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Ohio Farmers' Ins. Co. v. Pennsylvania Co.

July 11, 1934

OHIO FARMERS' INS. CO.
v.
PENNSYLVANIA CO. FOR INSURANCES ON LIVES AND GRANTING ANNUITIES



Appeal from the District Court of the United States for the Eastern District of Pennsylvania.

Author: Buffington

Before BUFFINGTON, DAVIS, and THOMPSON, Circuit Judges.

BUFFINGTON, Circuit Judge.

The situation of the parties to this suit and the question involved are stated in the opinion of the court below as follows:

"The suit is by the first mortgagee of insured property against the insuring company, and the case turns upon the construction of the mortgagee clause attached to the policy. The facts, admitted by the pleadings, are as follows:

"On September 9, 1931, buildings owned by one Esther Charlestein and having an agreed value of $43,985 were damaged by fire for a total loss of $24,374.90. At the time of the fire there were two mortgages upon the property -- a first mortgage of $30,000 held by the plaintiff and a second mortgage of $15,000 held by a building and loan association. The defendant had insured the property for $30,000 with a standard mortgagee clause making the loss payable to the plaintiff in accordance with its terms. There was also another policy of $15,000 written by another company in favor of the second mortgagee under a similar clause. * * *

"The defendant, conceding that the total insurance upon the property was more than 80 per cent of its cash value so that the entire loss must be paid to someone, contends that the Co-insurance Clause in the policy is binding as between it and the plaintiff. And, since the plaintiff's policy is substantially less than 80 per cent. of the cash value of the property, it would follow that the defendant is liable to the plaintiff for only a major fraction of the amount of the loss and to the second mortgagee for the balance. The plaintiff's position is that the Co-insurance Clause is not applicable to it and it therefore claims the entire amount of the loss."

Without entering into details, we may say that if the defendant's contention is right, it has already paid the plaintiff the $16,629.54 payable under the policy.On the other hand, if the plaintiff's contention is right, the defendant owes the plaintiff $3,831.36, which it has not paid, but which it will pay to the second mortgagee. It will thus be seen that the contest is really one between the first and second mortgagees. The court adopted the plaintiff's view, and entered judgment against defendant for the last-mentioned sum, whereupon defendant took this appeal.

We are of opinion the court's construction of the policy in suit was right. As stated by it,

"The mortgagee clause in this policy however contains something in addition to the ordinary standard form. It reads as follows:

"New York and Pennsylvania Standard Mortgagee Clause

(Non-Contribution)

"Loss or damage, if any, under this policy, shall be payable to," etc. Then follows the usual form.

"In my opinion the addition of the words "(Non-Contribution)" indicate an intention on the part of the parties to exclude the mortgagee from the operation of the ...


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