Palmer Sav. Bank v. Insurance Co. of North America

• Citation: 166 Mass. 189,44 N.E. 211
• Parties: PALMER SAV. BANK v. INSURANCE CO. OF NORTH AMERICA.
• Decision Date: 23 May 1896
• Court: United States State Supreme Judicial Court of Massachusetts

166 Mass. 189

44 N.E. 211

PALMER SAV. BANK v. INSURANCE CO. OF NORTH AMERICA.

Supreme Judicial Court of Massachusetts, Hampden.

May 23, 1896

COUNSEL

Stephen S. Taft, for plaintiff.

Robinson & Robinson, for defendant.

OPINION

FIELD C.J.

This is an action on a policy of fire insurance issued on March 12 1890, by the defendant to James W. Calkins for $400, and made payable in case of loss to the plaintiff "mortgagee as its interest may appear." At the time when the policy was issued, James W. Calkins owned the real estate, and the barn on it, which was insured; and the plaintiff, the Palmer Savings Bank, held a mortgage on the property, given by James W. Calkins to the plaintiff to secure his note, payable on demand, for $200. Subsequently James W. Calkins made and delivered a deed of the premises to Inez B. Burleigh, who made and delivered a deed thereof to Lucia E. Calkins, the wife of James W. Calkins. The peculiarity of these deeds will be noticed hereafter. They were each subject to the mortgage which has been mentioned. Afterwards Lucia E. Calkins, for $400 received of the plaintiff, gave a note therefor, payable on demand, signed by herself and her husband and two other persons, and secured it by a power of sale mortgage on the property described in the deed to her as aforesaid, and on other property. In this mortgage her name alone appears in the granting clause, but in the proviso her husband's name appears, in the following manner: "And, for the consideration aforesaid I, James W. Calkins, husband of the said Lucia E. Calkins, do hereby release unto the said grantee and its successors and assigns all right of or to both curtesy and other rights, in the aforegranted premises and in the proceeds thereof, in case of sale hereunder, and agree to join in any deed of confirmation or any sale or foreclosure made or affected as aforesaid." The in testimonium clause is as follows: "In witness whereof, we, the said Lucia E. Calkins and James W. Calkins, have hereunto set our hands and seals this twenty-third day of May, in year of our Lord eighteen hundred and ninety-two;" and both signed and sealed the deed. At the time of the fire there was due on the first mortgage $200 and some interest, and on the second mortgage $400 and some interest, but after the fire the amount due on the second mortgage was somewhat reduced by partial payments. The amount due on both mortgages at the time of the trial was about $548, which is more than the amount of the insurance. The policy was a Massachusetts standard policy, under St.1887, c. 214, § 60, and it was not under seal. The loss was total, and was more than the amount of the insurance.

At the conclusion of the trial the defendant asked the court to rule as follows: "(1) The plaintiff has no right of recovery in its own name, and in the form of the plaintiff's action. (2) If the defendant is liable at all to the plaintiff, no greater amount can be found against it than the principal of the first note signed by James W. Calkins, and the interest thereon. (3) The plaintiff cannot recover of this defendant in this action any sum in excess of the amount due on the said first note of James W. Calkins." These rulings the court refused to give, and, trying the case without a jury, found for the plaintiff in the sum of $432,--being the whole amount of the insurance, with interest,--and the presiding justice reported the case to this court. The report concludes as follows: "If the plaintiff is not entitled to recover at all in this action, judgment shall be entered for the defendant. If the plaintiff is entitled to recover of the defendant only the amount of the note of James W. Calkins, and interest thereon, there shall be judgment for the sum of two hundred dollars, and the interest accrued thereon. If the plaintiff shall be entitled to recover the whole amount of said policy in this action, then the judgment of the superior court, as stated above, shall be affirmed."

