
    ROSENSTEIN et al. v. TRADERS’ INS. CO. OF CHICAGO.
    (Supreme Court, Appellate Division, Fourth Department.
    January 13, 1903.)
    1. Insurance—Transfer of Title—Conditions—Violation.
    A policy provided that it should be void if any change other than by death of insured should take place in the title of the subject of insurance. A judgment had been rendered against insured, and thereafter, without the insurance company’s consent, he executed a deed of the property insured, in which his wife joined, to their son, intending thereby to prevent the enforcement of the judgment against the same. The deed was recorded, but no consideration was paid by the son, and there was no change of possession. (Held, that the deed constituted a “change of title,” within the policy, rendering it unenforceable.
    3. Same—Mortgage Clause—Breach of Condition by Insured—Effect.
    Where a mortgagee did not require the insertion in a policy on the property of the statutory clause that the insurance, as to the mortgagee’s interest, should not be invalidated by any act of the mortgagor or owner, a breach of condition by the insured voiding the policy invalidated it as to the mortgagee.
    If 2. See Insurance, vol. 28, Cent. Dig. §? 707.
    McLennan and Spring, JX, dissenting.
    Appeal from trial term, Orleans county.
    Action by Solomon Rosenstein and another against the Traders’0 Insurance Company of Chicago, 111. From a judgment in favor of plaintiffs, defendant appeals. Reversed.
    Argued before McLENNAN, SPRING, WILLIAMS, HISCOCK, and NASH, JJ.
    Horace McGuire, for appellant.
    T. S Dean, for respondents.
   HISCOCK, J.

This action was brought to recover upon a policy of insurance issued by the defendant to the respondent Rosenstein, and containing a clause in favor of the other respondent, the Brock-port Loan & Building Association, as mortgagee. The defense urged upon the trial and upon this appeal was and is that said policy became invalidated through a violation of a clause therein contained respecting a change of title without notice to or consent by the company. The learned trial justice held that the evidence disclosed no such violation of said clause as invalidated said policy, and therefore rendered judgment in favor of plaintiffs. We think that he committed such error in so ruling as requires a reversal of the judgment appealed from. The clause contained in the policy which is material provides that “the entire policy shall be void if any change, other than by the death of the insured, should take place in the interest, title, or possession of the subject of insurance, whether by legal process or judgment, or by voluntary act of the insured, or otherwise.” The subject of the insurance was real property. After the policy was issued, without any notice to the defendant, the plaintiff and insured, Rosenstein and his wife executed to their son a warranty deed of the premises, which was thereafter delivered to him, and still later by the father duly placed upon record in the county cleric’s office. Thereafter the fire occurred which occasioned the loss in question. There was no dispute in the evidence concerning the execution of this transfer, and in regard to what took place in connection therewith. It seems that a judgment had been recovered against the plaintiff Rosenstein about io years before the execution of this deed. He desired to so place the real estate covered by the policy of insurance that the judgment could not be enforced against it. His son took counsel with an attorney, and, in accordance with advice received, had a deed prepared, which he took to his father, who thereafter executed the same, his wife joining in the execution, and who still later placed the same upon record. The son knew of the execution of the deed, had it in his possession after execution, understood it was to be recorded, and was informed by his father that it had been so recorded. The deed recited a consideration, but as a matter of fact neither the sum' stated nor any other sum was paid by the son to his father therefor, and no change took place in the possession or control of the property. Under these circumstances, as above stated, the trial justice held that there was no such change in ownership, title, or possession as invalidated the policy. The respondents, in seeking to sustain this decision, place especial reliance upon the-case of Forward v. Insurance Co., 142 N. Y. 382, 37 N. E. 615, 25 L. R. A. 637, and we may assume that such case was largely relied upon by the trial justice in reaching the conclusions which he did. In that case the subject of insurance was personal property, and the insured, before the policy was issued, had given a purported bill of sale thereof, which was placed on file in .the town clerk’s office. As a matter "of fact, no consideration for this purported transfer was ever given, and there was no change, or thought or expectation of change, in the possession, control, and real ownership of the property. The purported transfer was nominal, and the instrument was colorable, and executed apparently for the purpose merely of impeding creditors. It was claimed by the defendant in that case that this purported transfer came within the provisions of a clause in the policy that the same should “be void * * * if the interest of the insured' should be other than unconditional sole ownership.” The court held, a majority of the judges concurring, that the transaction described was not a violation of said clause. We do not, however, regard a fair construction of that case as sustaining the claim made by respondents in this action. It seems to us that the two cases may clearly be distinguished. Without stopping to dwell upon the fact that there was another answer to defendant’s defense in that action than that furnished by overruling its contention with reference to the violation of the clause in the polic)r, we think there were features which plainly distinguished that case from this one. The property which was the subject of the purported transfer in the Forward Case was personal property. Nothing was done to make a transfer thereof except to execute and place upon file a written bill of sale. Change in possession or control of the property, which, under all ordinary circumstances, is so essential an element to a transfer of the ownership of personal property, was entirely wanting. As stated by the court:

