Opinion
No. 32931.
December 13, 1937. Suggestion of Error Overruled January 24, 1938.
1. CHATTEL MORTGAGES.
A purchase-money retained title contract is in the nature of a mortgage to secure the unpaid purchase money, and it is a charge or lien on the property for that purpose.
2. INSURANCE.
An automobile fire policy containing doubtful provisions must be construed most favorably to assured.
3. INSURANCE.
Under automobile fire policy providing that termination of assured's interest in automobile by sale should avoid policy except as to any encumbrance specifically described, sale of automobile without consent of assignee of retained title contract did not bar recovery on policy by assignee, where policy provided that payment should be made to assured and assignee as their interests might appear, that automobile was fully paid for, and that there was no encumbrance except a balance due in ten monthly notes.
APPEAL from the circuit court of Washington county. HON. S.F. DAVIS, Judge.
Butler Snow, of Jackson, and S.V. Anderson, of Greenville, for appellant.
The appellant contends that, while the automobile was sold to Cadenhead under a conditional contract of sale with title reserved in the seller, which title was transferred by the assignment to the Greenville Bank and Trust Company, the sale was a conditional sale and the title retained in the contract was merely security for the debt; that such retention of title operated to constitute the seller a mortgagee.
The authorities in Mississippi are clear and definite that a conditional sales contract is security for the debt therein evidenced.
Federal Credit Co. v. Boleware, 142 So. 1; Bankston v. Hill, 98 So. 689; Superior Laundry Co. v. American Laundry Machine Co., 170 Miss. 450; Broom v. Dale, 109 Miss. 52.
The mortgagee clause in a policy of insurance insuring personal property is not an independent contract between the insurance company and the mortgagee; the mortgagee is merely constituted the agent to receive payment and his rights are governed and restricted to the rights of the insured.
3 Cooley on Insurance, pages 2383-85; Aetna Ins. Co. v. Cowan, 111 Miss. 453.
There being no provision in the code with reference to a mortgage clause on a policy covering personal property, the rights of the mortgagee are subject to the same forfeitures as the rights of the insured, and any violation of a condition in the policy by the insured affects the rights of the mortgagee.
Bacot v. Phoenix Ins. Co., 96 Miss. 223.
The transfer of Cadenhead's interest subsequent to the issuance of the policy operated to avoid the policy, and the policy being void as to Cadenhead, it was void as to the bank.
3 Cooley on Insurance, pages 2641-2; 26 C.J. 229-30; Home Ins. Co. v. Hardin, 162 Miss. 254; National Fire Ins. Co. v. Partridge, 162 Miss. 626; Globe Rutgers v. Green, 167 Miss. 698; Scottish Union Ins. Co. v. Warren-Gee Lbr. Co., 118 Miss. 740; Rosenstock v. Miss. Home Ins. Co., 82 Miss. 674; Groce v. Phoenix Ins. Co., 94 Miss. 201; Osler v. Atlas Assurance Co., 127 Miss. 511; New Orleans Ins. Co. v. Holberg, 64 Miss. 51.
Percy Farish, of Greenville, for appellee.
Whatever interest the bank had it had the right to insure, and because W.H. Cadenhead was named as the assured, the bank's interest is not affected; and it would not even make any difference if the policy was issued without naming any assured, so long as by its terms the interest of the bank was protected by the policy.
Hope, etc., Co. v. Phoenix, etc., Co., 74 Miss. 320.
If this was an independent contract between the bank and the appellant, the fact that W.H. Cadenhead transferred his interest in the automobile described in the policy did not in any way affect the bank; and if the policy is void as between the appellant and W.H. Cadenhead on account of some act or omission on the part of Cadenhead, nevertheless, it is a valid and binding contract between the appellant and the bank.
Ins. Co. v. Cowan, 111 Miss. 453.
The appellant, no doubt, wrote the policy, and it must be construed most strongly against the appellant and in favor of those insured by it. If the clause in the policy relied on by appellant is susceptible of two meanings, one favorable to the bank and one favorable to the company, we submit that under the rule of construction of insurance policies adopted by all the courts, that construction favorable to the bank should prevail. Certainly this is true where each meaning is equally probable. The company will not be permitted to set up the narrowed construction to prevent recovery under the policy.
Boyd v. Ins. Co., 75 Miss. 47.
Appellee brought this action against appellant in the county court of Washington county on a fire insurance policy covering a Dodge automobile to recover the sum of $154. There was a judgment on the pleadings alone for the sum sued for, from which judgment appellant appealed to the circuit court of that county, where the judgment was affirmed, from which latter judgment this appeal is prosecuted.
The record consists of a declaration, two special pleas, one of which was abandoned, a demurrer to the special pleas, judgment sustaining the demurrer and final judgment for appellee on appellant's declining to plead further, and a judgment of the circuit court affirming that of the county court. The case made by the declaration is substantially this: Appellant issued a policy of insurance whereby it insured a certain Dodge automobile against loss by fire. W.H. Cadenhead was named as the assured. By its terms appellant agreed to pay Cadenhead and appellee, as their interests might appear, loss to the extent of $225 if the car was destroyed by fire. Cadenhead had purchased the car from McHie Motor Company under a retained title contract to secure the unpaid purchase money. The McHie Motor Company sold and transferred the contract for a valuable consideration to appellee. The car was totally destroyed by fire after the transfer. There was a balance due appellee under the contract of $154; for that amount it sued and recovered judgment. Copies of the retained title contract and the policy of insurance were made exhibits to the declaration.
Appellant's defense was that there was no liability because Cadenhead, in violation of the paragraph of the policy entitled "Title and Ownership," had, after appellee's interest had been acquired and the insurance effected, sold and transferred the automobile to another without appellant's consent. In determining the question involved, the title and ownership paragraph of the policy should be considered in connection with the preceding paragraph entitled "Lien and Encumbrance." They provide, among other things, that appellant should not be liable for any loss or damage to the car while subject to any lien or mortgage or other encumbrance, unless otherwise provided in a written agreement attached to the policy, and that the termination of the interest of the assured in the car by sale and transfer should avoid the policy "except as to any lien, mortgage, or other encumbrance specifically set forth and described in Paragraph D of this policy."
Appellant's position is that no lien or encumbrance on the car is described in paragraph D of the policy, therefore, the transfer by Cadenhead without appellant's consent avoided the policy. Appellee's position is the converse. Paragraph B of the policy names Cadenhead as the assured, giving his address, and provides that in case of loss payment shall be made "To Assured and Greenville Bank and Trust Company," as their interests may appear. That provision of paragraph D involved is in this language: "The automobile described is fully paid for by the Assured and there is no Lien, Mortgage or other Encumbrance thereon, except as follows: Bal. $220. in 10 monthly notes of $22.00 each."
A purchase-money retained title contract is in the nature of a mortgage to secure the unpaid purchase money; it is a charge or lien on the property for that purpose. It is true that the appellee's interest is not described with great particularity, but applying the universal rule that where there is doubt such a contract must be construed most favorably to the assured, we think it could mean nothing else than that appellee was the holder of a purchase-money lien against the car. The provision states that there is no lien of any kind, "except as follows," then states that there is a balance due of $220 in ten monthly notes of $22 each.
Affirmed.