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McDowell v. St. Paul Fire and Marine Ins. Co.

Supreme Court of New York, Appellate Division

June 28, 1911


APPEAL by the plaintiff, John McDowell, from a judgment of the Supreme Court in favor of the defendant insurance company, entered in the office of the clerk of the county of Ulster on the 28th day of December, 1910, upon the decision of the court, rendered after a trial before the court without a jury at the Ulster Trial Term, dismissing the complaint upon the merits.


John R. De Vany, for the appellant.

William D. Murray, for the respondent.

Page 725


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

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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 ...

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