opinion: HOME INS. CO. OF NEW YORK et al. v. SCOTT, and four other cases.
  Nos. 5275-5279.
  Circuit Court of Appeals, Sixth Circuit.
  Dec. 12, 1930.
  KIIJjlTS, District Judge, dissenting in, part.
  Rolland M. Edmonds, of Columbus, Ohio (Mooney, Bibbee & Edmonds, of Columbus, Ohio, on the brief), for appellants.
  F. S. Monnett, of Columbus, Ohio (James Joyce, of Cambridge, Ohio, and Elwood Murphy, of Columbus, Ohio, on the brief), for appellee.
  Before MOORMAN and HICKEN-LOOPER, Circuit Judges, and KILLITS, District Judge.
  Certiorari granted 51 S. Ct. —, 75 L. Ed. —.,
  MOORMAN, Circuit Judge.
  Those suits were brought in the state court and wore removed by tho several defendants to the federal court, whore they were consolidated. Each of them sought a recovery upon a policy of fire insurance issued upon wool, including woolen bags, belonging to plaintiff. To each of thorn the defense was made that plaintiff had placed a chattel mortgage on the property in violation of a provision in the policies as follows: “This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured he other than unconditional and sole ownership; * * * or if tho subject of insurance be personal property and be or become incumbered by a chattel mortgage.” In each of the policies there was the further provision that “no officer, agent or other representative of this company shall have power to waive any provision or condition of this policy except such as by tho terms of this policy may be the subject of agreement endorsed hereon or added hereto; and as to such provisions and conditions no officer, agent or representative shall have such power or he deemed or held to have waived such provisions or conditions unless such waiver, if any, shall he written upon or attached hereto.” This latter provision was relied upon by defendants in response to plaintiff’s claim that there was-a waiver of the former.
  It was shown in the proofs that on June 19, 1926, tho plaintiff executed a mortgage on the property to the Cumberland Savings Bank Company, and that this mortgage was subsisting with the principal unreduced at the time of the fire. It further appeared though that the mortgage had not been verified nor deposited for record as required by the Ohio Statutes. Upon this latter evidence the court concluded that it was not a mortgage, but was only a collateral contract, and, being of the further opinion that no other valid defense was made out, directed verdicts for the plaintiff for the full amount of the policies with interest.
  The statutes of Ohio (Gen. Code) provide: Section 8560, a mortgage of chattels “which is not accompanied by an immediate delivery * * * shall bo absolutely void as against the creditors of the mortgagor, subsequent purchasers, and mortgagees in good faith, unless tho mortgage, or a true copy thereof, be forthwith deposited as directed in the next succeeding section”; section 8561, such a mortgage “must he deposited with the county recorder of the county where the mortgagor resides”; and section 8564, “tho mortgagee, * * * before tho instrument is filed, must state thereon, under oath, the amount of the claim, and that it is just and unpaid.” We do not find from the language of these statutes that the failure of the mortgagee to comply with them vitiates the mortgage as between him and the maker. It has been ruled that it does not by the courts of Ohio. Hutchins v. Cleveland Mutual Ins. Co., 11 Ohio St. 477; Francisco et al. v. Ryan, 54 Ohio St. 307, 43 N. E. 1045, 56 Am. St. Rep. 711; Boyer v. Knowlton Co., 85 Ohio St. 104, 97 N. E. 137, 38 L. R. A. (N. S.) 224; York v. Cassell, 201 U. S. 344, 26 S. Ct. 481, 50 L. Ed. 782. Hence upon this point wo think the court was wrong, and that it must be held that the mortgage was an incumbrance within the meaning of the policy provisions relied upon.
