
    Blackwell v. Insurance Co.
    
      Policy — Clause in that transfer shall forfeit — Taking in of partner does not forfeit — Assured may recover for loss of his interest, after partnership formed.
    
    1. A provision in a policy of fire insurance, to the effect that a sale or transfer of the property insured shall forfeit the policy, does not become operative to avoid the policy, unless the entire interest of the assured • in the property insured is sold or transferred.
    2. If the property insured consists of the stock of goods of a merchant doing business alone, the taking in-by him of a partner in the business is not such a sale or transfer by him of his entire interest in the property as will avoid the policy.
    3. Where the policy has not been assigned or transferred, and the property thus insured is destroyed or damaged by fire, after the partnership had been formed and had assumed the management of the business,' the assured may maintain an action on the policy in his own name to recover the damages sustained by him on account of the injury done to his share of the property. .
    (Decided October 20, 1891.)
    Erbob to the Superior Court of Cincinnati.
    The plaintiff in error brought an action in the Superior Court of Cincinnati against the defendant in error, upon a policy of insurance issued by it to him upon a stock of dry goods, notions, etc., owned by him in said city.
    The defendant admitted issuing the policy and the loss of the goods by fire, and set up in bar of a recovery for the loss, that the policy contained a provision that it should become “ null and void ” if the property insured should be sold or transferred by the assured; and averring that, in violation of this condition, after the policy was issued and before the fire, he sold and transferred the goods and business to a firm composed of himself and one Horman, and that at the time of the loss the goods were owned, and the business was conducted, by said firm, by which sale and transfer the policjr became forfeited and void.
    The plaintiff interposed a demurrer to this defense, and upon its being overruled, declined to plead further and suffered judgment to be entered against him. This judgment was affirmed by the Superior Court in general term ; whereupon this proceeding was brought to reverse both judgments.
    
      Joseph W. O'Hara, for plaintiff in error.
    I. Defendant contends that Blackwell is not the proper party to sue. This is really a question of pleading, and could only arise under the strict common law procedure. Our code requires the real party in interest to sue. The contract was made with Blackwell; he paid the premium, and is the party entitled to the benefit of the policy. It is well settled that any person who has an interest in property may insure the same; and this includes partners. Wood on Fire .Ins., secs. 257j 267, 283, 287, 292 and 306; Converse v. Citi
      
      zens Ins. Co., 10 Cush. 37; Manhattan Ins. Co. v. Webster, 59 Pa. St. 227.
    II. Counsel-for the company mainly rely upon the condition in the policy against alienation, and claim that the transfer of a partnership interest in the property to Horman avoids the policy. The rule is too .well settled to admit of doubt, that as long as the insured retains any interest in the property, he may recover to the extent of that interest. Wood on Fire Ins., sec. 311; Jackson v. Mass. Mut. Fire Ins. Co., 40 Mass. 418; VanDeusen v. Peoples Ins. Co., 1 Rob. N. Y. 55; West Ins. Co. v. Halfstein, 40 Pa. St. 289; Gordon v. Mass. Fire Ins. Co., 2 Pick. 249; Coml. Ins. Co. v. Spankneble, 52 Ills. 53; Hobbs v. Memphis Ins. Co., 1 Sneed (Tenn.) 444; May on Ins., see. 381; Phillips on Ins., sec. 208.
    The decisions of the courts in these cases always turn upon the construction to be given to the language in the condition. In the case at bar the language is the broadest known to the law ; in fact it is nothing more than a declaration of the undisputed principle than when the insured parts with all his interest in the property he cannot recover, nor can his assignee or transferee. The reasonable and proper rule on this subject is laid down in the case of West v. Citizens' Ins. Co., 27 Ohio St. 1; also Dix v. Mercantile Ins. Co., 22 Ill. 277; The Hartford Ins. Co. v. Ross, 23 Ind. 179; Stetson v. Mass. Mut. Fire Ins. Co., 4 Mass. 330; Cowan v. Iowa State Ins. Co., 40 Iowa 551; Scanlon v. Union Ins. Co., 4 Biss. 511.
    But great reliance is placed by the company’s counsel upon two decisions, which they claim are conclusive of the question and override the two decisions above referred to by us. These are: Malley v. Atlantic Ins. Co., 51 Conn. 322; and Drennan v. London Assurance Co., 20 Fed. Rep. 657. But we submit that not only do these cases not overrule the others, but they are not in conflict with them at all.
    Counsel contend that by the introduction of a stranger, the risk of the company is increased, and this is really the foundation of its claim to a forfeiture. On the contrary, the risk is diminished in the ease at bar. As only Blackwell’s interest can be recovered, and as he is still in the firm and in control of the property, what possible danger or increase of risk is there beyond that which the company was willing to incur when it took the policy? As a partner, Blackwell is in possession and is seized per my et per tout of every part and parcel of the property of the firm, and has his interest in and right of control over every piece of goods and merchandise in the store; and should anjr portion be lost or destroyed he would suffer loss to the extent of his interest therein. It is more against his interest, so far as any claim against the company is concerned, to have the property burned than it was at first, for the reason that he cannot recover as much.
    But upon an analysis of the case it will be seen that no stranger is introduced into any contract relation with the company, nor into any proprietary interest in the property insured that can in any way affect the insurer. It is admitted that Horman has no rights whatever against the company, in any event. The question then is narrowed down to the issue whether if the party insured places another in chai’ge of the property insured he defeats his rights to a recovery.
    
