Home Loan & Finance Co. v. Fireman's Fund Ins. Co. of San Francisco, Cal., 8 Div. 215.

• Decision Date: 28 June 1930
• Docket Number: 8 Div. 215.
• Court: Alabama Supreme Court
• Parties: HOME LOAN & FINANCE CO. v. FIREMAN'S FUND INS. CO. OF SAN FRANCISCO, CAL.

129 So. 470

221 Ala. 529

HOME LOAN & FINANCE CO. v. FIREMAN'S FUND INS. CO. OF SAN FRANCISCO, CAL.

8 Div. 215.

Supreme Court of Alabama

June 28, 1930

Appeal from Circuit Court, Madison County; Paul Speake, Judge.

Action on a policy of fire insurance by the Home Loan & Finance Company against the Fireman's Fund Insurance Company of San Francisco, Cal. From a judgment for defendant, plaintiff appeals. Transferred from Court of Appeals.

Affirmed.

Watts &amp White, of Huntsville, for appellant.

Cooper & Cooper, of Huntsville, for appellee.

BOULDIN J.

A policy of fire insurance naming the owner as the insured with loss payable clause to a mortgagee, as his interest shall appear, without more, constitutes the mortgagee an appointee entitled to payment only in case a liability accrues to the insured. No separate and distinct contract insuring the interest of the mortgagee, free from the conditions touching continued ownership in the insured exists.

A forfeiture by reason of complete change of ownership without the consent of the insurer, so that the policy is no longer in force in favor of the insured, defeats also the claim of his appointee. 26 C.J. p. 44; 2 Cooley's Briefs on Ins. (2d Ed.) 1267 and 1287; Hartford Fire Ins. Co. v. Liddell, 130 Ga. 8, 60 S.E. 104, 14 L. R. A. (N. S.) 168, 124 Am. St. Rep. 157; Southern States F. & C. v. Napier, 22 Ga.App. 361, 96 S.E. 15; Brecht v. Law Union & Crown Insurance Co. (C. C. A.) 160 F. 399, 18 L. R. A. (N. S.) 197, and note; Boston Cooperative Bank v. American Cent. Ins. Co. 201 Mass. 350, 87 N.E. 594, 23 L. R. A. (N. S.) 1147, and note; Roper v. National Fire Ins. Co. 161 N.C. 151, 76 S.E. 869.

A different rule applies where what is known as a "union mortgage clause" is made a part of the contract, either by stipulation or incorporated by statute. By this clause it is stipulated that the rights of the mortgagee shall not be affected by the subsequent act or neglect of the insured without the consent of the mortgagee. Tarrant Land Co. v. Palmetto Fire Ins. Co. (Ala. Sup.) 125 So. 807; 26 C.J. p. 274-5; National Union Fire Ins. Co. v. Short (C. C. A.) 32 F. (2d) 631, 64 A. L. R. 753.

The "Title and Ownership" clause of the present policy reads:

"Except as to any lien, mortgage, or other encumbrance specifically set forth and described on Page One of this policy, this entire policy shall be void, unless otherwise provided by agreement in writing added hereto, if the interest of the Assured in the subject of this insurance be or become other than unconditional and sole lawful ownership, or if the subject of this insurance has ever been stolen or unlawfully taken prior to the issuance of this policy and not returned to the lawful owner prior to the issuance of this policy, or in case of transfer or termination of the

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