  Three of the policies, those issued by the Sun Insurance Office, the Norwich Union Fire Insurance Society, and the Home Insurance Company, carried riders providing that any loss occurring under the policies that might be proved to be due the assured should “be payable to the assured and Cumberland Savings Bank Company, subject, nevertheless, to all the terms and conditions of the policy.” Two of them, those issued by the New York Underwriters Company and the Westchester Fire Insurance Company, carried no such clause. It is claimed by the plaintiff, as to these latter policies, that Stottsberry, the local agent who wrote them, was informed or knew of the mortgage, and hence, under Foster v. Scottish Union & National Insurance Co., 101 Ohio St. 180, 127 N. E. 865, and Hartford Fire Ins. Co. v. Glass, 117 Ohio St. 145, 158 N. E. 93, there were waivers of the policy provisions prohibiting the incumbering of the property. There are two objections to this contention: The first is the question is not controlled by Ohio law, but is one of general jurisprudence, Hartford Company v. Nance, 12 F.(2d) 575 (6 C. C. A.); the other, the contracts of insurance specifically provide that a waiver may be made only in a designated way, and there was no attempt to effect waivers in that way in these eases. We held in both the Nance Case and Hartford Co. v. Jones, 15 F.(2d) 1 (6 C. C. A.) that such provisions were binding upon the parties to the contract, and that, where' the policy contained such a provision, knowledge of the local agent of the forbidden condition did not effect a waiver of the policy provision. In our opinion there is no escape from the application of those cases to the two policies here in question.
  Nor did the defendants’ failure to tender a return of the premiums that were paid on the policies operate to estop them from urging the effectiveness of the policy provisions. United States Life Insurance Co. v. Smith, 92 F. 503 (6 C. C. A.); Georgia Home Insurance Co. v. Rosenfield, 95 F. 358 (6 C. C. A.); Kentucky, etc., M. Co. v. Norwich Union Fire Insurance Society (C. C. A.) 146 F. 695. Neither did the action of the adjuster, immediately after the fire, in investigating the loss, amount to a waiver of the breach of those. provisions. The evidence shows that plaintiff granted'the adjuster permission to make a full investigation, and agreed that such action as he might take in that respect would not constitute a waiver nor invalidate any of the conditions of the policies. It was under this agreement and with the full consent of plaintiff that the adjuster acted. Plaintiff was nowhere misled or prejudiced by his investigation) and certainly it ought not.to result in a waiver of a provision with which it had no legal connection. We hold that it did not, and also that the trial court should have directed verdicts for the New York Underwriters and the Westchester Fire Insurance Companies. Whether there are grounds for and the plaintiff may yet seek reformation of the policies issued by' those companies are matters not presented on this record. See reference to Northern Assuranee Co. Case, 183 U. S. 308, 22 S. Ct. 133, 46 L. Ed. 213, in Forkner v. Twin City Fire Ins. Co., 19 F.(2d) 419 (6 C. C. A.), j
  As to the policies with riders providing that any loss occurring under the policies should be payable to the assured and the Cum-. berland Savings Bank Company, the question is different. In two decisions by this court— Commercial Union Fire Insurance Co. v. Marshall, etc., 18 F.(2d) 457 and Firemen’s Insurance Co. v. Brooks, 32 F.(2d) 451, 452, 65 A. L. R. 909 — it has been held that such a rider is tantamount to an indorsement in accordance with the provisions of the policy permitting an incumbrance of the property. It is true that the policies in those cases provided for payment of the loss as “interest may appear”; but under the circumstances we do, not think a legal distinction can be founded upon the absence of that phrase from the two policies here under consideration. Nor is Bates v. Equitable Insurance Company, 10 Wall. 33, 36, 19 L. Ed. 882, inconsistent with that conclusion. In that ease there was no evidence “outside of the two indorsements * * * that there was any consent to accept Bates, the purchaser, as the party whose interest was insured,” and hence the question became determinable upon implications arising from the indorsements alone. It was pointed out in that ease, however, that, if it had been shown that it had been the course of dealing between the parties to recognize the indorsement of the party first assured as evidence of a sale or the indorsement of the company as a consent to the sale, or if it had been shown that by custom and usage in any particular place such indorsements were so treated, “the ease might be different.” In the case at bar the riders appear to have been attached to the policies by an agent of the company who was also an officer of the mortgagee bank. These riders