“Nothing was done except to execute and file a paper. There was no intention in fact to transfer the title, or vest any beneficial interest in the nominal vendee. * * * It was a mere paper transfer without consideration, and without delivery of possession, and, while it had the form, it had none of the legal elements, necessary, even between the parties, to constitute a valid contract of sale. In legal effect, it was * * * the same as an unexecuted gift.”

In the case at bar the property is real estate. All that was necessary to be done to accomplish an absolute and perfect change of title from the grantor to the grantee was done when the deed was duly executed and placed on record. An alteration in the possession of the property was, to say the least, no such essential element to a complete transfer as it would have been in the case of personal property. Upon the execution and recording of the deed, the son, as grantee, became vested with what was, under the statutes and law governing the subject, a perfect record title. He was in position to deal with the. subject of his deed by conveyance. A person desiring to negotiate with him upon the faith of his title would have been under no such necessity to investigate the subject of possession as would have at least been natural and prudent in the case of a paper transfer of personal property. Upon the undisputed evidence we believe that he would have been entitled to enforce his conveyance as. against his grantor, the insured. Moreover, it was clearly the intention of the parties that there should be a change in the title to this real estate. That was necessary to carry out the plan formulated in their minds of withdrawing the property from any pursuit which the judgment creditor might attempt to make. Very likely they intended that this change in title should be utilized and claimed only in a qualified degree. As between themselves, it was doubtless the intention that at some time in some way the father should be reinvested with the title to or get the benefit of this real estate. But for the time being, and certainly a-s against the judgment debtor, it must be assumed that their purpose was to insist that this conveyance was valid and effective for the purpose of transferring the title from the judgment debtor to his son. We think it is no violent presumption to assume that, if this action were a proceeding by the judgment creditor to reach this property, both the father and the son would be upon the stand, pointing .to ¡this conveyance as a valid and effective one to take the title to the property away from the lien of the judgment The question of where this title is may, perhaps, be tested by other illustrations, if it were necessary to bring an action of ejectment to recover the possession of the real estate, and that action should be instituted in .the name of the father, with this deed on record running to the .son, we apprehend that no court would hesitate to declare against the right of the former to maintain the action. If .the father, having made a contract of sale of this property, should attempt to enforce specific performance by the vendee with the deed in question upon the record to his son, we again apprehend that no court would he willing to indorse by a favorable decision ‘ his right to maintain such action. These considerations, and others which might be urged, lead us to the conclusion that the transfer in this case cannot, like that of the personal property in the Forward Case, be regarded as a mere nominal, colorable, and unexecuted transfer.

When we come to the consideration of the respective clauses in the two cases claimed to have been violated, we find what seems to us to be a wide difference. As already stated, the clause in the Forward Case called for an absolute, unconditional ownership of the property by the insured, and, as already indicated, the .court found that such ownership existed. In this case the clause provides against a change in the “interest, title, or possession” of the subject of insurance. Those words, to our mind, are very comprehensive and explicit. They guard against a change in the interest of the insured, and likewise against any alteration or modification of the title or possession. The wording clearly indicates an intention to have the policy avoided if a change should occur in either the “title or the possession.” The concurrence of both was distinctly rendered unnecessary by the language employed. While it is true that there has loeen no change in the actual, physical possession of this real estate, we scarcely see how it can be claimed, with the warranty deed duly executed and spread upon the records of the county clerk’s office conveying the real estate from the father to the son, that there has been no change in the title.

We do not lose sight of the contention made by respondents that this deed was not intended eventually to be effective as between the father and the son, but that it was only executed for a qualified purpose; that the spirit and intention of the clause in the policy of insurance such as is under consideration here is to guard against any moral hazard involved in changed relations to the insured property, and that there is no such change here as supplies the basis for such a hazard. We are, however, uiiable to agree with this argument. The defendant had a right to say in its policy that the same should be invalidated by a change in the title, and, having done this, we think that upon the facts devéloped in this case it is entitled to insist that a violation has occurred. Further than that, however, we do not think that the transaction between the father and son was entirely free from those features which would entitle the defendant to insist that it had an equitable and meritorious right to object to the change in the situation brought about by the parties. We think that under the clause quoted it might fairly insist that it should not be held liable for property subject to a shifting and uncertain title, which at one time, for one purpose, would be claimed to be in one person, and at another time, for another purpose, would be claimed to be somewhere else. We certainly do not feel that there is any such lack of merit in the defendant’s defense in this case as should lead us to put a strained and unnatural construction upon the clause in order to relieve the insured from the difficulties created by him.

