Supreme Court of Rhode Island, 1869

Harris v. Gaspee Fire and Marine Insurance Co. and Others

Supreme Court of Rhode Island · Decided March 6, 1869 · Durfee

9 R.I. 207

Counsel

T.A. Jenckes and Tobey, for the plaintiff: — I. The plaintiff having an insurable interest in the property insured at the time the insurance was effected, of greater value than the amount insured, and having since established his lien on said property, is entitled to recover of the defendant companies the whole amount of his policies. 2 American Leading Cases, p. 541 et seq. 550, 551, and cases cited. Any interest in real estate, or which would be impaired or injured by its destruction, may be made the subject of a valid insurance. 2 American Leading Cases, p. 553, and cases cited. A lien or security is an insurable interest. 2 American Leading Cases, p. 565, and cases cited. Every one who will be injured by the destruction of property has an interest in its preservation, which he may protect by a policy of insurance. 2 American Leading Cases, p. 580; Holbrook et al. v. American Insurance Co. 1 Curtis, 193 and 199, and cases cited. A mortgagee has an insurable interest corresponding in amount with that of the debt which the mortgage is intended to secure. Kernochan v. N.Y. Bowery Fire Ins. Co. 5 Duer (N.Y.) 1; 2 Phillips on Insurance, § 1511, §§ 289, 290, 292. II. The plaintiff is entitled to interest on the amount insured from the time of the loss. III. The sum of $1,059.77 paid the plaintiff as his share of the proceeds of the sale under the Coddington mortgage, should not be deducted from the amount insured in making up the judgment in these suits. King v. State Mutual Fire Insurance Co. 7 Cushing, 1; Dobson v. Land, 8 Hare, 216; Loomis, Adm'r, v. Eagle Life and Health Insurance Co. 6 Gray, 401, and cases there cited. Hart, for the defendants: — To satisfy the language of these policies, and entitle the plaintiff to recover, the mortgages must be established as a lien upon the whole property. They do not say, "payable when the lien by virtue of the mortgages is established upon the whole or any part of the property," but "upon said property." It is not pretended that the decree of the Circuit Court does this. II. The plaintiff's mortgages of the 21st and 22d of August, 1856, were guaranteed by W.W. Updike in writing, at or about the making of the same, viz., on the 21st and 27th of August, 1856, as a consideration for the original mortgagees, Lord, Warren, Evans Co. not recording them. This was known to all parties at the time of effecting the policies of insurance, and that, as a matter of course, the deed of September 27th, 1856, of one-third of the property to W.W. Updike was taken, subject to the lien of plaintiff's mortgages, said Updike, as guarantor, having actual notice of the same. What, therefore, was contemplated by the parties at the time of issuing the policies was, that plaintiff should establish them as good and valid liens upon the remaining two-thirds of the property, to bind the defendants to pay. The decree declares the mortgages no lien upon the third conveyed by Doyle to Wm. W. Bishop by deed dated September 27, 1856, and only a lien on another third, subject to prior mortgage to Bishop, of the 21st of October, 1856, for $16,207.21. III. All, therefore, that the decree does, within the true intent and meaning of the policies, is, to establish the mortgages as a dry, valueless lien upon one-third of the property. The plaintiff is entitled to recover nothing, as he has lost nothing. Insurance is a mere contract of indemnity. These are open policies upon the assured's interest in certain described property. Whatever was the true value of that interest, the plaintiff is entitled to recover, and no more. Angell on Fire and Life Insurance, p. 49, § 11; Phillips on Insurance, vol. 2, p. 1, § 1176; Niblo v. N. Am. Ins. Co. 1 Sandf. S.C.R. 551. This is the general principle applicable to insurance when the nature of the interest is not disclosed, or the assured describes himself as owner. Whatever may be the sum insured in case of loss, it is the value of the subject-matter that determines the amount recoverable. The same principle applies in case of insurance by a mortgage. The insurable interest of a mortgagee, is the debt or claim as security for which the mortgage is given. Phillips on Insurance, vol. 2, § 1511; also, Angell on Insurance, § 59. But the insurable interest is one thing and the value of the subject matter destroyed is another. See Smith v. 7 Cush. 1, but the weight of authority is with the Supreme Court of the United States, as see Phillips on Insurance, § 1712, and cases cited. If plaintiff is entitled to recover anything, interest should be computed only from date of decree.

