Citation Numbers: 183 A. 267, 87 N.H. 450, 1936 N.H. LEXIS 76
Judges: Allen, Branch
Filed Date: 1/7/1936
Status: Precedential
Modified Date: 11/11/2024
Liability is denied on the ground that the insurers, in an exercise of their right of subrogation set forth in the union mortgage clause, were entitled to receive the mortgage security in the character it had when the expired policies were issued. The mortgages were extinguished by the proceedings in connection with the tax sale and deed, and were revived upon the reconveyance of the property to the mortgagor through the operation of estoppel. Kezer v. Clifford,
When the policies in suit were issued, the mortgages of title had become lost, and they were then enforceable only under estoppel. The insurers, however, would seem to claim that promises of title were given in the policies because the policies extended the term of *Page 452 expired policies which were issued when the mortgages were of title; they say that, having no notice of any change in the title, they were promised that the title originally existing continued intact.
The insurers' position rests upon a fallacious premise respecting the consideration for their agreement with the mortgagees contained in the union mortgage clause. Although it be regarded that the agreement is separate from that with the owner, the premium paid for the policy is the consideration for both agreements. The entire amount of insurance, however, and on what terms it is divided by the policy between owner and mortgagee, is paid for by the premium. For the premium a single amount of insurance is promised, to be paid upon a loss towards satisfaction of the mortgage debt and the balance after such satisfaction to the owner. "Here the premium was paid by the owner or on his behalf, but the insurance company received it as consideration for its double undertaking to the owner and to the mortgagee." Smith v. Insurance Co.,
The view has been taken that the union mortgage clause has a special consideration for its validity. Union Trust Co. v. Insurance Co.,
Moreover, the policy shows no agreement by the mortgagee. The protection to him under the union mortgage clause is expressed to be upon stated conditions. He has his choice of compliance or refusal. If he refuses, he loses the benefit of the clause. The clause takes care of the mortgagee when the policy is void as to the owner, but the care is dependent on specified action of the mortgagee. He is protected if he sees fit to avail himself of the protection by doing what the policy says he must do to obtain it. But he has not bound himself to observe the conditions.
Nor, when a policy containing the union mortgage clause insures a mortgagee's interest, is the mortgagee, by the mere issuance of the policy, held to represent to the insurer that his mortgage will remain *Page 453
unchanged in force, validity or character. He may release part of his security or permit other liens to precede his without disturbance to his insurance. There is no promise on his part not to weaken or lessen the value of the security, in the mere fact of insurance of his interest or of the insurer's reserved right of subrogation. ". . . although the plaintiffs' position may be analogous in some respects to that of a surety, their rights and duties are defined by the terms of the insurance contract . . . ." Fidelity c. Co. v. Brennan, supra, 295. See also Guaranty Trust Co. v. Company,
The union mortgage clause is of service only when the owner has lost his insurance under the policy. If his insurance is in force, the mortgagee's is equally so. So long as the policy is not avoided as to the owner, the mortgagee stands in the owner's right. Here, but for the unpermitted non-occupancy of the property at the time of the fire, the policies would have been in force as to the owner. His loss of ownership caused a loss of insurance only during the loss of ownership. The insurance was restored to him by the reconveyance to him of the property. To construe the union mortgage clause in such a manner as to produce a loss of the mortgagee's insurance which would not occur save for the owner's acts or omissions avoiding the policy as to him, would not be in maintenance of its "primary object . . . to protect the mortgagee." Fidelity c. Co. v. Brennan, supra, 292, 293. For the insurer to have a defence against him which would not be available without the owner's loss of insurance, is a result so incompatible with the spirit of the clause as to make preferable a construction of the policy preventing such result, if the doubts of the meaning of its language were serious.
The plaintiffs are entitled to judgments.
Cases discharged.
BRANCH, J., did not sit: the others concurred. *Page 454
ON REHEARING. After the foregoing opinion was filed the defendants moved for a rehearing.