The owner in fee of land and of the buildings thereon, to whom
has been issued a policy of fire insurance which provides that
"If the interest of the assured in the property be any other
than the entire, unconditional, and sole ownership of the property
for the use and benefit of the assured, or if the buildings insured
stand on leased ground, it must be so represented to the company,
and so expressed in the written part of the policy, otherwise the
policy shall be void,"
is entitled, upon their destruction by fire, to recover on his
policy although at the time it was issued there was an outstanding
lease for years of the land to a third party, which fact was
neither so represented to the company nor expressed in the written
part of the policy.
The facts are stated in the opinion of the Court.
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Policies of fire insurance are contracts whereby the insurers
undertake for a stipulated sum to indemnify the insured against
loss or damage by fire, in respect to the property covered by the
policy, during the prescribed period of time, to an amount not
exceeding the sum specified in the written contract. Angell, Fire
and Life Ins. 43.
Insurance was effected by the plaintiffs, on the 9th of May,
1870, in the company of the corporation defendant for the term of
one year, against loss or damage by fire, to the amount of $3,000,
covering the ten buildings therein described, each of which being
insured in the sum of $300.
It appears by the bill of exceptions that the policy was in the
usual form of policies issued by the defendant, and that it
"if the interest of the assured in the property
Page 95 U. S. 243
be any other than the entire, unconditional, and sole ownership
of the property for the use and benefit of the assured, or if the
buildings insured stand on leased ground, it must be so represented
to the company, and be so expressed in the written part of the
policy, otherwise the policy shall be void."
Two other stipulations are contained in the policy, which it is
important to notice:
"the use of general terms, or any thing less than a distinct
specific agreement clearly expressed and indorsed on the policy,
shall not be construed as a waiver of any printed or written
condition or restriction therein."
2. That the policy is made and accepted in reference to the
foregoing terms and conditions, which are declared to be a part of
the contract, and may be used and resorted to in order to determine
the rights and obligations of the parties to the policy.
Nothing was expressed in the written part of the policy
indicating or tending to indicate that the interest of the insured
in the property purporting to be insured was any other than the
entire, unconditional, and sole ownership of such property for the
use and benefit of the insured, or indicating or tending to
indicate that the buildings insured stood on leased ground.
Payment of the alleged loss being refused, the plaintiffs
instituted the present suit in the state court, which was
subsequently removed into the circuit court of the same district,
the parties agreeing that the plaintiffs might prove any claim they
have under the common counts as if they should add special counts,
and that the defendants might prove any defense they have to the
action under the general issue the same as if it was set up in a
Pursuant to that stipulation, the parties went to trial, and the
verdict and judgment were for the plaintiffs in the sum of $3,730
damages, with costs of suit. Exceptions were taken by the
defendants to the charge of the court, and they sued out a writ of
error, and removed the cause into this Court.
Neither title deeds nor evidence of the same was introduced by
the plaintiffs, but the defendant admitted at the trial that "the
plaintiffs were owners in fee of the land on which the buildings
insured stood" at the time of the fire, as appears by the bill of
exceptions. Proofs were introduced by the plaintiffs, admitted by
the defendant to be in due form, which showed
Page 95 U. S. 244
that the buildings described in the policy were, on Dec. 31,
1870, destroyed by fire, and that the property insured belonged to
the plaintiffs, subject to the lease mentioned in the proofs so
introduced, to which more particular reference will presently be
made. Other evidence was introduced by the plaintiffs, but the
defendant offered no evidence, and the court directed the jury to
return a verdict in favor of the plaintiffs for the amount of the
policy, with interest from the expiration of sixty days subsequent
to the time the proof of loss was exhibited.
Seasonable exceptions were filed to the charge of the court,
upon the ground that the lease mentioned in the proofs of loss show
that the plaintiffs were not at the time of the loss the entire,
unconditional, and sole owners of the property for their own use
Sufficient appears to show that the fee simple title of the land
was in the plaintiffs, and that they were the entire owners of the
property destroyed, subject to the lease mentioned in the proofs of
loss, and it was admitted by the defendant that the fire caused a
total loss of the property, and that the value of the buildings
exceeded the amount of the insurance.
By the terms of the lease, referred to in the proofs of loss, it
appears that the instrument was for a term of ten years, from May
1, 1868, to May 1, 1878, and that it covered the land on which the
insured buildings stood, and the buildings and improvements to be
built thereon, having been executed before the buildings were
erected, at a rental of $3,500 per annum for the first five years,
and $5,976 per annum for the second five years.