The policy, being in the Massachusetts standard form, contained among others, the following provision: "If this policy shall be made payable to a mortgagee of the insured real estate, no act or default of any person other than such mortgagee or his agent, or those claiming under him, shall affect such mortgagee's right to recover in case of loss on such real estate." St.1887, c. 214, § 60. If the policy became void, as to James W. Calkins, by his conveyance of the premises, it still remained in force, for the benefit of the mortgagee, so far as its interest appears. City Five-Cents Sav. Bank v. Pennsylvania Fire Ins. Co., 122 Mass. 165; Harrington v. Insurance Co., 124 Mass. 126; Eliot Five-Cents Sav. Bank v. Commercial Union Assur. Co., 142 Mass. 142, 7 N.E. 550. The practice in this commonwealth has been, in a case of this kind, for the mortgagee to sue in his own name. Cases cited supra; Barrett v. Insurance Co., 7 Cush. 175; Foote v. Insurance Co., 119 Mass. 259; Franklin Sav. Inst. v. Central Mut. Fire Ins. Co., Id. 240; Wheeler v. Insurance Co., 131 Mass. 1; Fogg v. Insurance Co., 10 Cush. 337; Hale v. Insurance Co., 6 Gray, 169; Loring v. Insurance Co., 8 Gray, 28; Macomber v. Insurance Co., 8 Cush. 133; Smith v. Insurance Co., 120 Mass. 90; Fitchburg Sav. Bank v. Amazon Ins. Co., 125 Mass. 431; Eliot Five-Cents Sav. Bank v. Commercial Union Assur. Co., 142 Mass. 142, 7 N.E. 552. But it is said that in none of the foregoing cases was the right of the plaintiff to sue denied, although in some of them an opinion was expressed that the mortgagee could sue in his own name. It has also been held that the mortgagor can sue in his own name, with the assent of the mortgagee. Jackson v. Insurance Co., 5 Gray, 52; Turner v. Insurance Co., 109 Mass. 568; Kyte v. Assurance Co., 144 Mass. 43, 10 N.E. 518. In Jackson v. Insurance Co. it was held that, if the assent of the mortgagee was given before suit brought, the plaintiff, who was the mortgagor, would be entitled to recover costs, otherwise not. It is argued that these decisions permitting a mortgagee to sue in his own name are inconsistent with the decisions in Mellen v. Whipple, 1 Gray, 317; Bank v. Rice, 107 Mass. 37, and other similar cases; with our decisions on Life Insurance policies, of which Wright v. Insurance Co., 164 Mass. 302, 41 N.E. 303, is an example; and with the decisions on benefit certificates, such as Rindge v. Society, 146 Mass. 286, 15 N.E. 628. It is the practice of the courts of the states of this country generally, although not universally, in such a case as the present, to permit the mortgagee to sue in his own name. In some of these states, it is true, a person for whose benefit a contract is made, although not a party to it, is permitted to sue upon it; in some states a joint action by the mortgagor and mortgagee is permitted, where the mortgage debt does not exhaust the insurance; in some a distinction is taken between a case where the loss is payable to a mortgagee without any limitation, and one where the loss is payable to a mortgagee according to his interest; and in some the mortgagor and mortgagee each can sue according to his interest. See Motley v. Insurance Co., 29 Me. 337. See Chamberlain v. Insurance Co., 55 N.H. 249; Meriden Sav. Bank v. Home Ins. Co., 50 Conn. 396; Winne v. Insurance Co., 91 N.Y. 185; Cone v. Insurance Co., 60 N.Y. 619; Martin v. Insurance Co., 38 N.J.Law, 140; Insurance Co. v. Maackens, Id. 564; Coates v. Insurance Co., 58 Md. 172; Tilley v. Insurance Co., 86 Va. 811, 11 S.E. 120; Bartlett v. Insurance Co., 77 Iowa, 86, 41 N.W. 579, Hammel v. Insurance Co., 50 Wis. 240, 6 N.W. 805; Williamson v. Insurance Co., 86 Wis. 393, 57 N.W. 46; Insurance Co. v. Coverdale, 48 Kan. 446; Graves v. Insurance Co., 46 Minn. 130, 48 N.W. 684; Maxcy v. Insurance Co., 54 Minn. 272, 55 N.W. 1130; Ermentrout v. Insurance Co. (Minn.) 62 N.W. 543; Travellers' Ins. Co. v. California Ins. Co., 1 N.D. 151, 45 N.W. 703; Insurance Cos. v. Felrath, 77 Ala. 194; Insurance Co. v. Davenport, 37 Mich. 609; Minnock v. Insurance Co., 90 Mich. 236, 51 N.W. 367; Mitchell v. Assurance Co., 15 Ont.App. 262. In mortgages in this commonwealth it is customary for the mortgagor to covenant that he will keep the mortgage property insured for a certain amount, for the benefit of the mortgagee, in such form and in such insurance companies as the mortgagee shall approve. Although this does not expressly appear in the report, and we have not been furnished with full copies of the mortgages, we assume that they contained the usual provisions on the subject. A mortgagor and a mortgagee have each an insurable interest in the property. Each can insure for his own benefit,--the mortgagor for the full value of the property, and the mortgagee for the full value of his interest in the property,--and neither can avail himself in any way of the money recovered from insurance by the other unless there is some contract making it so available. But a form of insurance like that in the case at bar has become common, whereby a part or the whole of the insurance on the mortgagor's property is made payable to the mortgagee, and the money paid by the insurance company to the mortgagee operates, in whole or in part, as payment of the mortgage debt, and the mortgagor, after the mortgage debt is paid, is entitled to the remainder of the money due...