Case Name: Ætna Insurance Co. v. Thompson, Assignee, & a.
Court: New Hampshire Supreme Court
Jurisdiction: New Hampshire
Decision Date: 1894-06
Citations: 68 N.H. 20
Docket Number: 
Parties: Ætna Insurance Co. v. Thompson, Assignee, & a.
Judges: Smith, J., did not sit: the others concurred.
Reporter: New Hampshire Reports
Volume: 68
Pages: 20–21

Head Matter:
Belknap,
June, 1894.
Ætna Insurance Co. v. Thompson, Assignee, & a.
If a mortgagor is bound by covenant or otherwise to insure the mortgaged property for the security of the mortgagee, the latter has an equitable lien on the money due on a policy taken out by and payable to the mortgagor.
Bill op Interpleader. Facts found by tbe court. January 5, 1891, Woodbury L. Melcber and Edmund Tetley became sureties for John J. Lane upon bis note to tbe Laconia Savings Bank. Lane secured them by a mortgage upon personal property which be agreed to have insured, and tbe policies made payable to tbe bank as security for tbe payment of tbe note. On tbe same day Lane procured policies of insurance in tbe plaintiff company and others on tbe mortgaged property, payable to himself, and containing no mention of Melcber or Tetley, or of tbe Laconia Savings Bank. He continued these policies in force up to and including tbe time when tbe property was destroyed by fire, December 25, 1893.
Melcber and Tetley relied upon Lane’s promise to have the policies made payable to tbe bank, and would not have signed tbe note unless be bad so promised. They supposed tbe policies were made payable to tbe bank, and did not learn they were not until after tbe fire. March 22, 1894, Melcber and Tetley' paid to tbe bank tbe amount of tbe note and took it up.
Insolvency proceedings were commenced March 15, 1894, and March 31, the defendant, Thompson, was appointed assignee of Lane’s estate. The plaintiffs have adjusted their loss under their policy, and the amount due from them is claimed by Melcher and Tetley, and by the assignee.
Napoleon J. Dyer, for the plaintiffs.
E. A. $ C. B. Hibbard, for Melcher and Tetley.
Beckford Sp Shannon, for Thompson, assignee.

Opinion:
Wallace, J.
If a mortgagor is bound by covenant or otherwise to insure the mortgaged premises for the better security of the mortgagee, the latter will have an equitable lien upon the money due on a policy taken out by the mortgagor and payable to himself to the extent of the mortgagee's interest in the property destroyed. Wheeler v. Ins. Co., 101 U. S. 439, 442; Providence County Bank v. Benson, 24 Pick. 204; Stearns v. Ins. Co., 124 Mass. 61; Dunlop v. Avery, 23 Hun 509; Cromwell v. Ins. Co., 44 N. Y. 42; Nichols v. Baxter, 5 R. I. 491; Miller v. Aldrich, 31 Mich. 408.
Lane procured the insurance on the mortgaged property, and afterwards kept it in force with intent to perform his agreement to insure for the benefit of the mortgagees; and although he neglected to have the policies made payable to the bank according to his agreement, yet the mortgagees, Melcher and Tetley, have an equitable lien on the policies to the extent of their interest against him.
The assignee in insolvency stands in the same position as Lane, the insolvent debtor. He is not by virtue of his office an attaching creditor, or subsequent purchaser. The estate of the insolvent debtor vests in him, not by virtue of an attachment or sale, but by force of the assignment under the statute, and he can take no more than the debtor had, except in case of a fraudulent sale. Adams v. Lee, 64 N. H. 421; Shaw v. Glen, 37 N. J. Eq. 32; Wilson v. Esten, 14 R. I. 621.
As the agreement provided that the insurance was to be made payable to the bank for the benefit of the mortgagees, and as they have paid the note and are equitably entitled to the benefit of the insurance, they may be subrogated to the rights of the bank. Philbrick v. Shaw, 61 N. H. 356.
Decree for the mortgagees.
Smith, J., did not sit: the others concurred.