10 Mo. App. 376 | Mo. Ct. App. | 1881
delivered the opinion of the court.
This is an action upon a policy of insurance against fire. The action was originally brought to reform the policy, but it has been changed to an action to recover upon the policy according to its terms. This renders it unnecessary to consider a mass of testimony found in the record, which is not relevant to the present issue. The policy was written by the defendant compauy, on April 24, 1874, and ivas kept alive by renewals until the loss sued for, which took place on October 2,1877. The policy, by its terms, insured “ F. A. Dick and Ben Farrar, trustees of Isaiah Y. Williamson, against loss or damage by fire, to the amount of $3,500 * * * on. their interest under deed of trust,’ ’ in a certain building in St. Louis County.
The interest of Dick and Farrar in the insured premises was that of trustees under a deed of trust executed on May 1, 1871, by John J. Murdock and wife to them, to secure a loan of $30,000 made by Isaiah V. Williamson to Murdock for a period of five years, at interest at the rate of
Among other covenants of the grantors .of the deed of trust was the following: “And also to keep the building on said ¡iremises insured for a sum not less than $16,000, until said notes" be paid, in a company or companies satisfactory to the party of the third part [Williamson], the policy or policies of insurance to be assigned or made payable to the party of the second part, and the money collected thereon in case of fire, to be held until said building be rebuilt by said first parties, as collateral security for said note, and when rebuilt shall be applied in payment of such rebuilding. If such insurance be not kept up, the party of the third part may pay the necessary premium therefor, and all sums so paid shall be held secured by the deed of trust, for the repayment of which and ten per cent per annum interest thereon said premises may be sold as below provided. Any failure by said first parties to comply with any of the provisions of this deed of trust shall, at the option of the third party, make said principal notes immediately due.”
The second paragraph in the .policy of insurance was in the following words : “ It is hereby agreed that in case of loss the assured shall assign to this company an interest in said deed of trust equal to the sum of loss paid under this policy, provided the said assignment shall in nowise prejudice the assured’s claim under said deed of trust to recover the full amount of their loan and proper charges.”
Before the policy was written, namely, the fifth day of May, 1873, Murdock and wife executed a second deed of trust, by which they conveyed the premises in question to Robert M. Renick, as trustee for David H. Armstrong, to secure the latter against a liability which he had incurred to
When the deed of trust matured, namely, on May 1, 1876, Armstrong, to protect his own interest, entered into a written contract with Williamson, in which he assumed and agreed to pay the debt secured by the deed of trust, and by which Williamson extended the time of payment for two years longer, namely, until May 1, 1878, at the same rate of interest, for which Armstrong gave to Williamson four notes for $1,200 each, maturing successively every six months thereafter.
It is alleged in the answer, and not denied in the reply, and it is also proved by the testimony of a witness, that the defendant offered to pay the amount insured, if the plaintiffs would assign to them an interest in the deed of trust equal to the sum which was to be paid, which offer was declined by the plaintiffs ; and that such an assignment was demanded by the defendant and refused by the plaintiffs. The grounds on which the plaintiffs refused this assignment, as stated in their reply, are substantially these: (1) That, although the clause providing for an assignment was a part of the contract, yet it was no part of the consideration of the contract; (2) that it was wholly immaterial to the rights of the parties, in that, under the facts of the case, it conferred no right or benefit on the defendant; (3) that the defendant was not entitled to the assignment because it had- paid no part of the loss; and (4) that, as the property was not worth the loan, interest, and charges secured
This suit was commenced on April 30,1878. On May 1, 1878, the two years for which Williamson’s loan had been extended in pursuance with the contract with Armstrong, expired. The debt not being paid, the property was advertised for sale under the deed of trust, and sold on May 22, 1878, to Williamson, for $23,000, he being the highest and best bidder. The defendant had no notice of the sale until after it had taken place. The case was tried by the court sitting as a jury. The court refused the following instructions for the plaintiff: —
1. “To entitle the defendant to an assignment of any portion of the deed of trust, the burden is on him to show that the plaintiff was able to recover his whole debt, interest, and charges, by sale under the deed of trust according to its terms.
