(329 Ill. 158, 160 N. E. 222.) THOMAS F. MACK, Receiver, etc., V. LIVERPOOL & LONDON & GLOBE INSURANCE COMPANY, Limited, Plff. in Certiorari. Insurance, §§ 292, 314 - provision against foreclosure - validity. 1. A provision in a fire insurance policy that it shall become void upon the commencement of a foreclosure proceeding is enforceable. [See annotation on this question beginning on page 1044.] 3. A contract of fire insurance appertains to the person or party to the contract, and not to the thing which is subjected to the risk against which the owner is protected. [See 14 R. C. L. 1365; 4 R. C. L. Supp. 966; 6 R. C. L. Supp. 889.] Receivers, § 72 action on fire in surance policy. 4. A receiver in charge of property which is the subject-matter of the litigation, and which has been damaged or destroyed by fire, may be directed by the appointing court to institute suit on an existing fire insurance policy to recover damages for the loss sustained. Receivers, § 28 effect of appoint 8. The court cannot make a new contract for the parties to an insurance agreement, or refuse to enforce the one they have made for themselves. [See 14 R. C. L. 931, 932; 4 R. C. L. Supp. 931; 5 R. C. L. Supp. 787; 6 R. C. L. Supp. 841; 7 R. C. L. Supp. 477.] Insurance, § 527 consent to encumbrance assumption of risk of foreclosure. 9. The mere assent by an insurer to an encumbrance on the insured property does not include an assumption of the greater risk or hazard of a foreclosure proceeding. Insurance, § 314 effect of foreclosure. 10. The forfeiture of a fire insurance policy by the commencement of foreclosure proceedings, which the policy provides will work a forfeiture, is not prevented by the fact that the insurer assented to the encumbrance. Insurance, §§ 314, 292 time of forfeiture commencement of suit. 11. Where by statute the filing in chancery of a bill to foreclose a mortgage is the commencement of the suit, and a policy insuring the property provides that the commencement of the suit shall forfeit the policy, the fact that summons has not been served on the mortgagor at the time of the loss, and that he has no knowledge of the commencement of the proceeding, is immaterial. [See annotation in 50 A.L.R. 1117.] CERTIORARI to the Appellate Court, Second District, to review a judgment affirming a judgment of the Circuit Court for Mercer County (Church, J.) in favor of plaintiff in an action brought on a policy of fire insurance. Reversed. The facts are stated in the opinion Messrs. D. A. Hebel and Hicks & Folonie for plaintiff in certiorari. Messrs. Watson & Duvall, for defendant in certiorari: While a policy of insurance is a personal contract and does not run with the property, yet the receiver appointed in this cause represented both the mortgagor and the mortgagee, and had the right to commence the action in his own name. High, Receivers, 2d ed. chap. 8, § 205, p. 165; Chicago Fire Proofing Co. v. Park Nat. Bank, 145 Ill. 481, 32 N. E. 534; 34 Cyc. 380, 385, 386, 403. Suit was not "commenced," in so far as any rights of the mortgagee in the policy in question were concerned, until service of summons upon the mortgagor, James Nolan, and summons was not served until after the time of the fire. Sharp v. Scottish Union & Nat. Ins. Co. 136 Cal. 542, 69 Pac. 253, 615; Lancashire Ins. Co. v. Boardman, 58 Kan. 339, 62 Am. St. Rep. 621, 49 Pac. 92; Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717, 36 L.R.A. 673, 58 Am. St. Rep. 663, 66 N. W. 646; Schroeder v. Imperial Ins. Co. 132 Cal. 18, 84 Am. St. Rep. 17, 63 Pac. 1074; Fitzgibbons v. Merchants & B. Mut. F. Ins. Co. 126 Iowa, 52, 70 L.R.A. 243, 101 N. W. 454; 26 C. J. 238, § 299; Findlay v. Union Mut. F. Ins. Co. 74 Vt. 211, 93 Am. St. Rep. 885, 52 Atl. 429. Defendant in its policy accepted notice of an encumbrance, and had constructive, if not actual, notice of all the terms and conditions of that encumbrance, which contained a covenant "to keep all buildings at any time on the premises insured against loss by fire and tornado in companies to be approved by the said holder of, and in an amount equal to, said indebtedness, and deliver to the holder of said indebtedness the