BRYANT 'V.
CflAR.TER.
OAlt LIFE INS. CO.
771
BRYANT and others v. CHA.RTER OAK «Jz'1'cuit Court, N. D. illinois.
LIFE
INs. Co.
July 9,1885.) IN-
MORTGAGE-CONVEYANCE WITH RESERVATION OF LIFE-EsTATE-PAYMRNT OF SURANCE MONEY-RENEWAL OF MOUTGAGE-l!'OHECLOSURE.
B. borrowed $19,OUO from I., and gave his bond for that amount, and secured it by mortgage on certain real estate in Chicago. The mortgage provided that B. should keep the property insured against tire and assign the policies as collateral security, which was done. The mortgage provided that in case of loss the mortgagee and his assigns might collect the policies and apply the money in payment of the loan. B. subsequently conveyed the property, in consideration of love and affection, to his children, reserving a life· estate therein to himself. 1. sold and assigned the bond and mortgage to C., and the hond became due and remained unpaid until the buildings were destroyed. by tire. C. collected $8,875 on the policies and gave B. credit on his bond for that amount. Subsequently, at his request. B. was allowed to renew the mortgage for five years, and to receive and expend the amount collected on the policles, less the interest due on the bond, III restoring the burned buildings. Held, that the money paid to C. did not extinguish the mortgage pro tanto; that the agreement between B., liS life tenant, and C. was valid; and that C. was entitled to foreclose the mortgage on default in payment thereof.
In Chancery. Hugh L. Mason, for complainant. Gyrus Bentley, for defendant. GRESHAM,J. James M.Bryant borrowed $19,000 from E. S. Isham, on the seventeenth day of May, 1866, and on the same day gave his bond for that amount, and, to secure its payment, executed a mortgage upon real estate in Chicago. It was made the duty of the mortgagor, by a provision in the mortgage, to keep the premises insured against fire, and assign the policies to the mortgagee as collateral security. Policies were obtained and assigned in pursuance of this covenant. The mortgage also provided that the mortgagee and his assigns might collect the policies in case of loss, and apply the money in payment of the mortgage debt. On the twenty-eighth of August following, Bryant, in consideration of love and affection, by a quitclaim deed conveyed the mortgaged premises to his children, reserving a life-estate to himself. This deed contained the "And it is hereby understood and agreed that the said party of the first part reserves the right and the power to charge each, any, and all of said lots or parcels of land by mortgages or trust deeds, conveying the fee-simple title thereof, for moneys raised. or to be raised, loaned. or borrowed thereon, for the purposes of improving or adding to the house or houses now upon" anyone or more or all of said parcels of land or lots. or erecting upon anyone or more or all of said lots, any new building or buildings, whenever, in his opinion, the same may be necessary or proper, by reason of injury or destruction of any house or houses now on said lots, or any of them, by fire or other casualty. or ordinary wear and tear from use, occupation, or time. Said improvements. if made, being for the benefit of those entitled. or to be hereafter entitled, to said lots, and it being right and proper to charge the whole estate in fee-simple with the moneys to be raised for such improvements. And it is further understood, provided, and agreed that no person or persons who
'172
FEDERAL REPORTER.
make a loan or loans upon such mortgages or trust deeds shall be required to look to the application of such ?}oneys. "It is distinctly understood that said party of the first part reserves to himself a life-interest in the property hereby conveyed."
