227 Mo. 100 | Mo. | 1910
Lead Opinion
This is a suit in equity wherein the plaintiff seeks to cancel a mortgage or deed of trust held by the defendants, the insurance companies, on the ground that the debt secured thereby has been paid. The defendants by their answer and crossbill deny that the debt has been paid and assert that they purchased the same, that they are the owners thereof 'and they pray a foreclosure. The trial resulted in a decree dismissing the plaintiff’s bill and foreclosing 'the mortgage as prayed in defendants’ crossbill. From that judgment the plaintiff has brought this appeal.
The following facts of the case are undisputed:
The title to the property is traced back to one Hopple, who in 1901 executed a deed conveying the land to one B. G. Farrar, trustee, to secure a principal promissory note for $2800, due three years after date, and twelve interest notes. That is the deed of trust in dis
When Choisel sold the property to the Williamses he assigned the policies to them with the written consent of the insurance companies. These policies were delivered to Farrar the trustee and were held by him when the fire hereinafter mentioned occurred. In each of the policies was the following clause:
“Loss or damage, if any, under this policy, shall be payable to Bernard G\ Farrar as mortgagee (or trustee), as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgager or owner of the within described property, nor by any foreclosure or other proceedings or notice of the sale relating to the property, nor by any change in the title or ownership of the property, or by the occupation of the premises for purposes more hazardous than are permitted by this policy. Provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand pay the same. . . .
“Whenever this company shall pay the mortgagee (or trustee) any sum for loss or damage under this policy and shall claim that, as to the mortgagor or own*110 er, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option, pay to the mortgagee (op trustee) the whole principal due, or to grow due on the mortgage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee (or trustee) to recover the full amount of its claim.”
There is also a long clause in each policy providing that: “This entire policy shall be void if” certain acts are done, or certain other acts are omitted to be done, e. g., concealment or misrepresentation of conditions; taking out other insurance on same property without consent of this insurer; keeping gasoline except under certain conditions, etc. etc.; but not including under that head the failure to make proof of loss after fire.
The Williamses took out a third policy of insurance in another company to cover their household goods, etc., in the dwelling house. At the time of their purchase from Choisel they executed a second deed of trust to secure him the purchase money which they had agreed to pay, twenty-nine hundred dollars; this second deed of trust was foreclosed June 14, 1902, and at the foreclosure sale the plaintiff became the purchaser; thus the plaintiff became the owner of the property subject to the first deed of trust. In January, 1902, before the foreclosure sale, the dwelling house was destroyed by fire. At that time, the property belonged to the Williamses, subject to the two deeds of trust. When the fire occurred the three insurance companies were duly notified and they appointed an adjuster to represent them; the same person was the adjuster for the three companies. The policies contained a clause requiring proof of loss, to-wit, that the assured “within
The facts above stated are undisputed, but there is a conflict of testimony on the question whether or not the adjuster waived the proofs of loss. The plaintiff testified that he went with Mr. Williams to see the adjuster about the payment of the policies and the adjuster said that so far as the house was concerned it was a total loss and the insurance on the house would be settled, but they had not determined what to do about the insurance on the personal property, they Wanted to settle everything at the same time. The personal property policy called for two thousand dollars and in the proof of loss the Williamses claimed it was
Mr. Williams employed an attorney to assist him in the negotiations and that attorney testified that after several meetings with the adjuster and discussions of the matter, they concluded that there was no profit to Williams in going to the expense of making proof of loss and collecting the insurance on the dwelling house and that unless Loewenstein would allow him something he would abandon it;' they went to Loewenstein but he declined to make any concession and Williams dropped the matter. We infer from the evidence that while those negotiations were going on Loewenstein was the holder of the second deed of trust, which had not then been foreclosed.
