RULE 30.

Mortgagee's Right to Settle with Other Companies.

If an insurance company desires to avail itself of a right of subrogation reserved to it under the terms of a mortgagee clause, and to acquire an interest in the mortgage, so as to be able to dictate or control settlement with other companies, it must first pay the amount due from it on account of the loss; until such payment is made the mortgagee is free to make any settlement he desires with other companies.

New Hampshire Ins. Co. v. National Life Ins. Co., 112 Fed. Rep. 199, 50 C. C. A. 188.

RULE 31.

Effect of Delay by the Insurance Company in Obtaining Assignment of Mortgage - What Tender Must Include.

The insurance company may lose its right to subrogation of the mortgage by delay in making tender or payment; the mortgagee's right to recover under the policy cannot be defeated where liability has been denied by a tender after suit is brought; a tender by the insurance company to secure an assignment of the mortgage must be within reasonable time and include what the mortgagee may have expended in preserving the property and security from further loss.

Elliot Savings Bank v. Commercial Union Assur. Co., 142 Mass. 142, 7 N. E. Rep. 550.

RULE 32.

Mortgage Must be Paid or Tendered in Full.

Where the insurance is not sufficient to cover the mortgage debt, the company takes nothing by subro

gation and assignment until the mortgage is paid or tendered in full, both principal and interest.

Phoenix Ins. Co. v. First Nat. Bank, 85 Va. 765, 8 S. E. Rep. 719; Gibb v. Philadelphia Ins. Co., 59 Minn. 267. And see New England Ins. Co. v. Wetmore, 32 Ill. 221; Allen v. Watertown Ins. Co., 132 Mass. 480.

RULE 33.

Insurance Company May be Bound to Credit on the Mortgage as Against Previous Owner Liable for Deficiency.

Where company has, pursuant to a mortgagee clause, paid the full amount of the mortgage and taken an assignment of it upon foreclosure of the same, it is bound only to credit upon the mortgage, as against a previous owner liable for any deficiency, the portion of the loss for which it was originally liable to the owner at time of the fire, under the apportionment clause of the policy.

Phoenix Ins. Co. v. Floyd, 19 Hun, 287, affd. without opinion. 83 N. Y. 613. And see Hamilton v. Gunther, 32 Hun, 22.

RULE 34.

Effect of Independent Insurance by the Mortgagee upon His Interest.

When a mortgagee, independently of the owner and mortgagor, obtains a policy upon his own interest, and at his own expense, and for his sole benefit, upon payment of loss to him, the insurance company is entitled to subrogation; and so, under such circumstances, when the mortgagee obtains the policy in form to the owner and mortgagor, with loss payable to him (the

mortgagee); this right of subrogation does not depend upon the contract.2

1. Excelsior Ins. Co. v. Royal Ins. Co., 55 N. Y. 343, 359; Honore v. Lamar Ins. Co., 51 Ill. 409; Carpenter v. ProvidenceWashington Ins. Co., 16 Pet. (U. S.) 495; Concord Ins. Co. v. Woodbury, 45 Me. 447; French v. Fitch, 67 Mich. 492. And see Norwich Ins. Co. v. Boomer, 52 Ill. 442; Pearman v. Gould, 42 N. J. Eq. 4, 5 Atl. Rep. 811; Dick v. Franklin Ins. Co., 10 Mo. App. 376, affd., 81 Mo. 103; Sussex County Ins. Co. v. Woodruff, 26 N. J. L. 541; Durnbrack v. Neall, W. Va. 47 S. E. Rep. 303.

2. Thomas v. Montauk Ins. Co., 43 Hun, 218. See Rule 36.

RULE 35.

Effect of Making Loss Payable to the Mortgagee without Mortgagee Clause.

If the policy is issued to the owner, with loss merely made payable to the mortgagee, without the mortgagee clause, the latter is merely an appointee to receive the loss (if any due) to the owner, with whom the contract of insurance is exclusively made,1 and there can be no subrogation on payment to the mortgagee.2

1. Moore v. Hanover Ins. Co., 141 N. Y. 219.

2. Cone v. Niagara Ins. Co., 60 N. Y. 619. And see Home Ins. Co. v. Marshall, 48 Kans. 235, 29 Pac. Rep. 161; Graves v. Hampden Ins. Co., 10 Allen (Mass.), 281. See also Rule 36.

