SECTION X.-Of the Defeasance of this Interest. AN insured may have a sufficient interest in the making of the policy, but it may be defeated afterwards, and this defeasance prevent or destroy his claim against the insurers. To have this effect, however, it must be something that operates as a complete divesting of his interest. If the goods insured are attached for debt, or seized on execution, he has still an insurable interest until the sale is made. Nor would a common assignment to trustees for the benefit of creditors defeat his interest.2 If he has contracted to convey the subject of the insurance, his insurable interest continues until the conveyance is made. Co., 1 Woodb. & M. 272. So, where ors. Adams on Equity, 31. 1 Hibbert v. Carter, 1 T. R. 745; Locke v. North American Ins. Co., 13 Mass. 61. In this case, A, having borrowed money of B for the purchase of a cargo, assigned the same to B, taking the bill of lading and making the invoice in B's name, under an agreement that B was to first receive his debt from the proceeds of the cargo, if it should be sufficient and should arrive safely, and the surplus, if any, should belong to A; or, in case of a loss, B should receive the amount of the insurance which was effected in A's name; and if in either case B should not be fully paid, A was to be accountable for the balance, the assignment and insurance being a pledge or security for the debt. A was holden to have an insurable interest in the cargo. Lazarus v. Commercial Ins. Co., 5 Pick. 76. Nothing short of a conveyance of the property insured amounts to an alienation. Masters v. Madison Co. Mut. Ins. Co., 11 Barb. 624. An ordinary assignment for the benefit of creditors constitutes the assignees agents, as it were, of the assign Thus Such a transfer would not destroy the interest of the original insured, and hence such an assignment would not work an alienation. Gourdon v. Ins. Co. of North America, 3 Yeates, 327, 1 Binney, 430, note; Gordon v. Mass. F. & M. Ins. Co., 2 Pick. 249; Lazarus v. Commonwealth Ins. Co., 5 Pick. 76. See also Dadman Manuf. Co. v. Worcester Mut. F. Ins. Co., 11 Met. 429. Stetson v. Massachusetts Mut. Fire Ins. Co., 4 Mass. 330; Gordon v. Massachusetts Fire & M. Ins. Co., 2 Pick. 249; Lazarus v. Commonwealth Ins. Co., 5 Pick. 76, 81; Jackson v. Massachusetts Mut. Fire Ins. Co., 23 Pick. 718; Higginson v. Dall, 13 Mass. 96; Rice v. Tower, 1 Gray, 426; Holbrook v. American Ins. Co., 1 Curtis, C. C. 193; Rollins v. Columbian Ins. Co., 5 Foster, 200; Folsom v. Belknap Co. Mutual Fire Ins. Co., 10 Foster, 231. In Vermont it seems to be doubted whether a mere mortgage would not be an alienation. Tittemore v. Vermont Mut. F. Ins. Co., 26 Vt. 546. In Indiana it is held to be an alienation. McCulloch v. Indiana Mut. F. Ins. Co., 8 Blackf. 50; Indiana Mut. F. Ins. Co. v. Coquilard, 2 Curt. Ind. 645. But it seems to be well settled, both on principle and it has been held that a policy of insurance will not be discharged by an executory contract for the sale of the object thereof, and by the receipt of a portion of the purchase-money, if the title to it at the time of the loss remains in the person insured; and his right to recover will not be limited to the balance of the purchase-money remaining due. And it has also been held in the same court that if a mortgagor of a vessel sells his remaining interest therein, with a stipulation that he will pay off the mortgage, and fails to comply with this stipulation, and the bargain is accordingly given up and the title reconveyed to him, a policy of insurance issued to him before his agreement of sale will be valid to cover a loss of the vessel after the reconveyance of title to him.2 And if the authority, that it is not. See cases, supra; also Bell v. Western Mut. & F. Ins. Co., 5 Rob. La. 423; Hibbert v. Carter, 1 T. R. 745; Alston v. Campbell, 4 Brown, P. C. 476; Reed v. Cole, 3 Burr. 1512; Pollard v. Somerset Mut. F. Ins. Co., 42 Me. 221. In McLaren v. Hartford F. Ins. Co., 1 Seld. 151, it was held that the interest of the mortgagor is gone after a sale of the mortgaged premises by a master in chancery under a decree of foreclosure, and payment of part of the purchasemoney, although the decree was not enrolled, and no deed executed by the master at the time of the sale. But in Bragg v. New England Mut. F. Ins. Co., 5 Foster, 289, where the insurance was in the name of the mortgagor, but