Hathaway v. Orient Insurance

On the 1st day of Jane, 1879, Eobert E. Treat and wife executed a mortgage to Samuel S. Eising, to secure the sum of $2,000, on two tracts of land and the undivided half of another, situate in the town of Somerset, Niagara county. The mortgage was conditioned to pay $2,000, in ten equal annual installments of $200 each, with semi-annual interest. In the description of the first parcel, which is involved in this action, the mortgage stated: “It being the lot on which the Novelty Grist Mill now stands, containing, etc., more or less, with all the fixtures, tools and articles kept or used upon the said premises for making and storing cider, and manufacturing or making vinegar.”

It was also provided in the mortgage that the party of the first part should keep the buildings erected, or to be erected upon the lands, insured against loss or damage by fire in an amount to be approved by the mortgagee, and that the policy should be assigned to him, and that in default thereof the party of the second part might procure the insurance. The mortgage was accompanied by a bond.

Treat conveyed the undivided half of the premises to Albert E. Bennett, and afterwards and on the 21st day of November, 1887, Treat and Bennett conveyed to Theodore W. Breckon that portion of the premises designated as the Novelty Mill property.

The mortgage was assigned in December, 1887, to Guy C. Humphrey, as executor of the last will and testament of Samuel S. Eising, deceased, who was the mortgagee. - Humphrey had been appointed executor of this will on the 2d day of January, 1889. There was unpaid on the mortgage $2,000. The assignment was recorded in the Niagara county clerk’s office.

The defendant is a foreign corporation engaged in the business of fire insurance, and on the 2d day of January, 1889, it issued its policy, dated that day, to Theodore W. Breckon. The policy was for $1,900, $1,200 on frame, two-story shingled roofed building with adjoining and communicating additions thereto, including foundations and fixtures, and the contents of the same, which property was occupied as a warehouse and cider mill; $200 on Acme oil engine and boilers, with connections, including settings and foundations; $200 on machinery, tools, etc.; $300 on stock and supplies, including stock in all stages of manufacture, all in the Novelty Mill.

On the 19th of February, 1889, a fire occurred which consumed all the property covered by the policy. Proofs of loss were served by Theodore Wi .Breckon on the 29th of March, 1889, and the amount of loss claimed in the proofs of loss was $1,900. In a schedule annexed to the proofs were the items of loss, amounting as therein stated to $2,632.74.

On the 14th of June, 1889, Breckon and the appellant estimated the loss on the buildings destroyed, including machinery and personal property, at $1,200, $700 of which was paid to Breckon and $500 was sent to the plaintiff, who refused to accept it. The adjustment between Breckon and the defendant was without the knowledge or consent of the plaintiff. There was no controversy as to the value of the property burned.

The complaint alleges in substance the issuing of the policy, the character of the property, and states that the 'plaintiff’s interest in the property destroyed was $1,574.70. The answer, among other things, puts in issue the amount due the plaintiff under the policy, and also sets up the settlement between it and Breckon, including payment in pursuance thereof, as a bar.

The action was referred to a referee, before whom a trial was had, who found the facts in favor of the plaintiff’s contention, including the claim that the fixtures for which he recovered were a part of the realty.

The evidence on the trial tended to support the referee’s findings.

No objection was taken by demurrer or answer to the plaintiff’s right to maintain the action, and objection on that ground is not available. Sections 487, 498 and 499, Code of Civil Procedure.

-But the objection that the complaint did not state a cause of action is not waived. Toolcer v. Arnoux, 76 N. Y., 397 .

The action could be maintained in the name of the mortgagee to recover the amount of his interest. Pitney v. Glens Falls Ins. Co., 65 N. Y., 6 .

Breckon and the defendant had full knowledge of the provisions of the mortgage in reference to insurance at the time of the adjustment. Under such circumstances, the mortgagee or assignee could recover the amount due as provided in the mortgage. Cromwell v. Brooklyn Fire Ins. Co., 44 N. Y., 42 ; Dunlop v. Avery, 89 id., 592; Reid v. McCrum, 91 id., 412.

A mortgagee has an insurable interest in property. Cone v. Niagara Fire Ins. Co., 60 N. Y., 619 -624; Dakin v. Liverpool Ins. Co., 13 Hun, 122 ; affirmed, 77 N. Y., 600 . Proofs of loss were properly served by Breckon. Wood on Insurance, Vol. 2, § 438. Breckon could not bind the plaintiff by any contract of adjustment with the defendant. Wood on Insurance, Vol. 2, § 370; Ennis v. Harmony Ins. Co., 3 Bosw., 516 -520; Martin v. Tradesmen’s Ins. Co., 101 N. Y., 498 .

The authorities cited by the learned counsel for the appellant do not conflict with the doctrine of the above cases. Although the policy had never been assigned to the plaintiff, that fact cannot impair his rights. It was contemplated that the policy should be taken in the name of the owner for the benefit of the mortgagee to the extent named. As soon as it was taken it enured to the benefit of the mortgagee the same as if it had been actually assigned and delivered.

Equity regards as already done what the parties have agreed to do. Lanning v. Tompkins, 45 Barb., 308 -316.

It is too plain for argument that the equities of the mortgagee could not be defeated or impaired by any contract or anangement between the owner of the property and the insurance company without his knowledge or consent.

¡No errors were committed in the admission of evidence to which exception was taken which would authorize a reversal.

The judgment must be affirmed.

Dwight, P. J., and Macomber, J., concur.