Court Opinion

ID: 6122921
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:09:27.236564+00
Date Added: 2024-06-11T08:23:59.596890
License: Public Domain

Dykman, J.
(dissenting).
The plaintiffs in this action held a bond and mortgage made by Sarah C. Stout and her husband for $14,000, and upon the buildings on the premises covered thereby she procured a policy of insurance against fire from the defendant for $10,000. In this, with her assent, and at the request of the plaintiffs, the defendant inserted the following clause: “ Loss, if any, payable to María L. and Eastburn Hastings, trustees and mortgagees.” The policy also contains these clauses: “ Other insurance permitted,” and “ It is hereby specially agreed that this insurance as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy.
The policy also contained the following condition: “ In ease of any other insurance upon the property hereby insured,- whether made prior or subsequent to the date of this policy, the assured shall be entitled to recover of this company no greater proportion of the loss sustained, than the sum hereby insured bears to the whole amount insured thereon, whether such other insurance be by specific or by general or by floating policies.” This policy was delivered to the plaintiffs, but before this, Sarah 0. Stout had obtained another policy of insurance against fixe upon the same buildings for $4,000, from the Lycoming Insurance Company. The buildings have been destroyed by fire, and the loss has been adjusted at $9,832,52, of which the Lycoming Company has paid to the assux*ed four-*423fourteenths, and the defendant has tendered to the plaintiffs and offered to pay them ten-fourteenths of the same, which they have refused.
There has been no litigation, but the case is agreed upon and submitted to the General Term for decision, and the points in dispute, to be decided, are as follows:
First. The whole loss having been adjusted at $9,832.52, is the defendant bound to pay the plaintiffs, as principal, the whole amount of the loss as so adjusted or only ten-fourteenths of it ?'
Second. Is the defendant to pay interest on the amount due the plaintiffs, after sixty days from the proof of loss furnished, or sixty days from the time of the adjustment ?
In relation to the first question the condition in the policy is plain and explicit, that in case of other insurance the assured shall recover of the defendant only the proportion of the loss which the sum insured bears to the whole amount of insurance, and if this were the only provision bearing on the subject, all would be plain, but embarrassment arises from the provision in the mortgage clause, that the interest of the mortgagee shall not be invalidated by any act or neglect of the owner of the property.
This clause was invented and introduced to avoid the effect of the decision of the Court of Appeals, in the case of Grosvenor v. The Atlantic Fire Insurance Company (17 N. Y., 391), where it was held, that the mortgagee could not recover upon a policy similar to this, where there had been a breach of the conditions of the policy by the mortgagor, and hence the words used are that the interest of the mortgagee shall not be invalidated by any act or neglect of the owner. That was all the office that clause was expected to perform, and it never was intended by its inventors to have any influence at all upon the question of contribution to a loss by different companies, and it would be a very strained construction to gi ve the language used any such signification. On the contrary, it ought not to have any influence at all upon the condition in the policy, which provides for contribution, and in this ease that clause should have its full force. Both contracts of insurance were with the mortgagor, and it was his interest that was insured by both. In the one case, if he sustain any loss, it is payable to the plaintiffs, and in the other, it is payable to himself, but in both cases the loss is his. *424His buildings are destroyed or damaged, and he incurs the loss, but the amount to be paid for such loss by the defendant has been in. legal effect assigned to the plaintiffs, and hence they must receive it as the appointees or assignees of the mortgagor, instead of him. Now as they can only take the amount, which but for the assignment, would go to him, how can they get more than he would get in that case ?
If the assignment of the policy had not been made to the plaintiffs, there would be no contention that the assured could recover of both companies any more than the amount of his loss, and as the plaintiffs can only get what they would have received under the defendant’s policy, it seems to follow that the defendant can only be called upon for its proportion of the loss.
The reason of this theory is certainly in favor of this position, and the principle contended for by the plaintiffs would be at war with all the rules governing the contract of insurance, which is one of indemnity only. If the plaintiffs can now recover the full amount of the policy assigned to them, then the assured will be benefited beyond his loss, and if there had been two mortgages for $10,000 each on his property, and he had procured two policies of insurance for $10,000 each, loss, if any, payable to the respective mortgagees and delivered them, and then taken the $4,000 policy for himself, as he did, the full amount of the two policies so assigned would both have been collected on the same principle, and the assured would then have received a benefit in more than double the amount of her actual loss.
This contract of insurance, being only for indemnity, should receive no such construction. It would be out of harmony with all settled action, and against good sense and right reason. Although no act or neglect of the owner can invalidate the interest of the mortgagee, yet the owner must sustain a loss or damage by fire before the mortgagee can recover, and certainly the recovery must be graduated by the amount of his loss, and must be controlled by the same considerations which would prevail if the action was in the name of the assured, except that it cannot be defeated by any act or neglect of his. This is the only limitation. In all other respects the mortgagee must recover, as the assured, would have recovered if the action had been in his name.
*425Upon the question of interest, the governing provision in the policy is that the amount of loss or damage must be estimated according to the actual cash value of the property at the time of the loss, and be paid sixty days after due notice and proof of the same are received at the office of the company. The amount of the loss is thus made payable in sixty days after the jxroofs of loss are furnished, and it follows if the same be not then paid, it must draw interest from that time.
Judgment for plaintiffs upon submitted facts, for whole amount of loss and for interest from January 14,1877.