Farnsworth v. Riverton Wyoming Refining Co.

• Decision Date: 28 September 1926
• Docket Number: 1252
• Parties: FARNSWORTH v. RIVERTON WYOMING REFINING CO. [*]
• Court: Wyoming Supreme Court

249 P. 555

35 Wyo. 334

FARNSWORTH v. RIVERTON WYOMING REFINING CO. ^[*]

No. 1252

Supreme Court of Wyoming

September 28, 1926

APPEAL from District Court, Fremont County, ROBERT R. ROSE, Judge.

Action by H. F. Farnsworth against the Riverton Wyoming Refining Company and G. Jos. La Jeunesse. Judgment in favor of the plaintiff as against the Refining Company, but against the plaintiff as against G. Jos. La Jeunesse, and plaintiff appeals.

Affirmed.

O. H Gibson, for appellant.

A mortgagee or grantee, in a deed of trust, has an insurable interest in the mortgaged property separate from the mortgagor; 26 C. J. 29. It may be expressed in one policy; 26 C. J. 30. A mortgagee clause has the same effect as if the mortgage ran to the mortgagee direct; Eddy v. London Assurance Corp., 143 N.Y. 311; Smith v. Ins Co., 26 C. J. 260; Megown v. Ins. Co., (Minn.) 91 A. S. R. 370; Ins. Co. v. Alvord, 61 F. 754. The mortgagee's rights are the same as the insured's; 26 C. J. 439; Ins. Co. v. Walker Co., 24 Wyo. 59. Mortgagee is liable for the premium if mortgagor defaults; Ins. Co. v. Upton, (N. D.) 50 N.W. 702; Trust Co. v. Thomas, (Kan.) 53 P. 472; 1 Cooley's Briefs on Ins., 374. Mortgagor is agent of mortgagee for purpose of receiving and accepting the policy; Union Savings v. Ins Co., 196 Mass. 230. Notice of acceptance is unnecessary; 28 C. J. 903-906.

Henry S. Sherman, A. H. Maxwell and William B. Neeley, for respondents.

La Jeunesse is not liable for the insurance premium; Ins. Co. v. Upton, 50 N.W. 702, is not in point, nor is the Kansas case of Trust Co. v. Thomas, 53 P. 472; ambiguities in a policy are to be construed favorably to insured; Co. v. Telephone Co., 152 F. 963; Royal Ins. Co. v. Lumber Co., 24 Wyo. 59, and cases cited. A mortgage clause is merely a condition; Shipley v. Institute, 58 A. 200; Brewer v. Rust, 95 P. 233; Rich v. Atwater, 16 Conn. 409; Hastings v. Westchester Ins. Co., 75 N.Y. 141; Home Ins. Co. v. Trust Co., (R. I.) 100 A. 1010; Ormsby v. Ins. Co., (S. D.) 58 N.W. 300. In order to impose liability on the mortgagee, we must look to the policy; it states that the mortgagee's interest shall not be invalidated by the mortgagor's neglect, provided that the mortgagee shall, on demand, pay the premium; this merely creates a condition, but not an original liability.

POTTER, Chief Justice. BLUME and KIMBALL, JJ., concur.

OPINION

POTTER, Chief Justice.

This cause is here on direct appeal from a judgment of the district court in Fremont County disposing of an action instituted by H. F. Farnsworth as plaintiff against the Riverton Wyoming Refining Company, a Corporation, and G. Jos LaJeunesse, Trustee, as defendants, in favor of the plaintiff as against the Refining Company, but against the plaintiff as against the other defendant; and the appeal is by the plaintiff, who complains of that part of the judgment denying relief as against the defendant LaJeunesse.

The nature of the action is described generally in appellant's brief as an action by an insurance agent against a mortgagor and mortgagee to recover premiums upon insurance upon the mortgaged property; and it is stated also that the appeal is by the agent from a judgment in favor of the mortgagee. In respondent's brief the action is said to have been instituted by the plaintiff, an insurance agent, to recover from the respondents, the Refining Company, mortgagor, and LaJeunesse, mortgagee, the unpaid premiums on five policies of insurance procured by the plaintiff (appellant) on the property of the Refining Company; that judgment was entered against the Refining Company by default, but in favor of LaJeunesse, the mortgagee, upon a trial.

