"(d) If any change, other than by the death of an insured, takes place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard)."-This clause, commonly known as the "alienation clause," is extremely broad and simply declares that all such changes must be brought to the attention of the company in order to give it the opportunity of canceling the policy, if an undesirable new party is brought into the insurance contract. Many cases will arise where the courts must pass upon the effectiveness of certain changes in the insured's title, possession, or interest, and in this connection their attitude has favored the view that only material changes in title or possession of the property should nullify the policy. Thus the appointment of a receiver is not considered, by the weight of legal opinion, such a change in the title or possession of the property as to lead to a forfeiture (136 U. S., 223), since receivers obtain their authority from the court, and their appointment is not made with a view to changing the title or right to possession, but to managing the property for the benefit of those ultimately entitled to the same. Nor will this provision, by the weight of court opinion, be violated by an executory contract of sale, according to the terms of which the vendor retains possession until the purchaser has made all payments; or by any change whereby the interest of the insured in the property is increased; or by an invalid sale of property; or by a transfer between partners or trustees without bringing any new owner into the property insured.

The policy wording is also such as clearly to imply that the clause is not intended to work a forfeiture in the case of the transfer of the insured property, by the death of the insured, to his heirs or other representatives. By the weight of opinion, the provision against the transfer or change of the insured's title is invalidated through the

conveyance of an undivided interest in the property, although the amount of insurance happens to be considerably less than the remaining interest of the insured in the property. Similarly, the clause is violated when the purchaser of the property, before completing his executory contract, has taken possession and control of the insured property.

"(e) If this policy be assigned before a loss."

Provision against the existence of chattel mortgages.It is noteworthy that the fire insurance policy specifically requires a disclosure of chattel mortgages. The policy reads: "Unless otherwise provided by agreement in writing added hereto this Company shall not be liable for loss or damage to any, property insured hereunder while encumbered by a chattel mortgage, and during the time of such encumbrance this Company shall be liable only for loss or damage to any other property insured hereunder."

The foregoing clause is upheld by the courts, although, generally speaking, the existence of a chattel mortgage is not regarded, to quote the policy, as a "change of interest, title or possession of the subject of insurance" or an "increase of hazard." From the insurance company's standpoint, personal property, owing to its movable nature, is much more hazardous than realty. Moreover, this type of mortgage is often indicative of the mortgagor's limited financial resources.

Assignment of Fire Policies.-Assignment before loss without company's consent prohibited. The fire policy, as explained previously, is essentially a personal contract and insures the owner of the property rather than the property itself. It is for this reason that the standard policy provides: "This entire policy shall be void, unless otherwise provided by agreement in writing added hereto, if this policy be assigned before a loss." This clause is necessary and reasonable as a precautionary measure against fraud.

It often happens that companies, following an assignment made contrary to the aforementioned policy provision, consent to the continued validity of the contract when they are satisfied with the character of the parties concerned. But the frequent extension of such acts of grace to the insured should not be interpreted as creating a general usage which tends to compel the company to accept the assignee. In life insurance the courts of many states have decided that, in the absence of restrictive policy provisions, the policy is assignable. But in fire insurance, on the contrary, it is a well-established legal principle that the policy, since it is a personal contract, can be assigned before a loss only with the consent of the company. In case of the transfer of the insured property by sale, the company, for example, may refuse its consent to the transfer of the policy, and will be relieved of all further liability.

Form of the Company's Endorsement Acknowledging Consent to Assignment. The policy form usually provides two assignment blanks on the reverse side, which must be properly filled by the insured and insurer to effect an assignment. It should be explained that companies do not regard the partial assignment of a policy with favor. As pointed out by Barbour: 5 "It is rarely advisable to partially assign a policy, as for example, where it covers on a dwelling and on household furniture therein and the dwelling is sold. Either cancel and re-write under two policies, one for each owner, or cancel the amount covering on the property sold, and write a new policy thereon. in the name of the new owner.'

Robert P. Barbour: "Agent's Key to Fire Insurance,

P. 44

4

(SAMPLE ASSIGNMENT FORM)

ASSIGNMENT OF INTEREST BY INSURED

The interest of ...

John

Doe.

covered by this policy is hereby assigned to

subject to the consent of the

Assignment When There Has Been a Transfer of the Property. In discussing the legal nature of an assignment of a fire policy it is essential to distinguish between those cases where there is an actual transfer of the property and those where there is not. Thus where a policy is assigned to a mortgagee as his interest may appear, the mortgagee, as will be explained more fully in the next chapter, is not absolutely protected. In law the mortgagor is still regarded as the owner of the property and the insured, and it is, therefore, his conduct which will control the validity of the policy. The policy may be valid at the time of assignment to the mortgagee, but, unless court or statute law prohibits, may be rendered null and void thereafter by the mortgagor's improper conduct. Or, the mortgagor may already have violated the policy so as to make it void at the time of the assignment in which case he cannot convey to the mortgagee more than he himself possesses, namely, an invalid policy, and the mortgagee, as assignee, cannot receive more than the mortgagor was

in a position to give. To overcome this obstacle it is the general practice of companies to protect the mortgagee by indorsing on the policy a so-called "mortgagee clause" which promises to indemnify him as his interest appears, and especially provides that he shall be protected against any act on the part of the mortgagor which may invalidate the insurance.

Where, however, there has been an actual transfer of the title, and the policy has been assigned with the company's consent, it is the general rule to view the assignment as constituting a new and independent contract between the assignee and the company. The assignee will thus be protected against the acts of the original policyholder, and this is true even though the company lacked knowledge of some act of the assignor violating the policy conditions. With the transfer of the policy by assignment, consented to by the company, the purchaser is considered by the courts to be protected in the same way as if the company had reissued to him a new policy, similar in all respects to the policy held by the person originally insured. Ostrander, in summarizing the various legal decisions which define the character of an assignment where there is a transfer of the property, gives the following explanation: "The assignment in such case has no other legal effect than to acquit the company as to the party first insured. This might be done in a different, and perhaps better, form, but the method chosen is sufficient to accomplish the object sought. It is a short, simple process to release the insurer as to one party, and bind it as to the other. In Continental Insurance Co. vs. Munns (120 Ind., 30; 22 N. E., 781) the property had been mortgaged in violation of the conditions of the policy, which was subsequently assigned, on sale of the property, with the consent of the company, who had no knowledge of the forfeiture occasioned by this circumstance. The court