Eddy v. London Assur. Corp.

Merwin, J. The questions upon these appeals relate to the rights of the mortgagee against the insurers. The appellants claim that their right of subrogation has been impaired by the foreclosure and sale; that the mortgagee, by such sale, has put it out of his power to subrogate the insurers to the rights which he had under his securities at the time of the Are, and that, therefore, he cannot recover for the loss. By the mortgagee clause it was provided that, whenever the insurer should pay the mortgagee any sum for loss, and should claim that as to the mortgagor no liability therefor existed, the insurer should, to the extent of such payment, be thereupon legally subrogated to all the rights of the mortgagee, under all securities held as collateral to the mortgage debt, or, at its option, might pay to the mortgagee the whole of the mortgage debt, and thereupon receive a full assignment of the mortgage and all such other securities. It was also provided that no subrogation should impair the right of the mortgagee to recover the full amount of his claim. This permitted the mortgagee to continue the foreclosure proceedings, which were commenced long before the Are, and to apply the proceeds of the sale upon the mortgage debt. In no other way would the right of the mortgagee to recover the full amount of his debt be preserved in accordance with the express stipulation. After the application of such proceeds, there still remained a large deficiency, much more than the entire claim against the insurers. The latter did not offer to pay the mortgage debt, as they might have done, and taken an assignment. The appellants, in substance, claim that, upon payment of the loss, they became owners of an equivalent proportion of the mortgage debt, and would be entitled to the benefit of the same proportion of the proceeds of the securities. This, however, would be inconsistent with the right reserved to the mortgagee to collect the full amount of his [220] claim, and that the subrogation should notimpair it. In Foster v. Van Reed, 70 N. Y. 19, there was a provision in the policy that in case of loss the assured should assign to the insurer an interest in the mortgage equal to the amount of loss paid. The insurer, however, paid the full amount of the mortgage, and therefore no question of importance here was considered. In Lett v. Insurance Co., (Sup.) 5 N. Y. Supp. 526, 125 N. Y. 82, 25 N. E. Rep. 1088, the plaintiff was assignee of the policy, but not.of the mortgage. He represented the owner of the property, but as to the owner the policy was void. The mortgaged property, after the loss, was fully sufficient to pay the entire mortgage debt. It was held that plaintiff could not recover, as he could not give effect to the right of subrogation which the insurer had upon payment of the loss. Many other cases are cited by the counsel for the appellants, but I find none that sustains the position that under a mortgagee clause like the present one the mortgagee could not enforce his securities to the full amount of his debt. His right to do this was superior to the right of subrogation, and so made in express terms. The appellants further claim that the referee erred in excluding from the basis of apportionment the additional insurance that the plaintiff had obtained, and in which the mortgagee had no interest. In the policies upon the Pearl street property the limit of insurance was placed' at $10,000. The additional insurance was in violation of this provision, and this, as against the plaintiff, made the policies in suit on that property void. In the policies on the Lock street property there was no such limit. All the additional insurance was without the knowledge or consent of the mortgagee. By the mortgagee clause it was provided that the insurance as to the interest of the mortgagee “shall not be invalidated by any act or neglect of the mortgagor or owner.” Does this prevent the insurers from having in the apportionment of the loss the benefit of the additional insurance? In the body of each of the policies in suit there is a provision that the insurer shall, not be liable for a greater proportion of any loss on the described property than the amount thereby insured shall bear to the whole insurance, whether valid or not. The claim of the appellant is that there is'nothing in the mortgagee clause that will prevent giving effect to this provision, and therefore including in the apportionment the additional insurance. It was, however, decided in Hastings v. Insurance Co., 73 N. Y. 141, in regard to the effect of a similar provision in a policy and a mortgagee clause in this respect like the one here, that the insurer was not entitled in the apportionment to the benefit of additional insurance obtained by the mortgagor without the knowledge of the mortgagee, although by the policy other insurance was permitted, as it was here in the four policies on the Lock street property. It was there held that the mortgagee clause operated as an independent insurance of the mortgagee’s interest, and gave him the same benefit as if he had taken out a separate policy, free