There seems to be no dispute as to the facts in the case. It appears that the Refining Company made and delivered to LaJeunesse, "Trustee," a mortgage on its refining property situated near Riverton, in this state, to secure a loan of $ 40,000. And it is conceded that, with the exception of describing the mortgagee as "Trustee," the instrument was in statutory form and contained the following provision, which is authorized by Section 4623, Comp. Stat. 1920, providing a short form for real estate mortgages:

"The mortgagor agrees to pay all taxes and assessments on said premises and to keep the buildings thereon insured in a sum not less than $ 50,000 to be carried during the life of this mortgage in favor of and payable to the mortgagee; and in case the mortgagor shall fail to pay such taxes and assessments, and to keep said premises insured as aforesaid, the mortgagee may insure said buildings and pay said taxes and assessments, and all sums so paid shall be added to and considered as a part of the above indebtedness hereby secured, and shall draw interest at the same rate."

It is also conceded, as the proof also shows, that there was attached to each of the insurance policies a so-called "mortgage clause" reading as follows:

"Loss, if any, payable to G. Jos LaJeunesse, Trustee, as mortgagee (or Trustee) 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 notice 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. And PROVIDED also that upon failure of the insured to render Proof of Loss, such mortgagee (or trustee) shall, as if named in this policy as the insured, but within sixty days after notice of such failure, render Proof of Loss, and shall be subject to the provisions of this policy as to appraisal and the times of payment and of bringing suit.

Failure upon the part of the mortgagee (or trustee) to comply with any of the foregoing obligations shall render the insurance under this policy null and void as to the interest of the mortgagee (or trustee).

This insurance may at any time be cancelled as to said mortgagee (or trustee) interest by giving the mortgagee (or trustee) a ten day's written notice of such cancellation.

In case of any other insurance upon the within described property, this company shall not be liable to said mortgagee (or trustee) under this policy for a greater proportion of any loss or damage of the within described property than the sum hereby insured bears to the whole amount of insurance on said property, payable to, held by, or consented to by said mortgagee (or trustee).

The payment to said mortgagee (or trustee) of any sum for loss or damage hereunder, if this company shall claim that as to the mortgagor or owner, no liability existed, it shall, to the extent of such payment, be subrogated to the mortgagee's (or trustee's) right of recovery and claim upon the collateral to the mortgage debt, but without impairing the mortgagee's (or trustee's) right to sue; or he may pay the mortgage debt and require an assignment thereof and of the mortgage."

The record contains no allegation or proof that the mortgagee aforesaid was a direct party to the transaction resulting in the issuance of the insurance policies in question, or that they were ever delivered to him or came into his possession, or that he in fact knew of the same prior to the cancellation thereof a short time before the expiration of each of the policies. But it appears from the evidence that the negotiations for the insurance were between the plaintiff, acting as agent for the several insurance companies, and the manager of the Refining Company; and also that the policies were delivered by the plaintiff as agent to the Refining Company; that the several policies were issued during the months of December, 1920, and January, 1921, and it is alleged in the petition that they were so issued and delivered pursuant to the special instance and request of the defendant corporation, and that "the said defendant" (presumably the refining company) agreed to pay plaintiff the full amount of the premiums, but that no part thereof were paid, and that on December 17, 1921 all of the policies were cancelled for nonpayment of premiums and that before such cancellation the mortgagee was given notice of the intention to cancel them.

It appears further that the plaintiff had accounted to the several insurance companies for the full amount of said unpaid premiums. And among the exhibits in the evidence are copies of letters sent to the defendant mortgagee, each referring to one of the policies so cancelled, and reading as follows, omitting the address, the amounts and the number of the policies and the name of the company:

"On account of the non-payment of the premium we elect to cancel our policy issued to the Riverton-Wyoming Refining Company covering the Buildings and Contents as per general form attached to said policy, and hereby give five days notice thereof, as provided by the terms of said policy. Take notice that on the 22nd day of December, 1921 at twelve o'clock noon, or if that is not five days from the receipt hereof, then at the termination of five days from its receipt, the...