policy or customs.

Questions on a policy of insurance are of general commercial law, and depend upon the construction of a contract of insurance, which is by no means local in its character, or regulated by any local The Circuit Court charged the jury, that at law; whatever might be the case in equity, mere parol notice of another insurance on the same property was not a compliance with the terms of the policy; and that it was necessary in the case of such prior policy, that the same should not only be notified to the company, but should be mentioned in or indorsed on the policy; otherwise the insurance was to be void and of no effect. Held, that this never can be properly said that the stipulation in the policy is complied with when there has been no such mention or indorsement as it positively requires; without which it declares that the policy shall be void and of no effect.

instruction of the Circuit Court was correct. It

IN error to the Circuit Court of the United

States for the of Rhode Island. The case was argued by Mr. Whipple for the plaintiff in error, and by Mr. Green and Mr. Sergeant for the defendants in error.

effect. And in case of any other insurance upon the property hereby insured, whether prior or subsequent to the date of this policy. the insured shall not in case of loss or damage be entitled to demand or recover on this policy any greater portion of the loss or damage sustained than the amount hereby insured shall bear to the whole amount insured on the said property." The interest of the insured in this policy is not assignable, unless by consent of this corporation, manifested in writing; and in case of any transfer or termination of the interest of the insured, either by sale or otherwise, without such consent, this policy shall henceforth be void and of no effect." Annexed to the policy are the proposals and conditions on which the policy is asserted to be made, and among them is the following: "Notice of all previous insurances upon property insured by this company shall be given to them, and indorsed on the policy, or otherwise acknowledged by the company in writing, at or before

Mr. Justice STORY delivered the opinion of the time of their making insurance thereon, the court:

This is a writ of error to the Circuit Court for the District of Rhode Island. The original action was brought by Carpenter, the plaintiff in error, against the Providence Washington Insurance Company, the defendants in error, upon a policy of insurance underwritten by the insurance company of fifteen thousand dollars, on the Glenco Cotton Factory in the State of 497*] New York," *owned by Carpenter, against loss or damage by fire. The policy was dated on the 27th of September, 1838, and was to endure for one year. Among other clauses in the policy are the following: And provided further, that in case the insured shall have already any other insurance on the property hereby insured, not notified to this corporation, and mentioned in or indorsed upon this policy, then this insurance shall be void and of no effect." "And if the said insured or his assigns shall hereafter make any other insurance on the same property, and shall not with all reasonable diligence give notice thereof to this corporation, and have the same indorsed on this instrument, or otherwise acknowledged by them in writing, this policy shall cease and be of no further

A policy upon a cargo in the name of A, "on account of whom it may concern," or with other equivalent terms, will enure to the interest of the party for whom it was intended. Hooper v. Robinson, 98 U. S. (8 Otto), 528.

The interest of sureties in a distiller's bond, given under the internal revenue laws, in the whiskey manufactured and in store, by reason of their liability for the government tax, is an insurable interest. Ins. Cos. v. Thompson, 95 U. S. (5 Otto), 447. One who is in possession of real property under a power of attorney to sell it to cover advances made to the owner, upon its purchase, has an insurable interest. Brugger v. State Investment, &c., Co., 7 Reporter, 616.

The owner of mortgaged property still retains an insurable interest to the full value, whether the mortgage is due or not. Allen v. Franklin Ins. Co., 9 How. Pr., N. Y., 501; Traders' Ins. Co. v. Robert, 9 Wend., 474; Stetson v. Mass. Mu. Ins. Co., 4 Mass., 330; Strong v, Manuf. Ins. Co., 10 Pick., 40; Curry

otherwise the policy made by this company shall be of no effect.

The declaration averred that during the continuance of the policy he, Carpenter, was the owner of the property by the policy insured, and was interested in said property to the whole amount so insured by the company; and that on the 9th of April, 1839, the factory was totally destroyed by fire, of which the company had due notice and proof. The cause came on for trial upon the general issue, and a verdict was found for the defendants. The plaintiff took a bill of exceptions to certain instructions refused, and other instructions given by the *court in certain matters of law [*498 arising out of the facts in proof at the trial; and judgment having been given upon the verdict for the defendants, the present writ of error has been brought to ascertain the validity of these exceptions.

