Phenix Ins. Co. of Brooklyn v. Omaha Loan & Trust Co.

• Decision Date: 19 September 1894
• Parties: PHENIX INS. CO. OF BROOKLYN v. OMAHA LOAN & TRUST CO.
• Court: Nebraska Supreme Court

41 Neb. 834

60 N.W. 133

PHENIX INS. CO. OF BROOKLYN

v.OMAHA LOAN & TRUST CO.

Supreme Court of Nebraska.

Sept. 19, 1894.

Syllabus by the Court.

1. One Crew borrowed of a trust company $4,000, agreeing to repay it in five years, with semiannual interest. To secure the payment of this debt, Crew executed to the trust company a mortgage upon his real estate. This mortgage provided that Crew should insure the mortgaged property against loss by fire for five years, for the benefit of the trust company. About the date of the mortgage an insurance company issued to Crew a policy insuring the property against loss by fire for five years. This policy contained the following provisions: (a) “If the property be sold or transferred in whole or in part without written permission in this policy, then, and in every such case, this policy is void.” (b) “When the property shall be sold or incumbered, or otherwise disposed of, written notice shall be given the company of such sale or incumbrance or disposal; otherwise, this insurance on said property shall immediately terminate.” Attached to this policy, and made part thereof, was a “mortgage slip,” as follows: “It is hereby agreed that this insurance, as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy. It is further agreed that the mortgagee shall notify said company of any change of ownership or increase of hazard which shall come to the knowledge of the said mortgagee, and that every increase of hazard not permitted by this policy to the mortgagor or owner shall be paid for by the mortgagee on reasonable demand, according to the established scale of rates, for the whole term of use of such increased hazard. It is also agreed that whenever the company shall pay the mortgagee any sum for loss under this policy, and shall claim that, as to the mortgagor or owner, no liability therefor existed, it shall at once be legally subrogated to all the rights of the mortgagee under all the securities held as collateral to the mortgage debt, to the extent of such payment, or, at its option, may pay to the mortgagee the whole principal due or to grow due on the mortgage, with interest, and shall thereupon receive a full assignment and transfer of the mortgage and all other securities held as collateral to the mortgage debt; but no such subrogation shall impair the right of the mortgagee to recover the full amount of its claim.” The policy, on its issuance, was delivered to the trust company, which retained the possession and title thereof. Crew sold and conveyed the mortgaged property without the written permission of the insurance company, and of which sale the latter had no notice of any kind until after the insured property was destroyed by fire. The trust company learned of the conveyance of the property soon after it occurred, but neglected to notify the insurance company thereof until after the fire. Prior to the destruction of the insured property by fire the trust company sold and assigned the mortgage debt, guarantying the collection and payment thereof, but did not assign the insurance policy, or part with its possession. The mortgage debt was unpaid and not due at the time of the destruction of the insured property. The trust company brought suit against the insurance company to recover the amount of the loss. While this action was pending the mortgage debt matured, and the trust company, in pursuance of its contract of guaranty, paid it off. Held: (1) That neither the sale and conveyance of the mortgaged property by Crew without the permission of the insurance company, nor his failure to give the insurance company notice thereof, voided the policy as to the trust company. (2) That the status of the trust company was not that of a mere assignee of the insurance policy issued to Crew, nor that of a person appointed to collect the loss for him; that the policy contained a contract between the insurance company and the trust company separate and independent from the contract between Crew and the insurance company; and that the rights of the trust company could not be made to depend upon Crew's observance of his agreements with the insurance company. (3) That the neglect of the trust company to notify the insurance company of the sale of the mortgaged property did not void the policy as to the trust company.

2. That as by the terms of the insurance policy the loss was made payable to the trust company, and as it owned and held possession of the policy, and had guarantied the payment of the mortgage debt, the suit was properly brought in its name, although the assignee of the mortgage debt was also a proper party plaintiff.

