First Nat. Bank v. Commercial Union Assur. Co., Ltd.

• Decision Date: 02 January 1925
• Citation: 232 P. 899,40 Idaho 236
• Parties: FIRST NATIONAL BANK OF POCATELLO, IDAHO, a Banking Corporation, Respondent, v. COMMERCIAL UNION ASSURANCE CO., LTD., OF LONDON, ENGLAND, a Corporation; THE NORTH AMERICAN MORTGAGE BANK, a Corporation, Defendants; INTERMOUNTAIN ASSOCIATION OF CREDIT MEN, a Corporation; CORA F. SNYDER, Administratrix of the Estate of W. C. SNYDER, Deceased; and CORA F. SNYDER, Appellants
• Court: Idaho Supreme Court

232 P. 899

40 Idaho 236

FIRST NATIONAL BANK OF POCATELLO, IDAHO, a Banking Corporation, Respondent, v. COMMERCIAL UNION ASSURANCE CO., LTD., OF LONDON, ENGLAND, a Corporation; THE NORTH AMERICAN MORTGAGE BANK, a Corporation, Defendants; INTERMOUNTAIN ASSOCIATION OF CREDIT MEN, a Corporation; CORA F. SNYDER, Administratrix of the Estate of W. C. SNYDER, Deceased; and CORA F. SNYDER, Appellants

Supreme Court of Idaho

January 2, 1925

MORTGAGE COVENANT TO INSURE - PROCEEDS OF INSURANCE POLICY TAKEN OUT BY MORTGAGOR IN OWN NAME-MORTGAGEE'S RIGHT TO PROCEEDS-EQUITABLE LIEN-PRESUMPTIONS IN FAVOR OF MORTGAGEE-ASSIGNEE FOR BENEFIT OF CREDITORS NOT AN INNOCENT HOLDER-MORTGAGEE'S RIGHT TO PURSUE PROCEEDS WITHOUT FORECLOSURE-PARTIAL ASSIGNMENT OF CHOSE IN ACTION-EQUITY-PRESENTMENT OF CLAIM FOR PROCEEDS TO ADMINISTRATRIX-NOTARY'S CERTIFICATE OF ACKNOWLEDGMENT-EVIDENCE REQUIRED TO OVERCOME.

1. Where a mortgage covenant expressly provided that the mortgagors should "keep the property fully insured for the benefit of the mortgagee, as its interest shall appear," and the mortgagors had at such time already procured certain insurance thereon in the name of one of them in a less sum than the mortgagee's interest, the mortgagee, after loss of the property, had an equitable lien upon the proceeds of such policy as against the mortgagors and their assignee for the benefit of creditors after the fire, the assignee not being an innocent holder for value and the law presuming that such policy was intended for the mortgagee's benefit.

2. Where in such case the mortgagee joined the insurance company, the mortgagors and the assignee in an action to establish such equitable lien, such action was not in conflict with C. S., sec. 6949, providing but one action for the recovery of a mortgage debt; it was unnecessary for the mortgagee to present his claim to the administratrix before suit.

3. Where in such case the policy provided for insurance upon the mortgaged building and the stock of goods therein situate equity will recognize a partial assignment of such insurance and enforce the same in favor of the mortgagee.

4. Where a married woman admits the signing of a real estate mortgage but denies an acknowledgment thereof, such instrument will not be set aside upon her own uncorroborated testimony, and the evidence as a whole must be clear and convincing to avoid the acknowledgment.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. O. R. Baum, Judge.

Action to enforce equitable lien on proceeds of fire insurance policy. Judgment for plaintiff. Affirmed.

Affirmed.

