Concord Union Mut. F. Insurance v. Woodbury

The opinion of the Court was drawn up by Appleton, J. It appears that one Morse having a mortgage from the tenant to secure two hundred and eighty dollars on the premises demanded, on Oct. 5, 1853, effected an insurance thereon at the office of the plaintiffs. In his application he stated his interest to be that of a mortgagee, and the amount due upon the mortgage, and obtained insurance for five hundred dollars. In December, 1854, Morse advertised in due form, a foreclosure of his mortgage. A loss afterwards ensued, and the plaintiffs declined payment, unless Morse would assign his mortgage. The amount due him was thereupon paid, and he assigned his mortgage and the note thereby secured, to the plaintiffs, who commenced this action to recover possession of the mortgaged premises. It appeared in the defence, that one Robinson, on April 3, 1852, conveyed the demanded premises to Martha Woodbury, the wife of the tenant, in whom the title thus acquired, remains. If the deed to the tenant’s wife conveyed to her the legal title, it may well be doubted whether the plaintiffs might not have avoided the insurance, on the ground of misreprésentation as to the title. In such case, the payment to the mortgagee of his debt, would be a sufficient consideration for the assignment of the mortgage. If the deed conveyed, no title, it could not, for that cause, be invoked by the tenant by way of defence. But it is unnecessary to discuss this question, as the tenant has no title derived from his wife, nor does it appear that he claims to be in possession in subservience to her title. He is estopped in this action, by his deed of mortgage, [453] to deny his title. The present suit is by the assignee of the mortgage against the mortgager. The wife of the mortgager is no party thereto, nor are her rights to be affected by its result. The judgment, if in favor of the demandant, would be no bar to her title, for it is not in any way in issue. The statute provides for a foreclosure by publication in a newspaper, but such publication is no bar to an action for the possession of the premises mortgaged. The mortgager and mortgagee have several distinct interests in the premises mortgaged, which either may insure for his own benefit. When a mortgagee insures his own interest without any agreement between him and the mortgager therefor, and a loss accrues, the mortgager is not entitled to an allowance of the sum paid upon such loss, to be applied to the reduction or discharge of his mortgage debt, but the mortgagee may, notwithstanding, recover the whole amount due. White v. Brown, 2 Cush. 413; King v. State M. F. Ins. Co., 7 Cush. 1; Cushing v. Thompson, 34 Maine, 496. It is true, it has been repeatedly held where the mortgagee effects an insurance for his own benefit and a loss accrues, which is paid by the insurers, that they are entitled to have the mortgage and note assigned to them, which they may enforce against the mortgager. Etna Fire Ins. Co. v. Tyler, 16 Wend. 397; Carpenter v. Providence Washington Ins. Co., 16 Pet. 495. This right of the insurers to subrogation, has been questioned in Massachusetts. It was held in King v. State M. F. Ins. Co., 7 Cush. 1, that a mortgagee insuring his interest in mortgaged property against loss by fire, at his own expense, is entitled in case of loss, before payment of the mortgage debt, to recover the amount of such loss without first assigning his mortgage. “We are inclined to the opinion,” remarks Shaw, C. J., “both upon principle and authority, that when a mortgagee causes an insurance to be made for his own benefit, paying the premium from his own funds, in case a loss occurs before his debt is paid, he has a right to recover the total loss [454] for his own benefit; that be is not bound to account to tbe mortgager for any part of tbe money so recovered, as a part of tbe mortgage debt; it is not a payment in whole or in part; but be bas still a right to recover bis whole debt of tbe mortgager. And so, on tbe other band, when tbe debt is thus paid by tbe debtor, tbe money is not, in law or in equity, the money of tbe insurer who bas paid tbe loss, or money paid to bis use.” But the right of subrogation and tbe time when, and tbe mode in which that right may be enforced, does not arise in tbe present case, because tbe insured has made an assignment. If tbe mortgager had no interest in the insurance, be cannot complain of any disposition tbe mortgagee may make of tbe mortgage, for no rights of bis would be injuriously affected thereby. As between tbe insurers and tbe insured, there is no controversy. -The question of subrogation is left to be hereafter determined upon reason and tbe weight of authority, whenever it may arise. While it is well settled that the mortgagee may insure for himself and at bis own cost, and that when so insuring tbe mortgager is not to be benefitted thereby, it is equally clear, when the mortgagee effects an insurance at tbe request and cost, and for the benefit of the mortgager, as well as bis own, that tbe latter has a right, in case of loss, to have tbe insurance money appropriated to tbe discharge of bis indebtedness. When the mortgagee, at tbe request of the mortgager, effected an insurance on tbe mortgaged premises, and paid tbe premium, it was held, that tbe premium so paid was a charge upon tbe premises in addition to, and equally with tbe original debt. Mix v. Hotchkiss, 14 Conn. 32. If a loss accrues, tbe money, in payment, extinguishes tbe same amount of tbe mortgage debt. King v. The State M. F. Ins. Co., 7 Cush. 1. Tbe insurance in such case, is for tbe benefit of both parties, it being effected by tbe mortgagee in his own name, but at tbe cost of tbe mortgager, and at bis instance, and for their mutual protection. Whether tbe tenant will be able to prove, by competent [455] evidence, the facts set forth in the affidavit of counsel, is not the question now before us. They are material, in one aspect of the case, and by the agreement of parties, the case is to stand for trial. Tenney, C. J., Rice, Hathaway, May, and Davis, J. J., concurred.