in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto," the preceding Conditions in the policy apply to the interest of a mortgagee or other person having an interest in the policy in all events, but as modified by whatever may be written upon the slip attached to the policy.

4 SAME-AVOIDANCE OF POLICY FOR BREACH OF CONDITION-TITLE OF INSURED. A policy of fire insurance containing a provision that it shall be void if the interest of the insured be other than unconditional and sole ownership is avoided by a contract by the insured for the sale of the property by which he transfers possession and agrees to convey the title, the effect of such contract being to vest the purchaser at once with the equitable title, and such rule applies whether the subject of insurance be realty or personalty.

[Ed. Note. For cases in point, see Cent. Dig. vol. 28, Insurance, § 799.] At Law.

On April 25, 1905, the defendant issued to George W. Cone, under the firm name of George W. Cone Lumber Company, its policy of insurance, to which a slip is attached showing the amount of insurance and the property covered, as follows:

$500 00 On one story rubberroid roof, frame building, occupied by the assured as a wet log sawmill, situate on the east bank of the Willamette river, at St. Johns, Multnomah county, Oregon.

$500 00 On engines, boilers, etc.

$500.00 On other fixed and movable machinery.

50000 On lumber in piles and about the premises.

$500.00 On frame dock, situate on the above-described premises.

Upon the same slip is the memorandum: "Loss, if any, payable to VanMuver National Bank, Vancouver, Washington."

The policy contains this clause at the foot of it:

"This policy is made and accepted subject to the following stipulations and Conditions, printed on the back hereof, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no cer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of his policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative hall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached bereto, nor shall any privilege or permission affecting the insurance under this Jolley exist or be claimed by the insured unless so written or attached." And on the back thereof are printed these provisions, among others: "This entire policy, unless otherwise provided by agreement indorsed hereon 4 * sk if the interest of the insured be other or added hereto, shall be void or if any change, other than than unconditional and sole ownership * by the death of an insured, take place in the interest, title or possession of the >bject of insurance (except change of occupants without increase of hazard) whether by legal process or judgment or by voluntary act of the insured, or ctherwise."

"If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee, or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manDer expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto."

The property was destroyed by fire September 1, 1905. Prior to that time, to wit, on April 22, 1905, George W. Cone, under the firm name of George W. Cone Lumber Company, entered into a contract with the Oregon Fir Lumber Company, whereby, for the consideration of $50,000, he sold and agreed to Convey the property, both real and personal, to the latter company. After the fire an adjustment was had of the loss, and there was apportioned to the defendant company, as its proportional liability, among other companies cov

ering upon the same property, the sum of $2,156.84. For a recovery of that amount, this action has been instituted.

The defendant has set up, by way of defense to the recovery, that the George W. Cone Lumber Company, in violation of the stipulations of the policy, on August 22, 1905, sold the property to the Oregon Fir Lumber Company, which said company assumed possession all without the consent or agreement of defendant; that thereafter the unconditional and sole ownership was not in the George W. Cone Lumber Company, and that by reason of such sale a change took place in the interest, title, and possession of the subject of the insurance, whereby the policy was rendered void as against the defendant company, and it was relieved of responsibility. The reply alleges that the defendant company had, long prior to the fire, full knowledge of such transfer under the contract alluded to, and, further, that the Oregon Fir Lumber Company never entered into possession, or carried out the covenants resting upon it, and thus never acquired any right, title, interest, or ownership in or to the property.

W. E. Yates and Platt & Platt, for plaintiff.
Snow & McCamant, for defendant.

WOLVERTON, District Judge (after stating the facts). It is first contended that the plaintiff cannot recover, for the reason that it is without an insurable interest in the property covered by the policy of insurance. Under the testimony, and by the explicit admission of the parties, the plaintiff had not at the date of the policy, nor has it now, any other interest in the subject of the insurance except as a general creditor. It had not then, nor has it now, any mortgage or judgment, but holds the promissory notes of the George W. Cone Lumber Company for moneys loaned or advanced, so that it stands absolutely as a general creditor, and in no other position. Such a creditor is without an insurable interest. As expressed by the court in Foster v. Van Reed, 5 Hun (N. Y.) 321, 325:

"It certainly would not be claimed that a mere simple contract creditor could obtain a valid insurance of his debt from a fire insurance company. The creditor must have an interest in the real estate to authorize him to insure."