B. W Davis, for Appellants.

A covenant to insure is not a covenant running with the land and not notice to subsequent purchasers or assignees. (1 Jones on Mortgages, sec. 400, p. 551, and cases cited; Dunlop v. Avery, 89 N.Y. 592; Cummings v. Cheshire Mutual Fire Ins. Co., 55 N.H. 457; Chipman v. Carroll, 53 Kan. 163, 35 P. 1109, 25 L. R. A. 305, and notes; Farmers' Loan & Trust Co. v. Penn Plate Glass Co., 186 U.S. 434, 22 S.Ct. 842, 46 L.Ed. 1234.)

The complaint did not state a cause of action, the contract set up in the complaint not being sufficient to permit the mortgagee to claim an equitable lien upon the proceeds of the policy, the covenant set up in the mortgage not showing what particular building should be insured nor the amount of insurance nor that any particular policy should be for the benefit of the mortgagee. (Stearns v. Quincy Mut. Life Ins. Co., 124 Mass. 61, 26 Am. Rep. 647; Cornell v. Savage, 49 A.D. 429, 63 N.Y.S. 540; Franklin v. Browning, 117 F. 226, 54 C. C. A. 258.)

An equitable lien can only be established where the intention is clear to charge some particular fund; equity only enforces the lien after the intention is clearly established. (Western States Finance Co. v. Ruff, 108 Ore. 442, 215 P. 501, 216 P. 1020; Carmichael v. Arms, 51 Ind.App. 689, 100 N.E. 302; Griel Bros. v. City of Montgomery, 182 Ala. 291, Ann. Cas. 1915D, 738, 62 So. 692; Pettibone v. Thomson, 72 Misc. 486, 130 N.Y.S. 284; 3 Pomeroy's Eq. Jur., 2d ed., secs. 1234, 1235; McClintock v. Laing, 22 Mich. 212; People's Elec. Ry. Co. v. McKeen Motor Co., 214 F. 73, 130 C. C. A. 513; Capen v. Garrison, 193 Mo. 335, 92 S.W. 368, 5 L. R. A., N. S., 838; Patterson v. Citizens Bank of Lubbock (Tex. Civ.), 236 S.W. 130; Lindberg v. Humphrey, 289 F. 901; Milam v. Milam, 138 Tenn. 686, 200 S.W. 826; Hibernia Banking Assn. v. Davis, 295 Ill. 537, 129 N.E. 540; Gove v. Morton Trust Co., 96 A.D. 177, 89 N.Y.S. 247; Westinghouse Elec. & Mfg. Co. v. Brooklyn Rapid Transit Co., 263 F. 532; McCaslin v. Advance Mfg. Co., 155 Ind. 298, 58 N.E. 67.)

The question is one of intention and depends upon the particular facts in each case. (1 Jones on Mortgages, sec. 400, and cases cited; Wheeler v. Insurance Co., 101 U.S. 439, 25 L.Ed. 1055.)

There can be but one action for the recovery of a debt secured by any mortgage. (C. S., sec. 6949; Dighton v. First Exchange Nat. Bank, 33 Idaho 273, 192 P. 832.)

The community real estate cannot be encumbered unless the instrument encumbering the same is signed and acknowledged by the wife. (C. S., sec. 4666; Myers v. Eby, 33 Idaho 266, 12 A. L. R. 535, 193 P. 77; Knudsen v. Lythman, 33 Idaho 794, 200 P. 130; McCaskill v. McKinnon, 121 N.C. 214, 28 S.E. 343.)

A void contract cannot give rise to a valid lien. (Barker Piano Co. v. Commercial Security Co., 93 Conn. 129, 105 A. 328.)

Where the defendant denies the allegations of the complaint and offers proof of the intention and plaintiff fails to offer proof to the contrary no lien can be established. (Starks Co. v. Bigler, 175 Mich. 468, 141 N.W. 570.)

Budge & Merrill, for Respondent.

