312 Ky. 151 | Ky. Ct. App. | 1950
Affirming.
This is an action by a mortgagee named as payee “as its interest may appear” in a policy insuring the owner of a motor truck, Fred Inman, against loss by its destruction in a collision. A demurrer to the petition was sustained, and the plaintiff, Farmers and Depositors Bank, appeals.
The petition sets forth the issuance of the policy to Inman, states that the plaintiff held a mortgage on the truck at the time to secure a note for $1,650.90, which fact was known to the defendant company, and it had issued the policy filed as a part of the petition.. It further states that while the insurance was in force, Fred Inman had transferred the motor truck to Ernest Inman, at which time he had executed his note to the plaintiff for $1,486.39 and a mortgage on the truck to secure same, and the bank had released Fred Inman from liability on his note; but the seller and buyer of the truck had failed to obtain a change in the beneficial provision of the policy, and alleges it remained in full force and effect with the plaintiff and Fred Inman as beneficiaries. It states that after the transfer, the car had been totally destroyed in a collision, within the insurance coverage, and a balance of $1,362.39 was owing to the bank, which sum was less than the value of the truck. Notice, demand and refusal to pay were alleged, and judgment asked against the insurance company. ■ ■ Hj
The policy named Fred Inman as the “insured.”
One of the conditions of the policy was, “Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon.” It is to be noted the petition does not allege either an assignment or consent.
As is well known, policies of property insurance generally fall into two classes. One contains what is known as the union or standard mortgage clause, which is ordinarily held to operate as an independent contract Detween the insurer and the mortgagee. The other contains a simple loss-payable or open mortgage clause, in which the loss is recited -as being payable to the mortgagee “as his interest may appear.” The present policy is of this class. The contract was expressly made between the company as insurer and Fred Inman as the insured. The provision designating the bank as “loss payee” did not bring it and the company into contractual relations with each other. The bank was simply a conditional appointee of the insured owner of the property to receive the proceeds according to its lien upon the property. Its right was collateral to the right of the owner to recover and it could be no greater than his. A breach of any condition of the contract by the insured owner that would prevent recovery by him precludes recovery from the insurance company by the mortgagee as his mere appointee to receive the money to the extent of its interest in the mortgaged property. McKinney v. Western Assur. Co., 97 Ky. 474, 30 S. W. 1004, 17 Ky. Law Rep. 325; Hendrix v. National Union Fire Insurance Co., 205 Ky. 283, 265 S. W. 795; Royal Insurance Co. v. Ward, 252 Ky. 687, 68 S. W. 2d 9; Rhode Island Insurance Co., v. Wurtman, 265 Ky. 835, 98 S. W. 2d 29.
We may accept the argument of the appellant that the provision with respect to an assignment of interest under the policy is inapplicable and also concur in the abhorrence of forfeitures. There was no attempt to assign any interest under this policy. The absence of consent to an assignment simply shows the insurance company did not assume any liability to the new owner
The judgment is affirmed.