The facts which were in proof at the trial were very complicated; but those which are material to the present inquiry will be, as briefly as they may be, here stated. The premises were originally owned in equal moieties by Egbert and Epenetus Reed. In June, 1835,

v. Commonwealth Ins. Co., 10 Pick., 535; Smith v. Lascelles, 2 Term R., 187; Higginson v. Dall, 13 Mass., 99.

A cestui que trust may insure his interest. Gordon v. Mass. Ins. Co., 2 Pick., 249, 250.

The mortgagee of a vessel has an insurable interest. Roussel v. St. Nicholas Ins. Co., 9 J. & Sp.,N. Y., 279.

The following persons have insurable interests, and may insure the property in their own names: A commission merchant on goods held by him for sale. Waring v. Indemnity Ins. Co., 45 N. Y., 606.

The owner of equity of redemption. Cone v. Niagara Ins. Co., 60 N. Y., 619.

The owner of a crop. Noyes v. Hartford Ins. Co., 54 N. Y., 668.

The owner of legal title, for benefit of another. Bicknell v. Lancaster Ins. Co., 58 N. Y., 677.

Trust company in possession of railroad. Farmers' L. & T. Co. v. Harmony Ins. Co., 51 Barb., 33: 41 N. Y., 619, n.

Different parties having different interests in the same subject matter, may severally procure insurance of their several interests. Higginson v. Dall, 13 Mass., 96: Locke v. North Am. Ins. Co., 13 Mass., 61.

One may insure his equitable interest in property, the legal title to which is in another. Oliver v. Greene, 3 Mass., 133; Locke v. North Am. Ins. Co.,

the American Insurance office, after the loss, by Carpenter, as trustee of or for the benefit of Reed, for the amount of the six thousand dollars insured thereby; and that at the November Term, 1839, of the Circuit Court, the company set up as a defense, that there was a material misrepresentation of the cost and value of the property in the factory insured made to them at the time of the original insurance; and it being intimated by the court that if such was the fact it would avoid the policy, the plaintiff acquiesced in that decision, and discontinued or withdrew the action before verdict.

The instructions prayed and refused, and also the instructions actually given by the court, are fully set forth in the record. It does not seem important to the opinion which we are to pronounce, to recite them at large, in totidem verbis, since the points on which they turn admit of a simple and exact exposition.

recover for the loss, for he sustains no damage thereby; neither can the mortgageor take advantage of the policy, for he has no interest whatsoever therein. On the other hand, if the premises are destroyed by fire before any payment or extinguishment of the mortgage, the underwriters are bound to pay the amount of the debt to the mortgagee, if it does not exceed the insurance. But then, upon such payment, the underwriters are entitled to an assignment of the debt from the mortgagee, and may recover the same amount from the mortgageor, either at law or in equity, according to circumstances; for the payment of the insurance by the underwriters does not, in such a case, discharge the mortgageor from the debt, but only changes the creditor.

Far different is the case where an insurance is made by the mortgageor on the premises on his own account; for, notwithstanding any mortgage or other incumbrance upon the premises, he will be entitled to recover the full amount of his loss, not exceeding the insur

remains personally liable to the mortgagee or other incumbrancer, for the full amount of the debt or incumbrance.

These principles we take to be unquestionable, and the necessary result of the doctrines of law applicable to insurances by the mortgageor and the mortgagee. If, then, a mortgageor procures a policy on the property [*502 against fire, and he afterwards assigns the policy to the mortgagee with the consent of the underwriters (if that is required by the contract to give it validity) as collateral security, that assignment operates solely as an equitable transfer of the policy so as to enable the mortgagee to recover the amount due in case of loss; but it does not displace the interest of the mortgageor in the premises insured. On the contrary, the insurance is still his insurance, and on his property, and for his account. And so essential is this, that if the mortgageor should transfer the property to a third person without the consent of the underwriters, so as to devest all his interest therein, and then a loss should occur, no recovery can be had, therefore, against the underwriters, because the assured has ceased to have any interest therein, and the purchaser has no right or interest in the policy. Another essential difference between the case of a mortgageor and that of a mortgagee (which has been already hinted at), is that the latter can insure for himself, at most, only to the extent of his debt, whereas the mortgageor can insure to the full value of the property, notwithstanding any incumbrances thereon, for the reasons already stated.