insurance policies so written, as to require all loss to be applied in reduction of said indebtedness." Rostetter v. American Ins. Co. 184 Ill. App. 157; Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717, 36 L.R.A. 673, 58 Am. St. Rep. 663, 66 N. W. 646; 26 C. J. 438, §§ 587, 588. of the court. A provision in a fire insurance policy, specifying that the policy shall be void in the event foreclosure proceedings are commenced without the consent of the insurance company, is inoperative where the insurance company knows of the encumbrance. German Ins. Co. v. Churchill, 26 Ill. App. 206; Getman v. Guardian F. Ins. Co. 46 Ill. App. 489; Rostetter v. American Ins. Co. supra; Jones v. Phoenix Ins. Co. 94 Kan. 235, 146 Pac. 354; Citizens State Bank v. Shawnee F. Ins. Co. 91 Kan. 18, 49 L.R.A. (N.S.) 972, 137 Pac. 78; Lancashire Ins. Co. v. Boardman, 58 Kan. 339, 62 Am. St. Rep. 621, 49 Pac. 92; 26 C. J. 239, § 300. Although a suit in chancery may be "commenced" by the filing of a proper bill of complaint therein, in order to prevent the running of the Statute of Limitations, yet the filing of such a bill is not sufficient to render void a policy of insurance where it is stipulated that the policy shall be void if foreclosure proceedings are commenced, unless the insured has knowledge of the filing of the bill. Gage v. Chicago Title & T. Co. 303 Ill. 569, 136 N. E. 483; Rostetter v. American Ins. Co. supra. De Young, J., delivered the opinion of the court: Thomas F. Mack, receiver in the matter of Elizabeth Mack against James Nolan and others, instituted suit on a policy of fire insurance against the Liverpool & London & Globe Insurance Company, Limited, a corporation, in the circuit court of Mercer county. The defendant filed a general and special demurrer to the amended declaration. The demurrer was overruled, and the defendant elected to abide by it. Evidence was heard and judgment was rendered in favor of the plaintiff for $1,000 and costs. The defendant prosecuted an appeal to the appellate court for the second district, and that court affirmed the judgment. Upon the company's petition a writ of certiorari was allowed, and (329 Ill. 158, 160 N. E. 222.) the cause is here for a further review. The plaintiff in his amended declaration alleged that the defendant on February 27, 1920, issued its policy to James Nolan in consideration of the stipulations therein set forth and the payment of a certain note for the premium, and that by the policy Nolan was insured for the ensuing term of five years, in amounts specified, against loss or damage by fire, lightning, tornado, cyclone, or high wind, to real and personal property particularly described, including a certain barn and sheds. The policy was set out at length in the declaration, and it contained the following among other provisions: "And it is stipulated and agreed that if . . the property or any part thereof shall hereafter become mortgaged or incumbered, or upon the commencement of foreclosure proceedings, or in case any change shall take place in title or interest or possession (except by succession by reason of the death of the assured) of the property herein named, or if the assured shall not be the sole and unconditional owner in fee of said property, or if this policy shall be assigned without written consent hereon, then in each and every one of the above cases this policy shall be null and void." It was further alleged in the amended declaration that on February 19, 1919, Gustaf Tollenaer owned the premises upon which the insured property was located; that he and his wife on that day conveyed the premises to R. P. Wait as trustee, to secure the payment of an indebtedness of $18,000; that thereafter, by deed dated February 26, 1920, Tollenaer and his wife conveyed their equity of redemption to Nolan; that Elizabeth Mack for a valuable consideration purchased and became the owner of the incumbrance on the premises; that the trust deed to Wait provided that the grantor therein would keep all buildings at any time on the land insured against loss by fire or tornado, in 57 A.L.R.