Summary
In Hennessey v. Helgason, 168 Miss. 834, 151 So. 724, 725, the Supreme Court of Mississippi explained its position in the Bacot case by saying: "In Bacot v. Phoenix Ins. Co., 96 Miss. 223, 50 So. 729, 25 L.R.A., N.S., 1226, Ann.Cas. 1912B, 262, it was held that the mortgage clause of the statute above referred to has the effect of making an independent contract in favor of the mortgagee.
Summary of this case from United States v. Sentinel Fire Ins. Co.Opinion
No. 30691.
January 8, 1934.
1. INSURANCE.
Clause in fire policy making loss payable to mortgagee as his interest might appear, and providing that mortgagee's interest should not be invalidated by any act of mortgagor, effects two policies of insurance, one to the mortgagor and other to mortgagee (Code 1930, section 5185).
2. INSURANCE.
Statute providing that, where mortgagor fails to pay premiums on insurance covering mortgaged property, mortgagee shall pay premiums on demand, imposes on mortgagor primary duty and on mortgagee secondary duty to pay premiums (Code 1930, section 5185).
3. INSURANCE.
Under statute providing that, if mortgagor insures mortgaged property and fails to pay premiums, mortgagee shall pay premiums on demand, such demand must be within reasonable time after mortgagor's failure to pay (Code 1930, section 5185).
4. INSURANCE.
Under statute providing that, if mortgagor insures mortgaged property and fails to pay premiums, mortgagee shall pay premiums on demand, whether demand was made in reasonable time after mortgagor failed to pay is question of fact (Code 1930, section 5185).
APPEAL from Circuit Court of Warren County.
Vollor Teller, of Vicksburg, for appellant.
Mortgage clause constitutes covenant on part of mortgagees to pay premium on default of mortgagor to pay same.
Section 5185, Code of 1930; Bacot v. Ins. Co., 96 Miss. 223, 50 So. 729; Scottish Union Ins. Co. v. Warren Gee Lbr. Co., 118 Miss. 740, 80 So. 9; St. Paul Fire Marine Ins. Co. v. Upton, 50 N.W. 702, 2 N.D. 229; Boston Safe-Deposit Trust Co. v. Thomas, 53 P. 472, 59 Kan. 470; Colby v. Thompson, 16 Col. App. 271, 64 P. 1053; Security Ins. Co. v. Eakin, 152 S.E. 606; Stoddart et al. v. Black et al., 8 P.2d 305; Coykendall v. Blackmer, 146 N YS. 631; Ormsby et al. v. Phenix Ins. Co. of Brooklyn, 58 N.W. 301; Home Ins. Co. v. Union Trust Co., 100 A. 1010, 40 R.I. 367, L.R.A. 1917F, 375, with Annotations, p. 379; Olmsted v. Metropolitan Life Ins. Co., 161 N.E. 276, 118 Ohio St. 421; 2 Cooley's Briefs on Insurance, 918; 26 C.J. 113, sec. 115.
The true sense in which words are used in a statute is to be ascertained generally by taking them in their ordinary and popular signification.
Chattanooga Sewer Pipe Works v. Dumler, 120 So. 450, 153 Miss. 276, 62 A.L.R. 999; Peeler v. Peeler, 68 Miss. 141, 8 So. 392.
In this state the insurer has no choice but to attach the mortgage clause as prescribed by statute to each of its policies wherein any mortgage clause is inserted, and, upon its failure so to do, our court will consider that it was inserted.
Bacot v. Ins. Co., 96 Miss. 223, 50 So. 729, 25 L.R.A. (N.S.) 1226, Ann. Cas. 1912B, 262; Scottish Union National Ins. Co. v. Warren Gee Lbr. Co. et al., 118 Miss. 740, 80 So. 9; Refuge Cotton Oil Co. v. Twin City Fire Ins. Co., 120 So. 214, 152 Miss. 522.
The general rule is that where language of a statute is plain and unambiguous the clearly expressed intent must be given effect, and there is no room for construction.
Yerger v. State, 45 So. 849, 91 Miss. 802; Eagle Lbr. Supply Co. v. Robertson, 135 So. 499, 161 Miss. 17.
Robbins Smith, of Vicksburg, for appellees.
The mortgage clause attached to the policies in question as relates to the payment of premiums by mortgagee contains a condition and not a covenant.
While this mortgage clause has never been construed by the Mississippi court as respects the obligation of the mortgagee to pay premiums for which the mortgagor is in default this question has been passed on by a number of courts of this country and the overwhelming weight of authority supports the position of the appellee here, viz., that this clause contains a condition and not a covenant.
Coykendall v. Blackmer, 161 App. Div. 11, 146 N.Y. Sup. 631; Robertson v. Caw, 3 Barb. 410, 418; Locke v. Farmers Loan Trust Co., 140 N.Y. 135, 148, 35 N.E. 578, 582; Brennan v. Brennan, 185 Mass. 560, 71 N.E. 80, 102 Am. St. Rep. 363; Rich v. Atwater, 16 Conn. 409, 418; Ormsby et al. v. Phoenix Ins. Co. of Brooklyn, 5 S.D. 72, 58 N.W. 301.
