Insurance Company of North America v. Martin

• Decision Date: 11 October 1898
• Docket Number: 18,655
• Citation: 51 N.E. 361,151 Ind. 209
• Parties: Insurance Company of North America v. Martin et al
• Court: Indiana Supreme Court

51 N.E. 361

151 Ind. 209

Insurance Company of North America v. Martin et al

No. 18,655

Supreme Court of Indiana

October 11, 1898

From the Whitley Circuit Court.

Reversed.

Finch & Finch and B. E. Gates, for appellant.

T. R Marshall, W. F. McNagny and P. H. Clugston, for appellees.

OPINION

Jordan, J.

Appellant commenced this action against appellees, Stephen A. and Nancy Martin, the Aetna Life Insurance Company, and William McMannen, by a complaint in four paragraphs, to foreclose a mortgage upon certain described real estate, situated in Whitley county, Indiana. Omitting some of the facts alleged in the complaint not essential to the determination of the controversy in this appeal, the following may be said to be a summary of the facts alleged in the first paragraph of the complaint: On August 26, 1885, appellee William McMannen, who was then the owner of the mortgaged premises, secured a loan of $ 1,000 from the Aetna Life Insurance Company, and on that day executed to it his note for that amount, which was to be due and payable on January 1, 1890. To this principal note there were attached coupon interest notes, due and payable as therein mentioned. McMannen and wife, to secure the payment of this loan, together with the interest thereon, when due, on the same date executed to the said Aetna Company, a mortgage, whereby they mortgaged the real estate described in the complaint. This mortgage was duly recorded as required by law, in the recorder's office of Whitley county, Indiana. McMannen, the mortgagor, to further secure the mortgagee, procured appellant to issue to him a policy of fire insurance, bearing date of September 1, 1885, whereby the dwelling house situated upon the mortgaged land was insured against loss by fire to the amount of $ 300. This policy, among others, contained the following provisions and stipulations: "If the insured shall, by voluntary transfer or conveyance, dispose of the property covered by this policy, or of an undivided interest therein, * * *, this policy may be assigned to the party or parties succeeding to the ownership of the property, provided the company shall first consent thereto by indorsement hereon; otherwise, this insurance shall cease from the date of such change of ownership."

Attached to this policy, and constituting a part thereof, is what is denominated a "mortgage clause," and the provisions and stipulations of this clause are as follows: "It is agreed that any loss or damage that may be ascertained and proved to be due under this policy to the assured, shall be held payable for the account of said assured to Aetna Life Insurance Co., mortgagee, subject to the following stipulations: (1) It is agreed that this insurance, as to the interests of the above-named mortgagee or beneficiary in the trust deed only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured, nor by the occupancy of the premises for purposes more hazardous than are permitted by the terms of this policy, nor by any change in title or possession, whether by voluntary transfer, legal process, or conveyance of the property. Provided, that the mortgagee or beneficiary shall notify this company of any change of ownership or increase of hazard, which shall come to the knowledge of such mortgagee or beneficiary, and shall have permission for such change of ownership, or such increased hazard duly indorsed on this policy; and provided, further, that every increase of hazard not permitted to the mortgagor or owner shall be paid by the mortgagee or beneficiary, on reasonable demand, and after demand made by the company upon, and refusal by the mortgagor or owner to pay according to the established scale of rates; the company reserving the right to cancel the policy at any time on the terms in said policy provided, on giving to the mortgagee ten days' notice of their intention so to do, and after said ten days this policy and this agreement shall be void. * * * (2) It is also agreed that whenever this company shall pay to the mortgagee or beneficiary any sum for loss on this policy, and shall claim that as to the mortgagor or owner, no liability therefor existed, it shall at once, and to the extent of such payment, be legally subrogated to all the rights of the party to whom such payment shall be made, under any and all securities held by such party on the property in question, for the payment of said debt. But such subrogation shall be in subordination to the claim of said party for the balance of the debt so secured, or this company, at its option may pay to the mortgagee or beneficiary the whole of the debt so secured, including such sums as said mortgagee or beneficiary may then have paid for taxes or fire insurance upon the property described in such mortgage or trust deed, pursuant to the terms thereof, with all the interest that may have accrued thereon to the date of such payment, and shall thereupon receive from the party to whom such payment is made an assignment and transfer of said debt, with all securities held by said party on the property in question, for payment thereof." On March 1, 1888, without the knowledge or consent of appellant, McMannen sold, and, together with his wife, conveyed the mortgaged real estate, upon which the house insured was situated, to the appellee Stephen A. Martin, and Martin went into possession of the property under this sale and conveyance. The fire insurance policy was not assigned nor in any manner transferred to Martin, and appellant was at no time requested to assign the policy to him.

