Union Institution For Savings in City of Boston v. Phoenix Ins. Co.
| Decision Date | 04 September 1907 |
| Parties | UNION INSTITUTION FOR SAVINGS IN CITY OF BOSTON v. PHOENIX INS. CO. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Brandeis, Dunbar & Nutter (Edward F. McClennen and Harrison F. Lyman, of counsel), for plaintiff.
Frederick W. Brown, for defendant.
This is an action upon a policy of fire insurance, which was submitted on a statement of facts to be treated as evidence it having been agreed that, if in the statement there was evidence for the plaintiff proper to be submitted to a jury a verdict should be ordered for the plaintiff for a stipulated sum; otherwise, there was to be a verdict for the defendant.
The plaintiff was a mortgagee, and the plicy contained a statement that it was 'Payable in case of loss to the Union Institution for Savings of Boston, mortgagee, as interest may appear.' The mortgage contained a covenant that the mortgagor should keep the property insured for the benefit of the mortgagee. The mortgagor, one Surbridge, procured the policy, but did not inform the plaintiff of it, and the plaintiff had no knowledge of it until after the fire.
The first question is whether the plaintiff can avail itself of the contract thus made for its benefit. We think it plain that this question should be answered in the affirmative. Surbridge acted in part for himself and in part as an agent and representative of the plaintiff in procuring the policy. He must be held to have acted in the same double capacity in receiving and holding it. This policy contained a contract between the defendant and Surbridge, and a somewhat different contract between the defendant and the plaintiff. Both the mortgagor and the mortgagee were protected in their rights under their several contracts contained in a single paper signed by the defendant. Palmer Savings Bank v. Insurance Company of North America, 166 Mass. 194, 44 N.E. 211, 32 L. R. A. 615, 55 Am. St. Rep. 387; Hastings v. Insurance Company, 73 N.Y. 141; Hartford Insurance Company v. Olcott, 97 Ill. 439-456. Surbridge's action in procuring the policy was in pursuance of the covenant in the mortgage, and was founded in part upon the consideration stated in the mortgage. It was immaterial which of the parties protected by the policy retained possession of the paper. It is also immaterial that the plaintiff, at the time of the fire, had not been informed of the action taken by the mortgagor for its benefit, under its authority.
Surbridge, soon after receiving the policy from the defendant, left the state for parts unknown, and so far as appears, has not returned. It does not appear whether he ever knew of the fire. The policy is in the massachusetts standard form, which appears in Rev. Laws, c. 118, § 60. It contains this language: 'If this policy shall be made payable to a mortgagee of the insured real estate, no act or default of any person other than such mortgagee or his agents, or those claiming under him, shall affect such mortgagee's right to recover in case of loss on such real estate,' etc. The case presents questions, as to the rights of the mortgagee under sucn a policy, which never have been decided in this commonwealth.
In the first place it is plain that the subsequent conveyance of the equity of redemption, by the mortgagor, does not affect the plaintiff's right to recover under the policy. Whiting v. Burkhardt, 178 Mass. 535. [1] It is equally plain that the defendant's offer, made several months after the suit was brought, to pay the plaintiff the amount of the mortgage if the plaintiff would assign it to the defendant, without any offer to pay interest or costs of suit, was not made within a reasonable time and cannot avail the defendants in this suit. Eliot, etc., Bank v. Commercial Insurance Co., 142 Mass. 142, 7 N.E. 550.
The more difficult questions arise under the provision that, in case of a loss, a statement in writing, setting forth the particulars of the loss, shall be forthwith rendered to the company by the insured, and the provision for an arbitration if the parties fail to agree as to the amount of the loss. It is quite certain that the party referred to as the insured in these provisions is the mortgagor. The contract calls for but one such statement, and if the duty of furnishing it is upon the mortgagee when the loss is payable to him, then there is no such duty upon the mortgagor. The paper must be 'signed and sworn to by the insured'; it must set forth 'the interest of the insured therein,' and various other stipulated facts which are peculiarly within the knowledge of the mortgagor, 'so far as known to the insured.' The mortgagee is referred to in the policy in contradistinction to the insured, in different parts of the policy. The mortgagee, to secure his rights in that capacity, must pay on demand 'for any increase of risks not paid for by the insured.' The company reserves the right to cancel the policy, 'after giving written notice to the insured and to any mortgagee,' etc. In the clause reciting the consideration, the company 'does insure * * *' (the mortgagor).
In Sanford v. Mechanics' Mutual Fire Insurance Company, 12 Cush. 541, a policy was taken out by the lessor of the premises, payable in case of loss to the lessee. It was held that the lessor was the insured within the meaning of that word in the policy. In Turner v. Quincy Mutual Fire Insurance Company, 109 Mass. 568, where the policy was payable in case of loss to the mortgagee, the mortgagor was treated as the person insured. In Campbell v. New England Mutual Life Insurance Company, 98 Mass. 381, it was said that 'the plaintiff did not, by virtue of the clause declaring the policy to be for her benefit, become the assured.' A similar doctrine is stated in Merrill v. Colonial, etc., Insurance Company, 169 Mass. 10, 47 N.E. 439, 61 Am. St. Rep. 268, in reference to the assignee of a policy taken as collateral security for a debt. See, also, Bowditch Ins. Co. v. Winslow, 3 Gray, 415.
It is not easy to determine, in all particulars, what provisions of the policy are left applicable to the claim of the mortgagee by the stipulation that no act or default of the insured shall affect the mortgagee's right to recover. The stipulation is not limited to acts or defaults occurring before the fire, but it includes all acts or defaults of the mortgagor which otherwise might affect the mortgagee's right to recover.
The policy creates a liability of the insurer which depends in part upon the performance of certain acts by the owner of the property after the fire, in reference to the claim. In making the contract the parties seem to have assumed that a mortgagor who obtains insurance payable to a mortgagee is the party ultimately interested, who will rightly represent the property and act for the mortgagee. It therefore provides that he shall make the statement in writing which the insurer needs as information of the loss. Under the contract the insurer may determine within fifteen days to repair or rebuild the property instead...
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