      Ramsey, Maxwell Ramsey, for defendant in error.
    Brief of Lawrence Maxwell, Jr.
    
    The objections to plaintiff’s action are two.
    1. Fie was not the owner of the property at the time of the loss. But it is said that he' retained some interest in the property and is entitled to recover to the extent of that in- . terest. What interest ? The property belonging to the firm. For the conversion of the property, the firm could alone have sued. The damage from loss of the property by fire is to the firm. Blackwell has no ascertainable interest in this particular property of the firm. Whether he has any interest in any of the firm property depends upon the state of accounts between himself and his partner after the firm debts are paid. If this action is allowed to proceed to the jury, it necessarily involves a settlement of the partnership accounts, if it be true that the plaintiff, notwithstanding the transfer of the property to the firm, nevertheless retained a separate, ascertain-. able and insurable interest therein.
    Whether the firm can sue and recover upon this policy, is not now the question; that depends upon whether Blackwell transferred the policy to the firm with the assent of the defendant.
    2. But the policy expressly provided that if during its existence the owner should sell or transfer the property insured, the policy should become null and void.
    It is insisted that the sale and transfer of the property by Blackwell to the firm, was not a sale and transfer within the meaning of the terms as used in the policy, and the cases of Scanlon v. Union Fire Ins. Co., 4 Biss. 511, and Cowan v. Iowa State Ins. Co., 40 Iowa 551, are cited.
    Of the latter case, the Supreme Court of Connecticut in the later case of Malley v. Atlantic Ins. Co., 51 Conn. 222, at page 251, says: “ It is true that the case of Cowan v. Iowa State Ins. Co., 40 Iowa 511, determines that the sale of the property by the insured to a firm of which he is a member is not such a change of. title as works forfeiture. We believe this decision is contrary to the weight of reason and precedent.” The Supreme Court of Connecticut held that such a sale and transfer made the policy void. The dissenting opinion is not upon this point; but upon the ground that the evidence showed that the partnership pleaded in that case had not been consummated at the time of the fire. The judges all concurred in holding that the transfer to a firm composed of the assured and another person, would avoid the policy.
    The other case cited by counsel for the plaintiff, being a brief report of the charge of Judge Drummond to the jury without showing any argument or consideration of the question upon either principle or authority, is overruled in the later case of Drennan v. London Assurance Corporation, 20 Fed. Rep. 657, a case argued by distinguished counsel and decided by Mr. Justice Miller of the Supreme Court of the United States. With him sat either the district or circuit judge; the report does not state which.
    ■ West v. Citizens Insurance Co., 27 Ohio St. 1, recognizes the distinction pointed out so forcibly by Mr. Justice Miller in the foregoing case. West v. Citizens Insurance Company was the case of a retiring partner; but Johnson, J., in delivering the opinion of the court was careful to point out the distinction between such a case and a case where a new partner is taken in. At page 11, he says: “ A mere change of interest or ownership among partners, where no stranger is introduced, and no addition made to the number of insured, a mere assignment of his interest, by one partner to the other, is obviously not within the principle or motives on which the condition is founded.” Later, on the page, he says : “ The chief reason for requiring such a stipulation is to guard against the introduction of a stranger, who may not possess the fidelity or watchfulness required by the insurers.” Later, on page 12, he says: “ The retiring partner no longer had a motive to endanger the insurer; no stranger was introduced; no one but those with whom the contract was made was left in control.”
    
      Biggs v. Insurance Co., 88 N. C. 141, is also direct authority in support of the proposition that the introduction of a partner avoids the policy.
    The stipulation of the policy at bar is unmeaning if it be held, as claimed by opposite counsel, to prohibit nothing but an absolute sale of the entire interest of the assured. No stipulation would be necessary to cover such a case. The right of the assured would cease as matter of law.
   Bradbury J.

The record in this case raises two questions, both of which must be determined in favor of the plaintiff in error, to entitle him to relief.

1. Did the act of the assured, who before was a sole trader, in receiving a partner, constitute a sale and transfer of the insured property, within the meaning of the policy, and the policy thereby rendered void ?

2. If it was not such a sale as to render the policy void, may the plaintiff maintain an action on the policy in his own name to recover for the loss ?