It is further urged that, so far as the loan association is concerned, it is harsh to deprive it, as a mortgagee, which took no part in the transfer, from the protection of the insurance. In support of this contention the learned counsel for the respondents calls our attention to a clause framed by the statutes of this state, which provides that the “insurance, as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within-described property.” We think that this argument discloses its own weakness. The law provided a clause for the benefit of the mortgagee, which it might have insisted upon, and which would have amply protected it from the loss which it is now suffering. It failed and neglected to insist upon this clause, and to secure the protection afforded thereby, and this court is powerless to relieve it from the consequences of its omission. In accordance with these views, the judgment appealed from should be reversed, and a new trial granted, with costs to the appellant to abide event.

Judgment reversed, and new trial ordered, with costs to appellant to abide event, upon questions of law only, the facts having been examined, and no error found therein.

WILLIAMS and NASH, JJ., concur.

McLENNAN, J.

(dissenting). The action was commenced to recover the amount of the loss sustained by the plaintiffs by the destruction of a barn by fire, insured by a policy of insurance issued by the defendant, insuring the building alleged to be owned by the plaintiff Rosenstein against such loss. The loss, if any, was made payable to the plaintiff building association, as its interest might appear, it being the owner of a mortgage upon the premises. The policy was the standard policy, and contained the usual provision which provided that the policy should be void in case there should be any change in the ownership or interest in the property without the consent of the company indorsed thereon. The policy was issued on the 24th day of May, 1 goo. The barn was destroyed by fire on the 19th day of March, 1901. The amount of the loss is not in dispute. After the policy was issued, the plaintiff Rosenstein and his wife, without the knowledge ' or consent of the defendant, executed a warranty deed in the usual form, of the farm upon which the bam was situated, in which deed his son, Abraham Rosenstein, was named as grantee. The consideration expressed in the deed was $3,000. The deed was procured to be executed by Solomon Rosenstein through his son, and it was procured to be recorded in the office of the clerk of Orleans county on the 14th day of January, 1901, by the grantor, and since it was recorded it has-been in his possession. The learned trial court found that the deed was never delivered to the grantee, although he knew of its execution • that no part of the consideration was ever paid; that the grantor continued in possession of the premises after the deed was executed the same as before, and that it was not the intention of the parties- that any title to or interest in the farm should pass to the grantee by virtue of such deed; that it was made and recorded for the purpose of preventing the collection of a judgment which had been recovered by a creditor against the grantor, the father of the grantee, and for nq other purpose. The court also found that, notwithstanding the execution and recording of such deed, the plaintiff Solomon Rosenstein continued at all times to- be the owner of the farm in question and of the building insured. The facts upon which such findings were based were testified to by the grantee, and are not contradicted, the defendant having offered no evidence to rebut the same. The only defense urged is that, as matter of law,, the execution and recording of the deed in question rendered the policy void.

It seems to me that the decision in Forward v. Insurance Co., 142 N. Y. 382, 37 N. E. 615, 25 L. R. A. 637, is decisive of the case, and compels an affirmance of the judgment upon the facts found by the court. In that case the policy covered a store, stock of goods, and store fixtures, and the personal property was destroyed by fire. The policy contained'substantially the same provisions in relation to a change of title or interest as the policy in question. The owner e-xeouted a bill of sale of the personal property to his brother, which was filed, but possession of the property was not surrendered, and the grantor' continued in possession of the same. The bill of sale was given for the purpose of preventing the creditors of the grantor from recovering their debts from him. No consideration was paid for the transfer of the property included in the bill of sale. There was no -change in possession, and it was not intended by the parties to such bill of sale that there should be any change in the ownership of or interest in the property. It was held the policy was not avoided. The vital point in that case was not as to the form of the transfer, but was as to whether or not the parties intended by it to transfer the title to the property,, or any interest therein. It having been found by the trial court that they did not so intend,, it was held by the court of appeals that such pretended transfer did not affect the policy of insurance upon which it was sought to- recover. In the case at bar it should be borne in, mind that the trial court has found upon sufficient evidence that it was not the intention of the father- to convey to the son, and that it was- not the intention of the son -to deceive from the father, the property which was in form conveyed, or any interest therein. I think the distinction which, is sought to be drawn in the prevailing opinion between a conveyance of real estate by a deed and- a transfer of personal property by a bill of sale is entirely immaterial. The point upon which the court of appeals- laid stress i'n the Forward Case, supra, was the intention of the parties; was the fact that the grantor did not intend to convey, and that the grantee did not intend to receive, by virtue of or under the bill of sale, any interest in or title to the insured property.

