Hanover Fire Insurance Co. v. Bohn
| Decision Date | 02 June 1896 |
| Docket Number | 6687 |
| Citation | 67 N.W. 774,48 Neb. 743 |
| Parties | HANOVER FIRE INSURANCE COMPANY ET AL. v. WILLIAM G. BOHN ET AL |
| Court | Nebraska Supreme Court |
ERROR from the district court of Douglas county. Tried below before KEYSOR, J.
AFFIRMED.
Thomas D. Crane, for plaintiffs in error.
B. G Burbank, Charles Offutt, and James B. Meikle, contra.
September 1, 1888, William G. and Conrad Bohn were the owners in fee-simple of a lot in the city of Omaha on which was situated a three-story building. On that date they were indebted to the National Life Insurance Company of Montpelier, Vermont, hereinafter called the "Life Insurance Company," in the sum of $ 25,000, and to secure said indebtedness they executed to said Life Insurance Company a mortgage upon said real estate. The mortgage required the said Bohns to keep said property insured during the existence of said mortgage against loss or damage by fire for the benefit of said Life Insurance Company or its assignee. On the said 1st day of September, 1888, the Hanover Fire Insurance Company and another, hereinafter called the "Fire Insurance Companies," issued and delivered their joint fire insurance policy to the Bohns insuring said property in the sum of $ 5,000 against loss or damage by fire for one year, or until September 1, 1889. This policy had attached thereto a "mortgage clause" making the loss, if any, payable to the Life Insurance Company or its assignee. At the date of the issuance of this policy the legal title to said real estate was unincumbered except by the mortgage held by the Life Insurance Company. On the 1st day of September, 1889, the policy issued by the Fire Insurance Companies expired and was by them renewed for another year. The renewal expired on September 1, 1890, and was by the Fire Insurance Companies renewed for still another year, or until September 1, 1891. On the 12th day of March, 1891, the property was wholly destroyed by fire. In the district court of Douglas county the Life Insurance Company and the Bohns sued the Fire Insurance Companies to recover the amount of loss and damage to said insured property. At the date of the trial of the action there remained due to the Life Insurance Company from the Bohns on the latter's mortgage debt about $ 20,000. The Life Insurance Company and the Bohns had a verdict and judgment and the Fire Insurance Companies have brought the case here for review.
1. The alleged errors relied on for a reversal of this judgment may all be considered under the proposition whether under the proved and admitted facts the judgment is contrary to the law of the case. Prior to the date of the issuance of the policy in suit the Bohns sold and conveyed the real estate on which was situate the insured building subject to the mortgage held by the Life Insurance Company. The policy provided: "If the interest of the assured in the property be untruly stated therein, or if the interest of the assured be other than the entire unconditional and sole ownership of the property, or if the property be incumbered by any other lien, mortgage or otherwise, or if the subject of insurance be a building on ground not owned by the assured in fee-simple, then and in every such case this policy shall be void." It is now insisted by the Fire Insurance Companies that since the Bohns were not the owners of the real estate on which the insured building was situate on the date of the issuance of the policy in suit, said policy has never had any force or validity whatever, and that, therefore, the judgment in favor of the Life Insurance Company cannot stand. At the time of the issuance of the policy in suit the Fire Insurance Companies attached to said insurance policy an agreement in writing called a "mortgage clause." It was provided in this "mortgage clause" that the loss, if any, should be payable to the Life Insurance Company; and it was further provided: "It is agreed that this insurance as to the interest of the above named mortgagee or beneficiary, or its assignee, only shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured." But what was the effect of this "mortgage clause" attached to this policy? We think that by this "mortgage clause" the Fire Insurance Companies entered into a contract with the Life Insurance Company in and by which they insured its interest as mortgagee in the insured property against loss or damage by fire to the extent of $ 5,000 for one year from September 1, 1890. The right of the Life Insurance Company to enforce the policy does not depend upon whether the Bohns have kept their engagements with the Fire Insurance Companies. By express provision of the "mortgage clause" attached to the policy no act or omission of the mortgagors or owners was to invalidate the insurance so far as the Life Insurance Company or its assignee was concerned; and this was true whether said act or omission of the mortgagor or owner occurred at the date of the issuance of the policy prior or subsequent thereto. In other words, it comes to this: that by the provision of the "mortgage clause" the Fire Insurance Companies insured the interest of the Life Insurance Company in the mortgaged property. The contract of insurance was made with the Life Insurance Company or with the Bohns for their benefit, and it is immaterial whether the Life Insurance Company itself paid the premium or whether the Bohns paid it, and it was clearly the intention of all the parties that the validity of the insurance of the Life Insurance Company should not depend upon anything which the Bohns or their grantees had done or omitted to do or might do or omit to do.
A question almost identical with the one under consideration was before this court in Phenix Ins. Co. of Brooklyn v. Omaha Loan & Trust Co., 41 Neb. 834, 60 N.W. 133. The policy in that case provided that if the property should be sold or transferred without the written permission of the fire insurance company indorsed on the policy, then that the policy should become void. There was attached to the policy a "mortgage clause" like the one in the case at bar. Before the loss occurred the mortgagor sold and transferred the property, the consent of the fire insurance company thereto not having been obtained. The insured property was destroyed by fire, and the mortgagee sued the fire insurance company for the amount of the loss. It was insisted by the fire insurance company that as the mortgagor had sold and conveyed the insured property prior to the loss, that at the date of the loss the policy was not in force; but the court held that the sale and conveyance of the mortgaged property by the mortgagor without the consent of the insurance company did not avoid the policy as against the mortgagee. We have re-examined that case and the authorities therein cited, and are satisfied that the decision is correct, both upon principle and authority, and we accordingly reaffirm it. Sustaining the doctrine announced in that case, see Ellis v. Council Bluffs Ins. Co., 64 Iowa 507, 20 N.W. 782; Ellis v. Ins. Co. of North America, 32 F. 646; National Bank of D. O. Mills & Co. v. Union Ins. Co. of San Francisco, 88 Cal. 497, 26 P. 509.
The provision in the policy, that it should be void if the subject of the insurance was a building on ground not owned by the assured in fee-simple, was not one that was binding or intended to be binding on the Life Insurance Company, mortgagee. The Fire Insurance Companies must have known when they issued the policy in suit with the mortgage clause attached thereto that the Life Insurance Company did not own the fee-simple title of the real estate on which the insured building was situate. The Life Insurance Company was not attempting to insure a fee-simple interest in the mortgaged property, nor did the Fire Insurance Companies understand that the former was attempting to insure anything further than the interest it had in the property by virtue of its mortgage. All the authorities agree that a mortgagee of real estate has an insurable interest therein which he may insure on his own account, and when he effects such insurance he is insuring not the real estate, but insuring his interest or lien therein. The terms "interest" and "title" are not synonymous terms in insurance policies, and the provisions in the policy under consideration, that it should be void if the interest of the assured should be other than the entire unconditional and sole ownership of the property, meant and means, not that the Life Insurance Company should be the owner of the legal title to the real estate on which the insured building was situate, but that the interest which it insured, namely, its mortgage lien upon the property, should be and was an unconditional interest belonging to it, not a contingent or speculative one.
2. After September 1, 1888, and before the issuance of the policy in suit, without the knowledge or consent of the Fire Insurance Companies, the Bohns placed two...
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