In re Moore , 6 Daly 541 ( 1876 )

Chables P. Daly, Chief Justice.

“ The referee’s report should be confirmed. The insurance was by Mrs. Redman, as interest might appear, loss payable to the Citizens’ Savings Bank. The policy was held by the bank as security for the mortgage given to it by Mrs. Redman, and the fact that the bank was entitled, in the event of the destruction of the premises by fire, to have the loss paid to it, gave the bank no authority to cancel the policy. The premium had been paid by Mrs. Redman throughout, and she had an interest in the policy contingent úpon any change of the existing relations between her and the bank, such as the payment of the mortgage, &c., for which the policy in the hands of the bank was only collateral security. After the company became insolvent, the bank, for its security, insured its interest as mortgagee in another company, and immediately thereupon the secretary of the bank agreed that the policy with the JEtna Insurance Company might be canceled if it should be ascertained that the company was insolvent. In my opinion he had no authority to make any such agreement, and the bank having secured itself by an insurance which it thought proper to effect with another company, and Mrs. Redman, after the fire, having repaired the building and restored it to the condition in which it was before the fire, the bank is fully secured by the restoration of the building, together with the policy in the other company which it held, and Mrs. Redman, and not the bank, is the one to whom the loss is payable by the defendants; she being the only one who has sustained loss and damage by the fire. The bank could not recover from the defendants, because the building has been restored by the mortgagee, for the agreement is one of indemnity, and the hank has sustained no loss or damage (Mathewson v. The Western Assurance Co. 10 Lower Canada, 18, G. C. Montreal, 8). The policy could be canceled as against Mrs. Redman only by the return of the premium and the return of it to her, for it was she, and not the bank, by whom the premium was paid and the policy continued by the payment of the accruing premiums. It could be canceled with consent of the bank and of Mrs. Redman, and by the repayment to her of the premium. The premium was not returned, and the only thing relied on, upon which I am asked to hold that the policy was canceled, is the consent or agreement of the secretary of the bank. What he consented to could not have the effect of canceling the policy. It is, as respects Mrs. Redman or her assignee, in full force and effect. The bank can claim no indemnity, for it has sustained no loss, and Mrs. Redman, who insured as interest might appear, is alone the one to be indemnified, she being the one who has sustained the loss and damage arising from the fire (Franklin Insurance Co. v. Massey, 33 Penn. St. 221; Peoria, dec. Insurance Co. v. Botto, 47 Ill. 516; Etna Insurance Co. v. Maguire, 51 Id. 342; Hathorn v. The Germania Insurance Co. 55 Barb. 28).”

From the order entered in accordance with this opinion, the receiver appealed to the court at general term, where the appeal was argued by

Julien T. Da/oies, for appellant.

F. C. Moore, respondent in person.

Labremore, J.

The order appealed from should be affirmed, and for the reasons stated in the decision of the Chief Justice (supra).

There was no authority, either expressed or implied, for the cancellation of the policy as to Mrs. Redman’s interest.

The contract of insurance shows that the rights of the assured were meant to be separate and distinct. This is evident from the fact that, as to the mortgagee, no act or neglect of the mortgagee would invalidate the policy. Unlike the case of Grosvenor v. The Atlantic Fire Ins. Co. (17 N. Y. 391), in which the mortgagee was regarded as an appointee to receive the money, the Citizens’ Savings Bank held a contract of indemnity against loss to the extent of its loan, independent of the owner’s rights, acts, or omissions. If the loan had been paid before the loss, would such payment of itself have canceled the policy, and left the owner remediless as to his indemnity ?

I cannot thus interpret the intention of the parties to a contract which insures both owner and mortgagee as interest may appear.

If the loan had been partially paid, and a total loss had occurred, the excess of insurance over the balance due on the loan would have belonged to the owner of the premises. Any other construction of the policy would make .it an agreement between the insurer and mortgagee, and for the sole benefit of the latter.

If this view he correct, it follows that the cancellation of. the policy was a release of the interest of the mortgagee only, and that the plaintiff is entitled to the sum awarded.

Joseph F. Daly and Van Hoesen, JJ., concurred.

Order affirmed.