In re San Joaquin Valley Packing Co.

• Citation: 295 F. 311
• Decision Date: 21 January 1924
• Docket Number: 4078.
• Parties: In re SAN JOAQUIN VALLEY PACKING CO. DODD v. SAN JOAQUIN LUMBER CO. DODD et al. v. SAME.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

295 F. 311

In re SAN JOAQUIN VALLEY PACKING CO. DODD v. SAN JOAQUIN LUMBER CO. DODD et al. v. SAME.

No. 4078.

United States Court of Appeals, Ninth Circuit.

January 21, 1924

Rehearing Denied March 3, 1924.

Lafayette J. Smallpage and Wm. T. Hawkins, both of Stockton, Cal. (Louttit, Stewart & Louttit, of Stockton, Cal., of counsel) for appellant and petitioner.

Nutter Hancock & Rutherford, of Stockton, Cal., for respondent and appellee.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

GILBERT Circuit Judge.

The San Joaquin Valley Packing Company, constructed a building and placed certain machinery therein, and the respondent herein filed a mechanic's lien upon the property for lumber furnished in the construction of the building. The packing company was later adjudged a bankrupt. Its trustee in bankruptcy caused the building to be insured in the sum of $10,000, and the machinery therein to be insured in a like amount, policies payable to the trustee. The building and the machinery were totally destroyed by fire, and the trustee collected $19,000 on the policies. The respondent, as holder of a valid mechanic's lien on the building, claimed to be subrogated to the insurance money so received by the trustee. The referee disallowed the claim, but the court below held that the lien on the building followed the insurance money, and that the respondent was entitled to the full payment of its claim.

The trustee brings a petition to revise the judgment. No precedent is found for the precise problem here presented, but it is believed that certain settled principles of law lead directly and conclusively to its solution. We are led to inquire first what respective rights as to insurance had the owner of the building and the lien claimant before bankruptcy intervened. At that time each had an insurable interest in the property. The respondent could have insured to the full amount of his claim. The owner could have insured to the full amount of the value of the property. If, while such insurance policies were in existence, the building had been destroyed by fire, each could have recovered according to his interest, but the destruction of the property would have destroyed the mechanic's lien. Humboldt Lumber Mill Co. v. Crisp, 146 Cal. 686, 81 P. 30, 106 Am.St.Rep. 75, 2 Ann.Cas. 811; Pilstrand v. Greenamyre, 34 Cal.App. 799, 168 P. 1161. And where the owner of real estate insures his interest therein against loss by fire, the holder of a mechanic's lien on the property has no claim upon the proceeds of the insurance money, unless by contract the owner was obligated to insure for his benefit. Imperial Elevator Co. v. Bennett, 127 Minn. 256, 149 N.W. 372; Healey Ice Mach. Co. v. Green (C.C.) 181 F. 890. The same is true of the relation between mortgagor and mortgagee, landlord and tenant, lessor and lessee. 14 R.C.L. 1367; 26 C.J. 436, 438, 445; In re West Norfolk Lumber Co. (D.C.) 112 F. 759; Farmers' Loan, etc., Co. v. Pennsylvania Plate Glass Co., 186 U.S. 434, 22 Sup.Ct. 842, 46 L.Ed. 1234; In re Balsier (D.C.) 215 F. 134; Sisk v. Rapauano, 94 Conn. 294, 108 A. 858, 11 A.L.R. 1291; Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 547; Oldham v. Boston Ins. Co., 189 Ky. 844, 226 S.W. 106, 16 A.L.R. 305. The reason of the rule is that, as between the insurer and the insured, a policy of fire insurance is purely a matter of personal contract. It does not attach to the insured property, nor does it run with the title thereto. It is in itself the measure of the rights of all persons under it, and its provisions must govern in determining who are the beneficiaries. Said the court in Columbian Ins. Co. v. Lawrence, 10 Pet. 507, 9 L.Ed. 512:

'We know of no principle of law or of equity, by which a mortgagee has a right to claim the benefit of a policy underwritten for the mortgagor on the mortgaged property, in case of a loss by fire. * * * It is strictly a personal contract for the benefit of the mortgagor, to which the mortgagee has no more title than any other creditor.'

The respondent's lien on the building was not affected by the bankruptcy. Section 67d (Comp. St. Sec. 9651). The trustee's relation to the property was the same...