The circuit court in an elaborate decree, including its finding of facts, finds especially that the Williamses failed to make proofs of loss and therefore “each of said policies became null and void as to the said insured Zachery T. and Priscilla Williams.” Then follows the finding that the mortgage notes were duly transferred and assigned by Farrar to the insur
I. The only ground on which the court based its adjudication that the policies became null and void was the failure of the Williamses to make proofs of loss and that is really the only ground on which respondents now seek to uphold that adjudication. In their briefs learned counsel for respondents point out the importance and justice of the requirement of proof of loss in fire insurance, the searching of the conscience of the insured and the sifting of the evidence by the adjuster to see that there has been no fraud perpetrated. We agree to all that is said on that subject; but we know that the law does not restrict the insurer in his investigations to the proofs of loss furnished by the insured. The insurer may institute his independent investigation and the adjudicated cases on contested policies show that he frequently does so. Whilst the law gives the insurer the right to demand proofs of loss, involving the conscience of the insured, it also gives him the right to waive that right and the adjudicated cases show that he is sometimes adjudged to have done so even when he insists that he did not. The proof of loss is no mere form; it has a wise purpose; it is for the information and satisfaction of the insurer; but when he has otherwise all the information that he requires and is satisfied that the insured is entitled to be paid, he may waive the proof of loss. There is no dispute of that proposition. And it is equally as clear that if he knowingly induces the insured to believe that he will waive the formal proof of loss, and tbe insured, acting on that belief, fails to make the proof, the insurer cannot escape liability on that ground. The adjuster in this instance was the agent of the three in
As we weigh the testimony we are of the opinion that the adjuster waived the proofs of loss and if the case is to turn on that point, as it seems to have turned in the trial court, we hold that failure to furnish the proofs under the circumstances does not affect the defendants ’ liability under the policies.
II. But even if there had been no waiver of the proofs of loss, the defendants acquired no title to the notes and deed of trust obtained from Farrar; the money they paid him was simply in payment of a debt they owed and the only thing they acquired was a discharge of their obligation.
A mortgagee has an insurable interest in the mortgaged property, therefore he may, on his own account and at his own expense, take out a policy of insurance to secure that interest, but that is quite different from this case. If a mortgagee takes out such a policy the contract of insurance may provide for an assignment of the mortgage debt with its security in the event of loss by fire and payment of the insurance. In such case the contract of insurance is a sufficient consideration to support the contract for assignment. Indeed under such circumstances if there was no express agreement for assignment doubtless equity would subrogate the insurer after he had paid the debt, to the rights of the mortgagee. The right of subrogation is an equity that arises out of a condition and does not depend on contract. Like a vendor’s lien or a resulting trust it arises when justice demands it and the course of equity jurisprudence allows it. In Words and Phrases, vol. 7, p. 6723, it is said: “A distinction must be observed between subrogation to and an assignment of a mortgage.” In Pomeroy, Equity, note to section 1419, it is said: “The doctrine of subrogation is of wide extent and operation in various depart
If one secondarily liable pays a debt, he is entitled as against the debtor who is primarily liable (there being no other fact in the case contra) to be subrogated to all the rights of the creditor, including securities held by him, and this, although there is no express agreement for subrogation; the right arises by operation of law and in such case an agreement expressly declaring that in that event a right of subrogation shall arise, neither adds to nor takes from the right, which the. law of its own force creates.
