70 N.Y. 19 | NY | 1877
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The policy of insurance issued to Mrs. Plank who held the mortgage sought to be foreclosed in this action, insured her against loss on "her interest as mortgagee," *24
in the buildings on the mortgaged premises, and contained a clause that "in case of loss the assured shall assign to this company an interest in said mortgage equal to the amount of loss paid." The mortgage contained the usual clause for insurance by the mortgagor, and in case of default provided that the mortgagee might make such insurance and the premiums paid should be deemed secured by the mortgage. There can be no question that a mortgagee has an interest separate and independent of any other interest which may be the subject of insurance generally or specially, and in case of loss the insurer having paid to the mortgagee the amount of his debt may be subrogated to the rights of the mortgagee. This principle is upheld by numerous decisions, and in a recent case, The Excelsior Fire Ins. Co. v. The RoyalIns. Co. (
The contract under the insurance clause in the mortgage authorized an insurance of the property by the mortgagee; but this provision did not prohibit or prevent an insurance directly of her interest as such mortgagee; and as she had authority to make such insurance it would seem to follow that she had a right to make such terms with the insurer as might be agreed upon. It was optional and not compulsory and entirely competent for the mortgagee to procure a policy with or without a subrogation clause. The parties had a right to determine that when the insurers paid any loss to the assured that the insurers should be entitled to an assignment of the mortgage, and such a provision is not in conflict with the insurance clause in the mortgage. Even although Mrs. Plank made declarations after the contract was entered *26 into showing that the insurance was made under the clause in the mortgage these statements cannot prevail against the contract in the policy which provides that her interest as mortgagee was insured, and whatever arrangement preceded the policy could not affect or impair the rights of the company who acted without knowledge of such an arrangement when the policy was issued.
It is difficult to see how the insurer can be deprived of the right to subrogation, when it is made a part of the contract that it shall enjoy such right. And whether the company knew of the agreement in the mortgage at the time of issuing the policy, or assented to it or otherwise, makes no difference, for in either case the contract between Mrs. Plank and the company is unaffected by it. (Kernochan v. N.Y. Bowery Ins. Co.,
It is also contended that as the policy provides for the assignment of the mortgage, and not expressly for the bond, that the mortgagee could not be compelled to transfer the bond under the contract, and, therefore, the payment to the mortgagee must be held to be in liquidation of the bond, and the assignment was a voluntary act of the mortgagee, and not by virtue of the clause in the policy. The answer to this position is, that the evident intention of the parties was to include both the bond and the mortgage; and a contract of insurance, like any other contract, must be so construed as to give effect to such intent. (Springfield F. M. Ins. Co. v. Allen,
The claim that as the mortgagor had an insurable interest, and as Mrs. Plank, by her declarations, prevented him from insuring on his own behalf, she, and her assigns, are estopped from denying that the moneys were to be, and had been, applied on the mortgage, is also unfounded. This position is inconsistent with the idea that a contract may be entered into between the mortgagee and the insurer, by which the insurer may be subrogated in the place of the mortgagee. Be this as it may, if the mortgagee had entered into a contract inconsistent with her right, to assign the mortgage debt as was provided, it would be a valid bar to any recovery upon the policy (May on Ins., 561), and, being such bar to a recovery, it is also a bar to any claim that the debt has been extinguished pro tanto; and as the company were under no obligation to pay any loss in this aspect of the *28 case, the plaintiffs, by the assignment to them, became the owners of the entire interest in the mortgage for the full face and value of the same.
No other question requires consideration, and as the court was clearly wrong in its decision, the judgment must be reversed and a new trial granted, with costs to abide the event.
All concur, except CHURCH, Ch. J., dissenting.
Judgment reversed.