Case Name: John N. Acuff Company v. Bankers Trust Company, et al.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1928-04-14
Citations: 157 Tenn. 99
Docket Number: 
Parties: John N. Acuff Company v. Bankers Trust Company, et al.
Judges: 
Reporter: Tennessee Reports
Volume: 157
Pages: 99–104

Head Matter:
John N. Acuff Company v. Bankers Trust Company, et al.
(Knoxville.
September Term, 1927.)
Opinion filed April 14, 1928.
Bowen & Bowen, for plaintiff: in error.
Anderson & Werd, for defendant in error.

Opinion:
Mr. Justice McKinney
delivered the opinion of the Court.
This is a suit by the local agent of the insurer to recover from the mortgagee premiums on fire policies covering the mortgaged property, which it advanced to its principal.
The mortgage provided that the mortgagor should keep the property insured, but if he failed to do so the mortgagee was authorized to have it insured, the premiums, with interest, to become charges on the property.
The mortgagor insured the property, without the knowledge of the mortgagee, but refused to pay the premiums, whereupon this suit was instituted.
The trial court and the Court of Appeals held that the agent of the insurer could not recover.
The clause in the policy to be construed is that usually found in standard policies, and is in this language :
"This policy, as to the interest therein of the said payee, as mortgagee (or trustee) only, shall not be invalidated by any act or negjlect of the mortgagor or owner of the within described property nor by the commencement of foreclosure proceedings, nor the giving of notice of sale relating to th§ property, nor by any change in-the interest, title, or possession of the property, nor by any increase of hazard; .provided that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same; and provided further that the mortgagee (or trustee) shall notify this Company of the commencement of foreclosure proceedings, and of any notice of sale relating to the property, and of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee (or trustee)."
A few authorities held that the- provision, with respect to the payment of the premium by the mortgagee in the event same is not paid by the mortgagor, is a covenant, while the great weight of authority construes the provi sion to be a condition, which, if not complied with by the mortgagee, would foreclose him of the right to a recovery given him in the preceding portion of the mortgage clause.
In Farnsworth, v. Riverton Wyoming Ref. Co. (Wyo.), 249 Pac., 535, 47 A. L. R., 1114, the facts were the same as those presented in the instant case. Chief Justice Potter prepared a most elaborate opinion upon this question, and, in the language of the annotator of A. L. R., appearing on page 1126, ' ' a more exact, exhaustive, and thoroughly analytical discussion of the authorities can scarcely be imagined." The Wyoming court concluded that the provision is a condition and not a covenant, and in this conclusion we concur, for the reasons stated in said opinion.
The annotator of A. L. R. refers to several other cases adopting the principle of that decision.
Where the mortgagee contracted for the insurance he would, of course', be liable.
Writ denied.