Whilst the terms “subrogation” and “assignment” are both used in the mortgage clauses of these two policies, yet so far as the term “subrogation” is concerned its effect is nothing, unless under the facts of the case equity would give a subrogation without the contract, but assignment is different, it stands on contract. The insurance companies in this case, as shown by their briefs, are both relying solely on the contract contained in the mortgagee clause of the policies; we do not understand that, independent of the contract, they claim to be the equitable owners of this mortgage debt and deed of, trust, and if they should make such a claim we see nothing in the facts of the case to support it. Let us consider the contract. We have already mentioned that class of contracts where the mortgagee on his own account and at his own expense takes insurance on the mortgaged property for his own protection. There is nothing of that kind in this case and cases in the books discussing the relative rights of parties to such a contract are of no assistance to us in this inquiry. But here we have a contract wherein it is provided that if the insurer pay the mortgagee “and shall claim that, as to the mortgagor or owner, no liability therefor existed”, then the insurer shall be subrogated to all the rights of the mortgagee
In each of these policies is a stipulation to the effect that if the mortgagor should do certain things or if he should omit to do certain other things or suffer certain conditions to .exist the policy should thereby become null and void, but in the mortgagee clause it is said that the policy does not thereby become void as to the mortgagee, and that where that is so the insurer may pay the mortgage debt and take a valid assignment of the mortgage notes and security. Cases are cited to show that that is a valid contract and its terms are enforced; of that class of cases is Allen v. Ins. Co., 132 Mass. 480, quoted in the briefs of respondents. We will refer to that case again hereinafter. It is sufficient now to say that that is not this case, but it differs in an essential point. There is a very great difference between the consequence of committing or suffering an act, for the commission or suffering of which it is stipulated that the policy shall become null and void, and the consequence of failure to make proof of loss after the loss has occurred. All the acts specified in the policy, of commission, omission or sufferance, whereby the policy is to become void, are referable to the time when the policy was issued or the period of its running, before the fire, but among those acts failure to make proof is not mentioned. The only consequence specified in the policy, of failure to furnish proof of loss, is to be gathered from the provision that when the amount of loss or damage has been ascertained it “shall be payable sixty days after due notice, ascertainment, esti
The answer concedes that at the time of the fire and for at least sixty days thereafter there was nothing to invalidate or to question the validity of the insurance, and if it should now be conceded that there was no waiver of the proof of loss and full force be given to . the letter of the policies on that point, it would only mean that the mortgagor’s right of action on the policies was barred, but in every other respect the insurance was valid. In that view of the case the mortgagor could not maintain a suit at law to recover the balance that is due (and there is a balance still
In Traders Ins. Co. v. Race, 142 Ill. 338, the court had in hand an insurance policy that contained a mortgagee clause like the one we are now considering and the insurance company was making a claim of the same kind that is now being made, that is, a right of subrogation. Referring to the language used in that policy that if the insurance company shall claim that it is not liable, etc., the court said: “The rights of a party
Suppose after the sixty days had passed and no proof of loss had been made, Farrar, the mortgagee, had in express terms refused to accept payment of his mortgage from the insurance companies and refused to avail himself of the provision in the policy, saying-that the property covered by the deed of trust was sufficient to afford him all the security he desired, could he by such refusal stand, as it were, between the mortgagor and the insurance companies and shield the latter from the payment that he could compel if he would and then turn upon the mortgaged property and foreclose his mortgage? Did the mortgagor have no right to enforce that provision of his policy because forsooth he could not maintain an action on the policy to recover the balance due him? The Supreme Court of Massachusetts answered that question in Graves v. Ins. Co., 10 Allen 281. In that case the policy provided that “if the title to said property shall be in any way changed the risk thereupon shall cease and determine, ’ ’ but it also provided that “no sale of the property shall affect the right of the mortgagee to recover in case of loss under the policy.” The title to the property had changed before the fire and the insurance as it applied to the mortgagor’s interest in the property beyond the mortgage had ceased, and after the fire the insurer paid the mortgagee the amount of the debt and took an assignment of the notes and after that the equity of redemption in the property was sold to Graves, the plaintiff in that suit. The court held that the policy belonged to the mortgagor, was obtained by him at his own cost to pay an incumbrance on his property and whatever was over to pay him for the further loss. The payment of the mortgage was as much a payment on his interest in the property as would be the further payment to him. The court said: “We are then to assume that this policy was
That case differed from the case at bar, however, in this, there was no stipulation in that policy to the effect that on payment of the money to the mortgagee
But we do not feel compelled to agree or to disagree with that interpretation because the case now before us differs in a very material point from the case in which that interpretation was made. In that case the policy provided that if the house should become vacant the policy should become void; 'it was vacant when the fire occurred. We are referred to other cases of that kind, but none more persuasive or more in
Our conclusion is that neither by the letter of the contract nor by any equitable principle are the respondents entitled to be subrogated to the rights of the mortgagee or to an assignment of the mortgage debt, therefore the judgment is reversed and the cause remanded to the circuit court with directions to enter judgment in favor of appellant cancelling the notes and deed of trust in question and dismissing the defendants’ crossbill.