Opinion of the Court

Durfee, J.

On the 30th of July, 1859, the plaintiff, being interested in the manufacturing estate of the To uro Manufacturing Company, so called, in Newport, R. I., as the transferee of two mortgages thereon, given by L. J. Doyle to Lord, Warren, Evans & Co., and dated, the one August 21st, and the other, August 22d, 1856, procured from the defendant companies an insurance of his interest to the amount of $15,000, being $3,000 in each company. Each of the policies states that the said mortgages are “ subject to a prior mortgage on said estate for twenty thousand dollars, or about that sum, and in case of loss the amount of this policy is to be paid to said Caleb E. Harris whenever and as soon as his lien upon said property, by virtue of said mortgage, is established by decree of court or otherwise.1’ This provision in regard to payment appears to have been inserted because, at the time the insurance was effected, the extent of the plaintiff’s interest under the mortgages transferred to him, was in question ; for the reason that after those mortgages were made, and before they were recorded, certain conveyances and mortgages had been made to other parties, thus complicating the title. The fire occurred, during the continuance of the policy, December 31, 1859, and afterwards, in 1864, the extent of the plaintiff’s lien under the mortgages transferred to him, was established by a decree of the Circuit Court. The priorities *215 of the parties interested in the property, as ascertained or admitted, in so far as we need state them, appear to have been as follows, to wit.:—

1. The Ooddington Manufacturing Co. held a mortgage for $20,000, being the prior mortgage mentioned in the policies, which covered the whole estate, subject to this mortgage.

2. "W. W. Bishop was the owner in fee of one undivided third.

8. W. W. Bishop held a mortgage for one other undivided third.

4. The plaintiff held a lien by his mortgages upon all the residue.

The property on which the mortgages were made was worth not less than $65,000 at the time of the fire. Since then, the Ooddington Manufacturing Company have sold the land and ruins under their mortgage and discharged their mortgage with the proceeds, and have paid over one third of what was left of the proceeds, to wit., $1,059.77, to the plaintiff, March 9th, 1866. The debt covered by the mortgages transferred to the plaintiffs was, at the date of the policies, $15,551.08.

These actions were brought in the Supreme Court, at the October term thereof, 1865.

1. The defendants contend that the plaintiff is not entitled to recover, because the policies, by their terms, are not payable until the plaintiff’s lien is established “upon said property,” which, they contend, means the whole property, whereas the lien decreed is only a lien upon two-thirds, subject to such priorities as practically reduces it to a lien on one-third. We do not ''think this is the fair construction of the policies. A lien upon two undivided thirds, or one undivided third, of a given estate or property, is, in our opinion, a lien upon said property. The lien, being upon an undivided interest, charges the whole propperty to the extent of that interest, which subsists as an undivided pai’t of every particle of the property. And this construction accords with the obvious design of the policies; for if, as we presume, they were designed as security against loss by fire, the plaintiff would desire to have them- hold, whether *216 his mortgages were a charge upon one undivided third or upon three undivided thirds ; for the risk, except perhaps in the value of the interest exposed, would be the same in either case.

2. The plaintiff can recover only the amount of his loss by the fire, and of course nothing was lost by the fire which remained to be sold after- the fire. Out of what was sold the plaintiff received $1,059.77, and this, therefore, if it was his proper proportion of what remained, should be deducted from the value of his interest in the property to ascertain his loss. If, at the time the fire occurred, the value of his interest was $15,000, then $15,000 — 1,059.77=13,940.23 was his loss by the fire, and consequently the amount which the defendant companies ought to pay him under their policies. The question chiefly argued by the counsel in regard to this payment does not, in our view, arise.

3. We think the plaintiff is entitled to interest on the amount to be paid by the companies, only from the time the lien was established by the decree of the Circuit Court, to wit., from November 22, 1864, the companies having agreed to pay the amount of the policies, in case of loss, whenever and as soon as the lien should be established.

Judgment accordingly.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.