Traders' Ins. Co. v. Race

• Decision Date: 20 June 1892
• Citation: 31 N.E. 392,142 Ill. 338
• Parties: TRADERS' INS. CO. et al. v. RACE.
• Court: Illinois Supreme Court

142 Ill. 338

31 N.E. 392

TRADERS' INS. CO. et al.

v.RACE.¹

Supreme Court of Illinois.

June 20, 1892.

On rehearing.

The other facts fully appear in the following statement by the court:

August 28, 1882, appellants, the Traders' Insurance Company and the Agricultural Insurance Company of Watertown, N. Y., issued their several policies of insurance on a frame dwelling, and furniture therein, to Sarah Hirsch, owner, running five years, in the sum of $2,500 each on the house and $500 on the furniture, aggregating $6,000 of insurance against loss or damage by fire. The policy issued by the Traders' Insurance Company contained the provisions: ‘If the above-mentioned premises shall be occupied or used so as to increase the risk, or become vacant or unoccupied, and so remain, without notice to and consent of this company, in writing, or the risk be increased by the erection or occupation of neighboring buildings, and by any means whatever within the control of the assured, without the assent of the company indorsed thereon,’ then the policy shall be void. The policy of the Agricultural Insurance Company contained a condition as follows: ‘If, at the time of effecting this insurance, any dwelling house hereby insured shall be unoccupied as a dwelling, and not so stated in the application, or if, without written consent and indorsement thereon, such dwelling house shall cease to be occupied as a dwelling house, then, so long as such dwelling house shall be so unoccupied, this policy shall be void, and of no force and effect.’ July 9, 1884, Mrs. Hirsch sold and conveyed all the property insured, including the furniture, to Miss Frances T. Race, who, to secure the unpaid purchase money, gave her four promissory notes of that date, payable to Sarah Hirsch,-one for $1,000, due March 1, 1885, and three for $1,333, each due March 1, 1886, 1887, and 1888, and each bearing interest at 6 per cent. per annum,-and to secure the payment thereof executed to Julius Rosenthal a deed of trust on the real estate sold, containing a clause authorizing the holder of all such notes to declare them due in default of payment of any one thereof, or of the interest thereon. At the time of such sale, and as part of the transaction, the policies of insurance in question were assigned to Frances T. Race, with the consent and approval of the insurance companies. Before these policies were delivered to Miss Race, Rosenthal, trustee, sent the policies to the offices of the insurers to procure consent to such assignment, and also to procure the insertion therein of the mortgage clause hereinafter mentioned. The direction was given by Rosenthal in the presence of appellee, Race, and the policies were delivered to Rosenthal by the direction of appellee, Race. The mortgage clause inserted in the policy of the Traders' Insurance Company, and made part thereof, is as follows: ‘Loss, if any, payable to Julius Rosenthal, trustee, as hereinafter provided; it being hereby understood and agreed that this insurance, as to the interest of the mortgagee or trustee 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 the terms of this policy: provided, that in case the mortgagor or owner neglects or refuses to pay any premium due under this policy, then on demand the mortgagee or trustee shall pay the same. * * * It is also agreed that whenever this company shall pay the mortgagee or trustee 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, and to the extent of such payment, be legally subrogated to all the rights of the party to whom such payment shall be made, under any and all securities held by such party for the payment of said debt. But such subrogation shall be in subordination to the claim of said party for the balance of the debt so secured. Or said company may, at its option, pay the said mortgagee or trustee the whole debt so secured, with all the interest which may have accrued thereon to the date of such payment, and shall thereupon receive from the party to whom such payment shall be made an assignment and transfer of said debt, with all securities held by said party for the payment thereof. This slip, being attached to policy No. 28,276 of the Traders' Insurance Company of Chicago, Ill., forms part of said policy. S. A. ROTHERMEL, Asst. Sec. Dated July 10th, 1884.’ A like clause, in effect, was inserted in the other policy. The dwelling house, with part of the furniture therein, was destroyed by fire May 5, 1885. The insurance companies, claiming that the policies were void as to the owner, Miss Race, because the premises had ceased to be occupied as a dwelling house before and at the time of its destruction, paid to Rosenthal, trustee, the amount due on said notes, May 25, 1885, the amount then being $4,840, and that by reason thereof they became entitled to be subrogated to the rights of the mortgagee. The trustee, on such payment being made, assigned and delivered the notes and trust deed to the Traders' Insurance Company, whereupon demand was made for the payment of the note then past due; and, on failure to pay the same, said company declared all of the notes due, and on June 20, 1885, filed this bill in the superior court of Cook county, against Frances T. Race, to foreclose said deed of trust. The Agricultural Insurance Company, July 9, 1885, interpleaded and filed its cross bill, claiming to have joined the other insurance company in the payment to Rosenthal, and claiming the same right and asking the same relief. On the 27th of July, 1885, Frances T. Race brought an action at law upon the policy against the Traders' Insurance Company in the state court, and against the Agricultural Insurance Company in the circuit court of the United States, upon its policy. Upon supplemental bill filed the prosecution of these suits at law was...