were in the form and were attached in the manner provided for in the policies, and it is to be presumed, nothing to the contrary appearing, that the agent attaching them acted with full authority. The purpose in attaching them was to grant authority to encumber the property. The language used was that of the insurance companies and was sufficiently comprehensive for the purpose for which it was intended. The reasoning of Judge Hook in his dissenting opinion in the Atlas Reduction Company Case (C. C. A.) 138 F. 509, 9 L. R. A. (N. S.) 433, is therefore directly applicable. In the Brooks Case, supra, this court chose to follow and apply that reasoning rather than that of the majority opinion, stating that, “if there were no other consideration, the familiar rule that an ambiguity should be solved against the insurance company, the party which selected the language used, would be applicable; for it is, at least, not clear that the language used might not have been intended to refer to that very interest which Trimby in fact had in the property, and which he and his grantor had agreed should be insured by the grantor and by this policy for Trimby’s benefit.” In this case it clearly appears that the indorsements were made with full knowledge of the facts and were intended to authorize the incumbering of the property by chattel mortgage. They are sufficiently comprehensive, as we have said, for that purpose, and, being so intended, they seem to us to be quite as effective as they would have been had they contained the further phrase “as interest may appear.”
  Complaint is made of the court’s ruling in consolidating the eases and hearing them together. We think that action was proper. The main question in each case was that of liability, and each ease was decided upon its own facts. There is no showing anywhere in the record that any one of the defendants was prejudiced by the trial of its case with the others. Nor in our opinion was it error to permit plaintiff to proceed with the trial without making the mortgagee bank a party plaintiff. The insurance companies agreed in ease of loss to pay the money to the insured and the bank. They could have made the bank a party to the proceedings if they had wanted to. They preferred, apparently, not to do so but to litigate the claim with the party to whom the primary liability was due. After doing this they cannot be permitted to say that the judgment should be reversed because the bank was not a party. Furthermore, there is yet time for them to obtain any protection to which they may be entitled as against the bank, for when the ease is remanded, the court below will see to it, no doubt, that the money is paid into court to be held until the rights therein as between the plaintiff and the bank are determined.
  The remaining defense relates to arbitration. The policies provided, in the event of disagreement as to the amount of the loss, the same should be ascertained by arbitration, the insurance companies and the insured each to select an arbitrator, and the two so chosen to select an umpire. They further provided that no suit or action on the policies for the recovery of any claim should be maintained in any court of law or equity until there had been full compliance by the insured with all the terms and requirements of the policies. As there was no arbitration, and no steps were taken by the plaintiff to bring one about, it is contended by the insurance companies that the present suits cannot be maintained. We do not agree with the contention. The contracts of insurance did not provide for arbitration of the question of liability but of the amount of loss in ease of disagreement. The defendants denied liability before suit was brought and after it was brought. Their defense went to the question of liability, not the amount of loss. The question to be arbitrated was therefore never reached, and defendants did not permit it to be reached. In this situation they cannot say that suits on the policies cannot be maintained.
  It results from the foregoing that the lower court was right in directing verdicts against the Sun Insurance Office, the Norwich Union Fire Insurance Society, and the Home Insurance Company. The judgments against those companies, however, carried interest from the date of the fire. In this respect they were erroneous, for each policy provided that the sum for which the insurer should become liable should not accrue until sixty days after proof of loss. Proofs of loss were made on October 4, 1926. The judgments against these three companies will therefore be affirmed upon condition that appellee file in this court within thirty days a certified copy of a remittitur filed in the district court remitting the interest from the date of the fire until December 4, 1926, otherwise the judgments will be reversed. For the reasons hereinbefore stated the judgments against the New York Underwriters Company and the Westchester Fire Insurance Company are reversed.