from the conditions imposed upon the owner, and making him responsible only for his own acts. See, also, Insurance Co. v. Olcott, 97 Ill. 455. The Hastings Case, it seems to me, disposes adversely to the appellants of all question as to the apportionment, except perhaps in the cases of the London Assurance Corporation, the Fire Association of Philadelphia, and the case of the Phenix Insurance Company under its first policy. The mortgagee clause in those three cases had an additional paragraph,—that, in case of any other insurance upon the described property, the company shall not be liable for a greater proportion of any loss than the sum thereby insured bears to the whole amount of insurance on the property issued to or held by any party or parties having an insurable interest therein, whether as owner, mortgagee, or otherwise. In each of those three policies the insurance was limited to $10,000, and the obtaining of the additional insurance was in violation of this provision, and, as against the mortgagor, made the policies void. Here, according to the decision in the Hastings Case, there was an independent [221] contract between the mortgagee and the insurers, by one provision of which it was agreed that the mortgagee should not be injured by the act of the mortgagor in obtaining additional insurance. Can it be held that by another provision it was understood that he should be injured by such act? Was it the intent o£ the parties that insurance, obtained by the owner in violation of the limit provided for, and by reason of which the insurance would be void as against the owner, and the insurer, if it paid a loss to the mortgagee, would liave the right of subrogation, should be included in the apportionment of the loss? Effect must be given, if possible, to all the provisions of the contract. The main object of the whole was to give the mortgagee a security upon which he could rely. Any act or neglect of the mortgagor or owner is to be thrown out of view as impairing the security of the mortgagee. This would throw out of consideration the question of additional insurance, as that was the unauthorized act of the owner, and would leave the apportioning paragraph to apply only to the insurance obtained within the authorized limit, or to any insurance obtained upon the interest of the mortgagee himself. The general rule is that, before different policies of fire insurance can be held to contribute to the same loss, the insurance must have been upon the same interest in the same property, or some part thereof. Lowell Manuf'g Co. v. Safeguard Fire Ins. Co., 88 N. Y. 591. In Acer v. Insurance Co., 57 Barb. 68, the policy issued to plaintiff contained the condition that “if the assured, or any other person or parties interested, shall have existing, during the continuance of this policy, any other contractor agreement for insurance (whether valid or not) against loss'.or damage by fire, on the property hereby insured, not consented to by this company, * * * then this insurance shall be void, and of no effect.” It was held that the expression, “other persons or parties interested, ” referred merely to the parties interested in the plaintiff’s insurance, and that, if other parties who bad a different interest obtained insurance upon their interest, the plaintiff’s policy would not be invalidated. We think that the additional insurance should not be considered in making the apportionment of the loss. The only other question that need be considered relates to the amount of damages recoverable upon the policies upon the Lock street property. It is claimed by the appellants that the referee erred in finding that the award of loss on that property was the sum of $5,322.68, and that it should have been the sum of $4,877.76. The difference, being the sum of $444.92, was made up from two supplemental statements, one of $284.05, and the other of $160.90. In pursuance of the provisions of the policies, an agreement for the appraisal of the amount of the loss was entered into by the parties, a separate agreement being made as to each property. In each agreement, E. M. Allen and D. I. Langworthy were named as appraisers, and they in each case named Henry Russell as umpire. The agreement is dated December 7, 1888. Thereafter the appraisers made an award as to the Pearl street property, which is dated December 21, 1888, and about which there is no dispute. An award was made by the appraisers and the umpire as to the Lock street property, which is dated December 28, 1888, and fixes the damage at $4,877.76. At the end of this there is a written approval, signed by Everson. This appraisal, in form, is complete, and covers the whole subject that was submitted by the „agreement, and no reference is made to other or further papers or statements. After the admission in evidence of the appraisals above referred to, Mr. Wilson, the attorney for plaintiff, testified: “I knew about the time when the appraisal was being made. After the appraisal I looked at the papers which they made. I found them at the insurance office of Pickard & Jones, the insurance agents who issued the policies, or some of