Case Name: John T. Macomber vs. The Cambridge Mutual Fire Insurance Company
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1851-10
Citations: 8 Cush. 133
Docket Number: 
Parties: John T. Macomber vs. The Cambridge Mutual Fire Insurance Company.
Judges: 
Reporter: Massachusetts Reports
Volume: 62
Pages: 133–137

Head Matter:
John T. Macomber vs. The Cambridge Mutual Fire Insurance Company.
The owner of mortgaged real estate obtained insurance thereon, payable to the mortgagee in case of loss, from a mutual fire insurance company, whose by-laws provided that no mortgaged estate should be deemed to be alienated, so as to avoid the policy, until the mortgage should be foreclosed, and that any policy, payable to a mortgagee in case of loss, should continue so payable, notwithstanding any subsequent alienation of the estate. A third person afterwards purchased the equity of redemption, and also obtained an assignment of the mortgage and of the policy. It was held, that the mortgage was thereby merged in the fee, and that no action could be maintained on the policy for a loss subse quently occurring.
This was an action of assumpsit, brought by the plaintiff, for the benefit of Eliphalet Wheeler, returnable at the October term, 1849, on a policy of insurance, whereby the defendants, on the 13th of March, 1844, insured Elijah Bemis and Cyrus Bemis against loss or damage by fire, under the conditions and limitations expressed in the rules and regulations annexed to the policy, for seven years, $600 on their dwelling house, “ payable in case of loss to John T. Macomber, mortgagee.” Among these rules and regulations was the following: —
“Am. 7. When any building shall be alienated by sale or otherwise, the policy shall thereupon be void; but the grantee or alienee, having the policy assigned to him by the insured, upon application to the secretary, within thirty days, may, with the consent of the president, have the policy renewed, upon becoming responsible for the payment of his, her, or their proportion of the conditional funds; and. by such renewal, the person or persons causing the same shall be entitled to all the rights and privileges to which the original insured was entitled under the said policy; and in case application and renewal shall not be made, as aforesaid, the policy may be surrendered, and the insured shall be entitled to receive his, her, or their deposit note, upon payment of his, her, or their proportion of all losses and expenses that have accrued prior to such surrender.
No mortgaged estate shall be deemed to be alienated, within the meaning of this article, until the mortgage shall have been foreclosed. And any policy, payable to a mortgagee in case of loss, shall continue so payable, notwithstanding any alienation of the estate, made subsequent to such mortgage; provided, such mortgagee shall pay any and all assessments, for which the company would have had a lien on the estate, if no such alienation had been made, if the original insured shall not pay the same on demand.”
The following facts were agreed by the parties: —
On the 17th of February, 1844, Elijah Bemis and Cyrus Bemis, being then the owners of the premises insured, mortgaged the same to Macomber. Elijah Bemis died in 1846, leaving a widow and eight children. On the 1st of September, 1847, Cyrus Bemis, and the widow and seven of the children of Elijah Bemis, duly conveyed all their interests in this estate to Eliphalet Wheeler; to whom the interest of the remaining child was also duly conveyed on the 14th of the same month. No notice of these conveyances was given to the defendants. After these conveyances, in 1846 and 1848, two assessments were laid by the defendants upon the deposit note, and collected of Cyrus Bemis.
On the 19th of November, 1846, Macomber assigned his mortgage, and all his interest in the policy, to Hollis Cloyes, who, on the 22d of September, 1847, assigned the same to said "Wheeler; and Wheeler, on the 34th of September, 1847, entered upon the premises, in the presence of witnesses, for the purpose of foreclosing the mortgage, and has since been in possession of the estate. On the night of the 26th of March, 1849, the dwelling-house described in the policy was wholly destroyed by fire; of which the defendants ha-’ due notice.
The parties agreed that the plaintiff should be nonsuit, or the defendants defaulted, as the court, upon the foregoing facts, should direct.
This case was argued and decided at the October term, 1850.
