Grange Mill Co. v. Western Assur. Co.

• Citation: 9 N.E. 274,118 Ill. 396
• Parties: GRANGE MILL CO. v. WESTERN ASSUR. CO. and others.
• Decision Date: 10 November 1886
• Court: Supreme Court of Illinois

118 Ill. 396

9 N.E. 274

GRANGE MILL CO.

v.WESTERN ASSUR. CO. and others.

Supreme Court of Illinois.

November 10, 1886.

Error to appellate court.

John M. Lansden, for plaintiff in error.

W. S. Day and Crawford & Bussey, for defendant in error.

SCOTT, C. J.

The original bill in this case was brought by the Grange Mill Company, in the circuit court of Union county, against certain insurance companies, and John T. Emison and Lee Musselman. It is alleged complainant sold its mill property to defendant Emison at a certain price, a part of which was paid in cash, and the remainder was to be secured to be paid by his promissory note, with interest. The negotiations for the sale of the property seem to have been conducted by a real-estate agent, and the contract agreed upon, whatever it may have been, was never fully complied with by Emison. It seems he refused to execute his note for the unpaid balance of the purchase money, and refused to accept the bond for a deed that was drawn up for delivery. Notwithstanding his refusal to execute the papers prepared, Emison did take immediate and exclusive possession of the mill property, which was surrendered to him by the company under the alleged contract, and perhaps commenced to operate it. Afterwards, Emison associated with himself one Lee Musselman, and thereafter carried on business under the name of John T. Emison & Co. The alleged contract of sale was made in October, 1880. Shortly after Emison & Co. began to operate the mill they procured insurance upon it for their own benefit from the defendant insurance companies, amounting, in the aggrate, to the sum of $5,000. In June. 1881, the mill property was totally destroyed by fire. No further sum had then been paid on the purchase price of the property. Suits had been commenced by Emison & Co. against the several insurance companies to recover for the losses sustained. Pending those suits this bill was filed, in which the insolvency of Emison & Co. was alleged, and by which complainant claimed the benefit of the insurance under an alleged contract made with Emison, at the time of the sale of the property to him, to have it insured for its benefit. To the bill the several insurance companies were made defendants with Emison and Musselman.

A summons was issued for the defendant companies on the seventh day of November, 1881, and an effort was made to obtain service. Other process was subsequently issued, and such service was had that the defendant companies came into court and defended. An amended bill was filed, in which it was alleged that Emison & Co. recovered judgments in the actions on the policies against the several companies, which judgments, while appeals were pending in the appellate court, were in some way settled by the payment to Emison & Co. of the sum of $2,500, each company paying a sum in proportion to the amount of its risk. On the answers filed by the several defendant companies, and the replication thereto, and upon the evidence, both documentary and oral, the cause was heard in the circuit court, and the bill was dismissed for want of equity. That decree was afterwards affirmed in the appellate court of the Fourth district, and complainant brings the case to this court.

The bill is framed on the theory Emison agreed, at the time of the sale, and as a part of the contract, that he would have the property insured for the benefit of complainant. The evidence contained in this record has been subjected to a careful consideration, and it is thought it fully sustains the position taken that Emison did agree to have the mill property insured for the benefit of his vendor. It is so expressed in a written memorandum made at the time, and that memorandum was given in evidence by plaintiffs in the trial of the case of Emison & Co. v. Traders' Ins. Co. That was evidence tending to show there was a contract that insurance should be procured. But, aside from the written memorandum, the agreement to procure insurance upon the property for the benefit of complainant is fully established by other testimony. Undoubtedly the law is that, as between the vendee and the vendor, the insurance money, in case of the destruction of the property, represents the property itself, and, in equity, the insurancemoney should be appropriated to the vendor, in case of the insolvency of the vendee.

The principle is of frequent application, where a mortgagor or vendee agrees to insure for the benefit of the mortgagee or vendor, in case of loss, in equity such party is entitled to the insurance money to the extent, at leas, of his interest in the property which was the subject of insurance. After notice to the insurance company having the risk, such company cannot pay the loss to the...