GROCERY SHOP BURNT

Otago Daily Times, Issue 23883, 10 August 1939, Page 2

GROCERY SHOP BURNT

SEQUEL TO RANFURLY FIRE CLAM AGAINST INSURANCE COMPANY Mr Justice Blair has given judgment in the action brought by Alexander Douglas Black against the United Insurance Company, Ltd., a claim under a policy of insurance against loss by fire. In a lengthy judgment his Honor found for the plaintiff. The judgment states that the policy was issued on April 27, 1937, to the plaintiff, A. D. Black, as owner, and covered the stock-in-trade of a general store and drapery business and office furniture then carried by the plaintiff at Ranfurly. Otago, the sum insured being £IOOO. This particular policy was a new one, replacing other similar policies which had been in force since 1928. The plaintiff -nad an adopted sonHarold Robertson Black—to whom he sold the business on February 9. 1937. The purchase price was £653 7s 4Jd, which was arrived at by valuation of the stock and fittings. The son paid the plaintiff £3OO cash. Thereafter until the destruction of the business premises by fire, on September 8, 1938, the son carried on the business. The amount owing by the son to the plaintiff at the time of the fire was £354 0s 4d. This fire destroyed the premises and contents, and the son was convicted of arson in respect of the fire and was sentenced to three years' reformative detention.

The judgment deals with the father's and the son's correspondence with the defendant company in regard to obtaining a policy which would safeguard the father's loan of £354 0s 4d, and the whole issue resolved itself into whether the father had an "insurable interest" in the stock, fittings, etc. The plaintiff also had the store premises insured with the defendant company for £BOO, and the company had paid the plaintiff the full amount of the insurance thereon. His Honor, after quoting the correspondence which took place between the plaintiff and his son and the insurance company, goes on to say:— "The question I have to decide therefore is whether in the case of a separate insurance company insuring the father on the basis I have assumed as above stated would it be able to avoid payment to the father on the ground that he had no insurable interest. It is not disputed that unless the plaintiff has an insurable interest he cannot recover. What then is the plaintiff's interest in the preservation of this stock in trade? It is clear he has no legal, interest in it. That I take it is conceded. And using the word in its strict legal sense I doubt if the plaintiff has any equitable interest in the stock in trade. But as between the son and the father both of them believed that the father had some sort of lien or equity in the stock to the extent of the unpaid purchase money. And the son's acceptance of the policy with the father's name on it is an acknowledgment that such was the position. All the plaintiff has in strict law is a covenant by the then owner of the stock in trade to pay the balance of the purchase monev on such stock in trade The beneficial interest of the plaintiff in the preservation of the stock in trade is that its loss by fire uninsured would certainly affect the plaintiff's chance of getting paid the balance of purchase money, and would destroy what both parties looked upon as at least a morally binding arrangement. The plaintiff in this particular case can actually prove a loss, because the son's ban'auptcy supervening on the fire coupled with the loss of the insurance moneys by reason of his act of arson means that the plaintiff, except to the extent that he may receive a dividend in the son's bankruptcy has lost the sum the loss of which both he and the defendant company that insured him against in the event of fire believed him to be insured against Any such dividend is admittedly to be credited against the Dlaintiff's actual loss. . . .

"Shortly put, therefore, the'position is that the company having been told the true position elected to give the plaintiff tne cover he sought. The cover was effected by stating that the policy 'stands in names of Alexander Douglas Black as vendor and H. R. Black as purchaser.' The contract in this case is very like a combination of an insurance against lire coupled with a kind of contract of guarantee of payment of a debt by a third party, the guarantee becoming effectual only on the happening of the fire. "I cannot in this case gel over the fact that there was full disclosure > to the insurance manager of the position and the acceptance by the company of the insurance on the basis of the position as disclosed. "Judgment will therefore be for the plaintiff for the amount claimed, but such judgment to be conditioned upon the plaintiff executing such assignment or transfer as the defendant company may require of all his. the plaintiff's, rights against H. R. Black in respect of purchase money on stock. I allow plaintiff his costs on the middle scale with disbursements and witnesses' expenses to be fixed by the registrar." At the hearing in the Supreme Court Messrs E. J. Anderson and D. A. Solomon appeared for the plaintiff and Mr A. N. Haggitt for the defendant.