Since it is the duty of the mortgagor and of the insurer to have attached or inserted such a loss payable clause, then that which the statute requires to be done will be regarded as having been done. The Fifth Circuit accurately assessed our law. According to the quitclaim deed granted to LCD, as a part of the conveyance, LCD assumed all indebtedness due or to become due on the mortgaged property. The insurance policy purchased by LCD can most accurately be construed as a fire insurance policy. The policy lists a variety of causes of loss that are under the basic coverage of the policy.
Fire is mentioned first.
Clearly an equitable lien exists in the present case. As such, we conclude that PCNB is entitled to an equitable lien in the proceeds of the policy. General Star asserted two defenses at trial. It claimed that LCD never acquired an insurable interest and that LCD never filed a sworn proof of loss. The chancellor found that LCD had acquired record title to the property and had record title at the time of the loss giving it an insurable interest in the property.