ON MOTION TO TRANSFER TO. ST. LOUIS COURT OF APPEALS.
This is a motion to transfer the cause to the St. Louis Court of Appeals on tbe ground that this court had no jurisdiction to render the judgment it did render.
The motion goes on the theory that the only question in the case is, was the debt secured by the deed of trust paid? And in support of the motion we are referred to cases wherein we have held that Where the only question was whether the debt was paid, title to real estate is not involved, although as an after consequence title to real estate might be affected. We have held in several cases where the debtor in a deed of trust sought to enjoin a foreclosure sale on the ground that the debt was paid, that title to real estate was not involved, but we have never held that a petition charging that the defendant had by an unlawful assignment obtained possession of a deed of
There was no question here as to the fact that the mortgage creditor had received all the money that was due him. The question was as to right of the defendants to take an assignment of the mortgage notes under the circumstances and the right of the trust-fee to make the assignment.
This court has always held that in order to give jurisdiction on the ground that title to real estate is involved, the judgment itself must directly affect the title, and the distinction has been drawn between judgments that directly affect the title and judgments that may result in title being affected. In this case the judgment which this court directs the circuit court to enter is that the deed of trust be cancelled; that is a direct operation on the title.
In Payne v. Savings Assn., 198 Mo. 617, the plaintiff sought to enjoin a sale under execution on a judg
In Gay v. Sav. & Bldg. Assn., 149 Mo. 606, the plaintiff was the maker of the mortgage or deed of trust; he sought to enjoin a .sale of. the mortgaged property on the ground that the debt -was paid, that is, he claimed that in an accounting with defendant he was entitled to a credit of $800 which if allowed would cancel the debt; the validity of the deed was not in question or defendant’s ownership of it; the court said: “In any event it is only a question of the amount of money due on tlm mortgage debt. ’ ’ To the same effect are Bonner v. Lisenby, 157 Mo. 166, and Vandergrif v. Brock, 158 Mo. 681.
In Christopher v. People’s H. & S. Assn., 180 Mo. 568, the question was between the mortgagor claiming to be entitled to credits on' his mortgage for certain payments which he had made, which claim the mortgagee disputed. It was held that although in consequence of a decree in that case the title to real estate might by proceedings thereafter be affected, yet the decree itself did not affect the title. We are also referred to cases wherein it has been held that suits to foreclose a mortgage or establish liens do not involve title to real estate, but they are not in point here. Of such the latest perhaps is Stark v. Martin, 204
The case of Turner v. Morris, 222 Mo. 21, was an action in replevin wherein it was sought to bring in a question of title to the land on which the wheat was grown, and what Judge Woodson then said was in reference to the facts of that case, and it was in harmony with all the decisions of this court on that subject.
We have also held that though title to real estate be in issue in the pleadings, yet if the judgment appealed from was only a money judgment, title to real estate was not involved. [Jones v. Hogan, 211 Mo. 45; Brannock v. Magoon, 216 Mo. 722; Klingelhoefer v. Smith, 171 Mo. 455; Kennedy v. Duncan, 224 Mo. 661.] But in those cases the parties claiming interest in the land did not appeal from the judgment, but were satisfied 'with the money judgment; if they had appealed still claiming the interest in the land, this court would have retained jurisdiction. In this case, although it is a money judgment, yet it is something more than that, it is a judgment dismissing the plaintiff’s bill wherein he seeks to have the incumbrance from his title removed and sustaining the defendants’ cross-bill, and it was from that that the plaintiff appealed. The Court of Appeals could affirm or reverse the money judgment, but it could not render a judgment giving to the plaintiff what his petition claims he is entitled to even if that court took the same view of the law that we have taken.
