Buckley v. Garrett ( 1869 )

The opinion of the court was delivered, by

Sharswood, J.

— If a debtor at or immediately after the execution or the assignment of a mortgage on his property to a creditor transfers to him a policy of insurance against fire on the mortgaged premises, though nothing be expressed at the time, or it be transferred as collateral security generally, it is a conclusion of law, from the very nature of the transaction, that the policy is to be held by the creditor as a collateral security for the mortgage. It would require evidence of an express agreement or understanding to authorize the assignee to apply the amount of the insurance received in the event of a loss to any other debt or liability. The policy being on the mortgaged premises was to make good the value of the property to the holder of the mortgage, if the buildings or improvements should be destroyed by fire. The transaction speaks for itself as loudly as any words could make it. So this court decided when the case was here before: Buckley v. .Garrett, 11 Wright 280. “ The bond of Buckley,” says Mr. Justice Read, “ was given to Garrett & Martin on the 28th of March, accompanied by his wife’s mortgage as a collateral security for an undivided third part of a mortgage to be assigned to them. By his bond Buckley became a debtor to Garrett & Martin, and also on the same day made his wife his creditor. When, therefore, on the 81st of March, he assigned this policy as collateral security, it was as collateral to his own bond given three days before, and to secure his wife who had become his creditor; and if it had been thus submitted to the jury their verdict must have been for the defendants;” that is, if the case had been submitted to the jury with this instruction from the court their verdict must have been for the defendants. Any other verdict would have been against the charge as to the law, and could not have been permitted to stand.

The learned judge below,'therefore, misapprehended the former decision in the case when he supposed that the question was one of fact to be left as such to the jury. It arose wholly upon the construction of writings, as he had properly apprehended it to do upon the first trial before him, and was therefore wholly in the province of tbe court. Instead of instructing tbe jury that tbe assignment of tbe policy to tbe assignee of tbe mortgage was a collateral security for that mortgage alone, in tbe event of loss by fire to tbe mortgaged premises, and wbicb of course enured to tbe benefit of tbe assignor’s own bond and bis wife’s mortgage also given as collateral for tbe same debt — be said in bis charge: “ If it was transferred by Mr. Buckley especially to secure tbe debt of $1000, with a view to protect bis wife against loss as bis surety, then tbe money received from tbe company should have been applied to this debt.” If this bad been a correct statement of tbe law be ought to have added that as there was no evidence in tbe case that it was in fact so specially assigned, their verdict must be for tbe plaintiffs. It is evident if tbe law has been correctly held by this court that tbe case called for a binding direction to tbe jury in favor of tbe defendants.

Nor do we think that tbe letter of Mrs. Buckley to Mr. P. F. Smith, or tbe conversation with Mr. Buckley detailed by that gentleman, bad any tendency to show that there was an agreement in regard to tbe assignment different from what tbe law implied. Had tbe defence now set up been that Mr. or Mrs. Buckley bad paid tbe money, this request for time when called on to pay tbe mortgage, would have been cogent evidence to throw discredit on such a defence. But when tbe question was, what appropriation tbe law would make of tbe proceeds of collaterals collected by tbe creditor, tbe evidence only showed that they were ignorant of their legal rights, and could not be tortured into an admission that they bad made any special agreement on tbe subject when tbe policy was assigned.

Judgment reversed, and venire faéias de novo awarded.