110 F. 35 | 4th Cir. | 1901
(after stating the facts as above). When a case comes by appeal into this court, in which there are questions of law depending, more or less, on questions of fact, we examine into the findings of fact made by the master in which the court below has concurred, and give them great 'weight in reaching oui; conclusion. W.e-regret to.say that in this case wg get nq .asr
We will inquire what was the connection of the Southern Building & Loan Association with the insurance on this property. The theory upon which the decree below proceeds is that Miller & Warden and-the trustee, Moore, with the Southern Building & Loan Association, were bound by mutual covenants to insure; that Miller & Warden, covenanted to insure the property in some solvent insurance company for the protection of the money loaned, and that the trustee and the association covenanted, if Miller & Warden did not so in-, sure the property, to do it themselves in some solvent insurance company; that Miller & Warden did not fulfill their covenant, and-that, therefore, the obligation fell on the trustee and the association; and that, these having insured in a company which proved to be insolvent, they must bear the loss, and Miller & Warden are discharged from the debt. If this theory be correct, then all that Miller - & Warden need do was to commit a breach of the covenant, and by this act — because of this act — throw upon the covenantee, the-creditor, the whole responsibility of effecting the insurance they had bound themselves to effect, and to assume the risk of obtaining sol-; vent insurance. This would be a most liberal construction of the-deed in favor of the debtor, enabling him to profit by his own default.'
The contract is not capable of such a construction. It is a deed-, poll, and not an indenture. The covenant is stated to be the cove--nant of the parties of the first part, the makers of the deed. There, are four clauses to this covenant of the parties of the first part:' (i)That they will promptly pay all monthly dues, fines, and interest by. the terms of the bond, or the laws, rules, and regulations of the said association; (2) that they will keep the buildings on said real, estate insured in some solvent company, in a sum not exceeding $5,000, for the benefit of the trust, and will assign the policies to the trustee as further security in the premises; (3) that they will, promptly pay all premiums of insurance on said property, as well, as all taxes and assessments thereon. These are three covenants based upon consideration of the loan. Then it is provided that, In case they fail to observe these covenants, then the trustee or the> association may — that is, will have the option, if they wish — take out: such insurance, and pay such taxes and assessments, and, if, they; dq so, any sum so paid, with interest from the day of payment, will become a part of the debt secured by the deed, and be payable with*
This conclusion is strengthened by the case of Wheeling v. Insurance Co., 101 U. S. 439, 25 L. Ed. 1055. In that case the mortgagor had executed successive mortgages on his plantation, buildings, machinery, and stock, securing the payment of certain notes. In two of these mortgages the mortgagor covenanted to insure the building, machinery, and stock, and to transfer the policies to the mortgagees, or, in default of this, that the mortgagees could insure at his'expense. No such policy was effected by the mortgagor, nor did the mortgagees exercise their right to insure. But there had befen effected on the same buildings, machinery, and stock an insurance prior to the mortgages by a creditor of the mortgagor. A firfe occurred,' and the amount of insurance paid exceeded the debt of the creditor, who insured, leaving an amount payable to the owner, the mortgagor. The supreme court held that the mortgagee, with whom the mortgagor had covenanted to insure the property arid did not do so, had an equity to be paid out of the residue coming tó the mortgagor! The court says:
“It is undoubtedly tbe general rule that a mortgagee has no right to the benefit of a policy taken by the mortgagor, unless it is assigned to him. But it is settled by many decisions in this country that if the mortgagor is bound, by covenant or otherwise, to insure the mortgaged premises for the better security of the mortgagee, the latter will have an equitable lien upon the money due on a policy taken out by the mortgagor, to the extent of the mortgagee’s interest in the property destroyed.”
• This¡ decision could not have been rendered if there was a binding contract on the mortgagee to insure if the mortgagor did not, so that if the mortgagee did not effect valid insurance the loss would have fallen on him.
■Even if we treat the association as the agent of the’debtors in effecting this, insurance, we can see no reason for holding them re
Miller & Warden seek to hold the association to the loss, because, having made arrangements for effecting an insurance on the property for $10,000, they abandoned it when they learned that the association had placed upon it a policy for $5,000. Incidentally, tlijs would appear to be complete recognition, affirmance, and adoption of the action of the association in insuring the property for them. Apart from this, the insurance effected by the association was for $5,000, payable exclusively on their debt, as additional security to it. The insurance proposed to be effected by Miller & Warden was on a wholly different insurable interest, the property itself, admitted to be worth more than $6,000. Both policies could have been effected. “A mortgagee can insure only to the amount of his debt,
Upon the whole-case, we are of opinion that there was error in the cpnclusion reached by the court below. Its decree is reversed, ' aiid the Case is remanded to the circuit court for such further proceedings as-may be consistent with the" conclusion of this court,