17 Pa. 253 | Pa. | 1851
The interest of a mortgagee is a special but an insurable one, and it may at his option be insured generally or specially: generally, when he says nothing about his mortgage, and insures as the entire owner-; and specially, when the nature of his interest is specified in a memorandum. By the first he pays a premium proportional to the risk of the absolute ownership; by the second, a premium proportional to the risk of a less and derivative ownership. In the one case and in the other the subject of the insurance is apparently the corpus of the thing insured, but actually the interest of the party assured in it. If the absolute owner be insured he recovers the full value of the thing lost, because his interest in it is commensurate with its value: if the owner of a limited interest in it is insured, he recovers only to the extent of his interest. Each may insure separately and recover separately pro interesse suo. A policy of insurance has been from the beginning a rude and indigested instrument, whose legal effect, moulded by usage and judicial decision, is different from a strict interpretation of it. As the words of an execution are frequently controlled with us by an endorsement, so are the words of a policy frequently controlled by a memorandum. Notwithstanding the form of the contract, therefore, a mortgagee insures, whether generally or specially, not the ultimate safety of the whole of the property, but only so much of it as may be enough to satisfy his mortgage. It is not the specific property that is insured, but its capacity to pay the mortgage debt. In effect, the security is insured.
The fallacy of the argument on the part of the plaintiff below is in assuming that the words in the policy, “ to pay, make good, and satisfy all such damages or loss which shall or may happen by fire to the property,” bind the insurer to pay in every case to the extent of an outside price, for which it might be sold, unencumbered, in the market. What is the property insured ? Not the thing independent of ownership; for if the law were otherwise, a policy might be, to some extent, a wagering one. The beneficial interest ip it is insured, and only to the value of it can the owner recover for a loss of it, because the contract of insurance is strictly a contract of indemnity. No one would pretend that the mortgagee of a house, who had insured it, could recover for the burning of a few shingles in the roof of it, though the unimpaired value of the building might be much greater than the amount of the mortgage. Were the law otherwise, the mortgagee might recover from the insurer the value of the property lost, and the whole of his mortgage debt from the mortgagor of the property saved. In reference to the clear value of the property insured, therefore, the existence of encumbrances is always material to the risk. Were it not, the holder of a mortgage for hundreds might insure and recover for thousands, on a gambling policy. And why
Nor can there be room for a doubt that the security protected was the mortgage in question. The plaintiff himself admits the fact by offering to assign it, and by denying the right of the defendant to have the benefit of the prior mortgages of tho realty. He
Judgment reversed and venire de novo awarded.