Suppose the Court of Appeals should hear this case and reach the same conclusion as to the law that we have reached, and should render judgment, as we have rendered, directing the circuit court to enter a decree cancelling the deed of trust, who would undertake to defend the validty of its judgment?
Dissenting Opinion
DISSENTING OPINION.
In this dissent I shall state the facts from my viewpoint based on a study of the record. In 1903 plaintiff lodged his bill in equity in the circuit court of St. Louis county, the object and general nature of which was to cancel and discharge the record lien of a deed of trust executed by one Hopple to Farrar, trustee, to secure certain notes. This deed of trust is often referred to and will be designated “A” for brevity. “A” conveyed part of two lots described by metes and bounds. Defendants answered by denial, by admissions, and by way of crossbill to foreclose “A.” The decree dismissed plaintiff’s bill, found the issues for defendants and foreclosed “A.” Plaintiff appeals.
Plaintiff claims title to the ground by virtue of a foreclosure of another deed of trust, a junior lien to' “A,” and a trustee’s deed under that sale. Defendant.
The facts are somewhat complicated, but there is no dispute on the features of the case evidenced by documents, which may be summarized as follows:
Hopple owned the ground on May 29, 1901. On that day he executed a deed of trust in the nature of a mortgage to Farrar, trustee, securing a principal note of $2800', due in three years, together with twelve quarterly interest notes of forty-two dollars each, and three yearly interest notes of fifty-six dollars each, which deed of trust (to-wit, “A”) was duly recorded. On that same day Hopple conveyed to one Choisel by warranty deed. This conveyance was subject to “A” and also to another deed of trust not material here. On June 14, 1901, Choisel took out two policies of insurance aggregating three thousand one hundred dollars — one-half in each of defendant companies. Each policy had a “rider” or attached clause, commonly known as a “mortgagee clause,” indemnifying the owner of the indebtedness secured by “A.” These policies contain the usual clause requiring proofs of loss to be made by the assured within sixty days after a loss by fire, which provision, together with the mortgagee clause, will be sufficiently elaborated presently.
“A” contained a provision that the property should be kept insured at all times and that the policies be kept “constantly assigned or pledged and delivered” to Farrar, trustee, as security for the notes. The policies were delivered to and thenceforth held by Farrar in pursuance of that provision. On the 20th day of July, 1901, Choisel sold and conveyed by warranty deed to Zackery T. Williams and Priscilla, his
It was contended below, inter alia, as it is here, that there was a waiver of proofs of loss and that
On the coming in of proofs of loss on the chattel policy an adjustment was negotiated and that policy was compromised and paid to Zackery T. and Priscilla through the services of Senator Kinealy.
At a certain time after proofs of loss were due, Mr. Farrar, trustee under “A,” who at that time for the purposes of settlement also held legal title to the notes secured by “A,” demanded a settlement from defendant companies under the mortgagee clause. His right to make such demand was recognized by the adjuster. In turn the adjuster claimed the right of defendant companies to have the notes and security evidenced by “A” assigned to them. This, on the theory that Zackery and Priscilla had no claim under the policies. On this basis a settlement was made. Defendant companies paid Farrar the amount of the notes secured by “A,” to-wit, $2930, with interest; and Farrar indorsed to them said notes without recourse. At the same time he executed the following written assignment:
“St. Louis, Mo., June —, 1902.
