Stuyvesant Ins. Co. v. Reid

• Decision Date: 10 May 1916
• Docket Number: 453.
• Citation: 88 S.E. 779,171 N.C. 513
• Parties: STUYVESANT INS. CO. v. REID ET AL.
• Court: North Carolina Supreme Court

88 S.E. 779

171 N.C. 513

STUYVESANT INS. CO. v. REID ET AL.

No. 453.

Supreme Court of North Carolina

May 10, 1916

Appeal from Superior Court, Gaston County; Justice, Judge.

Action by the Stuyvesant Insurance Company against J. P. Reid and others. Judgment for the defendants, and plaintiff appeals. Reversed.

Where mortgagee insured mortgaged property for his own benefit paying premiums himself and without agreement with mortgagor or stipulation or conditions imposing duty to protect mortgagor's interest, the insurance company, in case of loss, on payment of policy and satisfaction of debt, is entitled to be subrogated to rights of mortgagee.

Where defendants purchased a piano on the installment plan, the relation being that of mortgagor and mortgagee, under the terms of a general policy of insurance carried by the seller in which the defendant had no interest, held, that the defendant has no claim to the insurance money and no protection from the plaintiff's right of subrogation.

The relevant facts, as shown in the case, are as follows:

"On or about the 23d day of September, 1913, upon authority duly given him by the defendants, Joseph S. Wray executed a contract for the purchase of a Stieff piano, a copy of which contract is hereto attached, marked Exhibit A.

(2) That thereupon Charles M. Stieff, delivered to the defendants the piano described in said contract.

(3) That the defendants paid the installments called for by said contract, except the last three of $50 each.

(4) That on or about the 22d day of May, 1914, the said piano was destroyed by fire while in the possession of the defendants.

(5) That on or about the 1st day of April, 1914, Frederick P Stieff, trading as Charles M. Stieff, successor to Charles Stieff, and Frederick P. Stieff, trading as Charles M Stieff, entered into an insurance contract with the plaintiff, a copy of which is hereto attached, marked Exhibit B. This insurance policy was taken out by the firm of Charles M. Stieff, at his own expense, and without any agreement with the defendants, and the defendants paid no part of the premiums therefor.

(6) That after the said piano was destroyed by fire the plaintiff paid to Frederick P. Stieff, trading as Charles M. Stieff the sum of $150 due by reason of said insurance contract, and in consideration therefor the said Stieff duly executed the subrogation receipt and the assignment, copies of which are hereto attached, marked, respectively, Exhibit C and Exhibit D; That the contract referred to as Exhibit A was in form of a conditional sale, retaining title in Charles M. Stieff till payment of the purchase price, and closing with the following stipulations on the part of the purchaser: 'And I further agree to bear all loss in case of fire.' "

The insurance policy referred to, Exhibit B, was a contract insuring Frederick P. Stieff, trading as Charles M. Stieff, against all direct loss or damage by fire to an amount not exceeding $25,000, etc., on pianos and organs, etc., rented, leased, loaned, etc., or on installment or which they have for sale, while contained in any building, sheds, piers, wharves, etc., or in transportation, etc., and containing further provision:

"It is understood that in case a purchaser does not carry insurance the policy is extended to cover such piano."

The Exhibits C and D referred to are as follows:

"Exhibit C--Subrogation Receipt.

Received of the Stuyvesant Insurance Company, by the hand of J. S. Frelinghuysen, general agent, the sum of one hundred and fifty dollars, being in full of all claims and demands for loss and damage by fire on the twenty-second day of May, 1914, to the property insured by policy No. 55384, issued at the J. S. Frelinghuysen agency of said company, and in consideration of such payment the undersigned hereby assigns and transfers to the said company each and all claims and demands against any person, persons, or property arising from or connected with such loss or damage (and the said company is subrogated in the place of and to the claims and demands of the undersigned against said person, persons, or property in the premises) to the extent of the amount above named.

Frederick P. Stieff,

Trading as Charles M. Stieff."

"Exhibit D.

In consideration of $150.00 paid to him by the Stuyvesant Insurance Company, Frederick P. Stieff, successor to Charles Stieff and Frederick Stieff, trading as Charles M. Stieff, sells, assigns, and transfers to the Stuyvesant Insurance Company and its assigns, without recourse on him, the contract of which the annexed is a copy, together with all claims for the balance due on the indebtedness represented by it.

Frederick P. Stieff [Seal]

Trading as Charles M. Stieff."

Upon the facts as stated there was judgment for defendants, and plaintiff excepted and appealed.

C. W. Tillett, Jr., of Charlotte, for appellant.

Mangum & Woltz, of Gastonia, for appellees.

HOKE, J. (after stating the facts as above).

It is well recognized that a mortgagee and mortgagor may each insure the mortgaged property for his own benefit, and, where a mortgagee has taken out such insurance at his own expense without stipulations in favor of the mortgagor or conditions of any kind imposing an obligation or duty on the mortgagee to protect the property for the mortgagor's benefit, such mortgagee, in case of loss of the property by fire or damage thereto, is not accountable to the mortgagor for the amount collected from the insurance company, either on the debt or otherwise.

Leyden v. Lawrence, 79 N. J. Eq. 113, 81 A. 121; Insurance Co. v. Woodbury, 45 Me. 447; Fire Insurance Co. v. Bohn, 48 Neb. 743, 67 N.W. 774, 58 Am. St. Rep. 719; Gillespie v. Insurance Co., 61 W.Va. 169, 56 S.E. 213, 11 L. R. A. (N. S.) 143; Insurance Co. v. Insurance Co., 55 N.Y. 343, 14 Am. Rep. 271; 1 Jones on Mortgages (4th Ed.) § 420. In Insurance Co. v. Woodbury, the principles referred to are stated as follows:

"(A) If a mortgagee insures his own interest without any agreement between him and the mortgagor and a loss accrues, the mortgagor is not entitled to any part of the sum paid on such loss to be applied to the discharge or reduction of his mortgage debt.

(B) When the mortgagee effects insurance at the request and cost and for the benefit of the mortgagor as well as his own, the mortgagor has the right in case of loss to have the money applied in discharge of his indebtedness."

And it is further held by the great weight of authority that, where the mortgagee has taken out insurance on the mortgaged property for his own benefit, paying the premiums therefor himself, and without agreement with mortgagor or stipulations or conditions, as stated, imposing a duty to protect in that way the mortgagor's interest, the insurance company, in case of loss, on payment of the policy and satisfaction of the debt, is entitled to be...