2. “ The court declares the law to be that under the facts shown in evidence in this suit the defendant has shown no defence to this action.
4. “If the court find from the evidence that at and from the time when defendant requested an assignment of a portion of the deed of trust down to the time of the sale made by Farrar, as trustee, under the deed of trust, the value of the property conveyed by the deed of trust was not sufficient to pay the whole amount of the debt and interest secured thereby, then the defendant was not in any event entitled to have an assignment of any portion of said deed of trust.
5. “ The deed of the trustee Farrar to Isaiah V. Williamson is evidence tending to prove the value of the prem
The court gave, at the request of the defendant, the following instructions : —
a. “If it be found, from the testimony adduced in this cause, that before the policy sued on was made between the parties thereto, John J. Murdock had sold and by deed conveyed all his right, title, and interest in the insured property to JohnG. Priest, then it is declared said Murdock had no insurable interest in said property at the time said policy was made, and nq policy upon interest claimed to be that of Murdock, could be enforced.
b. “It is admitted by-the pleadings that the policy sued on contains a provision in words as follows: ‘ It is hereby agreed that in case of loss the assured shall assign to this company an interest in said deed of trust equal to the sum of loss paid under this policy, provided the said assignment shall in nowise prejudice the assured’s claims under said deed of trust to recover the full amount of the loan and proper charges.’ And the true construction thereof is declared to be that upon payment of any loss under said policy the insurer was entitled at the time of payment to an assignment by the assured of an interest in said deed of trust to au amount equal to the amount of loss paid subject to the right of the assured to first have and receive from the proceeds of said deed of trust or any collection thereunder, or the note or notes secured thereby, such sum as, including the sum of loss paid, would amount to the whole of the assured’s claim, and all proper charges. And if it is found that upon the occurrence of the loss sued for the insurer did offer to pay to the assured the loss in full if such assignment should be made, and the assured refused, absolutely denying the right of the. insurer to any assignment whatever, or at any time, and so continued to do to the commencement of this action, then the plaintiff cannot recover, and the verdict must be for the defendant.
d. “The court declares the construction to be placed upon the contract of insurance sued on, is, that it was upon the interest of the assured as trustees and under a deed of trust made to them by John J. Murdock and wife, May 1, 1876, and that said interest so insured was entirely separate from, and independent of, any insurable interest said Murdock might, under any circumstances, have had, in said premises insured, as owner; and that the interest of said trustees so insured was not the interest contemplated by or included in the terms of said deed of trust providing for insurance and payment of premiums, and any payments for premiums made by said trustees for insurance such as the policy made on their interest as distinguished from the interest of said Murdock, were not legally chargeable against said Murdock under said deed of trust or otherwise.
e. “The court declares that any agreement with David H. Armstrong made by Isaiah Y. Williamson on May 1, 1876, is subsequent to the agreement of the parties to this action, and the insurer is not shown by the testimony to have had any' notice of or given any assent to said mgree
We take it to be well settled that a mortgagee or trustee in a deed of trust in the nature of a mortgage, has a separate insurable interest in the mortgaged or granted premises, distinct from that of the mortgageor or grantor. Carpenter v. Insurance Co., 16 Pet. 495; Excelsior Ins. Co. v. Insurance Co., 55 N. Y. 343; Foster v. Van Reed, 70 N. Y. 19; Suffolk Ins. Co. v. Boyden, 9 Allen, 123, 126; Honore v. Insurance Co., 51 Ill. 409. Where a mortgagee, or the trustee in such a deed, effects an insurance of his separate interest in the mortgaged or granted property, and a loss supervenes, which the insurer pays, the insurer is held, in most jurisdictions, entitled to subrogation in equity to the rights of the mortgagee or 'grantee as against the mortgageor or grantor, independently of any stipulation in the policy conferring such a right. Ætna Ins. Co. v. Tyler, 16 Wend. 385; Honore v. Insurance Co., 51 Ill. 409; Sussex Ins. Co. v. Woodruff, 26 N. J. L. 541, 555; Concord Ins. Co. v. Woodbury, 45 Me. 447, 453; Carpenter v. Insurance Co., 16 Pet. 495, 501; Norwich Ins. Co. v. Boomer, 52 Ill. 442; Excelsior Ins. Co. v. Insurance Co., 55 N. Y. 343, 359. This right of subrogation, so far as we know, is denied only in Massachusetts. King v. Insurance Co., 7 Cush. 1; Suffolk Ins. Co. v. Boyden, 9 Allen, 123.
