Queen Insurance v. Dearborn Savings, Loan & Building Ass'n

Mr. Justice Sears delivered the opinion of the Court. The following "questions are presented upon this appeal: 1st. Did the provision of the policy, limiting the time within which suit might be brought, operate to bar this Ait of appellee, who was the mortgagee, to whom the loss specified in the policy is made payable ? 2d. Did the failure of appellee and Ellie L. Graham to make proofs of loss, required by certain terms of the policy, preclude appellee from maintaining its suit ? 3d. Was the proof of appellee’s interest sufficient ? 4th. Was the allowing of interest improper in the assessment of damages ? The policy provides, beginning with line seventy, that the insured, “ within sixty days after the fire, etc., shall render a statement to this company, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and origin of the fire, the interest of the insured, etc., in the property, the cash value of each item thereof, and the amount of loss thereon,” etc. It also provides, beginning with line 106, “ Ho suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.” It is undisputed that no proofs of loss were made by the insured, Graham, as above provided, or by appellee. And it is apparent that this suit was begun after the expiration of twelve months from the date of the fire. If, therefore, the above provisions are a part of the contract of insurance between appellant and appellee, just as they are part of the contract between appellant and Graham, then the suit of appellee can not be maintained. The doctrine is well established by the decisions of this State, that when a mortgage clause, like the one here, is attached to a policy of insurance, it operates to create a new and distinct contract between the underwriter and the mortgagee. After such clause is attached there are two contracts of insurance in force by reason thereof and by reason of the policy; one of which is a contract between the underwriter and the insured, and the other is between the underwriter and the mortgagee. And these two contracts may be very different in their provisions, dependent upon the terms of the policy and the clause added. Hartford Fire Ins. Co. v. Olcott, 97 Ill. 439; Traders Ins. Co. v. Race, 142 Ill. 338; Hastings v. Westchester Fire Ins. Co., 73 N. Y. 141. We have, then, to determine whether the two provisions in question, i. e., providing for proofs of loss and requiring suit to be brought within one year from date of tire, are operative alike in both the contract with Graham, the insured, and the contract with appellee, the mortgagee, or are limited in their application to the contract with the former. We find in the policy, appearing before either of these two provisions in question, beginning at line fifty-six, 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 thereto.” It seems clear that it was the intent of the underwriter who prepared the form of this contract to include some of the provisions thereinbefore set out, but there is no intimation that it was intended to include any of the provisions following thereafter. By exclusion they are left out when the ones preceding are specified. Hammerquist v. Swensson, 44 Ill. App. 627; Stettauer v. Hamlin, 97 Ill. 312; 2 Parsons on Cont., (6th Ed.), 515. As against this construction, appellant relies upon Eddy v. London Assurance Co., 143 N. Y. 311; American Bldg. & Loan Ass’n v. Farmers Ins. Co., 40 Pac. Rep. 125. The effect of these decisions is to hold that, while there results from the mortgage clause a new and distinct contract, different from that between underwriter and insured, yet it results not alone from the mortgage clause itself, but from it and the policy taken together; that the mortgage clause is not in itself a complete contract; and that the general provisions of the policy which are not inconsistent with the mortgage clause, are not abrogated or affected by it. If no such provision as the one above quoted, beginning at line fifty-six, were contained in the policy, the contention of counsel for appellant might be sustained; but upon consideration of this provision, we think it can not be. It is true that the mortgage clause does not alone constitute the contract between underwriter and mortgagee, and that some of the provisions of the policy must be taken with the mortgage clause to constitute a complete contract. If there were no specific provision in the policy as to which parts of the policy should be so taken as part of the contract with the mortgagee, it might follow that all parts not inconsistent with the mortgage clause, should be so included. But ive ha\re here the provision, at line fifty-six, which defines precisely Avhat parts of the policy shall be applicable to the contract with the mortgagee. The parts so indicated are enough of the policy to make a complete contract, and by-exclusion no other parts should be considered as included. Both the provision as to bringing suit Avithin tAvelve months, and the requirement of proofs of loss, follow the provision at line fifty-six, and are not included by the expression “ the conditions hereinbefore contained.” We hold, therefore, that the underwriter by its form of contract elected that these provisions should not apply to the mortgagee’s contract, and that they are no part of the same, and not binding upon the mortgagee. In no one of the cases cited is a proAdsion similar to the one at line fifty-six construed or considered. It is urged that the interest of appellee is not established by sufficient and competent evidence. The bond, evidencing the debt of the grantor of the insured, Graham, and secured by the mortgage or trust deed in question, Avas introduced in evidence. The bond is for §1,500 and interest at eight per centum per annum. It is recited in the deed from Chomer to the insured, Graham, that the incumbrance amounts to §1,050 “and interest.” If no interest were due at the date of this deed, viz., March 15, 1890, nevertheless the principal due with interest at eight per centum to the time of finding Avould amount to more than the sum due upon the policy of insurance. Mo attempt Avas made by appellant to show that any part of the debt evidenced by the bond, either principal or interest, had been paid. Comstock, the secretary of appellee, testified that the interest of appellee was “in excess of the face of the policy, and at the time we made the demand it was $2,000,” and had never since been less. This testimony was not necessary in the absence of any showing that the debt evidenced by the bond had been paid; and if, in form, subject to criticism, as giving a conclusion of the witness rather than the result of his computation, it was at least not harmful to appellant. Munson v. Farwell, 16 Ill. App. 365, which was a recovery for money paid, laid out and expended, and Hollst v. Bruse, 69 Ill. App. 48, which was a suit for goods sold, are not in point. The remaining question is as to the allowing of interest. One of the provisions of the policy, beginning at line three, is, that “ the sum for which this company is liable, pursuant to this policy, shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received by the company,” etc. The ascertainment and estimate referred to are provided for at line two, and are to be made by the insured and appellant, or, if they differ, by appraisers. The neglect of the insured to act in this behalf is expressly excluded as affecting the interest of appellee by the terms of the mortgage clause, which provide : “ It being hereby understood and agreed that this insurance, as to the interest of the mortgagee or trustee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured,” etc. The finding and judgment of the trial court was for $1,562. Of this $162 was allowed as interest. Whether the interest be computed from the date of the loss, or from the date of the offer by appellee to make proofs of loss, it is in either case not excessive. The judgment is affirmed.