Opinion
June 28, 1911.
John R. De Vany, for the appellant.
William D. Murray, for the respondent.
This action was brought upon a policy of insurance for $1,000, issued January 5, 1910, to the defendant Max Cohen, upon a building in Centerville, Sullivan county, which was damaged by fire February 2, 1910, to the amount of $3,361.38. At the time the policy was issued, the plaintiff was the owner of a mortgage upon the property to secure the payment of $4,000.
The policy contained the statement: "Loss, if any, first payable to John McDowell, mortgagee, as his interest may appear." The policy provides among other things that if a fire occurs the insured shall give immediate notice of any loss thereby in writing to this company, make a complete inventory of the property, stating the cost and the amount claimed, and within sixty days after the fire shall render a statement, signed and sworn to by the insured, stating certain other specific matters. The policy also provides that the loss should be payable sixty days after service of the proof of loss. The insured having refused to make proof of loss, the plaintiff on the 10th day of March, 1910, made and delivered to the defendant the proofs required by the policy. Attached to the proof was the affidavit of the plaintiff in which he stated that he had "attempted to persuade Max Cohen, the owner of said property, to make and file the proofs of loss, but said Max Cohen refuses so to do, and deponent is obliged to file them as mortgagee." The proofs were rejected upon the ground that they were not made by the insured as required by the policy.
The court found that there was no contract of insurance between the plaintiff and the insurance company; that the plaintiff was not entitled to recover against the defendant, and directed judgment dismissing the complaint.
The single question presented for decision upon this appeal is whether the proofs of loss furnished by the plaintiff were a sufficient compliance with the terms of the policy to enable him to maintain this action.
The case of Armstrong v. Agricultural Ins. Co. (56 Hun, 399) sustains the contention of the appellant that a mortgagee, to whom a policy of insurance issued to the owner of the mortgaged premises is payable as his interest may appear, is the party "assured" within the meaning of the policy. The court there said: "The present policy insures the mortgagee's interest. The loss is payable to the mortgagee `as interest may appear.' These words are significant. The contract is not to pay the mortgagee the sum insured, but to pay the mortgagee's interest only. * * * There can be no question but that the plaintiff was an independent contractor for his insurable interest as mortgagee by this contract." These views were also expressed in Moore v. Hanover Fire Ins. Co. (71 Hun, 199), where the owner refused to make out proofs of loss, and thereupon the mortgagee made and sent them to the company.
It is true that these cases were reversed by the Court of Appeals, but the reversal in each case was upon the ground that the policy was void for a condition broken prior to the loss. Nothing which is contained in the opinions of the Court of Appeals in these cases is in conflict with the conclusion that a service of proofs of loss by the mortgagee, instead of the owner, where he refuses to make them, is good. In Cornell v. Le Roy (9 Wend. 163) the Supreme Court held that a mortgagee, to whom a policy had been assigned as collateral security, may well be considered "the assured" within the meaning of a clause requiring "that all persons insured by the company, and sustaining loss or damage by fire, are forthwith to give notice thereof to the agent."
It needs no argument to show that the language of the mortgagee clause inserted in the policy indicates that the contract was not made on the sole account of the owner; that the plaintiff was in the minds of the parties when it was made, and that they intended that the policy should cover and protect his interest in the property as well as that of the owner of the equity of redemption. The plaintiff is named in the policy as the owner of an interest in the property intended to be covered by it, and is one of the persons for whose benefit the insurance was obtained. He had an insurable interest in the property by reason of his mortgage, which was actually insured. It was the owner's buildings and the plaintiff's interest therein which were embraced in the policy. I, therefore, think that the plaintiff was occupying the position of the "insured" under the defendant's policy, and that he was entitled to furnish the proofs of loss, which was a condition precedent to his right of action and to the assertion of any claim upon the policy. It follows that the judgment should be reversed and a new trial granted, with costs to abide the event.
All concurred, except HOUGHTON, J., dissenting, in opinion.
Had there been attached to the policy in question the regular "mortgage clause" providing that any act or neglect of the mortgagor or owner should not invalidate the policy as to the mortgagee, it would have been unnecessary for the plaintiff to furnish proofs of loss or prove that the owner had done so. ( Heilbrunn v. German Alliance Insurance Company, 140 App. Div. 557. ) The reason why the mortgagee would not be obliged to furnish proofs of loss in such a case is that the mortgage clause attached to the policy constitutes a new and independent contract between the insurance company and the mortgagee by which no proof of loss was required to be furnished. Where, however, the mortgage clause is not attached and the policy is issued to the mortgagor with loss, if any, payable to the mortgagee as his interest may appear, the entire contract is with the mortgagor and not with the mortgagee or to him separately, and although the mortgagee may maintain an action in case of loss he can do so only where the mortgagor could recover in case he had not appointed a mortgagee to receive the money. This principle is enunciated in many cases from Buffalo Steam Engine Works v. Sun Mutual Ins. Co. ( 17 N.Y. 401) to Lewis v. Guardian Fire Life Assurance Co. (181 id. 392).
It is true that in Armstrong v. Agricultural Ins. Co. ( 130 N.Y. 560, revg. 56 Hun, 399) and Moore v. Hanover Fire Ins. Co. ( 141 N.Y. 219, revg. 71 Hun, 199) and kindred cases the policy had been forfeited by some act of the mortgagor prior to the sustaining of the loss and because of which it was held that the mortgagee could not recover.
I can find no decision holding that where there has been no forfeiture of the policy prior to the fire the voluntary failure or refusal of the mortgagor to furnish proofs of loss defeats recovery by the mortgagee appointed to receive the money in case a loss shall occur, but upon principle it seems to me that such must be the effect. The mortgagee in the absence of a mortgage clause being a mere appointee to receive the money in case of loss, and not being otherwise a party to the contract of insurance, must depend for his right of recovery upon the right of the mortgagor to recover, with whom the contract of insurance is made.
In the present case, by the express stipulation of the contract, the mortgagor could not recover unless he furnished proofs of loss within a specified time. The mortgagor is the insured, and there is no provision in the policy that the appointee to receive the money may furnish proofs of loss on his own account or on behalf of the insured. The complaint alleges that the plaintiff and the insured performed all the conditions of the policy required to compel the defendant to pay the loss, but on the trial it was conceded that the mortgagor, the insured, refused to make proofs of loss, and that the proofs made by the plaintiff were returned by the defendant with a statement that they were insufficient and not in accordance with the requirements of the policy. If the insured had deliberately set fire to the buildings, or had violated any of the conditions of the policy prior to the occurring of the fire, concededly the plaintiff could not recover. The contract being with the mortgagor and he being the person insured, it seems to me that the same result must follow when the insured refuses to make proof of loss. The making of proofs of loss is a condition precedent to recovery, and the policy specifying who shall make such proofs and not giving the plaintiff any right to make them in his own behalf or in behalf of the insured it follows that no right of recovery exists.
I, therefore, vote for an affirmance of the judgment.
Judgment reversed and new trial granted, with costs to appellant to abide event.