On the other hand, where an insurance is effected upon mortgaged property by the mortgageor, he will, notwithstanding the mortgage, be entitled to recover the full amount of the loss, not exceeding the insurance ; for the whole loss is his own, and he remains personally liable to the mortgagee for the full amount of the debt secured by the mortgage. Carpenter v. Insurance Co., 16 Pet. 495, 501.
Thus it is that the mortgageor may insure the mortgaged propei^ to the extent of its value, and a mortgagee may
The mortgagee may, indeed, under an arrangement with the mortgageor, insure the mortgaged property at the charge of the mortgageor, or he may do so under a provision in the deed of mortgage making the premiums an additional charge upon the mortgaged property, in either of which cases, in the event of loss, the insurance-money will be paid to the mortgagee, extinguishing pro tanto the debt of the mortgageor to the mortgagee, or it will be applied to tne restoration of the mortgaged premises, if the mortgage so direct. Waring v. Loder, 53 N. Y. 581; Kernochan v. Insurance Co., 17 N. Y. 428, 441; Holbrook v. Insurance Co., 1 Cush. 193, 199. See also Carruthers v. Sheddon, 6 Taunt. 14. In such a case, the mortgageor may maintain an action upon the policy, and to this end is entitled to
If, in such a case, the insure^ receives the premium, knowing that it is paid by the iriortgageor, or that, by the terms of the deed of mortgage, it is an additional charge upon the mortgaged property, he will not, in the absence of a stipulation therefor in the policy, and as a mere matter of equity, be entitled to be substituted to the rights of the mortgagee against the mortgageor. Kernochan v. Insurance Co., 17 N Y. 428, 441; Cone v. Insurance Co., 60 N. Y. 619, 624 (affirming s. c. 3 Thomp. & C. 33).
Whatever view might be taken of the right of the insurance company to subrogation in a case like the present, it is clear that where the insurer has contracted with the insured for subrogation, as one of the conditions on which it assumes the risk, this contract is a good contract, which will be enforced in the courts, unless discharged by the act of the parties themselves, or by operation of law. The fact that the deed of trust gave the trustee the right to insure the mortgaged property at the expense of the grantor, making the cost of the insurance an additional charge upon the premises, and providing that the insurance-money collected in case of a loss, should be applied to the rebuilding of the buildings destroyed, did not, in any manner, deprive the trustees of the right to effect an insurance upon their own interest in the premises, and of contracting with the insurer to subrogate the latter to their own rights under the deed of trust, in proportion to the amount paid under the policy as a part of the consideration of the contract. They were entitled to insure for the benefit of the grantor without a stipulation for subrogation ; they were equally entitled to sue for the benefit of the cestui que trust with such a stipulation. This question ivas distinctly ruled by the Court of Appeals of New York, in Foster v. Van Reed, 70 N. Y. 19, 25 (reversing s. c. 5 Hun, 321). It was there said by Miller, J.: “The contract, under the insurance clause in the
It was no answer for them to say: “We cannot grant you such an assignment, because the mortgaged premises are not worth the amount of our debt, less the amount you are liable to pay as insurers.” They .could not thus set up their own opinion in avoidance of their contract. That was to be judged by the event, and the insurance company had the right to participate in the shaping of the event. They had a right, not to an unqualified subrogation, but a subrogation with the qualification that it should not operate to the prejudice of the beneficiary in the deed of trust; and that was what the learned judge of the Circuit Court declared as the law. An assignment of an interest in a deed of trust with such a proviso would have entitled them to be present at the sale which took place under the deed of trust, and to bid 'for the protection of their own interest. Their presence might have produced such competitive bidding as would have caused the premises to sell for the amount of the mortgage debt and charges, in w'hich case they would have been entitled to receive back from the trustees what they had paid to them as insurance-money ; or they might have been willing
Nor do we see the force of the plaintiff’s position that the deed of trust is not in its nature divisible ; that it cannot be carved up, and a portion of it assigned by the trustees. As we understand it, any beneficial interest in land beyond a mere license or personal privilege is vendible to a person capable of taking ; and if an interest is vendible, obviously an undivided portion of that interest is vendible; and an assignment of an undivided portion will confer upon the assignee rights which may be worked out under the statute of partition, or under the principle of courts of equity, and sometimes, no doubt, under ordinary actions at law.
