Turk v. Newark Fire Ins. Co.

• Decision Date: 08 January 1925
• Docket Number: No. 10892.,10892.
• Citation: 4 F.2d 142
• Parties: TURK et al. v. NEWARK FIRE INS. CO.
• Court: U.S. District Court — Western District of Pennsylvania

4 F.2d 142 (1925)

TURK et al. v. NEWARK FIRE INS. CO.

No. 10892.

District Court, E. D. Pennsylvania.

January 8, 1925.

Arthur S. Arnold, of Philadelphia, Pa., for plaintiffs.

Horace M. Schell, of Philadelphia, Pa., for defendant.

McKEEHAN, District Judge.

This is a suit on a fire insurance policy for $6,000 issued by the defendant to the plaintiffs as owners of premises 316 Market street, Chester, Pa. A loss occurred amounting to $14,276, and the question is whether the defendant is liable for 6/16 of this loss, or $5,353.50, as claimed by the plaintiffs, or for only 6/21, or $4,079, as claimed by the defendant. This depends upon whether the total contributing insurance upon the plaintiff's interest in the property was $16,000 or $21,000.

On May 31, 1919, the property in question was acquired by the plaintiffs by purchase from Bristol R. Lord, Jr., and William K. Lord, whereupon the plaintiffs placed three insurance policies on the property, the policy in suit for $6,000; a policy of the Firemen's Insurance Company for $5,000; and a policy of the Colonial Fire Underwriters for $5,000 (a total of $16,000), all of which were in effect at the time of the fire, which occurred on February 17, 1924.

Immediately prior to the conveyance the Lord Bros. had owned 316 Market street and also the adjoining property, 318 Market street, and on April 20, 1919, had secured a policy for $5,000, covering both properties from the Springfield Fire & Marine Insurance Company; the policy being issued to Bristol R. Lord, Jr., and William K. Lord. The latter policy was not purchased by the plaintiffs from the Lord Bros., was never assigned to the plaintiffs, and there was no agreement for its purchase by the plaintiffs. It appears from the pleadings that at the time of the conveyance the Springfield policy was in the possession of George K. Crozer, Jr., treasurer, as mortgagee under the standard New York mortgage clause. The affidavit of defense avers that a few weeks after the conveyance Messrs. Gray & Co., the writing agents of the Springfield Company "acquired knowledge of the transfer of the said property," and that subsequently, on October 24, 1919, Mr. Crozer delivered the policy to Gray & Co. for the purpose of having an indorsement placed thereon, changing the mortgagee's interest from George K. Crozer, Jr., treasurer, to J. Lewis Crozer Library, which change was duly made by indorsement attached to the policy. Upon these averments the defendant bases the contentions, first, that in view of Gray & Co.'s knowledge, this new indorsement, in spite of the change of ownership, rendered the policy valid as between the Springfield Company and the mortgagee, and that, being valid as to the mortgagee, it should, as between the parties to this suit, be considered as contributing insurance and pro rata with the policies carried by the plaintiffs on their property; second, that by the new indorsement, the Springfield Company ratified the transfer of ownership, and would be estopped from setting that up in a suit by the plaintiffs.

The first argument is based, I think, upon a misconception of the contractual relationships that exist between an insurer and an insured owner on the one hand and the insurer and a mortgagee on the other hand. A mortgagee clause creates a new and separate contract between the insurer and the mortgagee, and effects a separate insurance of the interest of the mortgagee, not affected for the most part by any act or neglect of the mortgagor of which the mortgagee is ignorant. Syndicate Insurance Co. v. Bohn, 65 F. 165, 12 C. C. A. 531, 27 L. R. A. 614; Pennsylvania Co. for Insurance on Lives, etc., v. Aachen (D. C.). 257 F. 189. Whether the mortgagee can recover from the Springfield Company is immaterial. The Springfield policy contained the usual clause that it should be void "if the interest of the insured be other than unconditional and sole ownership." The mortgagee clause modified this provision only so far as the mortgagee was concerned. It provided that "as to the interest of the mortgagee" the policy should not be invalidated by a change in ownership providing the mortgagee notified the company of any change of ownership which might come to its knowledge, and providing also that, if the insurer should pay the mortgagee any loss under the policy and claim that as to the mortgagor or owner no liability existed, the insurer would, to the extent of such payment, be subrogated to all of the rights of the mortgagee. The owners insured by the Springfield Company policy were the Lord Bros. They conveyed the property to the plaintiffs, but no assignment of the policy to them was made or contemplated. The Springfield Company has no contractual relationship with the plaintiffs, and, as I say, its liability, if any, to the mortgagee is immaterial to this suit.

The defendant's argument that the Springfield Company would be estopped in a suit by the plaintiffs to set up the change of ownership as a defense is, I think, equally without merit. In the first place, I agree with the learned counsel for the plaintiffs that the simple averment that in June, 1919, the Springfield Company's writing agents "acquired knowledge of the transfer of the said property" by Lord Bros. is too vague and is insufficient under the authorities to charge the Springfield Company. The agent's knowledge must have been acquired in his capacity as agent, regarding a matter within the scope of his agency, and the averment should be specific as to this. Again, the insurer's willingness to name a new mortgagee or the same mortgagee under another name,...