Coates v. Pennsylvania Fire Insurance

58 Md. 172, 1882 Md. LEXIS 19

• Court: Court of Appeals of Maryland
• Decided: March 22, 1882
• Status: Published

Opinion

Ritcuim, J.,

delivered the opinion of the Court.

The single question to be determined on this appeal is whether the plaintiffs, to whom the policy of insurance on which they seek to recover, was issued by the defendant, are entitled to maintain this action in their own name, because of the policy’s containing the clause, “Loss, if any, payable to the Havings Bank of Baltimore, mortgagee,” notwithstanding the mortgagee had given its written consent to the plaintiffs, so to bring the suit, and such consent was averred in the narr.

The plaintiffs were the party with whom the company contracted; were the owners of the property insured, when the policy was issued, and at the time of the loss, and had paid the intermediate renewals by which the policy was kept in force.

There was no consideration moving from the mortgagee to the company; and the company assumed no enhanced risk or burden in consenting to pay the insurance money to the mortgagee. This application or disposition of the money was an arrangement, in substance, as between the assured and the mortgagee, for the greater security or indemnity of the latter, and was not of the essence of the company's obligation. The right to the money really accrued to the assured, in case of loss, by virtue of their having been the contracting party; of their property being the subject of the insurance; and of their having paid the premiums which constituted the consideration. But because of their (direction simply, incorporated at their instance in the policy, and not because of any independent liability incurred to the mortgagee by the company, the mortgagee was designated as the recipient of the payment, though in fact such payment enured to their own benefit.

It is true, that by reason of this provision, the mortgagee acquired such an interest under it, that suit could have been brought by it, had it so elected. “If, (says Bulles,, J.,) one person makes a promise to another for the benefit of a third, that third may maintain an action upon it.'' 3 Bos. & Pul., 149, in notis. “In policies of insurance, it is a common practice to bring your action, ^ either in the name of the party by whom the contract was made, or of the party for whom the contract was made.” Per Bayley, J., Sargent vs. Morris, 3 Barn. & Ald., 281.

The designation of a party to whom the money shall be paid over, does not destroy the legal right of the party, through whose contract the right to have the money has accrued, to demand it himself when there has been a failure to so pay it over.

Of course, the company, in a case like the present, if willing to pay, is interested in not having to pay the money twice.

The payment to the third party would be a good plea in bar. Or his written consent that the original party to the contract may sue for himself, as in this case, is a waiver or estoppel sufficient to protect tlie company, should such third party also attempt to bring suit. Indeed, if apprehensive of suits by both parties, tlie payment of the money into Court would be a ready and adequate means of protection against separate demands. But, where, as in the present instance, the party assured brings the suit with the express consent, distinctly alleged, of the party indicated to receive the money in case of loss, no risk can be incurred by the defendant in pleading to the merits. A judgment in such a case would he a plain bar to any further demand.

(Decided 22nd March, 1882.)

The following citations support the view we take of this case. 18 Pick., 56; 20 Pick., 265; 5 Gray, 52; 61 Me., 503; 12 Cush., 541; 109 Mass., 573; 38 N. J. L., 140; Flanders on Ins., ch. xv, sec. 7; 1 Jones on Mort., 408.

The exception to the Court’s refusal to admit the proof offered by the appellants having been well taken, the judgment is reversed and the cause remanded.

Judgment reversed, and cause remanded.