63 F. 925 | 8th Cir. | 1894
This was a suit on an, insurance policy which was issued by the plaintiff in error, the Hartford Fire Insurance Company, to Grace Henderson on the 21st day of July, 1890. The policy insured “a two-story brick dwelling house, * * * Ao. 1045 Washington avenue, Denver, Colorado,” to the amount of $3,500. On the 8th of September, 1890, Grace Henderson sold the insured property to Bertha Shaw; and, with the consent of the insurer, the policy aforesaid was assigned to Bertha Shaw. On March 25, 1892, Bertha Shaw borrowed $4,000 from the Philadelphia Mortgage & Trust Company, one of the defendants in error, and, to secure the payment of said loan, executed a deed of trust conveying the insured property to the other defendant in error, Frederick A. Williams, as trustee of the Philadelphia Mortgage & Trust Company, which deed gave the trustee power to sell the property in case the borrower made default in paying the notes that .had been given as an evidence of such loan. A mortgage clause was thereupon attached to the aforesaid policy, which was duly signed by the agent of the Hartford Fire Insurance Company, the material parts of which are as follows:
“Loss, if any, on realty, payable to Frederick A. Williams, trustee, mortgagee or .trustee, as bereinafter provided; it being hereby understood and agreed 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 of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by the terms of this policy; provided that, in case the mortgagor or owner neglects or refuses to pay any premium due under this policy, then, on demand, the mortgagee or trustee shall pay the same; provided, also, that the mortgagee or trustee shall notify this company of any change of ownership or increase of hazard which shail come to his or their knowledge, and shall have permission for such change of ownership or increase of hazard duly indorsed on this policy; and provided, further, that every increase of hazard not permitted by the policy to the mortgagor or owner shall be paid for by the mortgagee or trustee on reasonable demand, and after demand made by this company upon and refusal by the mortgagor or owner to pay, according to the established schedule of rates. It is, however, understood that this company reserves the right to cancel this policy, as stipulated in the printed conditions in said policy; -and also to cancel this agreement on giving ten days’ notice of their intention*927 to the t nisi re or mortgagee named therein, and from and after the expiration of the said ten days this agreement shall be null and void. It is further agreed that. In ease of any other insurance upon the property hereby insured, then this company shall not be liable under this policy for a greater portion of any loss sustained than the sum hereby' insured hears to the whole amount of insurance on said property, issued to or held by any party or parties having an insurable interest therein. It is also agreed that whenever this company shall pay the mortgagee or trustee any sum for loss under this policy, and shall claim that, as to mortgagor or owner, no liability therefor existed, it shall at once, and to the extent of such payment, be legally subrogated to all the rights of the party to whom such payments shall be made, under any and all securities held by such party for the payment of said debt. But such subrogation shall he in subordination to the claim of said party for the balance of the debt so secured. Or said company may, at Its option, pay the said mortgagee or trustee the whole debt so secured, with all the interest which may have accrued thereon to the date of such payment, and shall thereupon receive from the party to whom such payment «hall be made an assignment and transfer of said debt, with all securities held by said parties for the payment thereof.”
The premises were destroyed by fire on July 31, 1892, and thereupon the defendants in error made claim upon the insurance company for the entire amount of the insurance aforesaid.
The chief question that is presented by this record concerns the proper construction of the aforesaid mortgage clause, and particularly that paragraph which provides that, in case of other insurance on the property, no greater amount shall be recovered under this policy "than the sum insured bears to the whole amount .of insurance on said property, issued to or held by any party or parties having an insurable interest therein.” On July 23, 1892, Bertha Shaw, the mortgagor, obtained a policy of insurance for ■her own benefit, in the sum of $0,000, in the ítala tine Insurance Company, covering the same dwelling house that was insured by the policy in suit, and did so without the knowledge or consent of the plaintiff in error, the Hartford Fire Insurance Company. On the trial of the case, the last-named company offered this policy in evidence, with a view of showing, among other tilings, that the total insurance on the dwelling house in question was $9,500 at the time of the loss, and that it was only liable for seven-nineteenths of the loss, or about §1,400, as the total loss on the dwelling house was about §3,800. This proof was excluded, the trial court being of the opinion, as it seems, that the clause above quoted, relative to prorating the loss among all policies covering the insured property, only applied to policies covering the interest of the mortgagee therein, and lliat it did not compel the mortgagee to prorate with policies issued to the mortgagor, which did not contain the aforesaid mortgage danse, and were not intended as an insurance upon the mortgagee's interest. In this we think the circuit court erred. The language employed in the mortgage clause that the insurer "shall not be liable under this policy for a greater portion of any loss sustained than the sum hereby insured bears to the whole amount of insurance on said property, issued to or held by any party or parties having an insurable interest therein,” seems to us to have been inserted ex industria for the purpose of making it clear that the mortgagee’s policy was entitled to prorate with
It is suggested in the brief of counsel for the plaintiff in error, but the point: was not pressed on the oral argument, that the first paragraph of the mortgage clause, which declares, in effect, that the policy as to the mortgagee’s interest shall not be invalidated by any act or neglect of the mortgagor, is not adequate to preserve the insurance, even on the mortgagee’s interest, if the mortgagor intentionally destroys the insured property. It is claimed that such an act: of the mortgagor would invalidate the insurance held by Hie mortgagee. It is urged in compliance with this view that the circuit court; also erred in refusing to admit evidence tending to show that Bertha Shaw intentionally set fire to the insured property. With, reference to this contention, it is sufficient to say that, in our opinion, the language of the mortgage clause is broad enough to protect: the mortgagee’s insurance, and to prevent it from being invalidated even by such a willful act committed by the mortgagor. It is conceded by counsel Hat the mortgagee