UNION INST. FOR SAVINGS v. PHOENIX INS. CO

Agency. Insurance, Fire. Mortgage, Rights of mortgagee under policy of fire insurance. Words, "The insured."

Where a mortgage contains a covenant that the mortgagor shall keep the property insured for the benefit of the mortgagee, and the mortgagor without the knowledge of the mortgagee procures a policy of insurance against fire on the mortgaged property "payable in case of loss to . . ., mortgagee, as interest may appear," if a fire occurs before the mortgagee learns of the existence of the policy, he can sue on the contract made by the mortgagor as his agent, and the fact that at the time of the fire he had not been informed of the action taken by the mortgagor for his benefit in pursuance of the covenant of the mortgage is immaterial.

Where a policy of fire insurance in the Massachusetts standard form is made payable in case of loss to a mortgagee of the property as his interest may appear, a subsequent conveyance of the equity of redemption by the mortgagor does not affect the right of the mortgagee to recover on the policy.

In an action on a policy of fire insurance by a mortgagee of the insured property to whom the policy is made payable in case of loss "as interest may appear," the proof of an offer by the defendant to pay the plaintiff the amount of the mortgage, made several months after the action was brought and without any offer to pay interest and costs of suit, even if the offer otherwise were equivalent to a tender, is no defence to the pending action because not made within a reasonable time.

The Massachusetts standard form of fire insurance policy contains the following provision: "If this policy shall be made payable to a mortgagee of the insured real estate, no act or default of any person other than such mortgagee or his agents, or those claiming under him, shall affect such mortgagee's right to recover in case of loss on such real estate." It also contains a provision that in case of loss "a statement in writing, signed and sworn to by the insured, shall be forthwith rendered to the company, setting forth" the particulars of the loss and other facts and the "manner in which the fire originated so far as known to the insured." It also contains a provision requiring, in case of a failure of the parties to agree as the amount of loss "that the amount of such loss shall be referred to three disinterested men, the company and the insured each choosing one out of three persons to be named by the other and the third being selected by the two so chosen," that the award of a majority of the referees shall be final "and such reference unless waived by the parties shall be a condition precedent to any right of action in law or equity to recover for such loss." In different parts of the policy the "mortgagee" is referred to in contradistinction to the "insured." In an action by the mortgagee of the insured property, on such a policy made payable in case of loss to the "mortgagee, as interest may appear," it appeared that the mortgagor procured the policy without informing the mortgagee that he had done so, and soon after receiving it left for parts unknown. It did not appear that he ever had heard of the fire, and he complied with none of the requirements of the policy mentioned above in regard to making a statement in writing of the loss or in regard to arbitration. The plaintiff furnished a statement in writing of the loss about four months after the fire. The amount of the loss was not agreed upon or determined, and the plaintiff did not ask for an arbitration. There was no evidence of a waiver by the defendant. Held, that the person referred to as "the insured" in the above requirements of the policy was the mortgagor and not the mortgagee, that on the failure of the mortgagor to make a statement or to ask for arbitration, the mortgagee, without any express provision on the subject, had by necessary implication the right to make a statement of loss and to ask for an arbitration, that this implied contract did not require him to make his statement forthwith after the fire but only to furnish in writing within a reasonable time proper information in regard to the loss as to such matters as a mortgagee reasonably might be expected to know, but that in the absence of an agreement as to the amount of the loss or a waiver of arbitration the appointment of arbitrators to determine the loss was a condition precedent to recovery on the policy, and that the plaintiff's failure to ask for an arbitration was fatal to his claim.