“For value received I hereby transfer, assign and set over to the Queen Insurance Company of America and the Phoenix Assurance Company of London, all*135 my right, title and interest in all the securities held by me for the payment of any debts due me by Zackery T. Williams and Priscilla Williams, or either of them, hereby subrogating to said insurance companies all my rights under such securities.”
And delivered the notes, mortgage, policies and assignment to the adjuster on June 6, 1902.
Policy provisions touching proofs of loss were the same in each. They need not be set forth in extenso. In substance they are: (1) A provision that the policy loss shall be payable sixty days after due notice, ascertainment, estimate and satisfactory proof of the loss have been received by the company in accordance with the terms of the policy; and (2) another provision to the effect that the insured should give immediate written notice to the company of loss by fire and within sixty days render a statement to the company signed and sworn to by the insured, stating the knowledge and belief of the insured as to the time and origin of the fire, the interests of the insured and of all others in the property, any incumbrance, any other insurance, and many other things.
The mortgagee clause attached as a rider to each policy reads:
“Loss or damage, if any, under this policy, shall be payable to Bernard C. Farrar as mortgagee (or trustee), as interest may appear, and 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 within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy. Provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the*136 mortgagee (or trustee) shall, on demand, pay the same.
“Provided also, that the mortgagee (er trustee) shall notify this company of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee (or trustee) and, unless permitted by this policy, it shall be noted théreon, and the mortgagee (or trustee) shall, on demand, pay the premium for such increased hazard for the term of the use thereof; otherwise this policy shall be null and void.
“This company-reserves the right to cancel this policy at any time as provided by its terms, but in such case this policy shall continue in force for the benefit only of the mortgagee (or trustee) for ten days after notice to the mortgagee (or trustee) of such cancellation, and shall then cease, and this company shall have the right on like notice, to cancel this agreement.
“Whenever this company shall pay the mortgagee (or trustee) any sum for loss or damage under this policy and shall claim that, as to the mortgagor or owner, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option, pay to the mortgagee (or trustee) the whole principal due, or to grow due on the mortgage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee (or trustee) to recover the full amount of its claim. ’ ’
Defendants claim to own “A” and the notes secured thereby by virtue of the foregoing mortgagee clause and assignment; contra, plaintiff, as owner und§r the foreclosure of “B” and the trustee’s deed following, claims that defendants’ payment to Farrar,
We have carefully examined the record and have reached the conclusion that plaintiff’s bill was properly dismissed and that the decree of foreclosure on the crossbill accords with correct and settled legal principles. This, because:
(a) It must be conceded that the lawmaker, because of the importance of insurance contracts and the intricate nature of the subject-matter, has evidenced a lively concern in regulating insurance companies and their contracts. This is not singular when the technicalities of the business are considered and when experts usually represent the insurer, while the assured as a rule does not stand on an equal footing. Courts have not been laggard in keeping pace with the lively concern of the lawmaker. Policies are contracts prepared by skilled and astute people and accepted by plain folk, the unwary and confiding. Therefore, they are construed somewhat strongly against the insurer. Such policies swarm with intricate technical provisions hedging about liability or looking to its avoidance, and courts are inclined to match their judicial astuteness to avoid a forfeiture against the astuteness of the policy-maker to invent or establish one. This judicial attitude may be gathered from cases. For example:
In Boyle’s Sons v. Insurance Co., 169 Pa. St. l. c. 355, Mr. Justice Williams commenting on a policy, says: “Arranged around this contract is a line of defensive ‘stipulations, exceptions, conditions and provisions.’ Some of these are not numbered, but with-others numbered from 1 to 112 inclusive, they stand bristling like armed sentinels around the contract and the liability of the company thereunder, ready to impale even an honest claimant on a bare technicality.”