Ten buildings were to be erected, to cost not less than $24,000;
and the lessor was to pay one-half the amount in installments, each
installment to be $1,000, and to be paid when the lessee had
expended twice that amount in the prosecution of the work.
Arrangements of a contingent character are also prescribed in case
the lease is continued or determined, and for the basis of
adjustment in either event and for payment or repayment as the case
may be, which it is not necessary to reproduce in the present
Errors assigned material to be noticed are as follows:
1. That the court erred in directing the jury to return a
Page 95 U. S. 245
favor of the plaintiffs for the amount of the policy and
2. That the court should have directed the jury to return a
verdict the other way, as the law of the case was with the
3. That the court erred in not submitting the questions of fact
to the jury whether the plaintiffs were so far the sole, entire,
and unconditional owners of the property insured as to be entitled
to recover in view of the evidence.
Authorities to prove that a fee simple estate is the highest
tenure known to the law are quite unnecessary, as the principle is
elementary and needs no support; nor is any argument necessary to
show that the title of the plaintiffs to the land where the
buildings stood was of that character, as that is admitted in the
bill of exceptions, which constitutes a part of the record.
Concede that and it follows that the plaintiffs were, within the
meaning of the policy, the entire, unconditional, and sole owners
of the land where the buildings stood, for their own use and
benefit, at the time of the fire; and if so the prima
presumption must be that they held the title of the
buildings by the same fee simple title, in the absence of any
evidence in the case to controvert that conclusion. None certainly
was introduced by the defendant, and it is not pretended that there
is any thing in the proofs introduced by the plaintiffs so support
any different theory, except the lease referred to in the evidence
offered to prove the loss.
Landowners under a fee simple title, in the absence of any proof
to the contrary, are certainly presumed to be the owners of the
buildings erected and standing on the premises, the rule being that
the buildings and the lands together are known as real estate, and
the buildings, where nothing is shown to the contrary, are presumed
to be held by the fee simple owner of the land by the same title as
the land on which the buildings are situated, from which it follows
that the plaintiffs, being the owners in fee of the same, are also
the owners in fee of the buildings, unless there is something in
the terms of the lease to disprove that theory, and it is equally
clear, that, if they are the entire, unconditional, and sole owners
of the buildings as well as of the land, the assignment of error
must be overruled.
Page 95 U. S. 246
Nor is any thing contained in the lease to support any different
theory. Instead of that, the lease shows that the plaintiffs were
the owners of the land, and that the contractor agreed to erect the
ten buildings on the land for the owners; nor does it make any
difference that the owners of the land contracted with the builder
that they, when the buildings were erected, would lease the same to
him for the term of ten years.
Buildings of every kind are frequently erected by landowners to
be rented; nor is it any thing uncommon that the contract for lease
should be made before the buildings are erected, or that the
contract for a lease should be blended with the contract for
erecting the building, as in this case. Leases of the kind are not
uncommon; nor is there any thing in the terms of the instrument to
countenance the theory that the title of the plaintiffs did not
remain as before -- a fee simple title, as described in the
admission of the defendant.
In the words of the contract, the lessee agreed to proceed at
once to erect ten buildings on the land therein described, to cost
not less than $24,000 for the other party to the instrument, and
"to receive payment for the same at the times and in the manner
therein described," which of itself shows to a demonstration that
the buildings when erected became the property of the plaintiffs,
as the terms of the instrument called a lease show that the
buildings were erected for the plaintiffs on their land, and that
they paid the agreed price for their erection. Decided support to
that theory is also derived from another clause of the lease, by
which the lessee bound himself to insure the buildings during the
time employed in their erection, in the name and for the benefit of
the plaintiffs, and to deposit the policies in their keeping and
possession. Policies were to be taken out and kept in force in the
sum of $13,000, in the name and for the benefit of the lessors,
during the continuance of the lease, in companies to be approved by
the plaintiffs; and the stipulation was that the policies should be
deposited with lessors of the property. Other evidence to support
the theory of the defendant is entirely wanting, the record showing
that they offered no evidence at the trial; and inasmuch as the
terms of the lease show that the plaintiffs owned the land in fee
simple, and that they contracted to have the buildings erected
Page 95 U. S. 247
paid for their erection, and caused them to be insured in their
own name and for their own benefit, it is clear that the supposed
defense that the plaintiffs were not the entire, unconditional, and
sole owners of the buildings utterly fails, and that the charge of
the court directing a verdict for the plaintiffs is correct.
