether in the creditor or in some
third person to whom the conveyance is made for that purpose, it is
still in effect a mortgage, though in form a deed of trust, and may
be foreclosed by sale in pursuance of the terms in which the power
is conferred, or by suit in chancery. "
Page 196 U. S. 50
The legal effect of the two instruments had been recognized as
practically the same in several cases in this and other courts.
Platt v. Union Pacific R. Co., 99 U. S.
48,
99 U. S. 57;
Palmer v. Gurnsey, 7 Wend. 248;
Eaton v. Whiting,
3 Pick. 484;
Wheeler & Wilson Mfg. Co. v. Howard, 28
F. 741;
Bartlett v. Teah, 1 McCrary 176, 1 F. 768;
Southern Pacific R. Co. v. Doyle, 11 F. 253;
McLance
v. Paschal, 47 Tex. 365.
There may be cases under particular statutes recognizing a
difference between them in reference to the application of the
recording laws, as appears to be the case in Maryland (
Charles
v. Clagett, 3 Md. 82), but in their essential features and in
their methods of enforcement, they are practically identical. Both
are transfers conditioned upon the payment of a sum of money; both
are enforceable in the same manner, and the difference between them
is one of name, rather than substance. The provision in the policy
is one for the protection of the insurer, who is entitled, if he
insists upon it in his questions, to be apprised of any fact which
qualifies or limits the interest of the insured in the property,
and would naturally tend to diminish the precautions he might take
against its destruction by fire.
In passing upon the identity of the two instruments in this
case, we may properly refer to the further provision of the policy
that the interest of the insured must be an unconditional and sole
ownership. While the breach of this condition is not specifically
urged in the briefs, we may treat it as explanatory of the other
condition against the existence of a chattel mortgage. The company
evidently intended by this provision to protect itself against
conditional transfers of every kind. The contract of the company is
a personal one with the insured, and it is not bound to accept any
other person to whom the latter may transfer the property.
The conditions of the policy in this case were broken by the
trust deeds, and the judgment of the court below is therefore
Affirmed.