On the twenty-fourth of January, 1867, Isham sold and assigned the bond and mortgage to the defendant. The bond became due on the seventeenth day of May, 1871, and rem!Lined wholly unpaid until the ninth day of October of the same year, when the insured buildings were destroyed by the great Chicago fire. On the twenty-first of November following, the defendant collected $8,875 on the policies, and on its books gave the mortgagor credit for that amount, but madc no indorsement of this credit on the bond or mortgage. On the second day of June, 1878, the mortgagor made application to the defenda.nt for a renewal of the mortgage for five years, and asked that he be permitted to receive and expend the insurance money in restoring the destroyed buildings. The defendant agreed to this on the tenth of the same month, and on the faith of this agreement the mortgagor proceeded to rebuild. After the mortgagor had expended between eight and ten thousand dollars under the agreement, the defendant, on the thirtieth of September following, delivered to him the amount collected on the policies, less the interest which had accrued and remained unpaid on the bond. The exact amount the mortgagor thus received under the old mortgage, and without executing a new one, was $7,880.09. It is insisted by the complainants that the money paid to the defendant amounted to an extinguishment pTO tunto of the mortgage; and that the mortgagor, as life-tenant, could not mortgage the fee. It is not denied that the insurance money was expended in good faith, in restoring the destroyed buildings. As life-tenant the mortgagor was entitled to possession of the premises, and the rents a.nd profits, and no one could interfere with his possession, so long as he committed no waste. He was bound to keep down the interest, but he was not bound to payoff incumbrances. Although the evidence is not clear on that point, it may be assumed that the mortgagor had the buildings insured before he executed the deed to his children. No right was secured to them in the deed, or otherwise, to share in the benefit of the insurance. The mortgagor's covenant to keep the buildings insured for the benefit of the mortgagee was his personal obligation to the latter. While the policies were held by the mortgagee as collateral security to the mortgage debt, they were also intended to indemnify both the mortgagee and the mortgagor. It does not follow that, because the defendant, as the owner of the bond and mortgage, was authorized to collect the insurance money, and apply it as a payment on the debt, that the underwriters might not have paid the loss to the mortgagor, with the mortgagee's consent. If payment had been thus made, the children could not have complained. In using the insurance money to rebuild, and thus
PEORIA SUGAR REFINING CO. 11. PEOPLE'S FIRE INS. 00.
77 3
restore the impaired security, no injury resulted to the estate. This money was placed to the mortgagor's credit on the defendant's books without being indorsed as a credit on the bond; it stood for the destroyed building, and, as such, was collateral security for the debt, just as the policies were before the destruction of the property. It was therefore competent for the defendant and the mortgagor to dispose of this money as they saw fit. The mortgagor did not choose to direct the defendant to apply it as a payment on the mortgage debt. Gordon v. Ware Savings Bank, 115 Mass. 588. The right asserted by the children as remainder-men is unfounded both in law and equity. It follows from this view of the case that, without reference to the terms of the deed from the mortgagor to his children, the defendant, the Charter Oak Company, is entitled to a decree on its cross-bill for the amount of the bond and interest, less the credit already made on the interest, and a decree of foreclosurl"
PEORIA SUGAR REFINING
Co.
V. PEOPLE'S FIRE INS.
(Circuit Oourt, D. Connecticut. 1.
September 10, 1885.)
FIRE I"SUUANCE-IxCREASE OF HAZAlm, S'rrpULATION AS To-REKEWAI>.
A policy of lire provided that once made might be continued for such further time m ght hc agrecd on, certain condilions bcing complied with, "and it shall he considered as continued under the original in so far as it may not be varied by a new reprcsentation in writing, which it shall in all cases he incumh"nt on the party insured to make when the risk has been Changed, either within itself or by surrounding or adjacent buildings; otherwise said policy and renewal shall lJe void and of no effect." During term of risk a building was erected within 41 feet of the property insured, hut the fact not reported to the insurance company. At expiration of rlsk a rcnewal by a new policy was asked for and given. covering the same amount at a slightly incrcased rate. Fire from the new building was communicated to the one insured, and that de'ltroved. Held, that the new building was an increase of the hazard of the risk, and that the failure to notify the company thereof avoidcd the policy.
2.
SAlIm-PEHMrssION "TO MAKE ADDITIONS, ALl'EUATIOXS, AND REPAIUS."
·Where a policy of insurance gave permisSlon to the insured" to make additions, alterations, and held, that a new warehouse erected 40 feet away from the main buildlllg is nBither an addition, an alteration, nor repairs. although connected with the main building by a bridge and an underground passage used for pipes.
