Greenlee v. North British & Mercantile Insurance

Deemer, J. 1 The property insured was a store and opera-house building and fixtures, situated in the city of Belle Plaine; and the policy contains these, among other, conditions: “This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the hazard be increased by any means, within the. control or knowledge of the insured, * * * or if the interest of the insured be other than unconditional and sole ownership, * * * or if, with the knowledge of the insured, foreclosure proceedings be commenced, or notice given of sale of any property covered by this policy by virtue of'any mortgage or trust deed, or if any change other than by the death of the insured take place in the interest, title, or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment, or by voluntary act of the insured, or otherwise. * * *” At the time the policy was issued, mechanic’s liens had been filed against the property, one by Robert Smith, who claimed six hundred and twenty-two dollars and sixty cents; and another by J. F. Atkinson, who claimed nine thousand four hundred and seventy-three dollars and sixty-eight cents. Thereafter, and before the loss, these mechanics’ liens were reduced to judgments, and foreclosure decrees and an execution had issued upon the Atkinson judgment, and the property was advertised and sold, and a certificate had issued to Atkinson as purchaser. The period for redemption had not expired, however, at the time 429 of the fire. The defendant pleaded that these foreclosures and the sale of the property to Atkinson constituted a breach of the conditions of the policy above' set out. By the terms of the policy, the loss, if any, was made “payable to J. F. Atkinson, as his interest may appear.” 2 Appellant claims in argument that the judgments and decrees of the court foreclosing these mechanics’ liens, and the sale of the property under the Atkinson decree, come within the express terms of the policy, forbidding “a change in the interest, title, or possession of the subject of insurance, whether by legal process or judgment, or by voluntary act of the insured, or otherwise.” Now, it is clear that the judgment and foreclosure proceedings did not change either the title or possession of the property. During the period for redemption, Greenlee, who was the owner of the property, held both the title and right of possession, and was entitled to the rents and profits thereof. Did these proceedings change the interest of the assured ? The word “interest,” as used in the policy, means the share, portion, or part that the assured had in the property; and, in order to determine whether or not there was a change by the proceedings complained of, we must see whether there was any change in his right. What share or portion had the assured in the property before the foreclosure proceedings and sale thereunder that he did not have afterwards? If the mechanics’ liens were in fact liens upon the property‘at the time the policy was issued; the judgments and the sale under execution were no more. If they created no title, neither did the judgments, nor the sale on execution. In other words, neither the judgments nor the sale on execution created any new interest or estate. At most, a mere lien which was uncertain in amount, was made certain and conclusive, and an 430 indefinite period of redemption was made certain and definite. But neither of these things changed in any respect the share or part that the assured had in the property. In the case of Curtis v. Millard, 14 Iowa, 128, we said, in speaking of the estate created by a sale under execution: “Now, the courts hav.e frequently declared that ' the purchaser of lands on execution acquires by his purchase no more than a lien upon the lands for the amount of his bid and interest. During the time allowed for redemption, he acquires no right or estate upon which he could maintain ejectment, or which could be levied upon and sold for his debts. It is simply an inchoate or conditional right to an estate, liable to be defeated any time within one year by the payment of the purchase money and interest.” So, also, in the case of Stanbrough v. Daniels, 77 Iowa, 567, we said that one who held a certificate of purchase upon foreclosure proceedings is, during the year allowed by law for redemption, only a lien-holder. Atkinson, then, was a mere lienholder at the time the fire occurred. He was also a lien-holder for the same amount when the policy was issued, for the record shows that he bid no more than the amount of his judgment for the property. True, the amount was not ascertained and fixed until the judgment was rendered, but the lien existed for the true amount before as well as after judgment. The fixing of the period for redemption did not change the interest, portion or share that the assured had in the subject of the lien. In a certain sense, Greenlee had nothing but an equity of redemption in the property, uncertain as to time within which it should be exercised before judgment, certain and fixed after-wards. It appears to us that there was no substantial violation of the conditions of the policy above referred to. In the case of Wood v. Insurance Co., 149 N. Y. 382 (44 N. E. Rep. 80), the court, in construing a like 431 condition in a policy, said, in speaking of the effect of a sale upon execution: “At the time, therefore, that the property in question was destroyed by fire, the interest, title, or possession of the insured had not been changed. The statute (which is much like ours) had operated to postpone the effect of the sale upon the interest, title, or possession of owners until the expiration of the period for redemption.” We have held that an interest in real estate is something more than a right to a remedy against it, and a lien therefore, whether special or .general, is not an interest in lands. Andrews v. Burdick, 62 Iowa, 714. As the sale upon execution gave to Atkinson nothing more than a lien, or at most an inchoate or conditional right to an estate, he acquired no interest in the property; and, if he acquired no interest Greenlee lost none. We do not overlook a statement made in the case of Shimer v. Hammond, 51 Iowa, 401, to the effect that a purchaser at execution sale holds the equitable title to the property. But it is manifest that such statement was not essential to the determination of the controversy, and should therefore be regarded as dictum. It will be noticed that the conditions of the policy sued upon in this case do not avoid the policy in the event that the property should be incumbered by judgment, as did the provisions in the policies involved in the cases of Insurance Co. v. Schmidt (Pa. Sup.) 18 Atl. Rep. 317, and Hench v. Insurance Co. (Pa. Sup.) 15 Atl. Rep. 671, relied upon by appellant. Hence these cases are not in point. Neither is the case of Hicks v. Insurance Co., 71 Iowa, 119, for the reason above stated, and for the further reason that it is expressly held in Lodge v. Insurance Co., 91 Iowa, 103, that a judgment is not an incumbrance, within the meaning of that term as used in insurance 432 policies, explaining and distinguishing the Hides Case. To avoid the policy in this case, the judgments or other proceedings must change either the interest, title, or possession of the subject of insurance. As we have seen, they did neither. ' 3 Appellant further contends that the judgments and execution sale violated the condition of the policy as to increase of hazard. We do not think this is so. The amount of the liens was in no manner increased, except, it may be, to the extent of the costs taxed m the case; and there was no evidence offered or introduced which tended to show that any increase of hazard resulted from the proceedings to enforce the mechanics' liens. We cannot presume that there was any such increase. Russell v. Insurance Co., 71 Iowa, 69; Russell v. Insurance Co., 78 Iowa, 216; Martin v. Insurance Co., 85 Iowa, 643; Runkle v. Insurance Co., 99 Iowa, 414; Wood, Ins., section 243. Moreover, the condition last referred to does not apply, to immaterial changes, which do not increase or enhance the risk. Changes in the form of an existing lien will not, as a matter of law, amount to an increase of hazard. Wood, Ins., section 245. And the insurer has the burden of proving an increase of risk. Proof of a change in the risk, without more, does not make out the defense. It must also appear that the change increased the hazard. Wood, Insurance, section 260. It is clear that the condition with reference to foreclosure sale of the property under mortgage or deed of trust was not violated. As none of the conditions of the policy were broken, the district court was right in directing a verdict for the plaintiff, and the judgment ÍS AFFIRMED.