Attempt is made in this case to maintain the theory that the
plaintiffs are not the entire owners of the property, because it
was under lease both when the policy was issued and at the time of
the loss, but it is clear that the theory has no foundation in law
or justice. Nor can the theory be sustained which attempts to
separate the ownership of the buildings from the land, which, it is
admitted, is vested in the plaintiffs by a fee simple title. Such
an assumption is contrary to the facts exhibited in the record, and
can no more be supported than that the lessees of stores, tenement
houses, or other buildings in our large cities own the same by mere
possession or occupancy of the particular store, tenement, or
building included in the lease they hold from the owner.
Thousands of cases arise where dwelling houses, stores, and
other buildings of every kind are leased to occupants, for longer
or shorter periods of time, and upon still more varying conditions
and stipulations, and yet the owners procure insurance upon the
same without mentioning the names of the lessees in the policies,
or ever suspecting that they have omitted any duty, or been guilty
of any concealment or neglect. Insurance companies set up no such
pretence, and if they should do so, they would find no support to
such a theory in the courts of justice.
Stores and other buildings are sometimes erected upon leased
lands by parties who have no title other than what is derived from
their lease, which is a very different thing from the case where
the owner, both of the land and the building, leases the estate to
the occupant for a term of years, without parting with the fee
simple title to the land or the building. Fee simple ownership in
such a case is matter of importance to the insurer, especially if
the company is a mutual one, as such companies usually have a lien
on the premises for the payment of the premium; nor is the
ownership of the land an immaterial
Page 95 U. S. 248
matter, even if no such lien arises, as it furnishes an
important element to enable the company to determine whether it is
expedient to take the risk.
Considerations of the kind, it may be presumed, induced the
defendant to insert the condition in the policy of the
"that, if the buildings stand on leased ground, it must be so
represented to the company, and must be so expressed in the written
part of the policy, otherwise the policy shall be void."
Nothing of the kind is pretended in this case, and if it were,
it could not be sustained for a moment, as it is admitted in the
record that the plaintiffs were the owners in fee of the land where
the buildings stood at the time of the fire.
Adjudged cases are invoked to sustain the theory of the defense;
but none of those cited support the proposition involved in the
theory. Examples of the kind are Gahagan v. Mutual Insurance
43 N.H. 176, and Warner v. Middlesex Insurance
21 Conn. 444, both of which are cases where the insured
represented that the property covered by the policy was free and
unencumbered, when, in fact, it was encumbered by mortgage. May,
Ins., sec. 290; Towne v. Mutual Insurance Co.,
Cases are also cited where the insured had only a bond for a
deed, or only a leasehold interest, and where the insured procured
a policy as the absolute owner of the property in the face of those
facts. Atlantic Insurance Co. v. Wright,
22 Ill. 474;
Smith v. Mutual Insurance Co.,
6 Cush. (Mass.) 448;
Brown v. Williams,
28 Me. 252; Hinman v. Hartford
36 Wis. 167.
Much discussion of such authorities is not required, as it is
clear they do not favor the theory of the defendants. Nor does the
case of Smith v. Colombia Insurance Co.,
17 Pa.St. 253,
aid the defendants, as it is clear that, if a mortgagee insures his
interest in the premises, he is bound, under a provision calling
for encumbrances affecting his interest, to state prior mortgages
on the same premises. May, Ins., sec. 293.
Misrepresentations of material facts, of course, avoid a policy;
but there were none such in the case before the court.
Colombia Insurance Co. v.
10 Pet. 507, cited by the defendant.
Page 95 U. S. 249
Where the policy contained the provision that if the property to
be insured is held in trust, or on commission, or is a leasehold
interest, or an equity of redemption, or if the interest of the
insured in the property is any other than the entire,
unconditional, and sole ownership of the property, for the use and
benefit of the insured, it must be so represented to the company,
and be so expressed in the written part of the policy, otherwise
the policy shall be void, the Supreme Court of Illinois held, in a
case where it appeared that the property had been sold under
judgment and execution against the insured, that the nondisclosure
of the sale and purchase avoided the policy, though the period
allowed for redemption had not expired. Reaper City Insurance
Co. v. Brennan,
58 Ill. 158.
By the sale and purchase in that case, nothing was left in the
insured but the right of redemption, which would expire in one year
from the sale; and it was well held by the court that, the
paramount title being in a third person, it could not be truthfully
said that the insured had, at the date of the insurance, "the
entire, unconditional, and sole ownership of the property."
