Opinion
4 Div. 269.
March 24, 1927.
Appeal from Circuit Court, Geneva County; H. A. Pearce, Judge.
Mulkey Mulkey, of Geneva, for appellant.
Plaintiffs had no insurable interest in the property and no authority to maintain the suit. Acts 1919, p. 588, §§ 27, 28; Id., p. 570, § 3; Code 1923, § 5699; Yerby v. Sexton, 48 Ala. 311. A violation of the provision against overinsurance avoided the policy. Home Ins. Co. v. Morrow, 145 Ala. 284, 39 So. 587.
Carmichael Tiller and E. C. Boswell, all of Geneva, for appellees.
Plaintiffs had an insurable interest in the property, and were entitled to maintain the suit. School Code 1924, §§ 107, 108, 149; Words and Phrases, "Insurable Interest"; 26 C. J. 35, § 19k; 1 May on Ins. (4th Ed.) 153. Defendant insured the property with full knowledge of the facts, and is estopped to deny the interest of the plaintiffs. 26 C. J. 36, § 22; A. S. Knowles D. G. Co. v. Gunter, 204 Ala. 411, 85 So. 735; Harris v. Amer. B. L. Ass'n, 122 Ala. 545, 25 So. 200; Tobias v. Josiah Morris Co., 126 Ala. 535, 28 So. 517. Insurance contracts are construed liberally in favor of the insured. Georgia Home Ins. Co. v. Allen, 119 Ala. 436, 24 So. 399. The provision as to other insurance applies only to such as is procured by the assured or with his consent. 2 May on Ins. (4th Ed.) 365, 803; London, etc., v. Turnbull, 86 Ky. 230, 5 S.W. 542; Carpenter v. Continental Ins. Co., 61 Mich. 635, 28 N.W. 749; Phœnix Ins. Co. v. Boulden, 96 Ala. 614, 11 So. 774; Cowart v. Cap. City Ins. Co., 114 Ala. 356, 22 So. 574.
Notwithstanding the statute (Code, § 5699) which provides that "actions on * * * contracts, express or implied, for the payment of money, must be prosecuted in the name of the party really interested, whether he has the legal title or not," one to whom a contract is made payable as trustee for others may maintain an action in his own name. Rice v. Rice, 106 Ala. 636, 17 So. 628; Ala., etc., Ry. Co. v. Kyle, 202 Ala. 552, 81 So. 54 (headnote 10).
The policy here sued on insured "trustees school district No. 24, Chancellor, Ala., route No. 1." The action is brought in the name of "J. J. Newberry and E. R. Vaughan, suing as trustees of school district No. 24, Chancellor, Ala., route No. 1." The general nature of the trusteeship thus indicated is a matter of judicial knowledge, and the law itself lays upon these trustees the duty —
"to care for the property, to look after the general interests of the school, and to make to the county board of education from time to time reports of the progress and needs of the school, and of the will of the people in regard to the needs of the school." School Code 1924, § 107.
Under the principle above stated, these trustees were authorized to prosecute this action in their own name, as such trustees, although the money, when collected, would be held in trust for the benefit of others.
The principle is well settled, also, that agents and trustees, who have the care and custody of property or the duty of keeping it safely, have an insurable interest therein. 26 Corp. Jur. 25, § 5, and cases cited in note 65; note to Strong v. Manufacturers' Ins. Co., 20 Am. Dec. 515; Ins. Co. v. Chase, 5 Wall. 509, 513, 18 L.Ed. 524. As said in the leading case of Waring v. Indemnity, etc., Co., 45 N.Y. 606, 6 Am. Rep. 146:
"Agents, commission merchants, or others, having the custody of, and being responsible for, property, may insure in their own names; and they may, in their own names, recover of the insurer not only a sum equal to their own interest in the property by reason of any lien for advances or charges, but the full amount named in the policy up to the value of the property."
And, where the insurance is for the benefit of other persons whom the agent or trustee represents, the proceeds of the policy, when collected, are held in trust for them. This insurable interest of an agent or trustee is recognized even when he is under no legal obligation to insure. Ins. Co. v. Chase, 5 Wall. 509, 513, 18 L.Ed. 524.
