Case Name: Hammel vs. The Queen Insurance Company of London and Liverpool
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1880-10-12
Citations: 50 Wis. 240
Docket Number: 
Parties: Hammel vs. The Queen Insurance Company of London and Liverpool.
Judges: 
Reporter: Wisconsin Reports
Volume: 50
Pages: 240–246

Head Matter:
Hammel vs. The Queen Insurance Company of London and Liverpool.
September 22
October 12, 1880.
Insurance a&ainst Fire. (1) Reformation of policy: Jurisdiction of equity: Sow issues of fact tried. (2) When mortgagee of property may sue alone. (3) When demurrer for defect of parties plaintiff will lie.
1. In an action for a loss upon an insurance policy, an averment in the complaint of a mistake in the policy, and a prayer for its reformation, give jurisdiction in equity; if the policy should'be reformed, the court will retain jurisdiction for the determination of all issues which may be made upon it; and all issues of fact will, if required, be tried by a jury.
2. If a policy of insurance is payable to a mortgagee of the premises, as his interest shall appear, and if, when a loss becomes payable, his mortgage debt is in fact greater than the sum insured, the legal title of the policy is in him, and he may sue upon it alone.
3. In an action upon such a policy by the mortgagee alone, the question whether the mortgagor is a necessary plaintiff cannot be raised by de- ■ murrer, unless the complaint itself shows an interest in the mortgagor; and an averment that the mortgage debt still due the plaintiff exceeds the insurance, being admitted by demurrer, shows that plaintiff is the sole party in interest.
Orton, J., dissents from the last two propositions.
APPEAL from tbe Circuit Court for Outagamie County.
Action upon a policy of insurance. The complaint alleges: 1. The incorporation of the defendant. 2. That on the 17th of May, 1879, the defendant issued its policy, whereby it in sured O. A. Gachnang, Herman Gachnang and John Gach-nang against loss by fire, to the amount of $1,200, on certain described property, for the term of one year from said date; that the said Gachnangs had an insurable interest in the property, as owners; that the policy, at the time of its delivery, contained a clause as follows: “Loss, if any,payable to Max Goldberg, as his interest may appear as mortgagee; ” that on the 18th of September, 1819, the defendant, by and with the consent of the assured and the said Goldberg, promised and agreed with the plaintiff in writing by an indorsement upon the policy as follows: “Loss, if any, under this policy, payable to J. Hammel, as his interest may appear.” 3. That on the 11th of November, 1819, the property insured was destroyed by fire, and that the value thereof exceeded $1,200. 4. That the insured gave due notice and delivered due proofs of the loss to the defendant, and demanded payment. 5. That the plaintiff had an insurable interest in the property, for that, on the 2lth of December, 1817, the said Gachnangs executed and delivered to one Regina Gachnang their promissory note for $1,000, secured by a mortgage on the property insured; that at the time the mortgage was given the Gachnangs were in actual possession of the premises, and so remained until the assignment of said mortgage to Max Goldberg, which was made by said Regina Gachnang, April 4, 1818; that, at that time, said Goldberg took possession of said premises, and continued in possession thereof to the time of the fire; and that defendant well knew, at the time the policy was issued, that the interest of said Goldberg in said insured property was that of mortgagee in possession; that on September 28, 1819, said Goldberg duly assigned said note and mortgage to the plaintiff, and, with the consent of the defendant written on said policy as aforesaid, duly assigned to this plaintiff all his right, title and interest in and to the said policy, and all claims and demands which might accrue thereunder, and the defendant well knew at that time that the interest of the plaintiff in said insured property was that of mortgagee. 6. That plaintiff is the lawful holder and owner of said note and mortgage, no part of which has been paid, and that the interest of the plaintiff in said insured property, by reason of said note and mortgage, at the commencement of this action exceeded $1,200; that plaintiff is sole owner of all claims and demands against the defendant under said policy, on account of the loss aforesaid; and that there is due and payable to plaintiff from defendant, the sum of $1,200 with interest. 7. That defendant has received, accepted and retained said proofs of loss, but has refused to recognize plaintiff’s claim, and denied all liability, thereby waiving all proofs of loss. 8. That at the time of the .execution and delivery of the policy, the lots upon which the insured property was situate, were erroneously described as [description in the policy], and in order to make it conform to the actual intention and agreement of the parties, it is necessary that the said description in said policy should be corrected so as to read as follows: [true description].