The first instruction asked the court, in effect, to say that the original policy of the Amercan Insurance Company, made in De-ance; since the whole loss is his own, and he cember, 1836, and the several renewals thereof, although made in the name of the Wheelers (the mortgageors), being in fact for the use and benefit of Epenetus Reed, the mortgagee, were for all substantial purposes the policy of Reed, and could never inure to the benefit of the Wheelers or of Carpenter; and that neither the Wheelers nor Carpenter had any such interest therein as rendered it incumbent on them to give any notice of its existence to the Washington Insurance Company; and that it was to all intents and purposes as if Reed had effected the said policy in his own name upon his -specific interest as mortgagee. This instruction the court refused to give; and on the contrary, instructed the jury that as by the memorandum made on that policy on the 14th of December, 1837, the policy was by the consent of all the parties interested therein, and of Carpenter, to be for the benefit of Carpenter, he, Carpenter, became interested therein legally or equitably; and that notwithstanding the assign ment thereof by the Wheelers to Carpenter, and of Carpenter to Reed, the policy and the renewals thereof ought to have been notified to 501*] the *Washington Insurance Company at the time when the policy declared on was underwritten, if the policy was then a subsisting policy, and was so treated by Carpenter and the American Insurance Company, and Carpenter had a legal or equitable interest therein, and was entitled to the benefit thereof. The question, then, is here broadly presented. whether the policy of the American Insurance Company is, under all the circumstances, to be treated as a policy exclusively for Reed, the mortgagee, or whether it is to be treated as a policy on the property of and for the benefit of the mortgageors. No doubt can exist that the mortgageor and the mortgagee may each sepa rately insure his own distinct interest in the property. But there is this important distinction between the cases, that where the mortgagee insures solely on his own account, it is but an insurance of his debt; and if his debt is afterwards paid or extinguished, the policy Ceases from that time to have any operation; and even if the premises insured are subsequently destroyed by fire, he has no right to

Some of these principles are completely illustrated by the terms of this very policy of the American Insurance Company; and the like clauses are to be found in the policies of the Washington Insurance Company, now under consideration. Thus, although it is expressly provided that the assured may assign this policy to Epenetus Reed," yet it is at the same time provided that

the interest of the assured in this policy is not assignable unless by the consent of this corporation, manifested in writing; and in case of any transfer or termination of the interest of the insured, either by sale or otherwise,

without such consent, this policy shall from thenceforth be void and of no effect." Now, the interest here last spoken of, manifestly is the interest of the owner in the premises insured, and not merely his interest in the policy.

66

premises, in case of a loss by fire. It is not attached or an incident to his mortgage. It is strictly a personal contract for the benefit of the mortgageor, to which the mortgagee has no more title than any other creditor."

For these reasons it is apparent that Epenetus Reed, as mortgagee, and merely in that character, can have no interest in or right to the policy in the American office now under consideration. The insurance is not made by him, or in his name, or upon his account. The policy was originally made in December, 1836, for Henry M. Wheeler & Company, who were then the owners of the factory; and by its very terms it is an insurance for them against loss or damage by fire. When the policy was renewed in December, 1837, it was so renewed for the benefit of Henry M. Wheeler and Jeremiah Carpenter, who had then become the joint owners thereof. When subsequently, in April, 1838. Carpenter became the sole owner of the premises, the company agreed to the transfer and assignment of the entirety to Carpenter, so that henceforth it became a policy upon his sole property, for his account and benefit, in the same manner and with the same legal affect as if the policy had been renewed in his own name.

