Sun Fire Office v. Fraser

2 Evidence of waiver admissible when. Gilkeson, P. J. Under other conditions of the pleadings the contention might be tenable that, under the allegations of the petition that "due proofs had been made,” evidence was inadmissible that proofs were waived ; but the plain-x tiff in error overlooks the fact that failure to furnish proofs of loss was set up as a matter of defense, and that the reply not only denied this defense, but assigned the reason for pleading "due proofs ” and inferentially averred a waiver of objection to their sufficiency: ‘ ‘ That after said proofs of loss were received by the defendant, Sun Fire Office, as aforesaid, said Sun Fire Office made no objection to said proof for substance, form or manner of making the same.” We think the referee was correct in construing all the pleadings together, and the evidence [66] sustains his findings on this proposition. It will not be contended that Camp had not.sustained a loss, and he made, or verified, the proofs which the Mortgage Company furnished. The Mortgage Company, which, having guaranteed the loan for which this insurance was indemnity, had, perhaps, indirectly suffered loss by a diminution of the security, prepared and forwarded proofs of loss, which were received by the plaintiff in error and by its state agent. The state agent, knowing that the Mortgage Company had sent these proofs, paid no attention to that Company, but wrote to Camp ; and although informed by him that he was hostile to the Mortgage Company and would not assist in procuring the insurance, never notified the Mortgage Company nor Mrs. Fraser, although he knew she owned the note and held the policy. 1. Transferring does not avoid policy. We fail to discover anything tending to show that the policy of insurance was, in the strict sense of the term, “ assigned " by the English and American Mortgage Company. True, it was delivered to Mrs. Fraser, with the other papers pertaining to the loan, as a part of her security ; but did that invalidate the policy? We think not. The policy was procured for the express purpose of indemnity to the Mortgage Company, and this Avas unquestionably understood by the plaintiff in error when the mortgage clause was inserted expressly providing for that indemnity. All the language used conveys this idea. Even the cancellation clause provides that the policy shall, as to the mortgagee, remain in force for ten days after notice to the mortgagee. “It is the policy of this court to strictly construe those clauses in an insurance policy which forfeit the indemnity provided for the assured." Blackwell v. Insurance Co., 48 Ohio St. 533. We do not think the [67] term “assigned,” as used in this policy, contemplated a mere delivery of the policy to one who, subsequently to the mortgagee, might become the owner and holder of the bond and mortgage. Besides, in this case, the Mortgage Company was made a defendant, pleaded its guaranty, and asked for the same relief Mrs. Fraser demanded. The mortgage clause created a new, independent contract, and must be construed in connection with the mortgage which was a conveyance of the property as security only. As said by the learned referee : ‘ ‘ The term mortgagee is used throughout this clause ; and who is the mortgagee ? Is he not the owner of the security secured by the mortgage? and is it not fully the understanding of the Sun Fire Office Insurance Company that, when they permitted the attaching of a mortgage clause under circumstances like this, they intended the policy to accompany the mortgage, and add to its security in the hands of whoever may become the owner and holder of such negotiable bond? There are no words in the mortgage clause restricting the assigning by the mortgagee of the mortgage debt.” The Supreme Court, in Insurance Co. v. Coverdale, 48 Kan. 451, says : ‘ ‘ The mortgage clause was agreed upon for this •very purpose, and created an independent and a new contract, which removes the mortgagees beyond the control or the effect of any act or neglect of the owner of the property, and renders such mortgagees parties, who have a distinct interest, separate from the owner, embraced in another and a different contract. The tendency of the recent cases is to recognize these distinctions, and thus protect the rights of the mortgagee, when named in the policy, and the interest of the owner and of the mortgagee are regarded as distinct subjects of insurance.” The rule is that “ exceptions in a policy should be [68] strictly construed, and when there are two interpretations equally fair, that which gives the greater indemnity should prevail. ” Under this rule, the courts will, if possible, so construe the contract as to carry into effect the primary purpose for which it was made. This case was carefully tried by the learned referee, and has been reviewed by an able trial judge. We perceive no error in the record and the judgment will, therefore, be affirmed.