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pear,” then both the mortgagee and owner are proper parties to receive or recover the loss;' if the amount of the mortgage debt or such interest exceeds the whole amount of the insurance, the mortgagee may maintain claim alone;" although it remains proper to make the owner and insured a party to answer as to his interest. Interest of a mortgagee ceases with discharge of the mortgage. But his right to claim the insurance does not depend upon mortgage debt being due. He may execute a waiver or disclaimer of claim to the insurance.6
1. Ermentraut v. American Ins. Co., 60 Minn. 418, 62 N. W. Rep. 543; Burlington Ins. Co. 1. Lowery, 61 Ark. 108, 32 S. W. Rep. 383, 25 Ins. L. J. 610; Proctor v. Georgia Home Ins. Co., 124 N. C. 265, 32 S. E. Rep. 716; Powers v. New England Ins. Co., 69 Vt. 494, 38 Atl. Rep. 148; Carberry 1. German Ins. Co., 86 Wis. 323, 56 N. W. Rep. 920. 23 Ins. L. J. 137; Palmer Sav. Bank r. Insurance Co. of N. A., 166 Mass. 189, 44 N. E. Rep. 211, 25 Ins. L. J. 739, 32 L, R, A, 615; Smith i'. Packard, 19 N. H. 575; Colby v. Parkersburg Ins. Co., 37 W. Va. 789, 17 S. E. Rep. 303; Cone v. Niagara Ins. Co., 60 N. Y. 619; Winne v. Niagara Ins. Co., 91 N. Y. 185; State Ins. Co. v. Maackens, 38 N. J. L. 564; Scottish Union & Nat. Ins. Co. v. Enslie, 78 Miss. 157, 28 So. Rep. 822; Lewis v. Guardian Assur. Co., 93 App. Div. 157, 87 N. Y. Supp. 525, affd., 181 N. Y. 392, 74 N. E. Rep. 224; Farmers' Bank v. Manchester Assur, Co., Mo. App.
80 S. W. Rep. 299; Staats v. Georgia Home Ins. Co., W. Va. 50 S. E. Rep. 815.
2. Lowry v. Insurance Co. of N. A., 75 Miss. 43, 21 So. Rep. 664, 26 Ins. L. J. 618; Capital City Ins. Co. r. Jones, 128 Ala. 361, 30 So. Rep. 674; i'eck v. Girard F. & M. Ins. Co., 16 Utah, 121, 51 Pac. Rep. 255; Hammel v. Queens Ins. Co., 50 Wis. 240; Northwestern Mut. Life Ins. Co. v. Germania Ins. Co., 40 Wis. 446; Panhandle Nat. Bank 0. Security Co., 18 Tex. Civ. App. 96, 44 S. W. Rep. 936; Motley 1. Manufacturers' Ins. Co., 29 Me. 337; Baltis 1. Dobin, 67 Barb. 507; Franklin Ins. Co. l'. Wolff, 23 Ind. App. 549, 54 N. E. Rep. 772; Trust Co. v. Scottish Union & Nat. Ins. Co., 119 Ga. 072, 46 S. E. Rev. 855; Ritchie Co. Bank r. Firemen's Ins. Co., W. Va. 47 S. E. Rep. 94. See also “ Parties to Contract,” Rule 17.
3. Franklin Ins. Co. l'. Wolff.
4. Reynolds v. London & Lancashire Ins. Co., 128 Cal. 16, 60 Pae. Rep. 467.
5. Planters’ Ins. Assoc. v. Southern Savings Co., 68 Ark. 8, 56 S. W. Rep. 443.
6. Worley v. State Ins. Co., 91 Iowa, 150, 59 N. W. Rep. 16. 23 Ins. L. J. 580. It was held in Uhfelder v. Palatine Ins. Co., 44 Misc. 153, 89 N. Y. Supp. 792, that the interest of a mortgagee ceased with the purchase by him on sale in foreclosure and for fire occurring after such sale there was no damage to his interest.
Company May Interplead.
Where there is a dispute between the owner and assured, and a mortgagee to whom loss is payable as interest may appear, and payment to latter would involve risk or hazard, the insurance company should be permitted to deposit the money in court by interpleader.
Sexton v. Home Ins. Co., 35 App. Div. 170, 54 N. Y. Supp. 862; Fanning v. Equitable Ins. Co., 46 Ill. App. 215.
Effect of Repairs by Owner.
If policy insures owner and mortgagor and damaged property is repaired by him, no right of action remains in a mortgagee to whom the loss, if any, is made payable;' but may be otherwise when the policy or insurance is upon the interest of the mortgagee.”
1. Friemansdorf v. Watertown Ins. Co., 1 Fed. Rep. 68. And see Matter of Moore, 6 Daly, 541; Huey v. Ewell, 22 Tex. Civ. App. 638, 55 S. W. Rep. 606.
2. Ætna Ins. Co. v. Baker, 71 Ind. 102. And see Kernochan v. New York Bowery Ins. Co., 5 Duer, 1; and on a subsequent appeal, 17 N. Y. 428; Excelsior Ins. Co. v. Royal Ins. Co., 55 N. Y. 343; Foster v. Equitable Ins. Co., 68 Mass. 216.