C. R. Train, for the plaintiff.
B. F. Jacobs, for the defendants.

Opinion:
Shaw, C. J.
This case is somewhat complicated in its facts, but when understood, we think it presents no question of great difficulty. The insurance was on the property and interest of Bemis and Bemis, payable to Macomber, mortgagee, in case of loss. The insurance was not upon the interest of Macomber; but the undertaking to pay him was a collateral and derivative contract, growing out of the principal contract with the assured, by which the company stipulated to pay to the appointee of the assured, when a loss should become payable, instead of paying to the fissured himself. The ordinary effect of such a contract between the three parties is, that if the assured, whose property and interest alone are covered, should aliene before a fire, he would sustain no damage, there would be no loss, for which the insurers would be responsible, and, therefore, the contingency, upon which the appointee, by the terms of the contract, would have a right to claim, could not happen. In general the assured must have an insurable interest, at the time of the damage by fire, as well as at the time of effecting the policy, in order to recover. Wilson v. Hill, 3 Met. 66; Murdoch v. Chenango Co. Mut. Ins. Co., 2 Comst. 210. But the policy and by-laws, which constitute together the contract of the company, contain an express stipulation, that no mortgaged estate shall be deemed to be alienated, until the mortgage shall be foreclosed And an? policy payable to a mortgagee in case of loss, shall continue so payable, notwithstanding any subsequent alienation of the estate. So far, therefore, as this policy was concerned, an alienation by the assured would not bar the right of the appointee or assignee to claim, when the loss should happen.
This stipulation, to pay Macomber in case of loss, was a provisional promise to pay a sum of money in the nature of a debt, and the assignment of it to Cloyes, and Cloyes's assignment to Wheeler, was the assignment of a chose in action, which vested an equitable interest in the assignee, which, in case the contingency should happen, and the obligation to pay become absolute, the assignee might sue for in the name of his assignor.
The remaining question is, whether this liability of the company did remain, in the events which occurred, until the happening of the loss by fire.
Taking the stipulation in the policy and the provision in the by-laws together, the true construction is, that although the insurance is not upon the interest of the mortgagee, and although the undertaking by the company to pay the mortgagee in case of loss is collateral and derivative, yet the stipulation is so made, because he is mortgagee, and for the better security of the mortgage debt. If therefore the mortgage is paid, foreclosed, or otherwise discharged and extin guished, such separate and collateral promise to pay the mortgagee would be determined.
The question therefore is, whether this mortgage was foreclosed. It appears that Wheeler first became the purchaser of the equity of redemption, and then took an assignment of the mortgage. Whether, in terms, he took the estate from the widow and heirs, and the surviving mortgagor, subject to the mortgage, or not, or as an equity of redemption, we do not think very material, because, in point of law, it was an equity, and was subject to that mortgage. Now, the court are of opinion, that when he legally acquired the entire equity of redemption, and then took an assignment of the mortgage, the two interests coalesced, and worked a merger, which vested in him an estate in fee, and effectually foreclosed the mortgage. After such union of the mortgage and the equity of redemption, of whom, as mortgagee, could he redeem, but of himself? Upon whom could he enter to foreclose but himself? On whom did he enter on the 24th September, 1847, for the purpose, as it is said, of foreclosing, but on himself?
It is said in argument, that he had a right to keep both estates open, for the purpose of foreclosing, and the better securing of his title. If indeed there had been any outstanding mortgage, attachment, or other real lien, which might intervene between his mortgage and his right of redemption, it might upon common principles have prevented a merger, and he would be entitled to stand upon both his rights. But there was no such intervening lien or real interest. The mortgage and the equity became merged, and this was a foreclosure, and primd facie a payment of the mortgage debt. What would have been the effect of an attempt to enforce payment of the mortgage note as a personal contract, we need not consider, because no such attempt was made. The court are therefore of opinion, that the mortgage was foreclosed before the loss by fire, and that the assignee cannot recover.
Plaintiff nonsuit.