the defendants had agreed by a memorandum on the policy to pay the loss to the mortgagee, it was held that a subsequent foreclosure did not work an alienation. In Morrison v. Tennessee Mut. F. Ins. Co., 18 Mo. 262, A effected insurance on certain property, and then sold it to B, who reconveyed it to a trustee, to secure to A the payment of the purchase-money. It was held that A still retained an insurable interest, and might recover on the policy to the extent of his actual loss. But if A conveys part of the premises to B, and then takes back a lease of the same for five years at a nominal rent, this is an alienation. Boynton v. Clinton & Essex Mut. Ins. Co., 16 Barb. 254. In Abbott v. Hampden Mut. F. Ins. Co., 30 Me. 414, where the policy declared that an alienation in whole or in part should avoid the policy, a feme covert was tenant for life in one third of a lot of land, and tenant for a term of years in the rest. Her husband erected a house on the land, and caused it to be insured as his property. The husband and wife then conveyed to the reversioner the life-interest of the wife, on condition that he should pay her a fixed sum annually during her life. The husband at the same time conveyed all his interest in the estate for years, and took back a mortgage upon the whole lot to secure the payment of several sums in yearly instalments. The mortgagor entered into possession. The house was destroyed before any of the sums became payable. Held, that the conveyances amounted to an alienation. 1 Boston & Salem Ice Co. v. Royal Ins. Co.; Adams v. Park F. Ins. Co.; Same v. Suffolk F. Ins. Co., 12 Allen, 381. • Worthington v. Bearse, 12 Allen, 382. vessel be captured, that interest continues until condemnation.1 It is a much more difficult question whether, if a vessel be liable to forfeiture for the breach of some statute law which has that effect, the insurable interest of the owner ceases as soon as the breach takes place, or continues until actual seizure, and perhaps until decree of forfeiture. This may depend in some measure upon the prior question, whether the property is vested at once in the government by the breach, or not until seizure or condemnation. In our notes we show the adjudication on this East India Co. v. Sands, cited 10 Mod. 79; Lucena v. Craufurd, 5 Bos. & Pull. 269, 319, per Lord Eldon, C. J.; The Arrogante Barcelones, 7 Wheat. 496; The Bello Corrunes, 6 Id. 152. Fontaine v. Phoenix Ins. Co., 11 Johns. 293; Amory v. McGregor, 15 Johns. 24. But see Wilkes v. People's Fire Ins. Co., 19 N. Y. 184. In United States v. 1960 Bags of Coffee, 8 Cranch, 398, and United States v. The Mars, Ib. 417, it was held that the forfeiture took place the moment the act was done, and that a person who became a bona fide purchaser before seizure had no rights as against the government. See also Gelston v. Hoyt, 3 Wheat. 246. The words of the statute creating forfeiture, under which the cases of United States v. 1960 Bags of Coffee, and United States v. The Mars, were decided are that "whenever any articles, the importation of which is prohibited by this act, shall be imported into the United States, all such articles shall be forfeited." In Clark v. Protection Ins. Co., 1 Story, 109, 134, Mr. Justice Story said: "It is not correct to say that property forfeited is vested in the government at the very moment of forfeiture, and the title of the owner immediately divested. On the contrary, the established doctrine is, that, notwithstanding the forfeiture, the property remains in the owner until it is actually seized by the government, and then by seizure the title of the government relates back to the time of the forfeiture. In the case of United States v. 1960 Bags of Coffee, and Gelston v. Hoyt, there had been a seizure and prosecution for the forfeiture by the government. The case of The Mars in this court, 1 Gallis. 