-66. companies to be approved by the holder of the trust deed, in an amount equal to the mortgage indebtedness, and deliver to the holder of the mortgage the insurance policies, so written as to require all loss to be applied in reduction of the indebtedness; that the policy of insurance upon which suit was brought bore on its face the indorsement, "Notice accepted of an incumbrance of $18,000 on premises herein described," and that the policy was obtained by Nolan to comply with the provisions of the trust deed. The plaintiff further alleged in his amended declaration that on June 9, 1924, Elizabeth Mack filed in the circuit court of Mercer county her bill to foreclose the trust deed; that she alleged in her bill that Nolan not only had made default in the payment of interest and taxes, but had left Mercer county, and his place of residence could not be ascertained, and she asked the appointment of a receiver to take charge of the property; that on the day the bill was filed Thomas F. Mack was appointed receiver and was directed by the court to take charge of the mortgaged property, to collect the income, to pay the taxes, and for necessary repairs, to keep the property insured, and to bring the balance of the money into court to await its order; that thereafter, on the day the receiver was appointed, the barn described in the policy was destroyed by fire, resulting in a loss to the plaintiff of $1,000; that Elizabeth Mack had an interest in the property and the receiver had an interest in the insurance on the property for her use; that at the time of the loss, the receiver, for the use of Elizabeth Mack, was the insured person, and that upon the occurrence of the fire the insurance became payable to him. The service of notice and of proof of loss in accordance with the provisions of the policy was then alleged. The declaration concluded with the allegations that by an order of the circuit court the receiver was directed to bring suit upon the pol icy, and that, although he had fully performed the conditions of the policy on his part, yet the company refused to satisfy the loss. The defendant's general and special demurrer to the amended declaration assigned the following causes: (1) That the plaintiff had no legal interest in the suit and was not a necessary or proper party to an action on the policy; (2) that the policy was not issued to and did not cover or protect any interest of Elizabeth Mack; (3) that subsequently to the issuance of the policy, and before the loss occurred, a foreclosure proceeding was commenced which rendered the policy void; (4) that there was a change in title, interest, or possession which invalidated the policy; and (5) that the policy was not in effect when the loss occurred. Since the demurrer was overruled and the defendant elected to abide by its demurrer, no further pleadings were filed. cause must therefore be determined upon the facts well pleaded in the amended declaration, which obviously are admitted by the demurrer. Insurancecontract personal. The The first contention made by the plaintiff in error for a reversal of the judgment is that the policy upon which suit was brought is a personal contract with James Nolan, and that an action upon it can be maintained, not in the name of the receiver appointed in the foreclosure proceeding, but only in the name of the person insured. The contract of fire insurance is a personal one, and does not run with the land. It is a contract to indemnify the person named in the policy for damage to property in which he has an insurable interest, existing both at the time of the issuance of the policy and at the time of loss. 1 Joyce, Ins. 2d ed. §§ 6, 23; 4 Joyce, Ins. § 2246. The contract of insurance appertains to the person or party to the contract and not to the thing which is subjected to the risk against which the owner is protect -person, not thing, insured. ed. 1 Joyce, Ins. 2d ed. § 23. It does not necessarily follow, because the action is personal, that it must be prosecuted, under all circumstances, only in the name of the person insured. A receiver in charge of property which is the subject-matter of litigation and Receivers-ac which has been tion on fire insurance policy. damaged or destroyed by fire may be directed