Court Opinion

ID: 7894189
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:29.459955+00
Date Added: 2024-06-11T16:32:00.892653
License: Public Domain

Alvev, J.,
delivered the following dissenting opinion in which Judge Grason concurred:
Upon what principle the plaintiff in this action founds his claim to recover it is rather difficult to imagine. The insurance was neither in his name, nor for his benefit and protection, but was a mere personal contract between the insurance company and the defendant, with which the plaintiff had no privity or concern whatever. And this *108being the case, the promise relied on, made by the defendant to the plaintiff after the loss by fire had occurred, but before the money had been paid by the insurance company, was a mere nudum pactum, being without a valid consideration.
The plaintiff seeks to recover of the defendant the money received of the insurance company as money had and received to his, the plaintiffs use; and, in order to maintain the action, it should be shown that the defendant stood in the relation either of trustee or agent to the plaintiff, and that the money received by the former justly belonged to the latter, and that it was received under such circumstances as would give rise to an implied promise by the defendant to pay it over to the plaintiff. Unless there was such right or interest of the plaintiff in the money received by the defendant as would give rise to an implied promise to pay, it would seem to be certain that there was no sufficient consideration for an express promise to pay, in view of the facts of this case.
Now, I am not aware that it has ever been questioned, since the case of Lynch vs. Danzell, 4 Bro. Parl. Rep., 432, that a policy of insurance against loss by fire is any thing more than a mere personal contract against an apprehended loss on account of the interest of the insured in the particular subject-matter; and that it does not attach to the realty, nor in any manner pass therewith as an incident thereto, by conveyance or assignment, without some special stipulation to that effect, between the insurer and the insured. This proposition is maintained by all the authorities.
In this case, when the insurance policy was originally issued to the defendant, it was upon his proprietary interest in the premises, but, upon the sale of the premises to the plaintiff, the policy was continued by consent of the insurance company, as an insurance of the vendor’s interest in the property as security for the unpaid purchase *109money, or as an insurance of the mortgage debt due from the vendee. In either case, there was sufficient insurable interest in the defendant to sustain the policy. But, by this change of proprietary right in the premises, there was a corresponding change in the rights of the defendant under the contract of insurance. From the time of the sale, the insurance was simply of the debt as the subject-matter, and not the property itself. The distinction between an insurance by a mortgagee, and an insurance by a mortgagor, is well stated by Mr. Justice Story, in delivering the opinion of the Supreme Court of the United States, in the case of Carpenter vs. The Providence Washington Ins. Co., 16 Pet., 501. It is there said: “No doubt can exist, that the mortgagor and the mortgagee may each separately insure his own distinct interest in the property. But there is this important distinction between the cases, that where the mortgagee insures solely on his own account, it is but an insurance of his debt; and if his debt is after-wards paid or extinguished, the policy ceases from that time to have any operation ; and even if the premises insured are subsequently destroyed by fire, he has no right to recover for the loss, for he sustains no damage thereby ; neither can the mortgagor take advantage of the policy, for he has no interest whatsoever therein. On the other hand, if the premises are destroyed by fire before any payment or extinguishment of the mortgage, the underwriters are bound to pay the aniount of the debt to the mortgagee, if it does not exceed the insurance. But, then, upon such payment, the underwriters are entitled to an assignment of the debt from the mortgagee, and may recover the same amount from the mortgagor, either at law or in equity, according to circumstances ; for the payment of the insurance by the underwriters does not, in such a, case, discharge the mortgagor from the debt, but only changes the creditor. Far different, however, is the case where an insurance is made by the mortgagor -on the premises on his own account; *110for, notwithstanding any mortgage or other incumbrance upon the premises, he will be entitled to recover the full amount of his loss, not exceeding the insurance ; since the whole loss is his own, and he remains personally liable to the mortgage or other incumbrance, for the full amount thereof.” These principles were taken in that case to be unquestionable, and the necessary result of the doctrines of law applicable to insurances by the mortgagor and the mortgagee ; and if they are there correctly expounded, they would seem fully to embrace and conclude this case.
Indeed, it would seem to be too well established for question, that where a mortgagee insures for himself and at his own expense, he is entitled to receive the insurance money to his own use, if the mortgage debt has not been paid before the occurrence of the loss, and that, as between the mortgagee and mortgagor, the payment to the former by the insurance company of the amount of the policy, does not ojierate a payment pro tanto of the mortgage debt, but that the mortgage still remains a valid security for the full amount due thereon, at the time of the loss, against the mortgagor, and that the latter has no interest in or concern with the money received from the insurance company. As we have seen, this is decided by the case of Carpenter vs. The Providence Washington Ins. Co., before referred to, and in addition to that case, the same principle has been explicitly decided in several other well considered cases, and is stated as the settled law by the text writers upon the subject. White vs. Brown, 2 Cush., 412; King vs. State Mut. Fire Ins. Co., 7 Cush., 1; Suffolk Fire Ins. Co. vs. Boyden, 9 Allen, 123; Cushing vs. Thompson, 34 Me., 496; Concord Mut. Fire Ins. Co. vs. Woodberry, 45 Me., 447; 2 Phill. on Ins., sec. 1712; May on Ins., sec. 456; Flanders on Ins., 360, 361.
• In the case of King vs. State Mut. Fire Ins. Co , just referred to, it was further maintained, in an elaborate opinion by the late Chief Justice Shaw, that there was no *111right of subrogation in such case, and consequently the mortgagee could not, after receiving the insurance money, be compelled to assign the mortgage debt, or any part of it, to the insurers ; that the insured was entitled to receive and retain to his own use, not only the insurance money, but the mortgage debt also. But this position is in conflict with the decided weight of authority, and has not been followed by the other Courts of the country ; and it may now be regarded as settled, that the right of subrogation does exist, and in case of loss, the insurance company, upon payment of the amount of the mortgage debt, or less, is entitled to be substituted to the rights of the mortgagee, and may recover from the mortgagor the amount thus paid. The Ætna, Fire Ins. Co. vs. Tyler, 16 Wend., 385; Ins. Co. vs. Woodruff, 2 Dutch., 541. And conceding this to be the law, it would seem to follow conclusively that the money received from the insurance company by the defendant was not received to the use of the plaintiff, nor could the latter have any right or interest therein.
For the reasons stated, I think the judgment appealed from should be affirmed; and I am authorized by Judge GIrason, to say that he concurs with me in this opinion.