Everhart v. Atlantic Fire Insurance

Stacy, C. J., after stating the case: Plaintiff was appointed under the policy in suit to receive payment, as his interest might appear, instead of the assured, in case the latter sustained any loss or damage to *496 bis dwelling by fire during the time the-said policy of insurance was in force. This, it has been held in a number of cases (Roper v. Ins. Co., 161 N. C., p. 161), is the extent of the mortgagee’s interest in the contract when it arises, as it does here, under an ordinary loss payable clause, and not under a “New York standard mortgage cluase.” We had occasion to consider the effect of the latter in Bank v. Ins. Co., 187 N. C., 97, where it was said: “With respect to the rights of the mortgagee under the standard mortgage clause, it is the generally accepted position that this clause operates as a separate and distinct insurance of the mortgagee’s interest, to the extent, at least, of not being invalidated by any act or omission on the part of the owner or mortgagor, unknown to the mortgagee; and, according to the clear weight of authority, this affords protection against previous acts as well as subsequent acts of the assured,” citing authorities for the position. But it is the holding with us, as well as with a majority of the courts throughout the country, that under an open “Loss Payable Clause” (a clause providing that the loss, if any, shall be payable to the mortgagee, as his interest may appear), in the absence of any other stipulation in regard to the interest of the mortgagee, the rights of the mortgagee are dependent entirely upon those of the mortgagor, and that any act or omission on the part of the latter, sufficient to avoid the policy as to the mortgagor, will avoid it as to the mortgagee also. Note: 18 L. R. A. (N. S.), 199. If this be true as to acts done before any loss occurs, we see no reason why a release executed by the assured, after the loss has been sustained, would not ordinarily be binding on the mortgagee. The property was his; the loss is his. Gilman v. Commonwealth Ins. Co., 112 Me., 528, 92 Atl., 721, 55 L. R. A. (N. S.), 758, and note. In the instant case, the assured has agreed to settle his loss with the defendant company for $450.00. There is no allegation of any collusion or fraud. We think the settlement is binding on the plaintiff. The motion for judgment as of nonsuit should have been allowed. Reversed.