by the appointing court to institute suit upon an existing fire insurance policy to recover damages for the loss sustained. The appointment of a receiver will not, however, change any existing contractual relation or effect of apcreate a new right of action where none existed under or by virtue of the insurance contract. pointment. Apart from the question of the receiver's right to prosecute this suit, plaintiff in error insists that the policy became void upon the commencement of the foreclosure proceeding, and consequently that no action by any person whomsoever is maintainable upon it. It is a rule of law that a contract of insurance will be construed most strong- struction-rule. ly against the in Insurance-con surer, and that a forfeiture of the policy will be avoided, if possible. Healey v. Mutual Acci. Asso. 133 Ill. 556, 9 L.R.A. 371, 23 Am. St. Rep. 637, 25 N. E. 52; Globe Acci. Ins. Co. v. Gerisch, 163 Ill. 625, 54 Am. St. Rep. 486, 45 N. E. 563; Titus v. Glens Falls Ins. Co. 81 N. Y. 410; Fitzgibbons v. Merchants & B. Mut. F. Ins. Co. 126 Iowa, 52, 70 L.R.A. 243, 101 N. W. 454. But provisions in an insurance contract which prohibit an increase of the risk or hazard and which avoid the policy upon against increase their violation are of hazardvalid and enforceable. Experience has shown that a foreclosure proceeding jeopardizes the mortgagor's interest to a greater degree than does the mere existence of an incumbrance and that such a proceeding increases the in -provisions validity. -provision against foreclosure-valid ity. (329 Ill. 158, 160 N. E. 222.) surer's risk. Hence a provision in a policy of insurance that it shall become void upon the commencement of a foreclosure proceeding is a common one and is enforceable. 4 Joyce, Ins. 2d ed. §§ 2246a, 2270a; J. I. Kelly Co. v. St. Paul F. & M. Ins. Co. 56 Fla. 456, 47 So. 742, 16 Ann. Cas. 654; McIntire v. Norwich F. Ins. Co. 102 Mass. 230, 3 Am. Rep. 458; Springfield Steam Laundry Co. v. Traders' Ins. Co. 151 Mo. 90, 74 Am. St. Rep. 521, 52 S. W. 238; Titus v. Glens Falls Ins. Co. 81 N. Y. 410; Findlay v. Union Mut. F. Ins. Co. 74 Vt. 211, 93 Am. St. Rep. 885, 52 Atl. 429; Algase Co. v. Corporation of Royal Exch. Assur. 68 Wash. 173, 122 Pac. 986; Woodard v. German-American Ins. Co. 128 Wis. 1, 116 Am. St. Rep. 17, 106 N. W. 681. If the parties enter into such a contract, it is binding upon them. The court cannot make a new contract for -power of court them or refuse to enforce the one they have made for themselves. Meadows v. Hawkeye Ins. Co. 62 Iowa, 387, 17 N. W. 600; Springfield Steam Laundry Co. v. Traders' Ins. Co. 151 Mo. 90, 74 Am. St. Rep. 521, 52 S. W. 238. to make. Defendant in error, however, contends that plaintiff in error, in its policy, accepted notice of an incumbrance; that this incumbrance contained a covenant which required the mortgagor to keep all buildings on the premises insured against loss by fire and to cause the policies to be so written as to require all loss to be applied in reduction of the mortgage indebtedness, and that plaintiff in error had constructive, if not actual, notice of the terms and conditions of the incumbrance. The notation upon the policy of acceptance of notice of an existing incumbrance did not name or designate any person to whom the loss or damage, if any, under the policy, should be paid. That notation did not constitute a mortgage clause. No person other than Nolan was named in the policy. Neither Wait, the trustee, nor Elizabeth Mack, the holder of the notes, was a party to or beneficiary under the contract. surer by its acceptance of notice of an existing incumbrance may be said to have assented to that incumbrance and to have waived the provision of the policy making it void if the assured should be other than the sole and uncon cumbrance closure. ditional owner of -consent to en- -effect of fore Since he had no closure. on the policy, the instant suit by the To avoid this result, defendant in error insists that, so far as the rights of the mortgagee under the policy are concerned, the foreclosure suit was not commenced until the summons issued in that suit was served upon Nolan, the mortgagor; |