Court Opinion

ID: 8505710
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:26:51.939175+00
Date Added: 2024-06-11T16:50:52.572335
License: Public Domain

Eastman, J.
Upon the first reading of this case, it appeared to us very clear that the plaintiff was entitled to recover for the loss upon all the property insured; but on perusing the very ingenious argument of the counsel for the defendants, we were led to examine the case with some care before arriving at a conclusion.
When this contract of insurance was entered into, all the facts connected with the property were distinctly set forth in the application, and the insurance was made with a full knowledge of the situation of the property and the interests of the parties. The application stated that the property was mortgaged for $1500, and that in case of loss the insurance was to be paid to Prescott, the mortgagee. The defendants, also, in issuing the policy, entered upon the margin that the amount insured was, in case of loss, made payable to Prescott. There was no fraud, no misrepresentation, no deception practised. Prescott signed the premium-note together with Bragg, and has paid assessments thereon as they have been ordered. And the foreclosure, and the rights that have passed from Bragg to Prescott, all, in fact, that has transpired between the owners of the property since the issuing of the policy, has been but the legitimate effect of the situation of the property at the time of the insurance. In equity and good conscience, then, there is no reason why the action should not be sustained. Is there any thing in the legal situation of the parties, or has any thing transpired since, affecting the insurance, that can- relieve the defendants from their liability to pay the loss' that has happened?
With regard to the stock in trade, the insurance upon which was $500, there is no controversy. But as to the *297mill, machinery and fixtures, which were covered by the mortgage, it is said the forceclosure has effected such a change in the ownership of the property as to cancel the policy to that extent. The argument is this: Bragg alone became a member of the company; he only was insured; by the foreclosure the property was alienated, and became absolutely Prescott’s; therefore Bragg, having ceased to have an interest in the property, an action upon the policy cannót be maintained in his name. •
It is true, that by the terms of the policy, Bragg alone is a member of the company, and a suit for the loss can be maintained only in his name. But it is quite evident that the defendants also made a contract with Prescott, although he may not be a member. An agreement was entered into by them with Prescott, at the request and by the consent of Bragg, by which they were to pay the amount of the insurance to Prescott, in case the property should be destroyed; and Prescott, on his part, signed the premium-note, and has paid assessments thereon as they have been ordered. The insurance, then, was in fact effected in the name of Bragg, for the benefit of both Bragg and Prescott. Instead of making an ordinary policy to Bragg, with no stipulations as to the payment of the money to Prescott, and having the policy assigned, with the consent of the directors, to Prescott, as collateral security for his debt, as is usually done, the company agreed, by their memorandum on the policy, to pay the money over to Prescott in the first instance; and had the property been destroyed before the foreclosure, the defendants could not have successfully resisted an action upon the policy in the name of Bragg, for the benefit of Prescott; for they had contracted to pay the money to him, in case of loss. Thus, although literally speaking, Bragg alone was a member of the company, yet as the property then stood,, both he and Prescott were interested in the policy by the-agreement of the company itself; and it does not lie in the power of the company to say that they were not, prior to > *298the foreclosure, liable to Prescott, in the name of Bragg. Unless, then, the foreclosure has worked an alienation of the property, within the meaning of the 13th section of the defendants’ act of incorporation, this action can be sustained for the loss upon all that was insured.
We had occasion, recently, to consider to some extent the construction to be put upon provisions of this kind, and we held at the last term of this court, in the ease of Burbank v. Rockingham M. F. Ins. Co. 4 Foster’s Rep. 550, that the death of the assured intestate, did not work an alienation of the property, and that the policy did not, thereupon, become void. In the opinion given in that case, it was remarked, in substance, that, as understood at common law, to, alienate real estate was voluntarily to part with the ownership to it, either by bargain and sale, or by some conveyance, or by gift or will; that alienation was effected by the voluntary act of the owner of the property, and not by operation of law; and that property not transferred or devised is not alienated according to the principles of the common law. To the authorities there cited as sustaining the position, we would add Strong v. The Manufacturers’ Ins. Co. 10 Pick. Rep. 40.
The title which became perfected in Prescott, by means of the foreclosure, was brought about by the operation of law. There was no act of conveyance or transfer by Bragg to Prescott; nothing done by Bragg after the execution of the mortgage and the effecting of the insurance, which gave to Prescott any more rights than those possessed by him when the policy was issued. Bragg did nothing to alienate the property; and the perfection of the title was the mere operation of law, resulting from the situation of the property as it existed at the time of the insurance, and which the defendants might well have foreseen. We cannot, therefore, regard the foreclosure to be an alienation. The title and possession of the property remain in the same persons as *299when it was insured; and the rights of Prescott through Bragg still exist.
We think that the defendants must be held liable for the loss upon all the property insured. A different doctrine would avoid a contract, which, so far as it appears, was made in good faith, and which, on the part of Bragg and Prescott, has been kept in good faith.

Judgment for the plaintiff.