McLaren v. Hartford Fire Insurance Co.

*McLaren v. Hartford Fire Insurance Co. Insurance against fire. — Transfer of title. After a judicial sale of premises, insured against fire, under a decree of foreclosure, and payment of part of the purchase-money, there is no interest remaining in the former owner, nor in the mortgagee, which is covered by the policy. The master’s deed relates back to the time of sale McLaren v. Hartford Fire Insurance Co., Edm. S. C. 210, reversed. Appeal from the general term of the Supreme Court, in the first district, where, after a verdict for plaintiff, subject to ,the opinion of the court, judgment had been entered for the defendant on the point reserved. (¡Reported, at the circuit, Edm. S. C. 210.) This was an action of assumpsit upon a policy of insurance, whereby the defendant insured the plaintiff against damage or loss by fire, for the term of one year from the 17th January 1843, to the amount of $5000, upon the Pavilion Hotel, at Saratoga Springs, of which the plaintiff was the owner. The policy of insurance in question was assigned by Daniel McLaren, the assured, with the consent of the company, to R. H. Cuming, who held two mortgages upon the premises amounting to $15,000, as collateral security for the payment thereof. • The mortgagee filed a bill to foreclose, and a decree of sale was made, under which, on the 6th September 1843, A. Quackenbush became the purchaser, for the price of $15,000, and paid $500 on account of the purchase-money. By the terms of sale, the sum of $500 was to be paid down; $12,000 secured upon the premises by bond and mortgage; and the balance of the purchase-money paid on the 1st October, or as soon as the decree of sale should be enrolled and the deed ready for delivery ; the building to be kept insured by the purchaser, and the policies assigned. The purchaser, accordingly, effected an insurance for $5000, and assigned the policy to Cuming. The decree was enrolled, and the deed *delivered on the 6th November 1843; and the plaintiff’s, mortgages to Cuming were paid off in full. On the 11th October 1843, the premises were totally destroyed by fire, and this action was brought by Mc-Laren, the party insured. The policy contained the usual clause that in case of any transfer or change of title in the property insured, the insurance should be void and cease. On the trial, Edmonds, circuit judge, there being no dispute about the facts, directed a verdict for the plaintiff, subject to the opinion of the court. There was a verdict for the plaintiff, accordingly, for $5466; and the supreme court having subsequently rendered judgment for the defendant, on the reserved point, non obstante veredicto, the plaintiff took this appeal. Gerard, for the appellant. Lord, for the respondent. [MAJORITY — Gardiner, J. Foot, J.] Gardiner, J. The general doctrine of the English cases is, that in judicial sales, and in contracts between individuals for the sale of lands, the vendee, from the time that his right to a conveyance, or to a specific performance, is complete, is in equity considered as the owner of the premises. In the language of Lord Eldon) “they are his to all intents and purposes; they are vendible as his, chargeable as his; they may be devised as his; they may be assets, and they may descend to his heirs.” (Paine v. Miller, 6 Vesey 353; Ex parte Minor, 2 Id. 561.) In contracts for the sale of real estate, the time when this equitable right is perfected will depend upon the agreement and acts of the parties. (Attorney-General v. Day, 1 Vesey 220; 1 Madd. 290.) In judicial sales in chancery, upon the confirmation of the master’s report, the previous order of sale being considered a mere authority to the master to sell, subject to the approval of the court (11 Vesey 561), after confirmation, and before a conveyance is executed, the vendee, as equit-a^e 0WJaer’ *s entitled ^ the advantages *arising from the increased value of the property, and must sustain the loss of its depreciation (that by the elements included), which does not arise from the acts or default of the vendee. (Ex parte Manning, 2 P. Wms. 441; 1 Id. 491.) The general principle established by these adjudications is applicable to sales of land with us. The practice of the court of chancery in England' may differ from our own, but if, according to either, the equitable right of the vendee may be perfected, before a conveyance is executed, at any stage of the proceedings, the privileges and responsibilities resulting from the equitable ownership would be the same in .both countries. The facts in this case show, that on the 6th of September 1842, McLaren was the owner in fee and mortgagor of the premises, and Cuming, mortgagee, the latter having obtained a decree for foreclosure and sale of the mortgaged premises, which was to take place on that day. McLaren, as owner, had effected the insurance in question with the defendants, which, with their assent, had been assigned to Cuming, as security for the mortgage-debt. Under these circumstances, the property was sold at public auction to Quackenbush, who paid the advance-money and executed the articles of sale, by which he bound himself to complete the purchase. The amount due Cuming, including interest and costs of the suit, was $15,411; the amount bid was $15,000. That the sale was regular and fair in all respects is unquestioned; and it vested, as I think, according to the practice of the court of chancery in this state, a complete equitable title in the vendee to the mortgaged premises. In England, the biddings in the master’s office are in the nature of proposals for the purchase, subject, of course, to the approbation of the chancellor, without which they have no validity, even prima, facie. But with us the sale is strictly judicial, binding all parties from the time when the property is struck off, and cannot be set aside, in general, except for reasons which would prevent *a specific performance, in case of a contract of purchase between individuals. (1 Clarke Ch. 101, and cases cited; 2 Paige 99; 26 Wend. 143.) But the parties went further in this case. The vendee effected insurance upon the premises, as owner, on the 16th of September, and assigned the policy to Cuming, the mortgagee, by whom it was accepted as part performance of the conditions of sale. Quackenbush, by the sale and the acts in affirmance of it, subsequently, became in equity the owner of the premises. If they had advanced in value, he would have been entitled to the benefit; if they had depreciated, he must sustain the loss. The mortgage of Cuming was extinguished, and the specific lien thereby created was converted into a lien upon the purchase-money, secured by the personal responsibility of Quackenbush, and a general lien for the balance of the decree upon the real estate of McLaren other than the mortgaged premises. The insurance in question was made by McLaren, as owner. By the sale, he was foreclosed and divested of every right in or to the premises, except the formal legal title; he had no interest in them, and consequently, could claim no indemnity for their loss. Cuming, to whom the policy had been assigned to secure him as mortgagee, had ceased to stand in that relation to the mortgagor, and through him to the premises; he had received $15,000 upon his mortgage, and for the balance had substituted a general lien, by way of judgment, on other property, for the specific lien upon the mortgaged premises. He had no mortgage, and, of course, could claim no indemnity as mortgagee. To my mind, it is apparent, that this transfer of the ownership of the mortgaged premises was within the spirit of the seventh condition of the policy. (Cook v. Black, 1 Hare 390.) But whether this be so or not, if there were no conditions whatever, McLaren could not recover upon the policy, a mere contract of indemnity, without showing a valuable interest in the subject insured, and a loss occurring by means of the *peril insured against, without changing the entire character of the contract. The judgment should be affirmed. Foot, J. The question is this case is, whether there remained any insurable interest in the appellant, or the mortgagee, after the sale of the premises under the decree; and this depends on the question, whether the right, title and interest of the mortgagor and mortgagee passed to the purchaser, on the sale under the decree. By the English practice and decisions, they did not; but our practice is somewhat different, and by a decision of our supreme court, made in 1843, and afterwards affirmed by tbe court of appeals, tbe master’s sale passed tbe interest of tbe parties, presently, and tbe deed, when given, related back to tbe time of sale. (Fuller v. Van Giesen, 4 Hill 173.) Although tbe naked title may not vest in tbe purchaser, till tbe deed be given, yet tbe whole right and interest passes to him, immediately on tbe sale, and be becomes from thence tbe owner. Judgment affirmed. Soe Cheney v. Woodruff, 45 N. Y. 99, where it is said, the case was well decided, on this ground.