This court has several times approved the statement (May on Insurance, § 80) that —
"Whoever * * * may fairly be said to have a reasonable expectation of deriving pecuniary advantage from the preservation of the subject-matter of insurance, whether that advantage inures to him personally or as the representative of the rights or interests of another, has an insurable interest." Continental Fire Ins. Co. v. Brooks, 131 Ala. 614, 618, 30 So. 876, 877; Commercial Fire Ins. Co. v. Capital City Ins. Co., 81 Ala. 320, 8 So. 222, 60 Am. Rep. 162.
Unquestionably, these plaintiffs, as trustees representing the state, the county or the citizens of their school district, had an insurable interest in this school property.
But, even were it otherwise, it is thoroughly well settled that —
"Where the company has, with knowledge of the nature of the interest of the insured, recognized such interest as sufficient to support a policy, it cannot question the sufficiency of such interest." 26 Corp. Jur. 36, § 22.
Conceding that this rule requires that the assured shall occupy such a relation to the property as would give him some sort of interest in its preservation, it cannot be denied that school trustees have a special as well as a general interest in their school property, such as would relieve their contract of insurance from the merely gambling element which is offensive to public policy. Quoting the language of the Supreme Court of Pennsylvania:
"This company demanded and received from this plaintiff, as the lawful holder of this policy, all the benefits and advantages which it was entitled to receive under it as a valid subsisting policy, up until the moment of the fire, and it would be a perversion of justice to permit it now to deny its liability and to allow it to escape the payment of its just dues under the contract. That is precisely what estoppel means." Light v. Countrymen's Mut. Fire Ins. Co., 169 Pa. 310, 316, 32 A. 439, 440, 47 Am. St. Rep. 904, 907.
Section 108 of the School Code, declaring that "the county board of education is charged with the duty of seeing that every school building-whose title is vested in the state, county or school district, is insured for its insurable value," does not require the county board to itself take out insurance in its own name, and by no means prohibits the school trustees from doing so. That provision has no bearing whatever on the issues of this case.
This policy was issued in October, 1922, and insured the property from October 19, 1922, for three years. The loss occurred on February 12, 1924. In the meantime, on October, 1, 1923, the state board of administration, duly authorized thereto, insured the "Geneva county board of education" for the same school building covered by the policy in suit, for the term of one year for $1,425, and delivered the policy to the county superintendent of education. Neither of these plaintiffs had any connection with the procurement of this policy, nor any knowledge even of its existence until after the loss; and thereupon the policy was canceled by the state board of administration, and the premium returned, prior to the institution of this suit. The policy sued on declares:
"This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy." (Italics supplied.)
It is insisted for defendant that, under this provision, the issuance of the state board of administration's policy on October 1, 1923, invalidated and voided the policy issued by this defendant.
So high an authority as May on Insurance (4th Ed.) vol. 2, p. 365, says that, in order to constitute "other" or "double" insurance, within the inhibition of such clauses, the insurance must be "effected by the same insured or for his benefit, and with his knowledge or consent." It is elementary that insurance policies are construed more strongly against the insurer, and that rule of construction applies with peculiar force to such provisions as this. According to the very words of the policy, forfeiture was to result if the insured made or procured the contract for additional insurance. It is no hardship on the insurance company to hold the intended forfeiture strictly within the bounds prescribed by itself, viz. to the acts or the cognizance of the person assured, and to deny the effect of forfeiture when that condition is not met.
The county board of education is distinct in every way from the several bodies of district school trustees; and, notwithstanding, the general interrelation of all governmental bodies, the doctrine that imputes to a principal the knowledge of his agent, because of their legal identity, can have no application to the various administrative departments of government, and the knowledge of facts possessed by one distinct body will not be imputed to any other. Hence the knowledge of the county board of education, or of the county superintendent, that other insurance had been taken out, was not, in fact or in law, the knowledge of the school trustees who took out the first policy.
Our holding is that the policy in suit was not voided or affected in any way by the issuance of the other policy.
We have discussed all those features of the case that are material to the result, and we conclude that the judgment for plaintiffs was free from error and should be affirmed.
Affirmed.
ANDERSON, C. J., and THOMAS and BROWN, JJ., concur.