Court Opinion

ID: 6965139
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:30.925897+00
Date Added: 2024-06-11T16:08:34.939129
License: Public Domain

Per Curiam : The question whether appellants were entitled to subrogation to the rights of the mortgagee in the notes and mortgage mentioned, and to foreclose the mortgage, was one of equitable cognizance. Their right to pursue the remedies for the foreclosure of the mortgage, vested by that instrument in the mortgagee, could not he determined except in a court of equity, and that court having jurisdiction of the subject matter, had the power to determine all incidental questions affecting the right claimed. If the contract of insurance was for the indemnity of the mortgagor as well as the mortgagee, the right of subrogation depends in this case upon the question whether the policies have been forfeited for the breach of the conditions therein. As originally issued, the policies were payable to Mrs. Hirsch, as owner, and contained clauses of forfeiture if the building became vacant and unoccupied as a dwelling house without notice to and consent in writing by the insurance companies. "When the property was sold the policies were assigned to the purchaser with the consent of appellant companies, and a mortgage clause inserted'to cover the interest of Mrs. Hirsch, as mortgagee. The interest of Hirsch was $5000, being $1000 less than the face of the policies. Appellee’s agent consented to the assignment to Rosenthal, trustee, to whom the loss if any, was to be paid. The effect of this change in the policies was to create a contract at variance with the original policies in this: that the interest of Mrs. Hirsch, as mortgagee, whatever it might be, was insured, while the residue of the policies stood as indemnity against loss by appellee. Under the policies the companies, in case of loss, obligated themselves to pay to the trustee, for the benefit of Mrs. Hirsch, a sum not. exceeding the amount due finder her mortgage, and the balance to the mortgagor. The contract as to the mortgagee was freed from the forfeiture clause, — that is, from the condition providing that the policies should be void while the property remained unoccupied, — which was, however, continued in force as respected the interest of the mortgagor. The insurance to-be paid, except as to the interest of Mrs. Hirsch, was still liable to forfeiture under this non-occupation clause. The language of the mortgage clause inserted, that “this insurance, as to the interest of the mortgagee or trustee, only, therein, shall not be invalidated by any act or neglect of the mortgagor or owner,,r clearly indicates that the insurance was not kept in force for the mortgagee’s interest, only, but that it was intended to keep it in force, according to its original terms, for the benefit of the owner, to whom the policies had been assigned, with the consent of the insurance companies. The effect of the mortgage clause inserted was to take the mortgagee’s interest out of the clause of forfeiture for non-occupancy, etA, and leave the policy in force covering the interest of the mortgagor, subject, however, to that clause. The mortgagor had, therefore, an interest in the policies, first, that her debt be paid in case of total loss, and she thereby relieved from liability therefor j and second, to have the balance due under the policies paid to her, if they continued in force at the time of loss. As we have seen, the interest of Race was liable to forfeiture for breach of the .conditions of the policies, and if such forfeiture was incurred, appellants had the right, on paying the mortgage debt, to be subrogated to.the mortgagee’s right, as against the mortgagor. In such case, the notes and mortgage would rightfully be assigned to appellants, and they be entitled to foreclose the same. The mortgage clause, however, provides, that in case of loss under such circumstances as that appellants shall deny their liability to the mortgagor, they may pay to the mortgagee the sum due under the mortgage, and become entitled to an assignment of the mortgage-debt and all securities therefor. The right to subrogation, however, can not be said to depend upon the naked claim of appellants that there is no liability on the policies to appellee, but the facts must warrant such claim. The claim, to entitle them to an assignment and subrogation, must be made in good faith, and be based upon a state of facts which, under the contract of insurance, would entitle them to exemption from liability. The rights of a party insured can not be made to depend upon the arbitrary claim of the insurer. Van Arman v. Byington, 38 Ill. 443; Furlong v. Cox, 77 id. 293; Davenport v. Ledger, 80 id. 574. Assuming, then, that equity has jurisdiction to enforce the contract of subrogation and to foreclo.se the mortgage, it must, as incidental to that jurisdiction, have jurisdiction to pass upon all questions upon which that jurisdiction depends. Proof of the destruction of the property, and of the amount of the loss, fixed the liability of appellants to the mortgagee. But to entitle appellants to be subrogated to the rights of the mortgagee and to foreclose the mortgage, the burden is upon them to prove that the loss occurred under circumstances exempting appellants from liability to appellee for the loss of the property, for, appellants being liable to pay the mortgagee as well where they are liable by virtue of the terms of their original contracts of insurance as where they are only liable by virtue of their enlargement of those .contracts by their contracts with the mortgagee, it is impossible that it can be inferred, from the mere fact of paying, that appellants were liable to pay upon the one ground rather than upon the other. Moreover, since appellants seek relief in a court of equity, rather than in a court of law, where appellee would be entitled to have the questions of fact passed upon by a jury, the evidence to be considered and the relief that shall thereupon be granted must be such as are within the principles applied in courts of equity. One of those principles is, a court of equity will never enforce either a penalty or a forfeiture. (2 Story’s Eq. see. 1319; 1 Pomeroy’s Eq. secs. 459, 460.) And so it must follow', here, that to entitle appellants to the relief they claim, they must prove, not merely that the premises were vacant or unoccupied at or before the time the fire occurred which destroyed the insured property, but that such vacancy or unoccupancy contributed, in some degree, to the causing •of that fire or the prevention of its extinguishment, for if the causation and the control of the fire were unaffected by the fact of vacancy or unoccupancy, to allow appellants to avoid liability, and recover what they have paid on account of the insurance, by a foreclosure of this mortgage, would, in effect, be to enforce a forfeiture, — decree a recovery on a mere technical legal breach of a contract. The evidence wholly fails to show that the property would not have been destroyed precisely as it was if a family had been residing in the house at the time. The brother and sister of appellee were in the house when the fire which destroyed it, began. Fires had been lighted for legitimate purposes, such as they would, presumably, have been lighted for by a family residing therein, in grates and stoves, some hours before the destruction of the property, and, so far as we are authorized to infer anything in that respect from the evidence, every care was observed that would have been observed by a family residing in the house at the time. It is insisted in argument by counsel for appellants, that the fact that the house had not been continuously occupied for some time -before its destruction by a family residing in the house, rendered the flues less secure, and increased the danger arising from their use on the day the fire occurred. We have been unable to find any evidence in the record sustaining this contention, and we are unable to assert it as a fact within judicial cognizance. • It follows, therefore, that we are of opinion that the evidence did not warrant a decree of forfeiture of the policies, and that appellee had a right to have the mortgage debt paid for her benefit, and to be paid the balance, if any, of the insurance money to herself. The payment of the mortgage, being for her benefit, operated as a satisfaction and extinguishment of her debt, and the insurance companies acquired no right to enforce the same as against her. By such payment to the trustee, Rosenthal, appellants discharged their obligation pro tanto under the policies, and are entitled to credit for the sum so paid, and are liable to her for the balance, if any, remaining unpaid. We are of opinion that the judgment of the Appellate Court dismissing the bills was correct, although we are.not prepared to agree with that court in the ground upon which its judgment was based. Appellee not having filed a cross-bill, no affirmative relief can be granted her in this proceeding. The judgment of the Appellate Court is affirmed. Judgment affirmed.