Where the mortgagors have agreed in the mortgage to keep the buildings on the premises fully insured against loss by fire, with loss, if any, payable to the mortgagee, as his interest may appear, equity will presume that any insurance procured by the mortgagor was for the benefit of the mortgagee and the mortgagee will have an equitable lien on the proceeds arising therefrom, although the policy may run to the mortgagor alone. (Miller v. Aldrich, 31 Mich. 408; Jones on Mortgages, 3d ed., 402, 403; Hyde v. Hartford Fire Ins. Co., 70 Neb. 503, 113 Am. St. 796, 97 N.W. 629; Wheeler v. Factors & Traders Ins. Co., 101 U.S. 439, 25 L.Ed. 1055; Chipman v. Carroll, 53 Kan. 163, 35 P. 1109, 25 L. R. A. 305; Branch v. Milford Savings Bank, 5 Kan. App. 246, 47 P. 555; Giddings v. Seevers, 24 Md. 363; Wilson v. Hakes, 36 Ill.App. 539; Ames v. Richardson (Western Mfrs. M. Ins. Co., 29 Minn. 330, 13 N.W. 137.)

An assignee for benefit of creditors cannot be an innocent purchaser. (Ross v. Hodges, 108 Ark. 270, 157 S.W. 391; Muller v. Kling, 209 N.Y. 239, 103 N.E. 138; Smith v. Equitable Trust Co., 215 Pa. 418, 64 A. 594; Beard v. Heardon, 84 Okla. 142, 203 P. 226.)

An equitable claim or a demand for equitable relief does not constitute a claim which must be presented to the administrator before bringing suit. (Toulouse v. Burkett, 2 Idaho 170, 10 P. 26.)

Where a certificate of acknowledgment is valid on its face and is attacked on the ground that it is false, the validity of the certificate will be sustained unless the proof of the falsity is clear and convincing and established beyond a reasonable doubt. (Gray v. Law, 6 Idaho 559, 96 Am. St. 280, 57 P. 435; Northwestern & Pacific Hypotheek Bank v. Rauch, 5 Idaho 752, 51 P. 764; Lickmon v. Harding, 65 Ill. 505; Russell v. Baptist Theological Union, 73 Ill. 337; First National Bank of Hailey v. Glenn, 10 Idaho 224, 109 Am. St. 204, 77 P. 623.)

T. BAILEY LEE, District Judge. McCarthy, C. J., and Wm. E. Lee, J., concur. Budge, J., William A. Lee, J., did not sit at the hearing nor participate in the decision.

OPINION

T. BAILEY LEE, District Judge.

--On March 30, 1921, Cora F. Snyder and her then husband, W. C. Snyder, executed and delivered to the First National Bank of Pocatello their mortgage on certain real property situate in Power county. Incorporated in such mortgage was the express provision, "And said parties of the first part hereby agree to keep the buildings on said premises fully insured against loss by fire in some reliable insurance company, with loss, if any, payable to the party of the second part as mortgagee, as its interest may appear."

At the time of the execution and delivery of such mortgage, the mortgagor, W. C. Snyder, held a policy issued him on Nov. 20, 1920, by the defendant, Commercial Union Assurance Company, in the sum of $ 1,250, of which $ 500 was for insurance on a store building on said premises, and the remainder covered the stock of goods. Thereafter the store building and contents were destroyed by fire. Immediately after the fire defendant and appellant, Intermountain Association of Credit Men, secured from mortgagor, W. C. Snyder, an assignment of the aforesaid policy for the benefit of the latter's creditors. Snyder later died and his wife, the defendant and appellant, Cora F. Snyder, was appointed his administratrix.

Before payment of the insurance money, respondent instituted this action claiming an equitable lien upon the money to the extent of $ 500, the amount on the store building, and praying that all the defendants save the insurance company be adjudged to have no right or interest in or to the fund involved, and that the insurance company be directed to pay the same to respondent to be applied upon the mortgage debt. The insurance company acknowledged its liability and paid the $ 500 into court. Defendant North American Mortgage Bank defaulted. The other defendants demurred generally, and after the demurrers had been overruled answered denying the material allegations of the complaint, and setting up...