Continental Insurance v. Cox

Mr. Justice Sheldon delivered the opinion of the Court: This was an action brought by Hulmán & Cox against the Continental Insurance Company, to recover for the destruction by fire of a dwelling house, upon which the defendant had-issued a policy of insurance to Sarah Jane Ryan and John Ryan. The facts appearing are, that on the 11th day of June, 1875, Sarah J. Ryan, and John Ryan, her husband, executed and delivered to Hulmán & Cox their mortgage upon a lot of ground at Watson, Ill., upon which was the dwelling house in question, to secure the payment of their note to Hulmán & Cox, of the same date, for $962.60, payable one year from date, with ten per cent per annum interest. On the following day, June 12, 1875, the policy of insurance sued upon was issued by the Continental Insurance Company upon the dwelling house, for the sum of $1000, to run one year. It recites that the “ Continental Insurance Company of the city of Hew York, in consideration of the receipt of $6, do by this policy insure Sarah J. Ryan and John Ryan against loss or damage by fire, to the amount of $1000, upon their two-story frame dwelling house, situated, etc. Loss, if any, payable to Messrs. Hulmán & Cox, of Terre Haute, Indiana, mortgagees, as interest may appear.” Among the provisions contained in the policy are the following: 1. “ If the assured shall have, or shall hereafter make any other contract of insurance, whether valid or not, on the property hereby insured, or any part thereof, without the consent of the company written hereon, then, and in every such case, this policy shall become void.” 10. “ It is hereby mutually understood and agreed by and between this company and the assured, that this policy is made and accepted upon and with reference to the foregoing terms and conditions.” On the 29th day of May, 1876, the property insured was wholly destroyed by fire, the whole amount of the debt due from the Ryans to Hulmán & Cox remaining unpaid, and being greater, including accrued interest, than the amount insured by the policy. John Ryan and Sarah J. Ryan both testified that at the date of the policy sued on, June 12, 1875, John Ryan held another policy of insurance in the Rockford Insurance Company on the house for $1500; that this policy was surrendered and cancelled June 25, 1875; that on August 11, 1875, Sarah J. Ryan applied for another policy of insurance from said Rockford Insurance Company, and a policy of insurance from that company was issued to her on the property covered by the policy sued on to the amount of $1200. It appeared that some time before the date of the mortgage John Ryan had conveyed the property embraced in the mortgage to his wife, Sarah J. Ryan. The preliminary proof of loss introduced in evidence, subscribed and sworn to by Sarah J. Ryan, also stated that, in addition to the policy sued on, there was other insurance made 0 on the property insured to the amount of $1200, as particularly specified in an accompanying schedule marked “A,” wherein was set forth the policy of insurance issued by the Rockford Insurance Company to Sarah J. Ryan, for the term of five years, commencing August 11, 1875, and terminating August 11,1880, it bearing date August 31, 1875, and being on this property in question, and for the amount of §1200. It was shown by the defendant that it had no knowledge of, and never consented to, this other insurance. One of the defences set up was, that the policy sued on had been made void by the other insurance in the Rockford Insurance Company. We are of opinion that this defence was maintained. There was here another contract of insurance on the prop-r, erty insured, made by the assured with the Rockford Insur-Í anee Company without the consent of the defendant written on the policy in suit, and it was an express condition of the policy that in every such case the policy sued on should become void. It is answered against this, that the interests of mortgagor and mortgagee are distinct, and each may be insured without one policy avoiding the other, as being other insurance, and that this was the case here—that in the policy issued by the Continental Insurance Company, Hulmán & Cox were the assured, and that it was their interest as mortgagees which was insured; whereas, in the policy of insurance issued by the Rockford Insurance Company to John Ryan, and the one to Sarah J. Ryan, they, the latter, were the assured, and it was their interest as mortgagors that was insured. It is the written policy itself that must determine who were the assured, and whose interest was insured. It is plainly Sarah J. Ryan and John Ryan whom the policy insures against loss or damage by fire, and it is their interest which it insures. The resort to parol evidence, if that were admissible, shows nothing different. The attorney of the plaintiffs in the taking of the mortgage, and the agent who made the insurance for the company, concur that the application was to insure the mortgagees’ interest, and the agent declined to do so, but would only issue the policy to the Ryans, making the loss, if any, payable to the mortgagees. It is true that the policy was issued and delivered to such attorney, he representing to the agent of the company that the Ryans had authorized him to insure the property in their names, making the loss, if any, payable to Hulmán & Cox, and the attorney paid the premium, Hulmán <& Cox furnishing- the money; but he states the amount of the premium was charged to the Ryans and included in their note and mortgage. Making the “ loss, if any, payable to Hulmán & Cox, mortgagees,” was not an insurance of their mortgage interest in the property. As said in Flanders on Fire Insurance, p. 441, “It is merely a designation of the person to whom it is to be paid, and is not an assignment of the policy. Hence it is the damage sustained by the party insured, and not by the party appointed to receive payment, that is recoverable from the insurers. The insurance being upon the interest of the insured, if he parts with that interest before the fire, no loss is sustained by him, and of course none is recoverable by his assignee or appointee. In other words, a policy made “payable to A in case of loss” is an agreement on the part of the insurers that “A” shall recover whatever the person originally insured may be entitled to recover in case of loss; that is, it is a contingent order or assignment of what may become due under the contract, and not an absolute transfer by virtue of which the assignee acquires the full rights of an assignee of a chose iu action.” In Franklin Savings Institution v. Central Mutual Fire Insurance Co. 119 Mass. 240, upon this subject, the court say: “ The plaintiffs held a mortgage of the property, and on the day after the policy was issued, an indorsement was made upon it that it was to be payable, in case of loss or damage, to them cas their mortgage claim may appear.’ It has been repeatedly held by this court that such an indorsement does not operate as an assignment of the policy, nor as a contract to insure the interest of the mortgagees, but that they can claim only what the party originally insured is entitled to recover under his contract. Fogg v. Middlesex Mut. Ins. Co. 10 Cush. 337; Haley. Mechanics’ Mut. Ins. Co. 6 Gray, 169; Loring v. Manufacturers’ Ins. Co. 8 Gray, 28.” That the rights of the plaintiffs under the policy are subject to the conditions therein, is quite clearly the case, under the decisions of this court. In Ill. Mut. Fire Ins. Co. v. Fix, 53 Ill. 151, after a very full and careful consideration of the subject, and in view of opposing decisions upon the point, this court said, “We deem it safer and more just to say, that where a policy is assigned as collateral to a mortgage, though with the consent of the company, the assignee takes it subject to the conditions expressed upon its face, or necessarily inhering in it, and that no recovery can be had merely in consequence of the equities of the assignee, if the assignor has lost the right to recover by violating the terms of the contract; ” and to the like effect are Ill. Fire Ins. Co. v. Stanton, 57 id. 354; Home Mut. Fire Ins. Co. v. Hauslein, 60 id. 521. In the latter case, where the assignment of the policy was made by the mortgagor to the mortgagee with the assent of the company, it was held that the assignee took the policy subject to the conditions it contained and that his equities conferred no right; that if the assignor had lost all right of recovery by violating the conditions of the policy, the assignee occupied the same position; and that the memorandum that the loss, if any, should be paid to the assignee as his interest might appear, did not change the rights of the assignee. Although the present is not the case of an assignment, but of a statement only in the policy, loss, if any, payable to the plaintiffs as their interest might appear, we consider the language and decisions above equally applicable here, as in the case of an assignment of the policy. The loss, which was made payable to the plaintiffs, was one which was payable under and by virtue of the policy, and in accordance with its terms and conditions, one of which was, that if the assured, who were John and Sarah J. Ryan, should have or make any other contract of insurance, whether valid or not, upou the property, then the policy should become void, and consequently no loss payable. There was such other insurance here—a violation by the assured of this condition— and no loss was recoverable under the policy; and no more so where the suit is in the names of Hulmán & Cox, conceding that they have the right to sue, than if it were in the names of the Ryans’. The import of the defendant’s agreement was to pay to the plaintiffs any loss to which the Ryans might be entitled under their policy to the extent of plaintiffs’ claim as mortgagees. But the Ryans were not entitled to any loss under the policy, and hence there was nothing payable to plaintiffs. It is objected that there was no competent proof of any other insurance—that such insurance could only be shown by the production of the policy of insurance itself, or accounting for its absence. The plaintiffs introduced proofs of loss which set forth, among other things, the policy in the Rockford Insurance Company, dated August 11, 1875, insuring Sarah J. Ryan upon the property in question. Where a party, in proving his loss under a policy, discloses the fact of the existence of another policy, obtained in violation of the conditions of the former, such statement is an admission that dispenses with any other proof against him of such other insurance. New York Central Ins. Co. v. Watson, 23 Mich. 486, and see N. A. Fire Ins. Co. v. Zaenger, 63 Ill. 464. And Sarah J. Ryan and John Ryan testified on the trial to this insurance without objection, so far as appears. We are of opinion that proof of the insurance by the Rockford Insurance Company was sufficiently made. And although the subsequent policy insures Sarah J. Ryan alone, we think this avoids the policy equally as if the subsequent insurance had been effected by both the assured. See Mussey v. Atlas Mut. Ins. Co. 14 N. Y. 79. It is said that to invalidate the prior policy, the second must be valid, and that the Rockford Insurance Company policy was void by reason of the existence of prior insurance without notice. There are two sufficient answers to this: 1. There is no proof that the policy of the Rockford Company contained a clause invalidating it, if there were prior insurance without notice. 2. The provision of the policy sued on is, that other insurance without consent, “ whether valid or not ,” renders the policy void. These words were doubtless inserted to prevent any controversy of the kind suggested. They are not to be disregarded. See Liverpool, London and Globe Ins. Co. v. Verdier, 35 Mich. 395; Bigler v. New York Central Ins. Co. 22 N. Y. 402; Lackey v. The Georgia Co. 42 Ga. 459. Holding the defence which we have considered, sufficient, it is unnecessary to advert to the other points of defence which are made, one of them being that the suit does not lie in the names of Hulmán & Cox. The judgment will be reversed and the cause remanded. Judgment reversed.