Court Opinion

ID: 6414302
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:55:00.208658+00
Date Added: 2024-06-11T15:51:29.079614
License: Public Domain

Chapman, J.
It is agreed that the only obstacle to the plaintiff’s right to recover is his agreement with Susan H. Fales.
His application for insurance was “on his interest as mortgagee in possession,” and describes the property as occupied by a tenant. The policy is on the same interest, and describes the property in the same way; so that the phrase “ mortgagee in possession ” was not understood by the parties to imply an occupancy by the plaintiff, and the mere occupancy of Mrs. Fales is not a material fact.
The plaintiff’s agreement with her was made prior to the date of the policy, and related to the same interest which was insured by the policy. In April 1860 Levi S. Fales had made two mortgages to D. Wheeler, one of which was to secure a note of $1250, and the other to secure several notes, amounting in all to $2750. In June 1860 Wheeler sold the first note and mortgage to the plaintiff. He also sold to him three of the other notes, amounting to $1500, and assigned to him a corresponding interest in the mortgage that secured them. Before the agreement was made with Mrs. Pales, the plaintiff had taker *117possession for foreclosure under both mortgages. As part of the consideration for the agreement with her, she paid the plaintiff $1400 in cash, but this is not mentioned in the agreement. The. terms of the agreement were, that in consideration of $150 to be paid by her in twélve months he would quitclaim to her his interest in the mortgages; that she might enter upon and occupy the premises and have the benefit of his entry; that she should have the benefit of the insurance on the buildings, she paying the expense of the insurance; and that he would quitclaim the land to her at any time within three years, she first paying the $150 and making request. As there was no agreement on her part, it was left at her option whether or not she would pay the money and take the conveyance. The contract was thus left executory, and until she paid or tendered the money she had no title, either legal or equitable, but only a right to acquire a title by making the payment. She entered and occupied as a mere tenant who had paid $1400, and had a right to occupy for a limited time, but no further present right in the property. This cannot be regarded as an alienation by the assured, within the terms of the policy.
Before the loss, she had paid to the plaintiff the expense of the insurance, but this cannot be regarded as effecting an assignment of the policy.
The most important question that arises in the case is under the clause in the policy which provides that, “ in case of payment of any loss to a mortgagee whose interest only is insured, the party so paid shall, at the time of payment, assign to the company so much of his interest in the mortgage as may not be necessary to extinguish the balance of the debt due thereon.” If by the agreement "with Mrs. Fales the plaintiff had disabled himself from making such assignment to the company, without violating that agreement, it might perhaps bar his right to recover. But the agreement expressly recognizes his right to insure, and it is implied that the insurance, may be on reasonable terms and conditions. The condition above stated is reasonable, it being the clause which has the effect to limit the insurance to his interest as mortgagee, and to prevent him from *118recovering not only the whole insurance in case of loss, but also the whole of his debt in addition. An assignment to the company according to this clause, on receipt of the money, would not therefore be a violation of the agreement with Mrs. Fales. In addition to this, it may be remarked that she has expressly recognized this policy as being within the terms of the agreement by paying the expense of it. It thus appears that the interest of the defendants is not affected by the agreement, and the plaintiff is entitled to judgment for $1000.