Nor do we think that there is force in the plaintiff’s suggestion, that the language of the policy does not require the trustees to assign the debt secured by the deed of trust, or any portion of it. The answer to this position is that the evident intention of the parties was, that there should be an assignment of the debt, as well as the security for the debt (Foster v. Van Reed, 70 N. Y. 19, 27); and a contract of insurance, like any other contract, must be so construed as as to give effect to the obvious intention of the contracting parties. Strictly speaking, the interest of the trustees was a naked power of sale. The assignment of such an interest would be nugatory and absurd. In the sense of the policy, their interest under the deed of trust included the interest of the beneficiary in the deed; and if he objects that they
Of course, our view of the case wholly excludes as immaterial the parol evidence in the record as to the meaning and intention of the parties to the contract. It may be time, as the plaintiff contends, that he and his co-trustee did not know that there was a subrogation clause in the policy. It may also be true, as the defendant contends, that it would not have written the policy without a subrogation clause. It may also be true that the premium paid, one per centum, was just what would have been paid had the policy been written upon the interest of the mortgageor, or upon the joint interests of the mortgageor and the mortgagee. With all these things we have nothing to do. The case stands before us now as an action at law upon a contract, and the parties must stand or fall upon their contract as they have made it.
We have sufficiently answered, we think, the plaintiff’s contention that the trustees could not assign to the insurer any greater rights than he had under the stipulation relating to insurance ; and that if he had made an absolute subrogation to the insurer, the latter would be as much bound by
Where there is no provision for subrogation in the policy, it may be proper, in some cases, to hear parol evidence on the question whether it was intended to effect the insurance upon the interest of the mortgageor, that of the mortgagee, or both, and to submit these 'questions to the jury. Irving v. Richardson, 2 Barn. & Adol. 193. But where there is a distinct agreement for subrogation, this necessarily excludes the idea that the policy was taken out for the benefit of the mortgageor. Parol evidence that such was the fact would be inadmissible on familiar grounds ; because it would vary or contradict the written agreement of the parties, and the question could not be submitted to the jury, for it is error to submit to a jury the construction of a written contract.
In none of the cases relied upon by the plaintiff, except the reversed case of Foster v. Van Reed, 5 Hun, 321, was there an express agreement in the policy that, in the event of the insurer paying the loss to the mortgagee, it should have an assignment of the mortgage. The plaintiff’s counsel make a mistake in supposing that such was the effect of the clause of the policy in Suffolk Insurance Company v. Boyden, 9 Allen, 123. The language there used was: “And whenever this company shall pay any loss, the assured agrees to assign over all his rights to recover satisfaction therefor from any other person or persons, town, or other corporation.” This obviously was a general clause in the company’s policies, intended to pass to the insurer such rights of action as the owner of goods would have against a common carrier in case of their loss, other than by the act of God or by the public enemy, or such as the owner of the building would have against an incendiary, or against a railway company negligently setting fire to it, or negligently cutting a fireman’s hose, and thereby preventing the extinguishment of a fire, which, if extinguished, would not have consumed it, as in the case of Metallic Casting Company v.
The judgment is affirmed.