Error to district court, Douglas county; Wakeley, Judge.

Action by the Omaha Loan & Trust Company against the Phenix Insurance Company of Brooklyn, N. Y., on a fire insurance policy. There was a judgment for plaintiff, and defendant brings error. Affirmed.

Fawcett, Churchill & Sturdevant, for plaintiff in error.

Howard B. Smith, for defendant in error.

RAGAN, C.

The Omaha Loan & Trust Company, hereinafter called the “trust company,” sued the Phenix Insurance Company of Brooklyn, N. Y., hereinafter called the “insurance company,” in the district court of Douglas county, to recover the value of certain property destroyed by fire, and insured by the insurance company. The trust company had judgment, and the insurance company brings the case here for review. The material facts in the case are: In February, 1886, one Nathaniel S. Crew was the owner of a tract of land in Buffalo county, Neb., on which were situate a barn and some other buildings. In said month of February, Crew and his wife borrowed of the trust company $4,000, and, as an evidence thereof, executed and delivered to the trust company their coupon bond payable to the order of the trust company five years after February 1st, with interest payable semiannually, and secured the same by a first mortgage on their said real estate. By the terms of this mortgage, Crew and his wife agreed to insure, and keep insured for five years, the buildings on their real estate, for the benefit of the trust company. On the 3d day of March, 1886, the insurance company issued the policy sued on, insuring the buildings of Crew on his real estate against loss or damage by fire for a period of five years. The policy contained the following clauses: (a) “If the property be sold or transferred in whole or in part without written permission in this policy, then, and in every such case, this policy is void.” (b) “When the property shall be sold or incumbered, or otherwise disposed of, written notice shall be given the company of such sale or incumbrance or disposal; otherwise, this insurance on said property shall immediately terminate.” Attached to this policy, and made a part thereof, was also what is known and called among insurance men a “mortgage slip,” which contained the following: “Phenix Insurance Co. of Brooklyn, N. Y. Loss, if any, payable to Omaha Loan and Trust Company, of Omaha, Neb., mortgagee, or its assigns, as its interests may appear. It is hereby agreed that this insurance, as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy. It is further agreed that the mortgagee shall notify said company of any change of ownership or increase of hazard which shall come to the knowledge of the said mortgagee, and that every increase of hazard not permitted by this policy to the mortgagor or owner shall be paid for by the mortgagee on reasonable demand, according to the established scale of rates, for the whole term of use of such increased hazard. It is also agreed that whenever the company shall pay the mortgagee any sum for loss under this policy, and shall claim that as to the mortgagor or owner no liability therefor existed, it shall at once be legally subrogated to all the rights of the mortgagee under all the securities held as collateral to the mortgage debt, to the extent of such payment; or, at its option, may pay to the mortgagee the whole principal due or to grow due on the mortgage, with interest, and shall thereupon receive a full assignment and transfer of the mortgage and all other securities held as collateral to the mortgage debt; but no such subrogation shall impair the right of the mortgagee to recover the full amount of its claim. Date, March 3, 1886. John H. Roe, Agent.” The policy, with the mortgage slip attached, upon its issuance, was delivered to the trust company, and has ever since been owned and held by it. The bond and mortgage executed by Crew to the trust company was in April, 1886, by it sold and assigned to one Huey, the trust company guarantying the collection of the principal and the prompt payment of the coupons of said mortgage loan. On the 1st day of April, 1886, Crew and wife sold and conveyed their real estate to one Platter. For the purposes of this case, we take it as established by the evidence that no notice, written or otherwise, of this conveyance, was given to the insurance company, either by Crew or Platter or the trust company, though the latter knew thereof soon after it occurred, until after the property insured had been destroyed, which occurred on the 27th day of April, 1889. On the 12th day of October, 1889, the insurance company having refused to pay the loss, the trust company brought this suit; and on the 1st day of February, 1891, in pursuance of its contract of guaranty with Huey (the...