Court Opinion

ID: 5481224
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:56:07.689167+00
Date Added: 2024-06-11T08:33:37.073622
License: Public Domain

Desmond, J.
(dissenting in first above-entitled action). No one doubts that the standard mortgagee clause, in a fire insurance policy, creates an independent contract of insurance for the separate benefit of the mortgagee (Goldstein v. National Liberty Ins. Co., 256 N. Y. 26, 29). In other words, the insurer is separately and directly obligated to the mortgagee. However, for the terms of that separate contractual obligation (insurer to mortgagee) we must look to the policy itself, for there is nowhere else to look. The sole question here is as to the alleged contractual right of the mortgagee (plaintiff Syracuse Savings Bank) to have notice of, and participate in, the appraisal procedure described-in the policy as one of the methods of establishing "the amount of the loss. Since the policy contains no language conferring any such right on a mortgagee, and indeed specifically confers such a right on the owner alone, I cannot find a basis for a holding that the mortgagee has such a right, nonetheless. Where does it come from?
The policy provisions bearing on this question are these:
“ STANDARD MORTGAGEE CLAUSE. Loss or damage, if any, under this policy, shall be payable to Syracuse Savings Bank, as first mortgagee * * * as interest may appear, and 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 * *
‘ ‘ Appraisal. In case the insured and this Company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon *415such umpire then, on request of the insured or this Company, such umpire shall be selected by a judge of a court of record * * *. The appraisers shall then appraise the loss and damage * * * and failing to agree, shall submit their differences only, to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of sound value and loss or damage ”.
Thus by the contract of the mortgagee with the insurer, it is provided: first that the loss or damage “ under the policy ” shall be paid to the mortgagee; second, that this insurance of the mortgagee shall not be invalidated by any act or neglect of the owner; third, that in case of disagreement between the insured and the company, there shall be an appraisal, with an appraiser nominated by the insured and the other by the company, and an umpire selected by the two appraisers; and, fourth, that the appraisal award shall determine the amount due under the policy. It can hardly be doubted that the “ insured ” referred to in the appraisal provision is the owner, not the mortgagee. Thus, there is nothing whatever in the policy to give the mortgagee any part in the appraisal. Since the policy makes the appraisal award determinative of the amount of loss, the appraisal, unless shown to be fraudulent or otherwise vitiated, must of necessity, conclude the mortgagee.
Surely, the owner, by going forward in good faith with the very appraisal procedures set up by the very policy to which the mortgagee must look for all the latter’s rights, cannot be guilty of an act or neglect invalidating the mortgagee’s rights. The owner, by so doing, is not invalidating, but asserting the mortgagee’s right to collect the amount of the loss.
None of the cases cited here for reversal is authority for a' holding that the mortgagee, despite the very language of the policy on which he relies, has some separate right to conduct or control the appraisal. Browning v. Home Ins. Co. (71 N. Y. 508) says only that once a mortgagee’s rights have become fixed, they cannot be affected by any admissions or declarations made by the owner. Hathaway v. Orient Ins. Co. (134 N. Y. 409, 413) says that a compromise or accord and satisfaction, agreed to by the owner without the mortgagee’s consent, does not bind the mortgagee. McDowell v. St. Paul Fire & Marine Ins. Co. (207 N. Y. 482) holds that the owner’s neglect to file a *416proof of loss does not affect the mortgagee’s separate rights. Lewis v. Guardian Fire & Life Assur. Co. (181 N. Y. 392) deals with a procedural matter only: the necessity for. joining the mortgagee in a suit on the policy. Savarese v. Ohio Farmers Ins. Co. (260 N. Y. 45) is another case of an owner attempting to cut down a mortgagee’s rights by accepting from the insurer something less than the full amount of the loss. Actually, the Savarese decision points to affirmance here, since it illustrates that, despite the “ separate insurance ” theory, there may be a full satisfaction of a policy loss without notice to, knowledge of, or payment to, the mortgagee; in the Savarese case, had the insurer properly exercised its option by notice to the owner alone, it could have performed its full obligation under the policy by repairing the property, without paying the mortgagee anything. Savarese v. Ohio Farmers Ins. Co., demonstrates that the mortgagee’s rights, as to amount and payment of the loss, are those only which the policy mentions and describes.
The language of the appraisal clause which contemplates an owner-appointed appraiser and an insurer-appointed appraiser, cannot be stretched to let in a third appraiser, the presence of a third appraiser would destroy the policy’s plainly pictured scheme of appraisal, and no reason appears why such stretching should be attempted. All the mortgagee is entitled to is the amount of the loss, determined as per the policy. This judgment gives it that.
The judgments in both actions should be affirmed, with costs.
In first above-entitled action: Judgments reversed, etc.
In second above-entitled action: Judgment affirmed.
In first above-entitled action: Lewis and Conway, JJ., concur with Dye, J.; Fuld, J., concurs in separate opinion in which Lewis and Conway, JJ., also concur; Desmond, J., dissents, in opinion in which Loughban, Ch. J., and Froessel, J., concur.
In second above-entitled action: Loughran, Ch. J., Lewis, Conway, Desmond, Fuld and Froessel, JJ., concur.
[See 301 N. Y. 731.]