There is some conflict among the authorities upon the first question. It is discussed by May in his work on Insurance, and by the courts of a number of the states; notably in Dix et al. v. The Mercantile Insurance Co., 22 Ill. 272; Finley et al. v. The Lycoming County Mutual Ins. Co., 30 Penn. St. 311; The Hartford Fire Ins. Co. v. Ross et al., 23 Ind. 179; The Western Mass. Ins. Co. v. Riker et al., 10 Mich. 279; Drennan et al. v. London Assurance Corp., 20 Fed. Rep. 657; Malley v. Atlantic Ins. Co., 51 Conn. 222; Scanlon v. The Union Fire Ins. Co., 4 Biss. 511; Cowan v. The Iowa State Ins. Co., 40 Iowa 551; Hathaway v. State Ins. Co., 64 Iowa 229; Keeler v. Niagara Fire Ins. Co., 16 Wis. 523; Wood v. Rutland Ins. co., 31 Vt. 552.

An examination of the cases above cited will disclose that the conditions in the policies, where forfeiture for alienation was sustained, were materially different from the one involved in this action, except perhaps in the cases in 30 Penn. St. 311, and that in 16 Wis. 523, where the language of the condition was very similar to that now under consideration. In the other cases sustaining the forfeiture, the condition contained a provision forfeiting the policy, not merely for a “ sale or transfer ” of the property, but in case of “ a change of title ” or the sale of “ any undivided interest therein ” (23 Ind. 179); in case of a “change of title” (10 Mich. 279); “ or any change took place in the title or possession ” (51 Conn. 222; 20 Fed. Rep. 657) ; and therefore they cannot be rightfully claimed as direct authorities for the insurance company in the case at bar. In the case in 40 Iowa, 551, the condition against alienation was very similar to those above quoted, but the Supreme Court of Iowa held “that nothing less than a sale of the entire interest of the party insured would defeat the policy.” This doctrine was maintained by Drummond, J., in 4 Biss. 411.

Heretofore this precise question has not been before this court, and in the conflict of authorities respecting it, we feel at liberty to adopt that rule upon the subject which most nearly accords with the policy of our decisions and the presumed intention of the parties. It is the policy of this court to strictly construe those clauses in an insurance policy which forfeit the indemnity provided for the assured. West et al. v. The Citizens' Insurance Company, 27 Ohio St. 1. In this case, on page 10, Johnson, J., refers with approval and in the following language to the views on the subject contained on page 74 of May on Insurance: “Exceptions in a policy should be strictly construed, and where there are two interpretations equally fair, that which gives the greater indemnity should prevail.” And on page 13 (27 Ohio St.) the same learned jurist says: “Stipulations in a contract providing for disabilities or forfeitures, are to receive, when the intent is doubtful, a strict construction against those for whose benefit they are introduced.”

Let us recur to the exact words of forfeiture as they are set forth in the defendant’s answer. “If.....said assured should sell or transfer the property thereby insured, that said policy should become null and void.” It was competent for the policy to provide, expressly, that a sale of a part of the property or of an interest therein should avoid the policy; this they did not do. The absence of a specific provision to that effect when it could have been so easily inserted, together with the rule before referred to that conditions which defeat a policy should be construed strictly against the forfeiture, leads us to hold that a sale of the entire interest of the party insured was necessary to avoid the policy.

In a strict legal sense, perhaps, wherever one engaged in business alone, takes a partner into his business, or a firm receives a new member, or a member goes out, the transaction results in the formation of a new concern, accompanied by a sale and transfer of all the property of the old establishment to the new one; but it is at least doubtful whether this strict legal result is contemplated by the business world generally. That the parties in the case before us intended the policy should be avoided, in case the assured received a partner into his business, is uncertain; that the plaintiff understood the transaction to be a sale of an undivided half of the property and business to Horman, rather than a sale of the whole of it to a firm composed of himself and Horman, is quite probable. It was competent for the parties to provide in unambiguous terms that, if the assured received into the business, without the consent of the insurer, a partner, the policy should become void. This was not done, and we think the principles already announced require us to hold that the sale and transfer resulting from the reception of a partner did not avoid the policy.

Notwithstanding the transaction the plaintiff retained a substantial and insurable interest in the property covered by the policy, while to avoid the policy on account of the provision against alienation it should have divested him of his eutire interest.

The defendant contends that this construction disregards the rule that, in construing an instrument, effect should be given to all its parts ; and that to hold that the plaintiff must divest himself of his entire interest to avoid the policy renders the provision against alienation nugatory, because, if the policy contained no such provision, yet he could not recover for a loss that occurred after he had sold his entire interest, as in that event he suffered no injury, and the contract of insurance is one of indemnity. Whether the construction we have adopted renders the provision against alienation nugatory or not, or whether circumstances may not arise under which it might be operative, we do not deem it necessary to inquire, for the rule thus urged upon our consideration is only one of many rules applied by courts to ascertain the meaning of the words adopted by parties to express their intentions, and in many instances it readily yields to other rules of construction, as we think it should in the case now under consideration.

The remaining question presents no difficulty. Section 4993, Revised Statutes, requires an action to be brought in the name of the real party in interest. Here the plaintiff, alone, is interested in the policy of insurance set forth by him in his petition; the contract it contains is to indemnify him; he can recover, of course, only to the extent he has been damaged; but, as no question is before us as to its proper measure, it will not receive consideration.

Judgment reversed.  