Commonwealth v. National Insurance

Colt, J. A policy of marine insurance was issued by the National Insurance Company to the Atlantic Mail Steamship Company by name, with the addition of the words “ for whom it concerns, payable to them or order.” There was a total loss, and the receivers of the insurance company claim the right to set off against their liability the amount due from the Atlantic Company at the time of the loss upon premium notes given upon other policies. The petitioner, at the time the policy was issued, held a mortgage on the vessel therein insured, with a covenant that the company should keep it insured for the benefit of the mortgagee; but this was not known to the insurance company, nor were they notified that the petitioner had any interest in the policy until after the loss. It was intended by the parties claiming the benefit of this insurance that the policy when obtained should insure the interest of the company, and be transferred to the petitioner in accordance with the stipulations in the mortgage. The petitioner contends that under these circumstances the legal effect of the words of the policy, and of the subsequent act of the Atlantic Company in ordering its payment to him, is to make him an original party to the contract of insurance and defeat the set-off claimed. But the fact that the policy was intended to be assigned to the mortgagee for his benefit, and was subsequently [517] so assigned by the order indorsed upon it, cannot have such effect. The defendants knew nothing of such intention or of the assignment until their right of set-off had been acquired. The policy is not a negotiable instrument, and the assignee must take it subject to all equities between the parties to it. Pearson v. Lord, 6 Mass. 81. Finney v. Warren Insurance Co. 1 Met. 16. The rules of law applicable to policies made to a broker or agent named, “ for whom it may concern,” by which the person who has the insurable interest intended to be covered by the policy is held to be the real party to the contract, do not govern this case. When the policy is made in that form, it is enough for the plaintiff to establish the fact that he was the possessor of the whole insurable interest intended to be insured; and he is then subject to no set-off except of claims against himself. Williams v. Ocean Insurance Co. 2 Met. 303. Somes v. Equitable Safety Insurance Co. 12 Gray, 531. The difficulty here is that the petitioner’s interest was not intended to be covered by the policy. The report finds that the policy was intended to cover the interest of the Atlantic Company and to be assigned for the security of the mortgagee. The policy as made was not intended directly to cover the mortgagee’s interest, and could be availed of only by the indorsement of the company. By the terms of the mortgage the company were to insure the vessel for the benefit of the mortgagee, implying that the interest insured was the interest of the mortgagor only. If the petitioner’s interest as mortgagee was only insured, then upon payment of the mortgage there would have been v o claim for loss, because the interest insured would have ended. The policy will not bear this construction. Decree affirmed.