192, 198, as to this point, has never to my knowledge been doubted or denied." See also dictum of Wayne, J., in Caldwell v. United States, 8 How. 366, 380. On referring to the case of United States v. The Mars, 8 Cranch, 417, we find that no opinion was given, the court stating that it depended on the coffee case, and therefore ordering the decree of the Circuit Court to be reversed. Mr. Justice Johnson, in delivering the opinion of the court in the coffee case, stated that the question rested altogether on the act of Congress; that it belonged to Congress "to decide on what event a divesture of right should take place, whether on the commission of the offence, the seizure, or the condemnation"; and the court were of the opinion "that the commission of the offence marked the point of time on which the statutory transfer of right takes place." It thus appears that this case was decided on the sole ground that the forfeiture divested the rights of the owner, and vested the right of property imme subject, and it will be seen that it is difficult to determine the question positively upon authority. We, however, are strongly disposed to hold, on general principles, that the insurable interest continues until seizure, and we add until condemnation. If there be as yet no seizure, how can it be certain that there will be a seizure? The claim under the policy is not divested by the breach of the law per se, but by that only as it leads to forfeiture. But if it cannot be certain that seizure will be made, before it is made, so it cannot be legally certain that a breach of law was committed, or that it will be followed by forfeiture, until that be established by the judgment of a competent court. If we suppose that the breach itself, or even the seizure itself, destroys the insurable interest, what would be the effect of a final judgment in favor of the owner? Would the property again come under the insurance which has been suspended in the mean time? We should prefer to say that the insurance had never been either destroyed or suspended, and would not be until a final judgment of forfeiture. Where the government had the election, either to seize the property, or to proceed personally against the offender, we should be still more confident that the insurable interest was not divested until the seizure took place.1 diately in government. This case of Clark v. Protection Ins. Co. and the case of Polleys v. Ocean Ins. Co., 14 Maine, 141, decide that the ship may be insured after the forfeiture and before the seiz ure. And the latter case is confirmed to some extent by the language of Mr. Justice Story in the Supreme Court of the United States, to which the case was taken. Ocean Ins. Co. v. Polleys, 13 Pet. 157. The decision of the court, however, proceeded on the ground that there was no jurisdiction. It is to be observed that the argument presented for the defence in this latter case was, that the vessel was sailing under circumstances which rendered her liable to forfeiture, and that the policy was therefore void. But if the defence had been taken that the interest of the insured ceased by the act of forfeiture, it would be difficult to see how the case could be reconciled with the earlier decisions of the Supreme Court, above referred to. 1 United States v. Grundy, 3 Cranch, 337. In this case it appeared that the United States had the option of a libel and condemnation of the vessel, the property of the defendant, or a proceeding in the nature of a personal action, but that before it elected the vessel was sold. Chief Justice Marshall, in delivering the opinion of the court, uses this language: "Has the doctrine of relation such an influence upon this case that an election subsequent to the sale shall carry back the title of the United States to the commission of the act of forfeiture, so as by this fiction of law to make them the real owners of the vessel at the time of sale, and conse quently of the money for which she was sold? Without a critical examination of the doctrine of relation, it would seem to be a necessary part of that doctrine that the title to a thing which is to relate back to some former time must exist against the thing itself, not against some other thing which the claimant may wish to consider as its substitute. To carry back the title to the Anthony Mangin to the act of forfeiture, the title to the Anthony Mangin must have an actual existence. If no such title exists, then the right to elect the vessel is lost, and the statute has not forfeited the money for which she was sold in lieu of her. Suppose, instead of being sold by the defendants, she had been exchanged by Aquila Brown himself for another ship, would that other ship have been forfeitable, by the doctrine of relation, in lieu of the Anthony Mangin? Clearly not; for the statute gives no such forfeiture. The forfeiture attaches to the thing itself, not to any article for which the thing may be exchanged." |