Beyond all doubt, the property in the case under consideration
vested in the lessors, and, if so, the two cases cited by the
defendant of Mayor v. Hamilton Insurance Co.,
(N.Y.) 537, and Mayor v. Insurance Company,
366, are authorities in favor of the plaintiffs, as the facts in
this case show that the property, in the true sense of insurance
law, belonged to the insured at the date of the policy.
Washington & Atlantic Insurance Co. v. Kelly,
438; Hubbard v. Hartford Insurance Co.,
33 Ia. 333.
Unless the true ownership or interest in the property is
required by the conditions of the policy to be specifically and
with particularity and accuracy set forth, it will in general be
sufficient if the insured has an insurable interest under any
status of ownership of possession, in cases where no inquiries are
made at the time the application is presented or the policy
executed. May, Ins., sec. 284.
No inquiry was made in this case, although it appears that the
agent of the company who took the insurance resided in Chicago,
where the buildings were situated; nor did the defendant
Page 95 U. S. 250
offer any evidence at the trial to show that the unencumbered
fee simple title was not in the plaintiffs at the time the
buildings were destroyed by the fire; nor did the defendant request
the court at the trial to give the jury any instructions upon the
subject. On the contrary, it admitted at the trial that the
plaintiffs were the owners in fee of the land on which the
buildings insured stood, leaving it to be inferred by the jury that
the plaintiffs were also the owners in fee of the buildings.
Enough appears in the terms of the instrument called the lease
to show that both the lessee and lessors treated the buildings
"during the process of erection" as the property of the plaintiffs,
and to show beyond controversy that the buildings when completed
vested in the plaintiffs as their absolute property, subject only
to the right of the builder to occupy and use the same, just as in
the ordinary case where the owners of property agree to lease the
same to be used by the lessee for a stipulated rent.
Lessees holding under an ordinary parol lease do not acquire
such an interest in real estate so leased as to avoid a policy
issued to the lessor, even though the insured failed to represent
the matter to the company in a case where no inquiries were made of
the applicant, at the time the policy was issued, as to the true
character of the title or occupancy of the insured premises, and
where no pretense is shown that the insured has been guilty of any
fraud or misrepresentation.
Such a lease is a mere chattel interest, being reckoned as part
of the personal estate of the lessee, and in case of the death of
the lessee goes to his executors, and not to the heirs-at-law, as
appears by all the authorities. 2 Bl. Com. (Cooley's ed.) 143;
Ex parte Gay,
5 Mass. 419; Brewster v. Hill,
N.H. 351; Bisbee v. Hall,
3 Ohio, 463; Dillingham v.
7 Smed. & M. (Miss.) Ch. 487; Spangler v.
1 Md.Ch. 36.
Leases for years, says Taylor, are considered chattel interests
arising out of a contract between the parties, and pass only a
transient interest in the land, which is not a freehold, and might
originally be made at common law by parol for any certain period.
Taylor, L. & T. (6th ed.) 22; Moshier v.
Page 95 U. S. 251
12 Me. 482; Maverick v. Lewis,
McCord (S.C.) 211; Carwell v. Dietrich,
15 Wend. (N.Y.)
379; Chapman v. Bluck,
5 Scott 533; Waller v.
18 B.Mon. (Ky.) 141.
Two requisites, says Blackstone, were necessary to make a fief
or feud -- 1. duration as to time; 2. immobility as to place; and
he adds that whatever was not a feud was accounted a chattel.
Chattels real, says the same commentator, are such as concern or
savor of the realty, including terms for years, and are called real
chattels, as being interests arising out of or being annexed to
real estate, of which they have one quality, to-wit immobility, but
want the quality of indeterminate duration, the want of which
constitutes them chattels. 2 Bl.Com. 386; 2 Kent Com. (12th ed.)
342; 5 Bac.Abr. (Bouvier ed.) 434; 2 Com.Dig., Biens, a
Chitt.Gen.Pr. 244; Co.Litt. 46, 118b
Terms of years belonging to a testator or intestate vest in his
executor or administrator without any entry, for the reason that in
contemplation of law such interests are chattels. Woodfall, L.
& T. (9th ed.) 239; Wollaston v. Hakewell,
& G. 297; Atkinson v. Humphrey,
2 C.B. 654;
Insurance Company v. Kelly,
32 Md. 421.
Insurers, if they desire to object to such a risk, should make
inquiries of the applicant, and should not admit at the trial,
without qualification, that the insured was the owner in fee of the
land, in a case where they offer no evidence in defense.