CASES

ARGUED AND DETERMINED

IN THE

SUPREME COURT OF OHIO

JANUARY TERM, 1909.

HON. WILLIAM B. CREW, CHIEF JUSTICE.

HON. AUGUSTUS N. SUMMERS,

HON. WILLIAM T. SPEAR,

HON. WILLIAM Z. DAVIS,

HON. JOHN A. SHAUCK,

HON. JAMES L. PRICE,

JUDGES.

THE ERIE BREWING COMPANY ET AL. V. THE OHIO FARMERS INSURANCE COMPANY.

Mortgage clause in insurance policy making loss payable to mortgagee-Not an assignment of the policy to mortgagee-Mortgagee of policy bound by award of appraisers, when.

A "mortgage clause" attached to a fire insurance policy at the time the same is executed, which clause makes the loss, if any, under the policy, payable to the mortgagee as his interest may appear, is not an assignment of the policy to such mortgagee, and, in the absence of fraud or collusion, he is bound by the award of appraisers provided for and required by the terms of the policy in the event of a disagreement between the insured and the insurance company as to the amount of the loss,

Statement of the Case.

although the mortgagee was not a party to and had no notice of the appraisement and award.

(No. 10948-Decided October 19, 1909.)

ERROR to the Circuit Court of Ashtabula county.

On the 8th day of September, 1904, Bridget Cullen brought suit in the court of common pleas against The Ohio Farmers Insurance Company, alleging in her petition that she owned certain premises, including the buildings thereon situate in the city of Conneaut, Ohio, and that on the 10th day of February, 1904, the said insurance company, for a consideration paid to it by her for the purpose, issued and delivered to her a policy of insurance in the sum of seventeen hundred and fifty dollars, and did thereby insure her against loss or damage she might sustain by fire in her two story frame metal roof building occupied by her as a boarding house and saloon. It is alleged that by the terms of the policy, the said company promised and agreed to make good to her all such loss or damage, not exceeding said sum, as should happen by fire to the property as therein. specified, during the term of one year from noon, February 10, 1904, to noon, February 10, 1905, and the loss should be paid after sixty days after notice and proof of loss had been received by said. company. A copy of said policy is attached to the petition and by its provisions other concurrent insurance might be taken on said property.

It is further alleged that on or about the 29th day of April, 1904, and while said insurance was in full force, the building so insured was damaged

Statement of the Case.

by fire, which did not occur from any of the causes excepted in the policy, and that the loss sustained by plaintiff by reason of the fire was at least $4,000. The policy held as concurrent insurance was for the same amount-$1,750.

The plaintiff alleged that she duly performed all the conditions on her part to be performed and that more than sixty days have elapsed since the delivery by piaintiff to defendant of notice. and proof of loss, and that the company has failed to pay said sum or any part thereof. And further, that The Erie Brewing Company claims some interest in the property insured and in said policy of insurance by reason of a mortgage upon the premises insured, and the plaintiff's prayer is that the brewing company answer and set forth what interest, if any, it has in said policy of insurance. Judgment is prayed for $1,750 with interest from May 27, 1904.

The Erie Brewing Company answered the petition, setting up the mortgage which it held covering the insured premises. It is alleged that this mortgage was executed and delivered by Bridget Carrigan (now Bridget Cullen) to Bridget Gaffney on the 8th day of November, 1893, to secure the payment of a note of even date executed by said mortgagor calling for the payment to the mortgagee of the sum of $2,000 on or before six years after date with six per cent. interest, interest payable annually. One payment of $129.75 was made and endorsed on the 24th day of January, 1902. It is averred that there was due at date of answer $2,449.25 with interest thereon from September 8, 1904, and further that on the

Statement of the Case.

8th day of November, 1899, said Bridget Gaffney assigned said note and mortgage to The Erie Brewing Company, defendant, which has ever since been the holder and owner of the same.

One of the provisions of the mortgage is that the mortgagor should keep the buildings insured for the benefit of the mortgagee, the policy payable to said Bridget Gaffney as her interest may appear at the time of the loss. The note has not been paid except as above stated.

The mortgage was duly recorded April 10, 1894. The brewing company further says in compliance with the covenant in the mortgage to insure the premises, the policy set out in the petition was issued by The Ohio Farmers Insurance Company and delivered to the mortgagor, now Bridget Cullen; that said policy had as a part thereof a mortage clause with full contribution, providing for loss or damage, if any, under the policy to be payable to The Erie Brewing Company as its interest might appear. The following is a copy of said mortgage clause in so far as pertinent to the present controversy: "Loss or damage, if any, under this policy, shall be payable to The Erie Brewing Company as mortgagee (or trustee) as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein shall not be invalidated by any act or neglect of the mortgagor or owner, of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by

Statement of the Case.

this policy; provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall on demand, pay the same." The brewing company then pleads the loss by fire on the 29th of April, 1904, as described in plaintiff's petition and avers that the loss by fire was to the extent of $2,449.20-this being about the amount due on its note and mortgage, and that the insurance company neglects and refuses to pay the amount due, though due proofs of loss had been made more than sixty days before the bringing of the action.

It is then alleged that The Columbia Insurance Company issued concurrent insurance on same premises for like amount, $1,750. The prayer of the cross-petition is for judgment against The Ohio Farmers Insurance Company for $1,224.63 with interest from September, 1904.

The said insurance company filed an amended answer to the petition on October 20, 1905, admitting its corporate capacity and business, and it admitted the issuing of the policy of insurance set out in the petition, and that it contained the mortgage clause in the copy attached to the petition, but for alleged want of knowledge, it denies that plaintiff is the person named in the policy and denies that the property damaged by fire was covered by the said policy, and for like want of knowledge it is denied that The Erie Brewing Company owns the note and mortgage set up in its cross-petition.

For a second defense, the insurance company "denies that said policy was issued in compliance with the covenant contained in said mortgage,