Home Ins. Co. v. Union Trust Co.

• Decision Date: 13 June 1917
• Docket Number: No. 5063.,5063.
• Citation: 100 A. 1010,40 R.I. 367
• Parties: HOME INS. CO. v. UNION TRUST CO.
• Court: Rhode Island Supreme Court

100 A. 1010

40 R.I. 367

HOME INS. CO.

v. UNION TRUST CO.

No. 5063.

Supreme Court of Rhode Island.

June 13, 1917.

Case Certified from Superior Court, Providence and Bristol Counties.

Action by the Home Insurance Company against the Union Trust Company. Case certified to the Supreme Court on an agreed statement of facts pursuant to Gen. Laws 1909, c. 298, § 4. Decision for defendant for costs.

Mumford, Huddy & Emerson and Charles C. Mumford, all of Providence, for plaintiff. Gardner, Pirce & Thornley, of Providence (Erving T. Arnold, of Providence, of counsel), for defendant.

STEARNS, J. This is an action to recover certain premiums upon two policies of fire insurance issued by the plaintiff on hotel and other property of the Mathewson Company in Narragansett, R. I. The case was certified to this court on an agreed statement of facts, pursuant to the provisions of section 4, c. 298, Gen. Laws R. I. 1909.

The material facts are as follows:

May 1, 1905, the Mathewson Company made a deed of trust conveying certain real and personal property to the Manufacturers' Trust Company to secure $120,000 of bonds. Later the defendant, Union Trust Company, became trustee under said trust deed in place of the Manufacturers' Trust Company. The trust deed contains the following covenants of the Mathewson Company:

"And the company covenants and agrees with the trustee that insurance against loss by fire shall be kept and maintained on the buildings and personal property liable to destruction or damage by fire covered by this indenture in such insurance companies as the trustee shall approve, in a sum not less than one hundred and twenty thousand dollars ($120,000), and that the policies of such insurance shall be assigned and transferred or made payable in case of loss to the trustee as collateral security hereto."

The trust deed contains certain conditions upon which the trustee accepts the trusts, among others the following:

"Second. It shall be no part of the duty of the trustee to record this indenture as a mortgage of real or personal property nor shall it be any part of the duty of the trustee to effect insurance against fire or other damage to any portion of the property hereby mortgaged, or to renew any policies of fire or other insurance or to keep informed or advised as to the payment of taxes or assessments of or upon the mortgaged premises and property, or to require the payment of such taxes or assessments, but the company shall and will perform all the acts above mentioned necessary to fully protect the bonds described herein. The trustee may, however, in its discretion, at the expense of the company, do any or all of the matters or things in this paragraph set forth, or procure the same to be done."

"Fourth. The trustee shall be under no obligation or duty to perform any act hereunder, or to defend any suit in respect hereof unless first indemnified to its satisfaction."

On or about July 29, 1914, the plaintiff issued a policy of fire insurance for $11,000 to the Mathewson Company for the term of one year from August 1, 1914, making the same payable in case of loss to the Union Trust Company, trustee, as its interest might appear, and annexed to said policy a certain contract or rider which contained the standard mortgage clause, as follows:

"Loss or damage, if any, under this policy, shall be payable to Union Trust Company, of Providence, R. I., trustee mortgagee (or trustee), as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within-described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy: 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. Provided also that the mortgagee (or trustee) shall notify this company 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, it shall be noted thereon and the mortgagee (or trustee) shall, on demand, pay the premium for such increased hazard for the term of the use thereof; otherwise this policy shall be null and void."

The premium on this policy was $492.80, and the Mathewson Company on various dates between July 7, 1915, and August 28, 1915, paid on account thereof $146.66, and there was further credited upon and deducted from said premium by the plaintiff company $34.10, because of certain improvements made in the premises, by reason of which the rate was reduced. The balance due and sued for on this premium is $312.04. About the 29th day of July, 1915, the plaintiff issued another policy to said Mathewson Company for the term of one year from August 1, 1915, for the same sum, made payable in the same way with a similar rider, the premium for which was $458.70. The Mathewson Company did not pay any part of this premium, and in October or November, 1915, the plaintiff asked the Union Trust Company (to pay this premium and threatened to cancel the policy if said premium was not paid. The premium was not paid, and on or about November 30, 1915, in accordance with the, provisions of the policy, the plaintiff gave five days' notice of cancellation of said policy to the insured and ten days' notice to the defendant, the mortgagee. At the expiration of said notices the policy was canceled according to its terms, and the plaintiff credited upon the amount of said premium remaining unpaid the sum of $294.53, and the balance of said premium ($164.17), which is the pro rata premium for the period during which said policy was in force, remains unpaid. Formal demand was made on or about December 24, 1915 upon the Union Trust Company for the payment of these balances, and that company refused to pay said balances, and the parties now ask this court to determine whether the defendant is liable to the plaintiff for either of the sums above mentioned.

The questions at issue are as follows:

I. Did the defendant, under the mortgagee clause attached to each policy as a rider, promise to pay the premium on demand in case the mortgagor should neglect to pay it?

II. If the defendant did so promise, did the delay on the part of the Insurance company in making demand for payment of the premiums release the defendant from liability under its promise?

When the plaintiff issued these policies, by reason of the attachment of the riders thereto, it entered into two separate and independent contracts of indemnity, relating to the same subject, but applying to different interests therein: (1) A...