Carter v. Rockett

The Chancellor. From the statements in this bill, the complainant is in the situation of a mortgagee of the premises upon which Rockett effected his insurance ; or rather, he is in the situation of a surety that Rockett shall pay $5000 to the assignee of one of the mortgages. He has therefore an interest in having that mortgage paid off and if the holder of the mortgage upon the insured premises has a specific lien upon the fund due upon the policy, this complainant would probably be entitled to the relief asked, had he made the holder of the mortgage a party to the suit. I am satisfied, however, that there is no pretence of claim to an equitable or specific lien upon this fund, for the payment of the $5000 of the mortgage which Rockett undertook to pay. A contract of insurance against fire, as a general rule, is a mere personal contract between the assured and the underwriter, to indemnify the former' against the loss he may sustain. But the assured, by an agreement to insure for the protection and indemnity of another person, having an interest in the subject of the insurance, may unquestionably give such third person an equitable lien upon the money due upon the policy, to the extent of such interest. Thus, in the case of Thomas’ ex’rs v. Van Raff’s ex’rs, (6 Gill & John. Rep. 372,) where the mortgagor covenanted with the mortgagee that he would keep the premises insured during the continuance of the lien of the mortgage, and in case of loss that the amount received upon the policy should be applied to the [439] rebuilding of the property insured, the court of chancery in Maryland decided, that the mortgagee had an equitable lien upon the fund received by the mortgagSt under the policy, to satisfy the balance due upon the mortgage which could not be collected upon a foreclosure and sale of the mortgaged premises. A similar decision was made by the court of king’s bench in England, in the case of Vernon v. Smith, (5 Barn. & Ald. Rep. 1;) where the lessee of premises, to which the 83d section of the building act 14 Geo. 3d, ch. 78, was applicable, covenanted with the lessor to keep the premises insured. But a mere lien upon the property insured does not give to the holder of that lien a corresponding claim upon the policy which the owner of the goods has obtained for the protection of his own interest therein ; although the assured is personally liable to pay the debt which is a lien upon the property insured, (Neale v. Reid, 3 Dowl. & Ryl. 158, Beaumont on Fire and Life Ins. 77.) Here the defendant Rockett is personally liable for the payment of $5000 on one of the mortgages upon the premises; but as there was no agreement, either express ommplied, that he would cause the premises to be insureipbr the protection of the rights of the complainant, or of his mortgagee, they have no better claim than any other creditors of Rockett, to the fund which is due to him from the insurance-company. The injunction should not have been granted upon the facts stated in the bill. It must therefore be dissolved ; with costs to the defendant Rockett, to be taxed,