Baker v. Fargo Bldg. & Loan Ass'n

• Decision Date: 04 January 1934
• Docket Number: No. 6208.,6208.
• Citation: 64 N.D. 317,252 N.W. 42
• Court: North Dakota Supreme Court
• Parties: BAKER v. FARGO BUILDING & LOAN ASS'N.

64 N.D. 317

252 N.W. 42

BAKER

v.FARGO BUILDING & LOAN ASS'N.

No. 6208.

Supreme Court of North Dakota.

Dec. 19, 1933.

Rehearing Denied Jan. 4, 1934.

On Petition for Rehearing.

Syllabus by the Court.

1. Following the case of St. Paul Fire & Marine Insurance Company v. Hiram D. Upton, 2 N. D. 229, 50 N. W. 702, the uniform mortgage clause in an insurance policy reading as follows: “Provided that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same”-is held to embody the promise of the mortgagee to pay on demand insurance premiums in case of failure of the mortgagor to pay them.

2. An insurance agent, paying the premiums on fire insurance policies, as required by his contract with insurance companies, is subrogated to the rights of such insurance companies to collect the premiums, including commissions.

Appeal from District Court, Cass County; P. G. Swenson, Judge.

Action by Roy T. Baker, as surviving partner of the Baker Insurance Agency, a copartnership, against the Fargo Building & Loan Association, a corporation. Judgment for plaintiff, and defendant appeals.

Affirmed.

Conmy, Young & Conmy, of Fargo, for appellant.

Nilles, Oehlert & Nilles, of Fargo, for respondent.

BURKE, Judge.

The plaintiff, as surviving partner of the Baker Insurance Agency, a copartnership, brings this action to recover the premiums from the mortgagee of insured mortgaged property. The trial court made findings of fact and conclusions of law favorable to the plaintiff, and, from a judgment duly entered thereon, the defendant appeals.

There is no dispute in the facts. At the time of the institution of the action, the defendant, Fargo Building & Loan Association, was the owner of two mortgages, one for $40,000 and one for $5,000, executed by one C. H. Porritt, covering a certain business block in the city of Fargo. The said mortgages contained a covenant on the part of Chas. H. Porritt to keep such premises and buildings insured against loss by fire, tornado, and windstorm and against loss of use, occupation, and rents to said premises arising out of any such casualty, and requiring the said Chas. H. Porritt to procure and deliver to the said defendant, Fargo Building & Loan Association, policies of insurance acceptable to the said Fargo Building & Loan Association, with loss, under said policies, payable to the said Fargo Building & Loan Association, as such mortgagee, as its interest might appear. That said mortgage further provided that, in case the said C. H. Porritt failed, neglected, or refused to procure said insurance or to deliver said policies to said mortgagee, the said mortgagee was authorized to obtain and procure such insurance, and, if said mortgagee was required to pay or advance any insurance premiums for the protection of said mortgaged property, then that amount so paid or advanced by said mortgagee should constitute a part of said mortgage indebtedness, and that the amount thereof, together with interest, should be added to and constitute a part of said mortgage debt which might be enforced against said mortgaged property.

The said C. H. Porritt, with the approval of the defendant, procured certain insurance policies from the plaintiff and delivered them to the defendant. The names of the insuring company, the policy numbers, the amount of the policy, and the premiums involved are as follows:

+-----------------------------------------------------------------------------+
                ¦Insuring Company.           ¦Policy       ¦Date.   ¦Amount of       ¦Premium.¦
                ¦                            ¦Number.      ¦        ¦Policy.         ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦N. Y. Underwriters Ins. Co. ¦27130        ¦2-18-27 ¦$ 8,850.00      ¦$178.06 ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦St. Paul Fire & Marine Ins. ¦7767         ¦4-20-28 ¦9,000.00        ¦155.25  ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦N. Y. Underwriters Ins. Co. ¦27276        ¦5-26-28 ¦4,500.00        ¦90.54   ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦N. Y. Underwriters Ins. Co. ¦2066         ¦6-29-28 ¦10,000.00       ¦50.00   ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦St. Paul Fire & Marine Ins. ¦7784         ¦9-14-28 ¦10,000.00       ¦201.20  ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦St. Paul Fire & Marine Ins. ¦321          ¦1-6-29  ¦10,000.00       ¦50.00   ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦Hartford Fire Insurance Co. ¦10431        ¦8-13-29 ¦7,500.00        ¦139.13  ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦St. Paul Fire & Marine Ins. ¦7868         ¦9-7-29  ¦2,500.00        ¦46.25   ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦Aetna Insurance Company     ¦9187         ¦9-24-29 ¦13,500.00       ¦249.75  ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦St. Paul Fire & Marine Ins. ¦7886         ¦12-11-29¦5,000.00        ¦92.75   ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +----------------------------+-------------+--------+----------------+--------¦
                ¦New York Underwriters Ins.  ¦27443        ¦2-28-30 ¦8,850.00        ¦164.17  ¦
                ¦Co.                         ¦             ¦        ¦                ¦        ¦
                +-----------------------------------------------------------------------------+
                

As a further security for the payment of the mortgage debt, the defendant took an assignment of the rents of the mortgaged property, and the record shows that it was collecting such rents at the time of the trial.

Some time after the last policy was issued, Porritt died, and the plaintiff who, by virtue of a contract with the insurance companies, had paid to the various companies the amount of the premiums, less 25 per cent., his commission, filed a claim for the amount paid in premiums against the Porritt estate in the county court, which claim has not been paid. The mortgage clause in each insurance policy had the usual provision for subrogation, and each of the insurance companies executed and delivered to the Baker Insurance Agency an assignment describing each policy, the amount of the premium, and containing this provision:

“Whereas, The premium on said policy was not paid by the said owner and/or the mortgagee, and, whereas, the premium on said policy was charged to and was also an obligation of Baker Insurance Agency of Fargo, North Dakota, and said premium has been paid by said Baker Insurance Agency to the undersigned.

Now therefore, In consideration of the payment to the undersigned, of a sum of money equal to the amount of said premiums, the receipt whereof is hereby acknowledged, the undersigned does hereby assign, set over, transfer and subrogate to the said Baker Insurance Agency of Fargo, North Dakota, all rights, claims, choses or things in action which the undersigned might have as against the said owner and/or mortgagee, to whom said policy was issued and do hereby authorize and empower the said Baker Insurance Agency at its own cost and expense to sue, compromise or settle in its name or otherwise, the said claim for said unpaid premium and said Baker Insurance Agency is hereby fully substituted in the place of the undersigned and subrogated to all of the rights of the undersigned by reason of the issuance and delivery of the said policy.”

On November 29, 1932, the plaintiff made demand upon the defendant for the payment of the premiums. The plaintiff relies on the clause contained in each of the insurance policies as follows:

“Loss, if any, payable to Fargo Building and Loan Association, or assigns as mortgagee, as such interest may appear. This policy as to the interest therein of the said payee, as mortgagee (or trustee) only, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property nor by the commencement of foreclosure proceedings, nor the giving of notice of sale relating to the property, nor by any change in the interest, title, or possession of the property, nor by any increase of hazard; Provided that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same; and Provided further, that the mortgagee (or trustee) shall notify this company of the commencement of foreclosure proceedings, and of any notice of sale relating to the property, and of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee (or trustee) and, unless permitted by this policy, the same shall be noted thereon and the mortgagee (or trustee) shall, on demand, pay the premium for any increased hazard.”

It is the contention of the appellant (1) that the standard mortgage clause of the insurance contract is a condition and not a covenant; consequently there is no obligation on the part of the appellant to pay the premiums. (2) The plaintiff is not entitled to be subrogated to the rights of the insurance companies by virtue of his laches. (3) The plaintiff is not entitled to recover the 25 per cent. commission.

The first case construing the uniform standard mortgage clause in an insurance policy is the case of St. Paul Fire & Marine Ins. Co. v. Upton, 2 N. D. 229, 50 N. W. 702, 703. Appellant admits that this case holds that a...