163 A. 680 | Pa. | 1932
Argued September 29, 1932. The question before us is: What parties are entitled to insurance money paid to the receiver of an insolvent corporation for the fire loss of the corporation's principal asset, a certain excursion boat called "Greater Pittsburgh?" The respective claimants are the corporation's general creditors and the holders of a mortgage on the vessel.
Defendant company, incorporated in 1929, conducted a carrying trade on rivers in the vicinity of Pittsburgh. Its business was unprofitable. Within a year of incorporation it became heavily indebted to some of its officers and stockholders. To secure them the company, by vote of its stockholders, agreed to give a mortgage on its steamer, the "Greater Pittsburgh." This mortgage for $62,500 was duly executed on March 7, 1930, and the Allegheny Trust Company was made trustee. The steamboat company became hopelessly involved financially and on petition of a creditor, a receiver was appointed for the company on October 23, 1930. The mortgage on the vessel contained a clause whereby the company agreed to insure it for the security of the trustee, to an amount satisfactory to the latter. The trustee was also authorized to place the insurance at the company's *343 expense if the company failed to do so. In November, 1930, certain insurance on the vessel expired, but the receiver had no funds for renewal. He so informed the officers of the company, some of the beneficiaries under the mortgage, telling them that, if they would order the insurance and "arrange it in any way they please," he, as receiver, would pay for it if and when he subsequently came into funds. The insurance was placed in the name of the receiver as such, premiums being paid by the Allegheny Trust Company, and receipts were issued to the defendant company. The total amount of the insurance was subsequently reduced to $50,000. There was no clause in the policies directing payment to the mortgagees. The vessel was destroyed by fire on November 11, 1931, and the underwriting companies paid the adjusted loss, amounting to $49,000, to H. M. Oliver, receiver. The assets remaining in the hands of the receiver to satisfy unsecured claims against the corporation are negligible. The appellant is one of the unsecured creditors and he contends that the insurance proceeds are distributable to all the general creditors ratably. The holders of the mortgage on the destroyed property contend that it goes to them.
It is claimed that since the insurance policies themselves and all the accompanying documents and instruments refer to the receiver alone as the insured and make no reference to the interest of the Allegheny Trust Company and the trust beneficiaries in the insured property, the trust company has no right to the proceeds. It is averred that this result must follow from general principles of insurance and receivership law, such as, that the insurance contract was between the insurance company and the receiver, not between the company and the trustee under the mortgage (Lumber Co. v. Ins. Co.,
If no receivership question were involved, and if the policies in question had been taken out by the Pittsburgh Steamboat Company itself, pursuant to its covenant in the mortgage, there can be no doubt that the mortgagees would be entitled to the proceeds on the theory of an equitable lien, even though, as here, the policies contained no mortgagee clause. Authorities are abundant on this proposition: Wheeler v. Ins. Co.,
The point made by the appellant is that the company, the mortgagor, did not take out the policies, but that *345
they were placed in the name of the receiver, representing the body of general creditors, with nothing expressed as to the mortgagees' beneficial interest in the proceeds. The question is: Does this fact affect the legal rights of the mortgagees? We think not. It is an undisputed fact that the receiver did not himself actually place the insurance; the mortgagees placed it and paid for it. The former knew the insurance had been issued, but testified that he never had the policies in his possession until after the loss occurred. Then he collected the insurance money and deposited it in the trustee bank. Even if he had procured the insurance himself in his own name, payable to himself in his capacity as receiver, thus complying with the terms of his company's covenant in the mortgage, the claim of the general creditors would be a doubtful one. The legal status of a receiver, his authority and duty, is clear. He is "the officer, the executive hand, of a court of equity. His duty is to protect and preserve, for the benefit of the persons ultimately entitled to it, an estate over which the court has found it necessary to extend its care:" Schwartz v. Keystone Oil Co.,
Certain other propositions are pressed by appellant. It is said that the mortgagees are estopped because they negligently allowed the policies to be issued in the form in which they were, without a loss-payable clause for the benefit of the mortgagees. But there can be no question of estoppel, for, as we view the case, the mortgagees did enough to protect their interests, even though they might have done more. The fact that one of the policies contained a clause excepting property encumbered by a chattel mortgage shows no intent one way or the other as to whose interest was insured. The entire vessel was encumbered, and if this clause excepted the whole vessel as a risk, then nobody's interest was insured, mortgagees', receiver's, or creditors'. This was a matter to be settled between insurer and insured, as the opinion of the lower court in banc points out, and was not open to question by appellant. See Wheeler v. Ins. Co., 101 U.S. at page 441. As soon as the proceeds of the policies were paid to the receiver, the lien of the mortgagees attached, without regard to any intent on the part of the insurance company to insure a particular interest. It is manifest that the whole purpose of the mortgagees in placing the insurance was to protect their own interest. This they did effectually.
The decree of the lower court is affirmed at appellant's cost.