At Law. Alvin P. Hyde and Franklin D. Locke, for plaintiff. Charles E. Perkins, for defendant. SHIPMAN, J. This is an action at law which was tried by the court, the parties having, by written stipulation duly signed, waived a trial by jury. The facts which are found to have been proved, and to be
774
true., are as follows: In February, 1880, the plaintiff employed Fred. erick B. Hamlin, as its insurance broker, to procure insurance upon its property to a large amount. He was not able to obtain the entire amount that was desired, and employed William W. Buckley & Co., as his subagents or brokers, to obtain for the plaintiff a portion of said insurance. Said Buckley, as the plaintiff's agent, and not in behalf of the defendant, applied on March 3, 1880, to the defendant, an insurance company in Middletown, Connecticut, for insurance on the plaintiff's brick grape-sugar manufactory, and on the machinery contained therein. He also furnished to the defendant a memorandum, containing a simple diagram of the lower story of the plaintiff's fac. tory,and written statements in regard to the characteristics and valuations of the property to be insured. The only statement which is important in the present case is the following: "Building detached on all sides." The memorandum did not indicate how near any other buildings were to the insured property. It was entirely detached from, and not within 40 feet of, any other building. The defendant issued to plaintiff a policy of insurance for $1,000 upon its factory; for $1,000 upon its machinery contained therein,-for the term of one year from March 4, 1880. Said policy contained the following provisions: "Insurance once made may be continued for such further term as may be agreed on, the premium therefor being paid. and a renewal receipt being given for the same; and it shall be considered as continued under the original representation in so far as it may not be varied by a new representation, in writing, which, in all cases, it shall be incumbent on the party insured to make when the risk has been changed, either within itself or by the surrounding or adjacent buildings; otherwise said policy and renewal shall be void and of no effect."
In May, 1880, the plaintiff built a warehouse, 144 feet long, and 40 5·12 feet distant from the main factory. The first story was of brick and the second story was of wood. All but the brick part was covered by an iron sheeting. The second story of the main building and the second story of the warehouse were connected by an iron skeleton bridge, which was used by the workmen as a passage-way. The bridge was originally of wood, but was changed to iron at the suggestion of some insurance men. There was also an underground passage, about four feet square, lined with wood, between the two buildings. This was not used as a passage-way for men nor to run feed, but as a place for pipes, and through it ran the large water· pipe which supplied the main building. The wooden lining was not scorched at the time of the fire, so that when the factory was rebuilt the same underground connection between the two buildings was again used. In the basement of the warehouse were two iron revolving cylindrical drums or dryers for drying feed. They were heated by iron steam-pipes to about 160 degrees Fahrenheit, and made six revolutions per minute. The main factory and its contents were entirely by fire
7EORIA SUGAR REFINING CO. V. PEOPLE'S FIRE INS. CO.
775
on October 27, 1881.
The fire originated in the warehouse in a room near the dryers, but how or from what cause it originated is nnknown. A strong wind which was blowing at the time carried the fire to the main factory. On February 24, 1881, said Buckley applied in writing, for the plaintiff, to the defendant to "renew by new policy" said policy, which was to expire March 4, 1881, "divisions same as last year; rate increased to It per cent." By "divisions" the respective amounts on building and machinery were meant. In pursuance of this application for renewal, and without anyexamination, or other representations or survey, the defendant issued a new policy, whereby said pre-existing insurance for $2,000 was renewed for one year, ending March 4, 1882. The risk had been increased by the erection of the new building. The action is brought upon the new policy. It contained the same provisions which have been quoted, and, except in rate, was a substantial repetition of the old policy. The defense is that after the date of the first policy, and before the renewal, the risk had been materially changed by the erection of the warehouse, of which no notice was given to the defendant; and that when the renewal was obtained, no information was given of the increased risk. The position of the case is this: The memorandnm made no representations as to the distance between the main factory anrl any other building. It simply said j "Building detached on all sides;" and no evidence was offered by the defendant to show that the connection by the underground, wooden-lined conduit increased the risk or made any material change of the representation; so that no attention need be given to any supposed increase of risk from the conduit. There was, as testified, an increase of risk by the erection of the new building within 41 feet from the main factory. The question, then, arises, does the quoted provision in the policy require that, when a renewal is obtained upon a risk which had been increased during the preceding term, without the knowledge of the insurer, in a particular concerning which no representations were made in the original application, information of such increase of risk shall be given upon the request for a renewal? The language of the provision is: "Which, [new representation, J in all cases, it shall be incumbent on the party insured to make when the risk has been changed," etc. If this was the only provision in the policy in regard to notice of change of risk, there would be good ground for the opinion that a new representation was incumbent upon the insured only when an original representation had been made in regard to the particulars which had been changed, and that when silence had originally existed, the insured was not called upon to make new representations. But the policy also says: "If, after insurance is effected, either by the original policy or by the renewal thereof, * * * if the risk be increased by any means whatever within the knowledge of the * * * without immediate notice
776
to the company, and indorsement made on the policy, this insurance shall be void and of no effect."
