Scottish Union & Nat. Ins. Co. v. Field

• Decision Date: 08 September 1902
• Citation: 18 Colo.App. 68,70 P. 149
• Parties: SCOTTISH UNION & NATIONAL INS. CO. v. FIELD.
• Court: Colorado Court of Appeals

70 P. 149

18 Colo.App. 68

SCOTTISH UNION & NATIONAL INS. CO. v. FIELD.

Court of Appeals of Colorado

September 8, 1902

Error to district court, Garfield county.

Action on a fire policy by Kirk H. Field, trustee, against the Scottish Union & National Insurance Company. From a judgment for plaintiff, defendant brings error. Affirmed.

S.A. Osborn (Van Ness & Redman, of counsel) for plaintiff in error.

Blackmer & McAllister, for defendant in error.

GUNTER J.

One Hubbard owned improved real estate; gave a trust deed thereon to secure an indebtedness, $1,150; took a policy on the improvements, a building, and assigned it as collateral for above debt. The policy insured Hubbard in the sum of $700 against loss of the building by fire and provided: "This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value. *** Said ascertainment or estimate shall be made by the insured and this company. ***" Also contained the union or standard mortgage clause, the pertinent part of which is: "It is agreed that any loss or damage that may occur under this policy shall be payable to Kirk H. Field, trustee, *** as interest may appear, and that this insurance, as to the interest of said trustee shall not be invalidated by any act or neglect of the grantors in the *** trust deed." The building was destroyed by fire, and the trustee sued to recover the amount of the loss, $700. The answer set up that after the loss said Hubbard and the defendant agreed upon the amount thereof as $375, and it made tender of such amount. To review alleged error in sustaining a demurrer to such defense, is this proceeding.

Was the trustee bound by the act of the owner, Hubbard, in so fixing the amount of the loss? That he was not, the authorities are agreed. In Hastings v. Insurance Co., 73 N.Y. 141 plaintiffs, as collateral to a debt secured by mortgage, held an insurance policy indorsed payable to them in case of loss and further indorsed, "It is hereby specially agreed that this insurance, as to the interest of the mortgagees only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the property insured. ***" The policy also contained this provision: "In case of any other insurance upon the property hereby insured, whether made prior or subsequent to the date of this policy, the assured shall be entitled to recover of this company no greater proportion of the loss sustained than the sum hereby insured bears to the whole amount insured thereon. ***" Prior to the issuance of the policy held by plaintiffs, the owner, unknown to plaintiffs, had taken out other insurance on the property covered by the mortgage. Loss occurred, and plaintiffs sued on the policy held by them for the full amount provided therein. Defendant company set up the other insurance, claiming that the amount of loss should be prorated with the other company carrying insurance, and that a recovery against it should be abated accordingly. Plaintiffs contended that under the union mortgage clause they were unaffected by the act of the mortgagor in taking out other insurance, and that the contribution clause was therefore not applicable to them. Their contention prevailed, the court saying, inter alia: "The legal effect of the mortgage clause was that the defendant agreed that in case of loss it would pay the money directly to the mortgagees, and they were thus recognized as a distinct party in interest. It created a new contract from that time with the mortgagees, the terms of which most clearly indicate that it had no relation to the application of the condition referred to. The insurance had been to the owner, and the additional provisions which were...