According to the clear weight of authority in other jurisdictions, where the clause in question has been construed, it is held to be a condition and not a covenant.
Whitehead v. Wilson Knitting Mills, 139 S.E. 456; Home Ins. Co. v. Union Trust Co., 40 R.I. 367, 100 A. 1010; Johnson v. Fort Worth State Bank, 244 S.W. 657; Farnsworth v. Riverton, etc., Co. et al., 47 A.L.R. 1114.
Argued orally by Landman Teller, for appellant, and by N. Vick Robbins, for appellees.
John A. Hennessey, doing business under the name and style of "P.L. Hennessey Brother," and conducting an insurance agency, brought suit against Julia Ellen Helgason, Mattie H. Johnson, W.I. McKay, trustee, and C.W. Thigpen, trustee, and the First National Bank Trust Company, for certain premiums of insurance on property mortgaged to T.A. Helgason and to Mattie H. Johnson. T.A. Helgason, the mortgagee in the first deed of trust, died, and Julia Ellen Helgason succeeded to his rights. The mortgages contained clauses requiring the owners to insure the property for the benefit of the mortgagees in stipulated amounts. The mortgages were given in 1926 and covered annual payments for a period of nine years, and required the owners to carry insurance in the sum of four thousand dollars in one policy, and four thousand dollars in a second policy, in some safe, solvent insurance policy, payable to the mortgagees, or the trustees for the mortgagees' benefit, as their interest might appear, and provided that, if they failed to procure such insurance, the trustees, or the holder of the instruments, should pay the premiums and consider such payments as part of the indebtedness secured by the mortgages.
The policies of insurance were issued and the premiums thereon were paid by the mortgagors up to the year 1929, during which year a policy for four thousand dollars, with premium amounting to seventy-three dollars and fifty cents thereon, was issued to run for one year, and the premium was not paid. On January 26, 1930, a policy for three thousand dollars, premium amounting to fifty dollars, was issued to run for one year, and the premium was not paid. On March 4th a policy for four thousand dollars, premium amounting to sixty-six dollars, was issued to run for one year, and the premium was not paid. On January 26, 1931, a policy for three thousand dollars, premium amounting to fifty dollars, was issued, and the premium was not paid. On March 4, 1931, a four thousand dollar policy was issued, premium amounting to seventy-two dollars, which premium was not paid by the mortgagor.
The declaration which was filed on December 1, 1932, with waiver of process, alleges that repeated demands have been made upon the mortgagors for the payment of the premiums due, but that said mortgagors failed, refused, and neglected to pay same.
The declaration was demurred to, and the demurrer was sustained. It will be noted from reading section 5185, Code 1930, that each fire insurance policy taken out by a mortgagor in a deed of trust shall have attached thereto, or shall contain, a clause providing that the loss or damage shall be payable to the mortgagee or trustee, and that the insurance, as to the interest of the mortgagee, shall not be invalidated by any act or neglect of the mortgagor, nor by any foreclosure or other proceeding, or notice of sale relating to the property, nor by any change in the title or ownership of the property; nor by the occupation of the premises for more hazardous purposes than permitted by the policy; and, in case the mortgagor fails to pay the premiums due on the policy, the mortgagee, on demand, shall pay the same. It is also provided that the mortgagee shall notify the company of any change of ownership of the property, or increase of hazard, and shall pay the premium for such increased hazard for the term of the use thereof; otherwise the policy shall be null and void. The statute reserves the right to the insurance company to cancel the policy at any time, but that, in such case, the policy shall continue in force for the benefit only of the mortgagee for ten days after notice to the mortgagee of such cancellation, and shall then cease and the company shall have the right to cancel the agreement. The statute also provides that, in case there is other insurance on the property, the company shall not be liable under its policy for a greater proportion of any loss than the sum of its policy bears to the whole amount of insurance.
In Bacot v. Phoenix Ins. Co., 96 Miss. 223, 50 So. 729, 25 L.R.A. (N.S.) 1226, Ann. Cas. 1912B, 262, it was held that the mortgage clause of the statute above referred to has the effect of making an independent contract in favor of the mortgagee. In other words, the effect is to issue two policies, one to the mortgagor for the difference between the mortgage debt and the amount of the policy and the other in favor of the mortgagee to the extent of his debt.
What effect is to be given to the statute's words, "shall on demand, pay the premium"? The statute does not fix any period of time at which the demand shall be made, and we must determine from the statute what is meant by the provision.
We are of the opinion that both the mortgagor and the mortgagee are liable to the insurance company, the obligation of the mortgagor being primary, and that of the mortgagee being in the nature of a surety or guaranty. We think that the demand must be within a reasonable time after neglect or failure of the mortgagor to pay the premium.
What is a reasonable time in which the demand must be made is a question of fact to be tried and determined by the trier of facts. Therefore we think that the court below should have overruled the demurrer, and should have determined, after the pleadings were finally settled in the manner provided by law, whether the demand was made within a reasonable time in this case.
As the case is here on declaration and demurrer, we do not decide whether the demand was seasonably made. That can be better determined on the whole pleadings and the evidence. The judgment of the court below, therefore, is reversed, and the cause remanded for further procedure.
Reversed and remanded.
Anderson, J., takes no part.