Fire insurance — Mortgagee clause — Effect of.
In an action of assumpsit by a mortgagee on a policy of fire insurance containing a union mortgagee clause, it is no defense that the owner of the property had another policy of insurance on the same premises.
Provisions in such policy making the defendant liable only pro rata with other companies, carrying insurance on the same premises on the application of the owner, do not apply to the mortgagee.
The effect of adding the union mortgagee clause to the policy is to constitute an insurance of the mortgagee's interest, distinct from that of the owner, and the result is a new insurance contract composed of the provisions in the clause and such of those in the policy as are essentially applicable to the mortgagee clause and the mortgagee's interest. Not all of the provisions of the contract with the owner stated in the policy govern the contract insuring the mortgagee's interest.
Affidavit of defense — Admissions — Fire insurance — Proofs of loss.
Where, in an action by a mortgagee on a fire insurance policy, the affidavit of defense avers an offer of a pro rata share of a total admitted liability based on the proofs of loss the defendant cannot question the sufficiency of the proofs of loss.
Argued March 14, 1928.
OPINION BY LINN, J., April 16, 1928:
An insurance company appeals from judgment of $1,257 for want of a sufficient affidavit of defense in a suit by a mortgagee on a policy of fire insurance containing a union mortgagee clause, of which a copy will be found in the reporter's statement of the case. The mortgage debt was $3,000, the fire loss was $1,257.
Of the defenses suggested the only one requiring notice arises on the averment that the owner (without mortgagee's knowledge) also had another policy of insurance on the same premises, and that therefore the defendant could apply against the mortgagee the prorating clause in the policy applicable between the defendant and the owner, and was accordingly required to pay the plaintiff only the proportion which the amount of the policy in suit bore to the amount of both policies taken out by the owner. On that basis defendant tendered $471.38.
That point is closed against defendant in Pennsylvania. It is settled that the effect of adding the union mortgagee clause to the policy is to constitute an insurance of the mortgagee's interest, — an interest distinct from the owner's, — and that the result is a new insurance contract composed of the provisions in the clause and such of those in the policy as are essentially applicable to the mortgagee-clause and the mortgagee's interest; that not all of the provisions of the contract with the owner stated in the policy govern the contract insuring the mortgagee's interest: Assoc. v. Insurance Co., 66 Pa. Super. 90; Reed v. Insurance Co., 67 Pa. Super. 110; Swoope v. U.S. Fire Ins. Co., 87 Pa. Super. 349. This conclusion is in accord with the weight of authority on the subject; see Joyce on Insurance, Vol. 3, section 2795; Richards' Insurance Law, 396 etc.; Cooley Briefs on Insurance, Vol. 1, p. 777.
Two other questions involved are stated, but neither requires discussion. It is asked whether the proofs of loss are sufficient. The affidavit of defense pleads a letter from defendant to plaintiff, based on the proofs of loss submitted, stating that a tender had been made and that the letter should be accepted as a continuing tender to plaintiff of the proportion of the total insurance as an admitted liability on defendant's theory of pro-rating already stated. It follows that as against the mortgagee, plaintiff, no defense as to the sufficiency of the proof of loss is open under the affidavit of defense, Simons v. Fire Ins. Co., 277 Pa. 200. The same is true of the other question suggested to the effect that the statement of claim does not aver that the debt secured by the mortgage is due; there are several answers to this, the most obvious on the record being that the affidavit of defense does not aver that it is not due; but in any event, it does not concern the insurance company.
Judgment affirmed.