We are asked to apply the doctrine of the Dezell case. We are quite willing to do so. But that or no other ease holds that a waiver can be seen where none exists. Courts have held under a general charge in a petition of full performance of policy conditions, where defendant pleads the non-performance of a specific policy term, that plaintiff may show a waiver without pleading one, this contrary to the general rule of pleading. Yet the general doctrine is that the requirement of proofs of loss is a fair and reasonable requirement, one intended to sift and purge the conscience of the assured and necessary to protect the insurance company from fraud and imposition, and that such policy provision must be substantially complied with. We know of no ruling to the effect that policies, such as these, are kept in force in favor of the property-owner unless proofs of loss are furnished by him or waived by the company.
(b) In this case it is conceded no proofs were furnished by the property-owner. Were they waived?
While a waiver is not a technical estoppel, yet it is closely related to estoppel and has elements of it. Says Brown, J., in Armstrong v. Insurance Co., 130 N. Y. 560: “The rule is now established, however, that if in any negotiations or transactions with the assured after knowledge of the forfeiture, it recognizes the continued validity of the policy, or does acts based thereon, or requires the insured to do some act or incur some trouble or expense, the forfeiture is waived.” And further in the same case: “As has
been already said, in every case where a waiver has been implied from the defendant’s acts, there has existed something of the element of an estoppel. The plaintiff has been misled to his harm, or the company has done something which could be done only by virtue of the policy, or has required something from the assured which he was bound to do only at the request of the company and which request could only be made under a valid policy.”
The foregoing we deem a fair statement of.the law. If in this case defendant companies on uncontradicted evidence, or on evidence which (if contradicted) • the chancellor believed, had taken such position in regard to the proofs that the insured was misled on the necessity of making them, we would have a different case. The most the adjuster did in this case, under the weight of the testimony, was to sit tight and do nothing after furnishing blank forms of proofs
(c) The right to subrogation to mortgage securities has been discussed in cases where there are no such mortgagee clauses as those in hand. For instance, where policies simply provide that loss, if any, is payable to a mortgagee or trustee as his interest may appear, and in other cases of similar kind. In such cases the courts have refused subrogation, and a payment to the mortgagee or trustee has been-held to extinguish the notes and mortgage lien by operation of law. We are cited to some such cases but they are not in point. Under such mortgagee clauses' as were attached to defendants’ policies the clear right to subrogation and assignment exists by the very terms of the contract in case the insurer is not liable to the insured under the policy but remains liable to the mortgagee or trustee by virtue of the policy terms. The claim of non-liability to the insured must not be merely arbitrary, colorable or whimsical, but based on fact. [Traders’ Insurance Co. v. Race, 142 Ill. 338.]
In the case at bar non-liability actually exists. That fact entitled the underwriters to claim an assignment and stand on the doctrine of subrogation as .provided in the contract of insurance; for, although the insured paid the premium, yet that premium was the consideration for a contract having dual features, vis: It insured his property against loss, but it also insured the mortgagee’s debt against loss, and it contemplated that a condition might arise in which it would insure the mortgagee and no longer insure the property-owner.' That condition arose in this case and under an unquestioned line of authorities the mortgagee clause was
(d) It is argued that the mortgagee clause contemplates, as a condition precedent to assignment, a forfeiture sprung before a loss by fire. Further, that it was the duty of the mortgagee to make proofs of loss; that such proofs would have answered for the assured; that the settlement with Farrar, trustee, is therefore equivalent to a waiver of proofs of loss. But learned counsel argue unsoundly, we think, in that behalf, because :
(1) The mortgagee clause is not restricted to forfeitures springing up before the loss. The words do not run that way, but plainly cover all acts making the insurance inoperative as to the assured, and leaving it alive as to the mortgagee. That clause reads, inter alia, that the insurance as to the interest of the mortgagee or trustee ‘ ‘ shall not be invalidated by any ret or neglect of the mortgagor or owner of the within described property.” It would be unnatural and strained construction to say the clause did not cover the property-owner ’s failure to furnish proofs of loss. We rule -the contention against plaintiff.