But it is said that there is a clause in the original policy, and it is equally applicable to the renewals, "that the assured may assign this policy to Epenetus Reed." And the argument is, that this liberty to assign, when the assign ment to Reed was actually executed, transferred the whole interest in the property insured, as well as in the policy to Reed, and made the policy, to all intents and purposes, a policy for the sole benefit of Reed as mortgagee, as much as if the insurance had been made in his own name.

But independently of any special clauses of this sort, it is clear, both upon principle and authority, that an assignment of a policy by the insured only covers such interest in the premises as he may have at the time of the insurance and at the time of the loss. It is the property of the insured, and his alone, that is designed to be covered; and when he parts 503*] with his title to the *property he can sustain no future loss or damage by fire, but the loss, if any, must be that of his grantee. The rights of the assignee cannot be more extensive under the policy than the rights of the assignor; and as to the grantee of the property, he can take nothing by the grant in the policy, since it is not in any just or legal sense attached to the property, or an incident thereto. This doctrine was laid down in very expressive terms by Lord Chancellor King, so long ago as in the case of Lynch v. Danzell (4 Bro. Parl. Rep., 432, edit. Tomlins; 2 Marsh. Insur., b. 4, ch. 4, 803), which was an insurance against fire. These policies," said he, are not insurances of the specific things mentioned to be insured, nor do such insurances attach on the realty, or in any manner go with the same as incident thereto by any conveyance or assignment, but they are only special agreements with the persons insuring against such loss or damage as they may sustain. The party in sured must have a property at the time of the loss or he can sustain no loss, and consequently can be entitled to no satisfaction." These policies are not in their nature assignable, nor is the interest in them ever intended to be To this suggestion several answers may be transferable from one to another without the made, each of which is equally fatal to the conexpress consent of the office." Now, this case struction contended for. In the first place, alis the stronger, because it was a case where though an assignment to Reed was authorized not only the policy but the premises had been by the policy, it was never disclosed to the assigned to the very parties who sought the American Insurance Company for what pur benefit of the insurance. The same doctrine poses or objects the assignment was to be made, was asserted by Lord Hardwicke, in the case of whether to Reed as trustee, or agent of the inThe Sadlers' Company v. Badcock (2 Atk., 554), sured, or for *fugitive and temporary [*505 where there had been an assignment of the purposes, or as a security for debts, or whether policy after the insured ceased to have any it was designed to be absolute and uncondi interest in the premises. Upon that occasion tional. Neither was it disclosed to the com Lord Hardwicke said: "I am of opinion [that] pany that Reed was in point of fact a mortthe insured should have an interest or property gagee; nor were the company requested to in at the time of the insuring and at the time the sure his interest as mortgagee, or to make the in fire happens." The society are to make sat-surance exclusively upon his interest and for his isfaction in case of any loss by fire. To whom account. Now, as has been already seen, an insuror for what loss are they to make satisfaction? ance for a mortgageor, and one for a mortgagee, Why, to the person insured, and for the loss involve very different considerations, responsi be may have sustained; for it cannot properly bilities, rights, and duties; and the company be called insuring the thing, for there is no might well be willing to make an insurance upon possibility of doing it, and therefore must mean the property on account of the mortgageors, insuring the person from damage; and he when they might be unwilling to make any on accited with approbation the very language of count of the mortgagee. And it is clear, upon Lord King, already stated, in Lynch v. Danzell. principle, that no policy can or ought to be deem The authority of these cases was fully recog-ed a policy exclusively upon the interest of the nized and acted upon by this court in the case of The Columbia Insurance Company of Alex andria v. Lawrence (10 Pet., 507, 512), where the 504*] *court said: We know of no principle of law or of equity by which a mortgagee has a right to claim the benefit of a policy underwritten for the mortgageor on the mortgaged

mortgagee, unless the company have notice that it is so designed and they assent to it. A mortgage interest is without doubt an insurable interest; but then it is a special interest, and should be made known to the underwriters. Mr. Marshall, in his Treatise on Insur ance against Fire, says: "It is not necessary,