Court Opinion

ID: 5231839
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:58:14.336693+00
Date Added: 2024-06-11T08:27:40.537581
License: Public Domain

Smith, P. J. (concurring):
I am unable to agree with Mr. Justice Lvov in his construction of this contract. As I construe the contract the provision of the policy in question constitutes a covenant on the part of the mortgagee, if the insurance policy be accepted by him, to pay under the terms thereof. In the first place, before the word “provided” is a semicolon, which would he out of place if what followed were a mere condition of what preceded. While this fact of itself has not much significance, in a close question connected with other facts it is worthy of note. In the second place, the word “provided,” which separates the two clauses, is printed in capital letters. This would not ordinarily be so if the clause thus introduced were merely a condition attached to what preceded it. Again, by subdivision 3 of section 254 of the Real' Property Law (Consol. Laws, chap. 50; Laws of 1909, chap. 52), if the mortgagor fails to *19keep the property insured the mortgagee may do so and charge the amount of the premiums paid as a part of the debt secured by the mortgage. The mortgagee and the insurance company are thus protected and the mortgagee is given his right to reimbursement from the mortgagor. These considerations indicate the intention of the Legislature to make this provision of the contract a covenant on the part of the mortgagee upon the acceptance of the policy by him. This construction is further in accord with the holding of the court in the case of St. Paul Fire & Marine Insurance Co. v. Upton (2 N. D. 229), and also in the case of Safe Deposit Co. v. Thomas (59 Kan. 470). I do not read in the case of Ormsby v. Phenix Insurance Co. (5 S. D. 72) any different rule of construction. The clause of the policy there construed was an entirely different clause, and could in no event, without forced construction, have been held as imposing a covenant upon the part of the mortgagee.
It does not follow, however, that the defendant is liable in this action. The mortgagee is to pay these premiums on demand. This demand cannot be made capriciously at the convenience of the insurance company, but must be made in the usual course of business. That means within a reasonable time upon the failure of the mortgagor to pay the insurance. This interpretation is in accord with the interpretation of analogous contracts. An indorser upon a note payable on demand is only made liable if the demand be made within a reasonable time. Moreover, under the provision of the Real Property Law cited, upon failure of the mortgagor to procure insurance, the mortgagee may declare the whole amount of the mortgage due, and proceed to foreclose. It will hardly be claimed that the insurance company may wait until after the mortgage had been foreclosed and then make demand and collect this premium. By parity of reasoning the insurance company should not be allowed to wait beyond a reasonable time before making the demand of the mortgagee, which is made a condition of the mortgagee’s liability to pay. If made promptly, the mortgagee might either declare the mortgage due and foreclose, or force the mortgagor to pay the premiums. In the case at bar nine of the insurance policies for which the premiums are *20sought to be collected were taken out in 1907, and eleven others were taken out between February 13, 1908, and July 13, 1910, the policies taken out in 1907 having expired in 1910. The first request to the mortgagee to pay was made in January, 1911, which was the first notification to the mortgagee that these premiums had not been paid by the mortgagor. Because, therefore, the demand was not made within a reasonable time in the due course of business, the mortgagee has, in my judgment, been relieved of the obligation to pay these premiums.
Judgment reversed, with costs, and complaint dismissed, with costs.