Schmitt v. Gripton

California Court of Appeal Apr 14, 1926 No. Docket No. 5355.Published

Before: Cashin

AI Brief

AI-generated · verify before citing

Holding. The court held that the standard mortgage clause requiring a mortgagee to pay premiums upon the mortgagor's default constitutes a condition of coverage rather than a personal covenant or promise by the mortgagee to pay. Consequently, the mortgagee is not personally liable for unpaid premiums.

Issues

Whether a standard mortgage clause requiring a mortgagee to pay premiums upon the mortgagor's default creates a personal covenant to pay or merely a condition of insurance coverage.
Whether the evidence supported a finding that the mortgagee expressly or impliedly promised to pay the premiums.

Disposition. reversed

Quotations verified verbatim against the opinion

“the use of the word “condition” in the same connection fairly removed the ambiguity and clearly expressed the intention that the clause should be construed in the sense which the word implies, namely, as a condition, and not a covenant.”

CASHIN, J.

An action to recover the earned premiums upon certain policies of fire insurance from the mortgagee of the insured property.

The court found, in accordance with the allegations of the complaint, that three policies of insurance were executed and delivered by respondent’s assignors, to California Lumber Products Company, a corporation, insuring property owned by the latter in Mendocino County against loss by fire; that at the special instance and request of appellant there was attached to each a clause providing that any loss within the terms of the policy should be payable to the mortgagee, and that it was further provided therein that should the corporation neglect to pay any premium on such policy the mortgagee would on demand pay the same; that the insured failed to pay; that demand was made therefor upon the mortgagee and, upon his refusal, the policies were canceled.

Upon the findings judgment for the aggregate amount of the earned premiums was entered against the mortgagee, and the appeal was taken by him therefrom.

The clause attached to each policy was the standard form of mortgage clause, the material portions of which are as follows:

“Standard Forms Bureau Form 371 (May 1923)

“Mortgage Clause With Full Contribution

“ (Only for policies covering buildings)

“Loss or damage, if any, under this policy, on buildings only, shall be payable to Walter A. Gripton, mortgagee (or trustee), whose mail address is - as interest may appear. Subject to all the terms and conditions hereinafter set forth in this rider, this insurance, as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of. the property, nor by

[431]

the occupation of the premises for purposes more hazardous than are permitted by this policy.

“Condition One—In case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same.

Schmitt v. Gripton

AI Brief

CASHIN, J.

More from California Court of Appeal

Related research

AI Brief