them. I found the awards which have been introduced in evidence here. I found two additional papers with them,—two papers in addition to the two that have been introduced in evidence. I have inquired of Mr. Jones for [222] those papers. Mr. Jones is in court. He states that he has looked for the papers among his papers, and is unable to find them.” The witness further testified that Lie made and had correct copies of the two papers, and that they' were signed by the appraisers, Allen and Lang worthy. Upon cross-examinatian he testified that there were two separate papers; that Henry Boggs, -whose name appeared attached to one of the papers, was a machinist, and that he knew nothing about what he had to do with the case except what the appraisers said ; that the appraisers lived in Syracuse ; that the two papers were with the two awards in a package, folded in together, and in Mr. Jones’ possession; that they were not physically attached to the awards. The copies were then received in evidence, over the defendant’s objections, which stated, among other grounds, that ho sufficient foundation was laid for the admission of the copies, and that they were incompetent and immaterial. It appeared that notice to produce had been served upon defendants’ attorneys. Both of these papers bear date January 15, 1889. One purports to be signed by Henry Boggs, E. M. Allen, and D. I. Langworthy, and is headed, “Estimate of damages on the following items in building of screw works.” The items named are “leather belting;” “shafting, pulleys, hangers, etc.,” “ Worthington steam pump,” and “small steam pump;” and the aggregate of the damages carried out is $284.05. At the bottom is entered, “Pearl street. ” The other paper purports to be signed by Allen and Langworthy, and is as follows: “We, the undersigned, find items to be added to award of fire damages upon Lock street building as follows: Benches and ceilings, (shelving,) $83.90; counters, $40; stairs, $20; water tank, $7; doors and frames, $10; (total,) $160.90.” There is evidence tending to show that the items in both papers were in or a part of the Lock street building. The referee, in his special findings, found “that an additional award was also made of $444.95. ” This was a finding in effect that the two papers together constituted an additional award, and was valid as such. Assuming that a case was made for introducing in evidence copies instead of the originals, the question is whether they amount to a valid additional award. In the first paper there is nothing indicating a design to add to the award on the Lock street property, or to indicate that the damages to the items there specified, so far as they were covered by the policies, were not fully included in the awards already made. In the second paper there appears an intention to add to an award already made of damages “upon Lock street building.” This subject was specifically passed upon in the original award. That was dated December 28, 1888, and upon the evidence as it stands we must presume that it was then delivered. The appraisers had no right after that to make an additional award, there being no evidence to show that there was any further agreement upon the subject. Doke v. James, 4 N. Y. 568; Fallon v. Kelehar, 16 Hun, 266; Flannery v. Sahagian, (N. Y. App.) 31 N. E. Rep. 319. The second award would be void. Bayne v. Morris, 1 Wall. 97.. The first or original award was approved by Everson. There is no explanation as to the making of the subsequent papers. In the proofs of loss on the Lock street property, the amount claimed was $4,914.76. The original award was $4,877.76. It must, I think, be held that neither of the two additional papers constituted a valid additional award, and that the evidence is not sufficient to justify the finding that they, or either of them, can be deemed a part of the original award. It follows that the recoveries upon the policies on the Lock street property must be based on the loss at $4,877.76. This involves a reduction of the recovery on each of those four policies from the sum of $1,330.67 and interest from March 29, 1889, to the sum of $1,219.44, with interest from the same date. Ho sufficient reason is apparent for any other interference with the judgments appealed from. The judgments in the cases against the London Assurance Corporation, the Li berty Insurance Company of Hew York City, the Eire Association of Philadel [223] phia, Pa., and the Fire Insurance Association of London, Eng., are affirmed, with costs. The judgments in the cases against the Westchester Fire Insurance Company, the New York Bowery Fire Insurance Company, and the WilliamsburghCity Fire Insurance Company are modified by reducing the recovery in each case to the sum of $1,219.44, with interest from March 29, 1889, and, as modified, affirmed, without costs of the appeal to either party. The judgment in the case against the Phenix Insurance Company is modified by reducing the recovery on the policy dated November 20, 1888, to the sum of $1,219.44, with interest from March 29, 1889, and, as modified, affirmed, without costs of the appeal to either party. All concur.