International Trust Co. v. Boardman
| Decision Date | 09 May 1889 |
| Parties | INTERNATIONAL TRUST CO. v. BOARDMAN. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
R.M. Morse, Jr., and W.M. Richardson, for plaintiff.
L.L Scaife and B.G. Davis, for defendant.
There are two questions in this case: (1) Whether the plaintiff must apply the insurance money upon its claim; (2) whether the plaintiff is entitled to enforce the agreement of the assignee.
1. It has been declared by this court that where a mortgagee, at his own expense, and without any agreement or understanding with the mortgagor, obtains insurance upon his interest as mortgagee, and collects the money from the insurer after a loss, he is not bound to account for it to the mortgagor, nor is the insurer entitled to be subrogated to the mortgagee's claim against the mortgagor. The insurance is a wholly collateral contract, which the law allows the mortgagee to make. White v. Brown, 2 Cush. 412; King v. Insurance Co., 7 Cush. 1, 4; Foster v. Insurance Co. 2 Gray, 216; Loomis v. Insurance Co., 6 Gray, 396, 401; Insurance Co. v. Boyden, 9 Allen, 123; Clark v. Wilson, 103 Mass. 219, 221; Haley v. Insurance Co., 120 Mass. 292, 296; Manufacturing Co. v. Insurance Co., 135 Mass. 503, 506. The defendant assumes that the insurer is not entitled to subrogation, and asks us to reconsider and overrule the doctrine that the mortgagee is not bound to account for the insurance money to the mortgagor; but we remain satisfied with the rule, and the reasons given for it in the cases above cited.
The defendant then seeks to distinguish this case from a case of a mortgagee, but we see no valid distinction. A mortgagee is a creditor with the security of a mortgage. The plaintiff was a judgment creditor with the security of an attachment followed by a levy of the execution begun, but not completed. As such creditor, the plaintiff obtained the insurance, and, after a loss by fire, collected the insurance money. The debtor was in no way privy to this transaction, and could not have been made chargeable with the premium, and stood no better than a mortgagor.
2. The present defendant, the new assignee, contends that the agreement of Mr. Boardman was unlawful, as promising to give to the plaintiff the benefit of property not attached. The consideration of the agreement was sufficient, it being the release by the plaintiff of its lien upon the real estate. The agreement did not have for its object the withdrawal of property from the general creditors, but the saving of property for them. It is conceded that the motives of Mr Boardman were good. The agreement, therefore, was not unlawful because of any improper motive; but, if unlawful, it was so because it was ultra vires. This argument, if carried out, must go to the length that an assignee has not the power to put at risk any property, however small, for the purpose of securing any advantage, however great. But this proposition could not be maintained in its full length and breadth. An assignee must be at liberty, within reasonable limits, to expend money for the purpose of benefiting the estate. The statutes require this by allowing him to prosecute doubtful claims, to avoid preferences and fraudulent conveyances, and to accept and hold under leases. Pub.St. c. 157, §§ 26, 46, 51, 96, 98. It must necessarily be within the power of an assignee to enter into some contracts for the benefit of the estate, although they may involve disbursements. Abbott v. Stearns, 139 Mass. 168. But, moreover, the statute expressly provides that "the assignee may redeem all mortgages, conditional contracts, pledges, and liens of or upon any goods or estate of the debtor, or sell the same subject to such mortgage, or other incumbrance." Pub.St. c. 157, § 46. The plaintiff's attachment and levy constituted a lien, and the statute is broad enough to have authorized the assignee to pay off the lien, or to sell the property subject to it. Of course,...
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