RULE 36.

When no Mortgagee Clause and Owner or Mortgagor as Between Himself and Mortgagee Entitled to Benefit of the Insurance Owner in Default.

If there is no "mortgagee clause" in the policy, operative as an independent contract of insurance with the mortgagee (when void as to the owner) under its special terms and conditions, and as between the owner and mortgagor and the mortgagee, the former

is entitled to the benefit of the insurance, as, for instance, where it is effected at the request or by the authority of the owner and mortgagor, or at his expense, or under circumstances which could make him chargeable with the premium, he is entitled to the benefit of the insurance obtained by the mortgagee, and there can be no subrogation upon payment of a loss to him, even if the policy was issued to and in the name of the mortgagee;' but where the owner and mortgagor is in default or has neglected to procure insurance as he agreed, and the mortgagee does procure the policy upon his own interest, at his own expense, though chargeable to the owner and mortgagor, he is at liberty to make any special contract or provision in the policy as to subrogation in the event of loss, which special agreement will be operative and binding as against the owner and mortgagor.2

1. Kernochan v. New York Bowery Ins. Co., 17 N. Y. 428; Waring v. Loder, 53 N. Y. 581; Honore v. Lamar Ins. Co., 51 Ill. 409; Pearman v. Gould, 42 N. J. Eq. 4, 5 Atl. Rep. 811; Norwich Union Ins. Co. v. Boomer, 52 Ill. 442; Stinchfield v. Miliken, 71 Me. 567; Concord Ins. Co. v. Woodbury, 45 Me. 447; Pendleton v. Elliot, 67 Mich. 496, 35 N. W. Rep. 97; Nelson v. Insurance Co., 43 N. J. Eq. 256; Cone v. Niagara Ins. Co., 60 N. Y. 619; Loudren v. Waddle, 98 Pa. St. 242; French v. Fitch, 67 Mich. 492; Suffolk Ins. Cc. v. Boyden, 9 Allen (Mass.), 123; Etna Ins. Co. v. Baker, 71 Ind. 102. 2. Foster v. Van Reed, 70 N. Y. 19.

RULE 37.

Mortgagor May be Subrogated to Rights of Mortgagee in Insurance.

Where a policy is assigned to a mortgagee by the mortgagor, with consent of the company, as collateral or additional security for the mortgage debt, upon its

payment by the mortgagor he is subrogated to the rights of the mortgagee in the policy.

Billings v. German Ins. Co., 34 Nebr. 502, 52 N. W. Rep.

397.

RULE 38.

Sureties May be Subrogated to Claim of Mortgagee.

Sureties on a note secured by mortgage, who pay the same, are entitled to be subrogated to the claim of the mortgagee to the insurance moneys.

Ætna Ins. Co. v. Thompson, 68 N. H. 20, 40 Atl. Rep. 396. And as to sureties, see also Merchants' Ins. Co. v. Story, 13 Tex. Civ. App. 124, 35 S. W. Rep. 68.

RULE 39.

Effect of Owner and Mortgagee Preventing or Destroying Right of Subrogation.

Where parties have, by agreement or act, destroyed any right on part of the insurance company to be subrogated to rights of the mortgagee, they thereby release the insurance company from liability.

Lett v. Guardian Ins. Co., 52 Hun, 570, affd., 125 N. Y. 82; Attleborough Savings Bank v. Security Ins. Co., 168 Mass. 147, 46 N. E. Rep. 390, 26 Ins. L. J. 620.

RULE 40.

Subrogation to Claim of a Vendor Under Executory Contract of

Sale.

If a vendee, under an executory contract of sale, agrees to pay the expense of insurance by the vendor, and does so, the insurance exists for his benefit, and the insurance company has no right of subrogation to claim of vendor on payment of a loss to him,' but may be otherwise when, as between the vendor and vendee,