The oontraot thus provided that when the risk was materially increased after insuranoe was effected, by any means known to the insured, notice must be given or the policy would become void. It can hardly be the fair oonstruction of the policy tha,t it could be avoided, during the continuance of the first term, by an increase of risk unknown to the insurer, and that when the insurance was renewed, without notice or knowledge of the increase, the renewal should be Yalid. The intent of the policy was to make it incumbent upon the insured, after the original insurance was effected, to inform tbe insurer of any material changes in the character of the risk by known means. He was compelled by the stringent provisions of his contract tu affirmatively tell the insurer of a material increase in the risk which occurred after the insurance was effected, and, if no such information had.been given, to tell the insurer of such increase when a renewal was asked for. The duty to give such information seems not to depend upon the fact that representations had been made prior to the original insurance which had become incorrect. But the plaintiff says that the provisions of the policy in regard to continuing or renewed insurance are applicable only when the renewal is evidenced or shown by a renewal receipt. This construction, though plausible, does not seem to me to be fair. The policy says that insuranoe once made may be oontinued for an agreed time, a renewal receipt being given therefor; that is, the insurance may be continued after the expiration of the original term, and may be evireceipt, and a new policy is not necessary. The denced by a policy then says: "it," i. e., the insurance continued for an agreed term, "shall be considered as continued under the original representation," eto. "It" refers to the renewed insurance, but is not limited to renewed insurance evidenced by a renewal receipt. Such a limitation would be unjust to the insurer, and is inconsistent with good faith on the part of the insured when he asks to have the insurance renewed by a new policy. It must be observed that in this part of the case there are three facts of importance: (1) The careful provisions of the policy which made it incumbent upon the insured to give notice of any material change in the risk by known means; (2) the defendant was expressly requested to renew the insurance and to renew by a new policy; (3) the new policy was a substantial repetition of the terms of the original policy except in the rate, the change therein having been directed by the applicant. What would be the state of the law in a case in which either of these conditions did not exist, it is not necessary to consider. By the policy permission was given "to make additions, alterations, and repairs." A building 40 feet distant from the insured building, though connected with it by a bridge and an underground passage, cannot, with propriety, be called an "addition." It
SWEE'J: V. PERKINS.
'177
is a new and separate building, while it is attached to the main factory in the way that has been stated. Let judgment be entered for the defendant.
SWEET
v.
PERKINS.
(Oircuit Oourt, E. D. Wisconsin.
June, 1885,)
PRACTTCE-llrLL OF EXCEPTIONS, WHEN SETTLED-REV. ST. § 700-LAW RUT,I>, 80.
A lJlIl of exceptions must be prupartJd and. settled. before the tJnd 01 tilt! tt:rm at which the cause was tl'itJd.
At Law. F. L. Gilson, for the motion. F. C. Winkler, contra. DYER, J. 'l'his is a motion by the plaintiff for leave to settle and file a bill of exceptions preliminary to a removal of the case by writ of error to the supreme court. The action was tried before the court, without the intervention of a jury, June 28, 1883, and a finding and judgment in favor of the defendant were made and entered July 23 of the S'tme year. No steps have been taken by the plaintiff from that time to the present application to make or settle a bill of excep" tions, and this application is presentecl within a short time before the statutory period of two years prescribed for bringing a writ of error will expire. Until the present time the court has had no notice of any purpose on the part of the plaintiff or his counsel to prepare and have settled a bill of ex.ceptions in the cause, and no consent of the defendant to now settle the exceptions has been obtained. The question, therefore, is whether, after this long delay, the application to present a bill of ex.ceptions, and have it settled and signed, should be granted. The only excuse made for this delay is set forth in an affidavit, which is now submitted to the court, and in which it is stated that on the rendition of judgment the plaintiff instructed his attorney then in charge of the case to take the necessary steps to remove it to the supreme court; that the plaintiff is informed and believes that his attorney allowed the term at which the action was tried to pas,:; without taking any steps to settle a bill of exceptions; that his attorney has since died; that he is ad vised by his present counsel that t'. bill of exceptions cannot be allowed except by special leave of tle court; and that the plaintiff was and is ignorant of the rules and pratltice of the court in respect to settling a bill of exceptions, and helieved that all things had been done in time to perfect flo removal of the cause to the supreme court. This affidavit presents no valid e::tcuse for failing to comply with the rule of court and the requiftl-
