Oakland Home Insurance v. Bank of Commerce

Irvine, C. This was an action on a policy of fire insurance written in favor of J. Nelson Jones, and having attached an instrument signed by the agents issu — 720 — ing the policy, the essential part of which is as follows: “Loss, if any, under this policy payable to the Bank of Commerce, or its assigns, as its mortgage interest may then appear.” The policy and the slip attached both bore date October 17, 1889, and were both executed on that day. The policy ran for five years from that date. Not far from the time when the policy was issued, the premises insured were conveyed to one Brownfield, and an assignment to Brownfield signed by Jones appears on the policy. This bears two dates, — October 17, 1889, and December 12, 1890. .No written approval of this assignment appears on the policy. The Bank of Commerce was the owner of mortgages on the premises to the full amount of the policy. A total loss occurred October 19, 1890. In the district court there was a verdict and judgment for the plaintiff, which is defendant in error, to reverse which the insurance company brings the case here. The contentions of the insurance company, based on proper assignments of error, are as follows: First — That the conveyance to Brownfield was prior to the issuance of the policy, and that therefore Jones had no insurable interest, and the policy never took effect. Second — That under the conditions of the policy it was avoided by the attempted assignment thereof before loss without the consent of the company. Third — That what is styled the “loss payable clause” attached to the policy was merely a direction as to who should receive the proceeds in case of loss; that it was subject to all the conditions of the policy, and the policy not being — 721 — available to Jones because of a want of insurable interest by his conveyance of the property and assignment of the policy to Brownfield, the bank, deriving its rights entirely through Jones, cannot recover. We shall, consider these several propositions without special reference to the assignments of error on which they are based. As to the first point, it is enough to say that there was evidence sufficient to sustain a finding that while negotiations had been carried on before the policy was issued, looking toward a sale of the property by Jones to Brownfield, and while a deed of 'conveyance had actually been executed, the deed had not been delivered and the contract of sale had not assumed an obligatory form until some time after the issuance of the policy. This issue was submitted to the jury under instructions, part of which were not excepted to by the company. It was properly a question for the jury. (Rochester Loan & Banking Co. v. Liberty Ins. Co., 44 Neb., 537.) The verdict on this issue cannot be disturbed, and it must therefore be taken as settled that Jones was the owner when the policy was issued. We may pass over the second contention and assume, for the purposes of this case, that the subsequent transfer of the property and assignment of the policy by Jones to Brownfield would be sufficient to prevent a recovery by Jones and would vest no right in Brownfield. We do not think the soundness of this contention is necessarily involved in the decision of the case. We therefore go directly to the claim of the plaintiff. The “loss payable clause” has already been quoted. In the body of the policy appears — 722 — the following: “If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest, as shall be written upon, attached, or appended hereto.” That the plaintiff did have an interest as mortgagee in the subject of insurance, and that this interest was created with the consent of the company is indisputable. The question is as to the construction of the latter portion of this clause. There can be no doubt that the “loss payable clause,” and this clause quoted from the body of the policy, must be construed together. It is the contention 'of the insurance company, in effect, that the “loss payable clause” was not an independent contract between the mortgagee and the insurer, but was simply a direction as to payment, and that the mortgagee’s rights must be derived through those of the owner, in spite of the clause in the body of the policy, which it claims should be so construed as to mate all the conditions and provisions of the policy binding upon the mortgagee except as other stipulations in the “loss payable clause” might vary those provisions and conditions. If the language were ambiguous in its grammatical signification, we would be compelled to adopt that construction which would be more favorable to the insured. Insurance policies are not contracts deliberated upon, clause by clause, and effected after detailed negotiations between insured and insurer. The actual — 723 — contract is for the most part entered into before the policy is delivered. The policy is proposed and tendered by the insurer on its own form. If it seeks to protect itself by a condition it should clearly express that condition by the policy. If it resorts to ambiguous language, under familiar rules of construction, such language must be taken most strongly against the party proposing it and in favor of the other party. But we do not see any marked ambiguity in this policy. We repeat the clause, omitting words not essential to its construction on the feature before us. “If * * * an interest * *■ * shall exist in favor of a mortgagee . * * * the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall' be written upon, attached, or appended hereto.”' “The conditions hereinbefore contained shall apply,” not absolutely, but in a qualified way, “in the manner expressed in such provisions and conditions * * * * as shall be written upon,.attached, or appended hereto;” — that is, in order' to render the general conditions of the policy applicable to the interest of a mortgagee there must be written upon, attached, or appended to the policy, relating to the interest of the mortgagee, some provisions or conditions expressing in what manner the conditions of the policy shall be so applicable. Neither in the “loss payable clause” nor otherwise by writing upon, attached to, or appended to the policy was there any provision or condition carrying the conditions of the policy into such clause or rendering them in any manner applicable. The authorities cited by plaintiff in error are not op — 724 — posed to this construction. In some cases the mortgage clause was not executed until after the policy had become voidable, and was then issued without new consideration while the insurer was ignorant of the facts avoiding the policy. In other cases the “loss payable clause” stood alone without provision in the policy as to its meaning or extent In this case, in view of the clause in the policy, the “loss payable clause” must be taken as if it contained an express provision insuring the mortgagee without regard to the conditions imposed upon the owner in the body of the policy. So construed, the case falls within the rule announced in the Phenix Ins. Co. v. Omaha Loan & Trust Co., 41 Neb., 834. As we view the case, the mortgagee was entitled to recover to the extent of its interest without regard to acts or omissions of the owner which might, as between the insurer and such owner, defeat a recovery. Judgment affirmed. Harrison, J., not sitting.