(2) As to the mortgagee’s furnished proofs of loss, this may be said: It has been ruled by the Kansas City Court of Appeals that the mortgagee could not maintain an action on the policy without proofs made by either the assured or the mortgagee. [Lombard Investment Co. v. Insurance Co., 62 Mo. App. 315.] It has been ruled by the same court that the mortgagee need not make proofs of loss. He may make them or let it alone. [Adams v. Insurance Co., 115 Mo. App.
It must be admitted that the law in that particular is in a fluid and formative state and possibly the last word has not been spoken. We think it clear, however, that while proofs furnished by the assured under the policy scheme would be all the proofs necessary to entitle the mortgagee to recover by suit in those jurisdictions requiring proofs of loss as a condition precedent to recovery on the policy by the mortgagee, yet proofs by the mortgagee himself, under his oath and on his personal knowledge, could not take the place of that sifting and purging of the conscience to which the insurer is entitled from the owner of the property. Therefore, a waiver of proofs of loss from the mortgagee could not be taken as a waiver of proofs from the assured. It follows that the insurer has the right to voluntarily recognize its liability to the mortgagee without thereby admitting liability to the property-owner. [Burnham v. Insurance Co., 75 Mo. App. l. c. 401 et seq.]
The necessity of proofs to maintain a suit on the policy by the mortgagee is a question not in this case, and is therefore reserved.
Finally, to sum. up, the grounds of this dissent are that:
(a) The opinion of my learned brother Valliant proceeds on an assumption of fact unwarranted in this record, as I read it, viz., that Loewenstein, at the time he purchased at the foreclosure sale, was the owner of the notes secured by the second deed of trust.
(b) The evidence on waiver fell from the lips of witnesses below, hone of it was documentary. At best it was conflicting, therefore, there being the factor of credibility to be reckoned with, the chancellor’s opportunity for weighing that testimony and tagging it with a value mark was superior to our own. He did weigh it and found against plaintiff. To overrule his decision on that question of fact seems to me contrary to the long-established and sound rule of this court — a rule announced over and over again early and late, that we, in such conflict, defer to the trial judge.
(c) True, subrogation is a doctrine of equity, arising as pure benevolence to seek and do' justice in a given case. It is judge-made law. But when even so much had been said as that, is it sound doctrine to rule that subrogation may not be specifically contracted for and that a contract, like the mortgagee clause we are •considering, adds nothing to itself by the use of the word “subrogation,” as held in the principal opinion? Here were three people entering into a solemn contract to the effect that in a certain contingency one of the parties might be subrogated to certain rights in certain
There are lurking dangers in insuring mortgaged property. There are still greater lurking dangers in insuring tbe mortgagee’s interest and making tbe insurer responsible to tbe mortgagee in spite of tbe act or neglect of tbe owner of the property. These mortgagee clauses aid business, they facilitate tbe investment of money, tend to lower tbe rate of interest, and meet a business Want; therefore, while insurance policies should be liberally construed in tbe interest of the insured yet we have no call to ignore or overcome tbe plain meaning of tbe contract words, but should enforce tbe contract as written.
(d) The contract does not say that the policy must be “null and void” before subrogation takes effect. To the contrary, it speaks of the “act or neglect” of the owner as the thing not affecting the mortgagee. It speaks of the “insurance” not being “invalidated.” Suppose the mortgagor declined to make proofs of loss, does not the mortgagee clause provide against that contingency when it speaks of the act or neglect of the owner? I think so. This sboWs it was not forfeiture and null-cmd-voidness which were alone held in mind. Therefore I dissent from my brother’s opinion in so far as it bolds, that the mortgagee clause only relates to those acts which forfeit the policy prior to the loss by fire.
(e) In effect and in a roundabout way tbe result reached is to allow a recovery on tbe policy of insurance without proofs of loss. Therefore, I dissent on that ground. If Williams could not recover as tbe
For these considerations, the judgment should be affirmed.