The complaint concludes with a prayer for the reformation of the policy, and for judgment thereon.
The defendant demurred to the complaint on the grounds that there was a defect of parties plaintiff, in that the Grach-nangs were not joined; that the complaint does not state a cause of action; and that several causes of action are improperly joined. It also demurred specifically to the eighth paragraph on the ground that there is a defect of parties, as before; that it does not state a cause of action; and that the court has no jurisdiction of the subject matter of the alleged cause of action therein, the plaintiff having a plain, complete and adequate remedy at law.
From an order overruling the demurrer, the defendant appealed.
For the appellant there was a brief by Fmoh & Ba/rber, and oral argument by Mr. Barber.
For the respondent there was. a briej by Barnes & Good- land and Leopold Hammel, and oral argument by Mr. Good-land.

Opinion:
Byab, O. J.
1. The jurisdiction of equity to reform a'' written instrument, on the ground of mistake, is exclusive. Story's Eq., § 154-157; Follett v. Heath, 15 Wis., 601; Harrison v. Bank, 17 Wis., 340. The counsel for the appellant-referred to two cases in this court—Parker v. Ins. Co., 34 Wis., 363, and Roberts v. Ins. Co., 41 Wis., 327—in support' of the position that courts of law now possess concurrent jurisdiction. But neither of these cases, nor, so far as is known, any others, support him. And it is hardly necessary to remark that such a rule would open the door wide for parol evidence to modify written contracts, of which' courts of law have such an abhorrence. The rule is familiar that a'court of equity, having taken jurisdiction of the subject matter of- liti--gation for one purpose, will, retain it for all purposes between' the parties. Prescott v. Evarts, 4 Wis., 314; Akerly v. Vilas, 15 Wis., 401; Hamilton v. Fond du Lac, 25 Wis., 490.
The averment in the complaint of a mistake in the policy of' insurance, and'the prayer for its reformation, give jurisdiction in equity. If the policy should be reformed, the court will retain jurisdiction for the determination of all issues which may be made upon it; and all issues of fact will, if required; be tried by a jury. Harrison v. Bank, supra.
2. The legal title to the policy of insurance was as effectually in the plaintiff as if it had been assigned to him. Appleton Iron Co. v. Ins. Co., 46 Wis., 23. He was' mortgagee of the premises insured, and the loss, if any, was made payable to him as his interest might appear. His mortgage debt is averred to be greater than the sum insured. Thus his interest appears to be the whole interest in the policy. In these circumstances it is difficult to pereeive why the mortgagor is a necessary party. It has been held in this court that where the legal.title of the policy is in the creditor, he may maintain an' action oil tlie' policy in his own name. Northwestern M. L. Ins. Co. v. Germania F. Ins. Co., 40 Wis., 446. Elsewhere, the great current of authority is to the same effect. Grosvenor v. Ins. Co., 17 N. Y., 391; Cone v. Ins. Co., 60 N. Y., 619; Ennis v. Ins. Co., 3 Bosworth, 516; Chamberlain v. Ins. Co., 55 N. H., 249. Both may undoubtedly join as plaintiffs, as has been often held in this court. Appleton Iron Co. v. Ins. Co., supra. If the mortgagee alone sue, and recover more than his debt, he will hold the surplus as trustee for his debtor. May on Insurance, § 449; Cone v. Ins. Co., supra.
It was contended that this rule affords no adequate protection to the mortgagor. The answer to this position is, that the demurrer admits that the mortgagor has no interest. It is competent for the defendant to suggest, by affidavit or answer, that the mortgagor is a necessary plaintiff. R. S., secs. 2610-2611. But he can raise the question by demurrer only when the interest in the mortgagor is patent in the complaint. Where the mortgagor is not made a party, there is, perhaps, a risk that his interest may not be properly protected. But this may happen to assignors in all actions by assignees. Indeed, it may happen in any litigation where there is an outstanding, unapparent interest in one not a party. This is an infirmity of human-justice. All that courts can do is to require those to be made parties whose interest is apparent; and sometimes, when this cannot be done, to do justice to the parties before them as far as they may be able. Du Pont v. Davis, 35 Wis., 631.
The order overruling the demurrer must be affirmed.