After the sale and conveyance of the mortgaged premises, as aforesaid stated, on April 4, 1888, the house insured was totally destroyed by fire. Martin, who was at the time the owner of the premises under the sale and conveyance mentioned, gave no notice to appellant of the fire, and made no claim against it for the indemnity under the policy. After the fire the mortgagee, under the provisions of the mortgage clause of the policy, demanded payment for the loss of said house, and on July 20, 1888, appellant, under the provisions of the policy and the mortgage clause thereof, paid to the mortgagee, the Aetna Company, $ 300, and the latter, as required by the mortgage clause, upon the payment of said amount upon the loss, assigned by indorsement to appellant $ 300 of the amount of the said principal mortgage note, said indorsement being as follows: "September 21, 1888. Received on the within note, $ 283.15 principal, and also $ 16.85 interest, from the Insurance Company of North America, and that amount of this note is hereby assigned to said Insurance Co., for their use as their rights may appear under their contract of subrogation, and without recourse upon this company. [Signed] Aetna Life Insurance Co., by M. G. Bulkeley, President. [Corporate Seal.]"

The Aetna Company also assigned by writing, duly acknowledged and recorded in the recorder's office of said county, its interest in said mortgage security to the amount of $ 300. It is also averred that Stephen A. Martin, as a part of the purchase-money for said land, assumed the payment to the Aetna Company of the mortgage debt, and that he has paid all of said debt except the $ 300 assigned to plaintiff, and the interest thereon, and that he denies his liability as to said amount; and there is now due and unpaid of the said amount, principal and interest, the sum of $ 500. The prayer of this paragraph, among other things, is for a personal judgment against Stephen A. Martin for $ 500, and for a foreclosure of the mortgage in payment and satisfaction of the judgment. Copies of the policy, note, and mortgage, together with the indorsement and assignments mentioned, are filed as exhibits with the first and second paragraphs of the complaint. The second paragraph is substantially the same as the first, except that it does not demand a personal judgment, but prays only for a foreclosure of the mortgage. The third paragraph makes no mention of the insurance policy, nor the mortgage clause attached, but simply alleges the execution of the mortgage and note and assignment of a part thereof to appellant, the assumption of the payment of the debt by Martin, and asks for a judgment against McMannen, and prays for a foreclosure of the mortgage. Copies of the note and mortgage and the assignment mentioned are filed as exhibits with the third and fourth paragraphs of the complaint. The fourth paragraph is substantially like the third, except that it demands a personal judgment against Martin and also a foreclosure of the mortgage.

Appellees Martin and wife, having unsuccessfully demurred to each paragraph of the complaint, filed their joint answer thereto, consisting of eleven paragraphs; the first being a general denial. Appellant demurred to each of these paragraphs except the first, and this demurrer was sustained to the fourth, fifth, sixth, and tenth paragraphs and overruled to the others.

Appellee McMannen was defaulted, and the Aetna Life Insurance Company filed an answer in denial. The second paragraph of Martin and wife's answer, we are informed by the briefs of the respective counsel, interposed as a defense the six-years' statute of limitations; but this original second paragraph does not appear in the record, for the reason that after the demurrer thereto was overruled, and at a subsequent term of court, appellees, upon leave of court filed a second amended paragraph of answer, whereby they plead the six-years' statute of limitations. No demurrer appears to have been filed to this amended paragraph. The filing of this latter paragraph, of course, eliminated the original second paragraph of the answer from the record, and the clerk, in preparing the transcript, has...