Lien of Mortgagee upon Insurance. Where the mortgagor is bound by covenant or otherwise by executory agreement to keep property insured for benefit of the mortgagee, the latter has an equitable lien upon the insurance obtained by the mortgagor even if taken out in his name and not made payable to the mortgagee;' but where the mortgagor obtained insurance not only upon the building, but also upon personal property, there should be some evidence that the insurance was obtained in discharge of the obligation to keep insured to sustain a lien. When the insurance company has notice of such a claim or lien, it should act very cautiously and carefully as it acts at its peril. A mortgagee is not entitled to benefit of insurance obtained by the mortgagor, unless there is a contract or agreement to that effect.*
1. Swearingen v. Hartford Ins. Co., 52 S. C. 309, 29 S. E. Rep. 722; subsequent appeal, 56 S. C. 355, 34 S. E. Rep. 449; Chipman v. Carroll, 53 Kans. 163, 35 Pac. Rep. 1109, Ætna Ins. Co. v. Thompson, 68 N. H. 20, 40 Atl. Rep. 396; Wheeler v. Factors & Traders' Ins. Co., 101 U. S. 439; Nordyke & Marmon Co. v. Gery, 112 Ind. 535, 13 N. E. Rep. 683; Wattengel v. Schultz, 11 Misc. 165, 32 N. Y. Supp. 91; Hathaway v. Orient Ins. Co., 58 Hun, 602, 11 N. Y. Supp. 413; Heins v. Wicke, 102 Iowa, 396, 71 N. W. Rep. 345; Nichols v. Baxter, 5 R. I. 491; Ames v. Richardson, 29 Minn. 330. And see Farmers' Loan Co. v. Penn Plate Glass Co., 103 Fed. Rep. 132, 43 C. C. A. 114; Dunlop v. Avery, 89 N. Y. 592; American Ice Co. v. Eastern Trust Co., 188 U. S. 626, 23 Sup. Ct. Rep. 432, affg. 17 App. D. C. 422; Hyde v. Hartford Ins. Co., Nebr. 97 N. W. Rep. 629.
2. Stearns v. Quincy Ins. Co., 124 Mass. 61.
3. Grange Mill Co. v. Western Assur. Co., 118 Ill. 396, 16 Ins. L. J. 129; Wilson v. Hakes, 36 Ill. App. 539. And see Rule 14.
4. Guill's Admr. v. Corinth Bank (Ky.), 68 S. W. Rep. 870.
Mortgagee May Claim Waiver.
A mortgagee to whom loss is payable may claim waiver of a forfeiture, where the company requires of him additional proofs, putting him to trouble and expense.
Granger v. Manchester Assur. Co., 119 Mich. 177, 77 N. W. Rep. 693, 28 Ins. L. J. 220. And see Waiver.”
Provision Requiring Notice of Change of Title - Foreclosure.
The provision in a mortgagee clause " requiring notice of a change of title which should come to the mortgagee's knowledge, has reference to a change or transfer of title to a third person, and not from the mortgagor and owner to the mortgagee through foreclosure;1 under the “mortgagee clause " the mortgagee, to whom the loss is made payable, may institute foreclosure proceedings and sell the insured property without affecting his right to the insurance.?
1. Pioneer Sav. & L. Co. v. St. Paul F. & M. Ins. Co., 68 Minn. 170, 70 N. W. Rep. 979, 26 Ins. L. J. 826.
2. Eddy v. London Assur. Co., 143 N. Y. 311, 38 N. E. Rep. 307, 24 Ins. L. J. 1; Washburn Mill Co. v. Fire Assoc., 60 Minn. 68, 61 N. W. Rep. 828, 24 Ins. L. J. 292. And see Sharp v. Scottish Union & Nat. Ins. Co., 136 Cal. 542, 69 Pac. Rep. 253. And see Rule 20.
Right to Assignment of Mortgage Must be Exercised Within
Under the “ mortgagee clause " the right, if any, to pay the full amount of the mortgage, and to receive an assignment, etc., must be exercised by the insurance company within a reasonable time.
Eliot Sav. Bank v. Commercial Union Ins. Co., 142 Mass. 142, 15 Ins. L. J. 777.
Special Rule of Construction in Some of the States. In the West and South there is a tendency to make such strict construction of the language in the New York and other standard forms, relating to the interest of mortgagee, etc. (see same Rule 1), that where the loss is payable to a mortgagee to extent of his interest, it is held that this is in legal effect the creation of an interest under the policy with consent of the company, but that the mortgagee is bound by such conditions only in the standard form of policy as are specially “ written upon, attached, or appended thereto."
Oakland Home Ins. Co. v. Bank of Commerce, 47 Nebr. 717, 66 N. W. Rep. 646; Henton v. Farmers' Ins. Co., Nebr. 95 N. W. Rep. 670; East v. New Orleans Ins. Assoc., 76 Miss. 697, 26 So. Rep. 691 ; Queen Ins. Co. v. Dearborn Sav. Loan Assoc., 175 Ill. 115, 51 N. E. Rep. 717; Northern Assur. Co. v. Chicago B. & L. Assoc., 98 Ill. App. 152, affd., 198 Ill. 474; Crawford v. Aachen & M. Ins. Co., 100 Ill. App. 454; Boyd v. Thuringia Ins. Co., 25 Wash. 447, 65 Pac. Rep. 785 (there is an able dissenting opinion in this case); Christensen 1'. Fidelity Ins. Co., 117 Iowa, 77, 90 N. W. Rep. 495; Senor and Muntz v. Western Millers’ Ins. Co., 181 Mo. 104, 79 S. W. Rep. 687. See Rule 10.
It has been held in Texas that if a policy is made payable to a mortgagee as interest may appear, such interest cannot be affected by a change in the policy making payable to another party without his consent. Security Co. v. Panhandle Nat. Bank, 93 Tex. 575, 57 S. W. Rep. 22.
But the controversy in this case was between the mortgagee and such third party after payment or deposit of the insurance money by the insurance company. And see case below, 18 Tex. Civ. App. 96, 44 S. W. Rep. 936.