McDowell v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 11 March 1913
• Citation: 207 N.Y. 482,101 N.E. 457
• Parties: McDOWELL v. ST. PAUL FIRE & MARINE INS. CO.
• Court: New York Court of Appeals Court of Appeals

207 N.Y. 482

101 N.E. 457

McDOWELL

v.ST. PAUL FIRE & MARINE INS. CO.

Court of Appeals of New York.

March 11, 1913.

Appeal from Supreme Court, Appellate Division, Third Department.

Action by John McDowell against the St. Paul Fire & Marine Insurance Company. From a judgment of the Appellate Division (145 App. Div. 724,130 N. Y. Supp. 294) reversing a judgment of the Trial Term in favor of defendant and granting a new trial, defendant appeals. Affirmed, and judgment absolute ordered.William D. Murray, of New York City, for appellant.

John R. De Vany, of Ellenville, For respondent.

MILLER, J.

This action was brought by the plaintiff, a mortgagee, upon a policy of fire insurance issued to the mortgagor, and the single question involved is whether the refusal of the mortgagor to make proof of loss at the request of the mortgagee prevents a recovery by the latter, who, upon such refusal and within the time limited by the policy, furnished such proof to the defendant. There was no mortgagee clause or rider attached to the policy, but only the following indorsement on its face, viz.: ‘Loss, if any, first payable to John McDowell, Mortgagee, as his interest may appear.’ The standard fire insurance policy of the state of New York contains in lines numbered 56 to 59, inclusive, this provision: ‘If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto.’

[1] The earlier provisions relate to matters affecting the risk either when incurred or while subsisting. The later provisions relate in the main to conditions to be complied with by the ‘insured’ after a loss has occurred. This court decided in Heilbrunn v. German Alliance Insurance Co., 202 N. Y. 610, 95 N. E. 823, that the said later provisions relating in terms to the ‘insured’ or mortgagor did not apply to a mortgagee, and adopted the opinion of Mr. Justice Scott on the point. Vide 140 App. Div. 557,125 N. Y. Supp. 374. There was a mortgagee clause attached to the policy in that case, but the reasoning of that opinion applies with equal force to a case like this, in which, by an indorsement on the policy, an interest is created by the act of the parties in favor of a mortgagee. It is undoubtedly the settled law of this state that such an indorsement, in the absence of a mortgagee clause, does not import an undertaking to pay the mortgagee, independent of that to pay the ‘insured’ or the mortgagor. Grosvenor v. Atlantic Fire Insurance Co., 17 N. Y. 391;Bidwell v. Northwestern Insurance Co., 19 N. Y. 179;Perry v. Lorillard Fire Insurance Co., 61 N. Y. 214, 19 Am. Rep. 272;Weed v. London & Lancashire Fire Ins. Co., 116 N. Y. 106, 22 N. E. 229. The rule is the same in the case of the standard form of policy prescribed by chapter 488 of the Laws of 1886. Moore v. Hanover Fire Insurance. Co., 141 N. Y. 219, 36 N. E. 191.

[2] But the words ‘first payable’ and ‘as his interest may appear’ import that the interest of the mortgagee is greater than that of a mere naked appointee. See Pitney v. Glens Falls Insurance Co., 65 N. Y. 6. The plaintiff has a vested legal interest in the contract, and a settlement made between the mortgagor and the defendant without his knowledge or consent would not have been a bar to a recovery by him. Hathaway v. Orient Insurance Co., 134 N. Y. 409, 32 N. E. 40,17 L. R. A. 514. He would be a necessary party to an action on the policy brought by the mortgagor. Lewis v. Guardian Fire & Life Assurance Co., 181 N. Y. 392, 74 N. E. 224,106 Am. St. Rep. 557 .

[3] An interest under the policy, therefore, existed in his favor as mortgagee with the consent of the company, and the case is plainly within the terms of the provision hereinbefore quoted . It is also within the reason of it, equally with the case in which there is a mortgagee clause.

[4] Upon the first reading of that provision it might appear to have been intended that the earlier provisions should not apply to the interest of a mortgagee except as, or ‘in the manner,’ provided by the rider to be attached; but a comparison of a single one of those provisions with the standard mortgagee clause discloses the error of that interpretation. Lines 31 to 35 provide that the company shall not be liable for loss caused by ‘invasion, insurrection, riot, civil war or commotion, or military or usurped power, or by order of any civil authority; or by theft,’ or, except as specified, by explosion or lightning . Plainly, the company does not insure against those risks either as to the owner or a mortgagee, but said provision is in no way referred to in the authorized riders. Obviously, therefore, the intention was that the earlier provisions should apply to the interest of a mortgagee ‘or other person,’ etc., except as otherwise provided by the ‘provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended’ to the policy. In the case at bar the only provision written upon, attached, or appended to the policy is the said indorsement. All of the earlier provisions, therefore, apply, and any act or breach of condition, while the risk was subsisting, which would have invalidated the insurance as to the owner, would equally have done so as to the...