Gleason v. First Nat. Bank of Lapeer

Brown, D. J. The action for money had and received is an equitable action, and, as Mr. Greenleaf says, (vol. 2, § 117,) “may in [720] general be proved by any legal evidence showing the defendant nas received or obtained possession of the money of the plaintiff, which, in equity and good conscience, he ought to pay over to the plaintiff. * * * But if the defendant has any legal or equitable lien on the money, or any right of cross-action upon the same transaction, the plaintiff can only recover the balance after satisfying such counter-demand.” In Eddy v. Smith, 13 Wend. 488, it is said that the same principle which allows the plaintiff in an action of assumpsit to recover what ex ceqiio et bono he is entitled to, operates in favor of the defendant when called upon to pay the money. If he can show the better equity, he will be permitted to retain it. This was a case where the purchaser of an equity of redemption demanded from a mortgagee the surplus remaining in his hands after satisfying the mortgage and the expenses of a sale, and the mortgagee showed that subsequent to the mortgage he obtained a judgment against the mortgageor, which was a lien upon the land, at the time of the transfer of the equity of redemption, to an amount equal to the surplus; and it was held, in an action of assumpsit by the purchaser against the mortgagee, that he was not entitled to recover such surplus. See, also, Moses v. Macferlan, 2 Burr. 1010. We do not dispute plaintiff’s contention that a policy of insurance is a personal contract; that a mortgageor and a mortgagee, or other owner and lienholder, have separate insurable interests, and that the right of subrogation does not exist as between them. If the mortgageor insures the mortgaged property in his own name and it is burned, the money belongs to him and not to the mortgagee, though the latter may thereby lose his whole debt. Leading cases upon this point are: Columbian Ins. Co. v. Lawrence, 10 Pet. 507; Carpenter v. Provident Washington Ins. Co. 16 Pet. 495,—in which it was held feat the mortgagee had no claim to the benefit of a policy of insurance underwritten for the mortgageor. McDonald v. Adm’r of Black, 20 Ohio, 185, was a case where a policy effected by a mortgageor contained the words “for whom it may concern,'” but it was held that the mortgagee could not claim the benefit of insurance if at the time the mortgage had not become absolute at law by failure to pay the money. In Plympton v. Ins. Co. 43 Vt. 497, a person having acquired title by levy of an execution upon premises insured :by the execution debtor, was held not entitled to the .'proceeds of the policy in case of loss by [721] fire. I had occasion to apply the same principle to a case where the owner of a vessel, injured by collision, sought to recover from the owners of the vessel in fault, which had been sunk by the collision, the amount of certain policies of insurance underwritten upon her, The Peshtigo, 9 Cent. Law J. 285. On examining the law in this case I became entirely satisfied that libelant’s lien upon the vessel for his damages did not attach to her policies of insurance, for the reason that the policies were written for the benefit of the owners and not for that of the creditors of the vessel. A moment’s consideration, however, will show there is but a slight analogy between these cases and the one under consideration. Here the policies were originally made payable to the defendant for its security, and until its debt was actually paid defendant had a right to the proceeds of the policy. Had the property burned before sale upon execution, the amount realized from the policies would have belonged to the defendant, by virtue of their assignment to him. He ought not to be placed in a worse position because his title had been changed from that of a creditor to that of a purchaser upon execution, with a right of redemption reserved to the debtor. It is true that the purchase of the property upon execution was a technical ex. tinguishment of the debt, or, rather, a satisfaction of the execution which represented it, but it was so only upon the theory that the defendant became thereby the owner of tho property, or a lienholder to the amount of its purchase money. It has always been held that if a sheriff levy upon and sell lands not belonging to the execution debtor, the court will require the moneys to be refunded, the return of the sheriff corrected, and a -new execution to be issued for the unpaid portion of the judgment. Adams v. Parmeter, 5 Cow. 280; Tudor v. Taylor, 26 Vt. 444; Warner v. Helme, 1 Gilman, 220; Zeigler v. McCormick, 14 Reporter, 440. If in this case the loss had occurred before the sale, defendant would have recovered the amount of the policies as payee thereof, and would have bid just so much less for the property as was represented by the amount so recovered; but as the mill was burned after the sale, defendant was entitled to the money as the payee of the policy, and the plaintiff was entitled to a credit of this amount upon the amount of the bid, in case he saw fit to redeem. A different rule would work a manifest injustice, and hold out a strong inducement to the destruction of the property. It would, in short, take $4,500, the amount of the policies, from the defendant’s vaults, and put if into the plaintiff’s pocket; in other [722] words, plaintiff would have paid his debt, and recovered back the money used in paying it. The case of Mickles v. Rochester City Bank, 11 Paige, 119, is in point. It was held in this case that where a judgment creditor of a corporation insured its real estate in tho joint names of himself and the corporation, and the property was afterwards sold under his judgment and bid in by him, and after such sale the property was partially destroyed by fire, and the property was not redeemed from the sale, he was entitled to the money received from the insurance company on account of such loss. It seems to me entirely clear that the plaintiff has no right to the money sought to be recovered. The motion must therefore be denied.