Peterson v. Hartford Fire Ins.

Mr. Justice Shepard delivered the opinion of the court. This was an action of assumpsit brought by the appellant against the appellee, to recover on the policy of insurance issued by the appellee, mentioned in the foregoing statement of facts. The case was tried by the court without a jury upon agreed facts of which the foregoing statement is the substance, and the issues being found for the appellee, a judgment followed against appellant for costs. There is no question of the effectiveness of ■ the policy issued to appellant by appellee, and the first inquiry that arises is, was such policy canceled. By its terms the policy might be canceled at any time at the request of the insured, “ or by the.company giving five days’ notice of such cancellation.” There is also the provision that when the “ policy is canceled by giving notice, it shall retain only the pro rata premium.” There is no pretense that the five days’ notice of intended cancellation was given by the company, or that any part of the premium paid by Peterson was returned to him. “We think it is incumbent on every insurance company acting under such a clause as in this policy (in effect the same as here) to tender the unearned premium with the notice of cancellation. The tender must be held a condition precedent * * * ” Peoria M. & F. Ins. Co. v. Botto, 47 Ill. 516. “ There can be no cancellation unaccompanied by a return of the unearned premium. * * * Until that is done, there can not be * * * a cancellation.” Ætna Fire Ins. Co. v. Maguire, 51 Ill. 342. “ If refunding the premium, or a portion of it, be one of the terms upon which the company can cancel the policy, there must be such payment, or a tender thereof, to the assured or his duly authorized agent, before cancellation is accomplished.” Hartford Fire Ins. Co. v. McKenzie, 70 Ill. App. 615. “ When the policy provides that the * * * insurer may, any time, at its option, cancel it, on giving notice to that effect, and paying a ratable proportion of the premium for the unexpired term, payment of the unearned premium is essential to absolve the company from liability under the policy; and although the policy has been surrendered to the company, yet if the unearned premium has not been paid until after a"loss, the company is liable for the loss, and this, even though the assured after the loss, but in ignorance of it, accepts the balance of premium due him for the unexpired term. * * * The policy is not canceled until the unearned premium is actually received by the assured or his agent; and if, after he receives notice to return the policy for cancellation, he sends it to the insurer, but before he receives the return premium, a loss occurs, the insurer is liable therefor.” Wood on Fire Ins., Sec. 113. The circumstance that the mortgagee, for whose use this suit was brought, consented to the cancellation of the policy, can not be held to deprive the assured of his right. Peterson, the assured, had no knowledge or notice of the action of the mortgagee, or the insurance company, until after the fire had occurred and his property became destroyed, and it would be a most harsh doctrine to hold that somebody else might surrender his rights without knowledge on his part or notice of any kind to him. The contract of insurance was with Peterson. His rights were fixed by that contract, and he could not be deprived of them without his consent, except in the manner provided by the contract. The mortgage clause became a part of the contract, but its effect, so far as questions here involved are concerned, was no more than to give to the mortgagee the right to receive from the insurance company whatever loss or damage Peterson might sustain under the policy. Ho right existed in the mortgagee under the mortgage clause to cancel the policy, and thus abrogate and destroy Peterson’s contract with the insurance company, and any attempted accomplishment of such result by the mortgagee was entirely ineffectual as against Peterson. The policy not being rightfully canceled, it remained in full force and effect, and was in law, at the time the fire occurred, just as effectual to maintain a suit upon as though it had always remained in Peterson’s hands. And such suit was properly brought in the name of Peterson for the use of the mortgagee, to whom the loss was made payable for Peterson’s account. Although it be that both Peterson and the mortgagee had separate insurable interests in the property covered by the policy, yet, the only interest that was insured being that of Peterson, the mortgagor, a suit in his name for the use of the mortgagee, to whom the loss was made payable, may be properly maintained. By the terms of the mortgage clause the loss was made payable to the mortgagee, and gave the benefit of the policy 'to the mortgagee. Hence, it was proper to sue in the name of the owner of the legal title for the use of the beneficiary. Illinois Fire Ins. Co. v. Stanton, 57 Ill. 354. What the effect may be upon the Fireman’s Insurance Company of the policy that was issued by it upon the premises without the knowledge of Peterson, we need not decide nor discuss; but that it was without effect as between the parties to this suit, we have no doubt. The facts concerning the issue of that policy and the conduct of Peterson in regard to it are set forth in the statement of agreed facts, and do not require special comment at this time. In our view, Peterson did nothing in connection with that policy that makes it inequitable, or contrary to any recognized rule of law, for him to recover from appellee the loss that it agreed to protect him against, and we therefore will reverse the judgment of the Circuit Court and remand the cause, with directions to that court to enter judgment in favor of the appellant and against the appellee for $1,700, with lawful interest from December 5,1893, the date when said loss became payable. ^Reversed and remanded with directions. Hr. Justice Horton does not concur.