Ætna Insurance v. Thompson

Wallace, J. If a mortgagor is bound by covenant or otherwise to insure the mortgaged premises for the better security of the mortgagee, the latter will have an equitable lien upon the money due on a policy taken out by the mortgagor and payable to himself to the extent of the mortgagee’s interest in the property destroyed. Wheeler v. Ins. Co., 101 U. S. 439, 442; Providence County Bank v. Benson, 24 Pick. 204; Stearns v. Ins. Co., 124 Mass. 61; Dunlop v. Avery, 23 Hun 509; Cromwell v. Ins. Co., 44 N. Y. 42; Nichols v. Baxter, 5 R. I. 491; Miller v. Aldrich, 31 Mich. 408. Lane procured the insurance on the mortgaged property, and afterwards kept it in force with intent to perform his agreement to insure for the benefit of the mortgagees; and although he neglected to have the policies made payable to the bank according to his agreement, yet the mortgagees, Melcher and Tetley, have an equitable lien on the policies to the extent of their interest against him. The assignee in insolvency stands in the same position as Lane, the insolvent debtor. He is not by virtue of his office an attaching creditor, or subsequent purchaser. The estate of the insolvent debtor vests in him, not by virtue of an attachment or sale, but by force of the assignment under the statute, and he can take no more than the debtor had, except in case of a fraudulent sale. Adams v. Lee, 64 N. H. 421; Shaw v. Glen, 37 N. J. Eq. 32; Wilson v. Esten, 14 R. I. 621. As the agreement provided that the insurance was to be made payable to the bank for the benefit of the mortgagees, and as they have paid the note and are equitably entitled to the benefit of the insurance, they may be subrogated to the rights of the bank. Philbrick v. Shaw, 61 N. H. 356. Decree for the mortgagees. Smith, J., did not sit: the others concurred.