Again, we call attention to the fact that in the case at bar the learned trial court has found that such deed was never delivered by the plaintiff Solomon Rdsenstein, the grantor-.named therein, and was never accepted as such- by the grantee; that the consideration expressed in- said deed was-the. sum of $3,000, but in reality .there was no consideration whatever for said deed; that said deed was colorable only,-, and was- not intended to transfer the title to said premises. In the case of Barry v. Insurance Co., 110 N. Y. 1, 17 N. E. 405, it was held- that, where a policy of fire insurance, contained a condition- to the effect that a sale •or transfer of. the, property, or any change in the title, without the consent of the company, would- void, the policy, a deed of the property, -executed simply to secure a debt, was not within- the condition, and did not affect the policy. In the Forward Case, supra, Judge O’Brien, in writing the opinion of the court, said:

“When the- transfer or incumbrance is merely colorable or nominal', and not real or effective, the reasons that induced the stipulation do- not apply. Was there- any real sale or transfer of this property within the- meaning of the policy? Nothing was done except to execute and.file a paper. There was no intention, in fact, to. transfer the title, or vest, any beneficial interest in the nominal1 vendee. There was no debt to be enforced; No consideration passed, and the use and possession remained, unchanged. The filing of the paper added nothing to- its- validity. It was not a mortgage, nor intended- as a security for any debt.. It was a mere transfer, without consideration, and without delivery of possession; and, while it had the form, it had none of the legal elements; necessary, even between the parties, to constitute a valid-contract of sale. In legal- effect it was, I think, the same as an unexecuted gift. The worst that can be said of it is that it was intended to defraud creditors, and, if that be true, the moral hazard, which was the basis of the condition of the policy, would still be absent, since the plaintiff’s interest in the property at the time of the insurance was, in fact, the same as before the same was executed.”

The part of the opinion of Judge O’Brien above quoted covers in all essentials the facts of the case at bar. As we have seen, and as the court found upon sufficient evidence, the grantor did not intend to convey, the grantee did not intend to receive a conveyance, the possession remained unchanged, and delivery of the deed was not in fact made with intent that it should convey title or interest.

In the case of Ten Eyck v. Whitbeck, 156 N. Y. 341, 50 N. E. 963, the court said:

“The delivery of a deed is essential to the transfer of title, and there can be no delivery without an acceptance by the grantee. The question of delivery, involving as it does acceptance, is always one of intention; and, where there is a conflict in the evidence, it becomes a question of fact to be determined by a jury. There must be both a delivery and acceptance with the intent of making the deed an effective conveyance. Jackson v. Phipps, 12 Johns. 418; Same v. Leek, 12 Wend. 105; Brackett v. Barney, 28 N. Y. 383, 340; McIlhargy v. Chambers, 117 N. Y. 532, 23 N. E. 561; Younge v. Guilbeau, 3 Wall. 641, 18 L. Ed. 262.”

Many other cases of like import might be cited, but it would seem that those referred to should be regarded as controlling upon the question presented by this appeal. Was there an intention to transfer or convey the title to the insured property ? The trial court, by its finding, has said no. Was there an intention on the part of the grantee to acquire by such deed any title to or interest in the premises ? The answer of the trial court is in the negative. Was there any delivery of the deed, or any intention to deliver it? Again the finding of the trial court is in the negative. The possession of the premises remained unchanged. No consideration was paid by the grantee for any transfer to him of the premises. It was simply a colorable transfer, made for the purpose of preventing the creditors of the grantor from recovering their indebtedness. Under those circumstances, and assuming those to be the facts, under the decisions referred to we think it cannot be held that the condition in the policy was violated, but, on the contrary, that the plaintiffs are entitled to recover. If the question had not been decided by the court of last resort, we might be quite willing to assent to the reasoning and logic of the majority of the court, as expressed in the prevailing opinion, but, as it seems to have been decided, we should yield to such decision.

It follows that the judgment should be affirmed, with costs.

SPRING, J., concurs.  