Summary
In Cromwell's case a house and lot had been sold under an executory contract by which the vendee covenanted to insure the house for the vendor's benefit.
Summary of this case from Hathaway v. O. Ins. Co.Opinion
Argued September 22d
Decided December 27th, 1870
John H. Reynolds, for the appellant.
Samuel Hand, for the respondent.
Chesley held a written contract for the purchase from Beach of the lot in question, and under the contract took possession of the lot. He then made the parol agreement with Eichenlaube, to sell the lot to him, and build a house upon it for the sum of $1,600. In pursuance of this agreement, he went on and built the house, and completed it in April, 1854. Not being able then to procure his title, and Eichenlaube being desirous to take possession, it was arranged that he should take possession, and pay the taxes and interest, and keep the house insured for the benefit of Chesley, and that Chesley should give the deed as soon as he could get the title from Beach. The original parol agreement was not repudiated or abandoned, but simply modified as to the time and manner of performance. There was clearly such a part performance of this agreement, as to take it out of the statute of frauds, and make it enforceable in a court of equity. As between Chesley and Beach, the former was the equitable owner of the lot, and, as such, had rights and interests therein. He agreed to perfect his title to this lot, and convey the same to Eichenlaube, and that created between them the relation of vendor and vendee, and according to well settled principles of law, Chesley had an equitable lien upon the lot for the balance of the purchase-money due from Eichenlaube, occupying the relation to Eichenlaube of equitable mortgagee.
If Eichenlaube had procured the insurance for his own benefit, without any agreement to insure for the benefit of Chesley, the latter could not have claimed any benefit from the insurance. A contract of insurance against fire, as a general rule, is a mere personal contract between the assured and the underwriter, to indemnify the former against the loss he may sustain; and in case a mortgagor effects an insurance upon the mortgaged premises, the mortgagee can claim no benefit from it, unless he can base his claim upon some agreement. But where the assured has agreed to insure for the protection and indemnity of another person having an interest in the subject of the insurance, then such third person has an equitable lien, in case of loss, upon the money due upon the policy to the extent of such interest. These are principles of law well settled. ( Carter v. Rockett, 8 Paige, 437; Thomas, Administrator v. Van Keft, 6 Gill. Johnson, 372; Providence Co. Bank v. Benson, 24 Pick., 204; Nichols v. Baxter, 5 R.I., 311; Ellis v. Krentsinger, 27 Mo., 311.)
In this case, Eichenlaube had agreed to insure for the benefit of Chesley. He did, at first, procure an insurance in his name, which by the terms of the policy was payable to Chesley. When that policy expired the company refused, for some reason, to renew it. Eichenlaube then took out another policy in his own name, which contained no specification that the loss, if any, was payable to Chesley or the plaintiff. But in the absence of any proof to the contrary, it must be inferred that he made the insurance in pursuance of his agreement, and for the benefit of his vendor. And such, undoubtedly, would have been the legal inference, no matter what may have been his secret intention when he effected the insurance, provided he did it while in possession of the premises, and while the agreement between him and Chesley was binding, either in law or equity.
It is claimed, however, that the plaintiff could not have the benefit of this insurance, because he was in default in the performance of the agreement to convey the lot on his part. The proof does not show such default, and the judge who tried this case has not found it. The plaintiff was bound to convey the lot as soon as he could procure the title from Beach. He made efforts from time to time to get the title from Beach, and as soon as he got it, he offered to convey it to Eichenlaube. There does not appear to have been any want of good faith on the part of the plaintiff. It is true that Eichenlaube several times demanded his deed, but he never in any way repudiated or put an end to the agreement, and he retained the undisputed possession of the lot, thus reaping the fruits of the agreement. Under such circumstances it cannot well be claimed that the plaintiff was in default, and that the agreement was not equitably binding at the time of the fire.
The plaintiff notified the company of his equitable claim to the insurance money before payment to Eichenlaube. After such notice, the company made the payment at its peril, just as much so as if there had been a regular assignment of the money to the plaintiff, and it had paid it to Eichenlaube after notice of such assignment. While both plaintiff and Eichenlaube were claiming the money, it would doubtless have been unwise for the company to have paid it to either. But it could have waited for suit by one of the claimants and then have paid the money into court and been relieved from all responsibility under section 122 of the Code.
These are all the questions raised in the case which I deem it important to consider, and I have reached the conclusion that the judgment should be affirmed with costs.
Cromwell, as assignee of the contract between Chesley and Eichenlaube, became entitled to its performance. Part of that agreement was, that Eichenlaube should keep the premises to which the contract related insured for the benefit of Chesley.
At the time of the fire, Eichenlaube had a policy with the defendants covering the premises, in his own name and for his own benefit, but none for the benefit of Chesley or Cromwell. Cromwell recovered judgment against Eichenlaube upon the contract assigned to him by Chesley for an amount greater than the sum insured. The judgment was good evidence in this case to prove that the contract with Eichenlaube was in full force, and that the obligation to insure still rested on him.
As between Cromwell and Eichenlaube there can be no doubt of the right of Cromwell in equity to receive the insurance money upon the happening of a loss. That right arises from Eichenlaube's contract to insure for the benefit of Chesley, and the fact that he had not paid the sum due under the contract. Had there been no judgment, Cromwell must have proven in this action that there was a sum due to him on the contract with Chesley. The judgment established that fact without other proof, as Eichenlaube, the defendant in that action, was the only party interested in contesting the amount due.
The plaintiff in due season notified the insurance company of his equitable claim to be paid the amount due under the policy to Eichenlaube, by reason of the loss against which the company had insured. The company have not denied their policy, nor their loss, nor their liability to pay the amount. On the contrary, admitting their liability, the company have paid the loss to Eichenlaube, and insist that such payment is a full discharge of their liability. The company thereby refused to recognize the right of Cromwell to charge them as a trustee of the fund due upon the policy. The company assumed the hazard of resisting the equity claimed by the plaintiff.
If the company erred in their interpretation of the law, their payment to Eichenlaube is no discharge of their liability for the loss arising under their policy.
The case of Carter v. Rockett (8 Paige, 437), is against the construction of the law assumed and acted upon by the company. That case is a full authority for the claim made by Cromwell. This claim does not operate as an assignment of the policy, against which the company by a condition of that instrument stipulated. They become by reason of the facts, and the notice given by Cromwell, trustees of a fund which they were equitably bound to pay to the party justly entitled. The party entitled in this case was the plaintiff, and the payment to Eichenlaube is no discharge.
The judgment should be affirmed with costs.
All concur, except LOTT, J., who did not sit.
Judgment affirmed with costs.