Under certain peculiar conditions simple contract creditors have been held to have an insurable interest, as where the debtor is insolvent, or has since deceased, and the estate constitutes a fund, as it were, for the discharge of his obligations, or the property has been purchased upon the credit or responsibility of the person claiming the interest. Herkimer v. Rice, 27 N. Y. 163; Rohrbach v. Germania Fire Ins. Co., 62 N. Y. 47, 20 Am. Rep. 451; Roos & Co. v. Merchants' Mutual Ins. Co. of New Orleans, 27 La. Ann. 409. But no such conditions attend the claim or demand of plaintiff.

The real question, however, is not whether the plaintiff has an insurable interest, but whether it is entitled to sue upon the demand for loss under the policy. It will be noted from the memorandum upon the slip that the loss, if any, was made payable to the bank unconditionally, not, as is usually the case, "as its interest may appear." This is, in effect, an appointment of the bank as the party to receive payment in case of loss. The parties to the policy have regularly so stipu lated with reference to the loss, and the bank has assented thereto and why may it not sue to enforce the obligation? The legal consequences of such a stipulation and agreement are well stated by

Mr. Justice Miller in the case of Bates v. Equitable Insurance Company, 10 Wall. (U. S.) 33, 19 L. Ed. 882. He says:

"Now, it is a well known and frequent thing in insurance business for a person to insure his life, or his property, and either in the policy itself, or by Indorsement at the time it is made, or by subsequent indorsement, to which the consent of the company is generally required, to direct the loss to be paid to some third party. And this is done in language similar to, if not identical It is a mode of appointing that the loss of the with, that used in this case. party insured shall be paid by the company to such third person. This transaction is a very common mode of furnishing a species of security by a debtor to his creditor, who may be willing to trust to the debtor's honesty, his skill and success in trade, but who requires indemnity against such accidents as loss by fire, or the perils of navigation. The property of the debtor at risk being thus insured for the benefit of the creditor gives him this indemnity."

So that the relation stands here simply that the Cone Lumber Company insured its property for the benefit of its creditor, namely, the Vancouver National Bank; and there exists no good or sufficient reason why this may not be done. Guiterman v. German-Amer. Ins. Co., 111 Mich. 626, 70 N. W. 135; Ermentrout v. American Fire Ins. Co., 60 Minn. 418, 62 N. W. 543. I am of the opinion, therefore, that the action was rightly brought in the name of the Vancouver National Bank, and that it could sue whether it had an insurable interest in the Such property of the insured or not. It is sufficient that the bank was appointed as the party to receive the loss, if any should occur. being the agreement of all the parties concerned, it occupies the relation of a trustee, and may recover in its own name.

The next contention is on the part of counsel for plaintiff, which is that, under the provisions of the paragraph running, "If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee," etc., it was not designed that a breach by the assured of any of the preceding conditions contained upon the back thereof should void the policy, because, it is argued, all the conditions, if any, affecting the bank were, by intendment, to be contained upon the slip attached thereto, whereby the loss is made payable to the bank. There are several cases in the state courts so holding, the first, and leading one, of which is Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717, 66 N. W. 646, 36 L. R. A. 673, 58 Am. St. Rep. 663. The case is determined entirely upon the interpretation of a paragraph The learned commissioner who announced identical with the above.

the opinion of the court renders the stipulation as follows:

"The conditions hereinbefore contained shall apply,' not absolutely, but in a qualified way, 'in the manner expressed in such provisions and conditions as shall be written upon, attached, or appended hereto'; that is, in order to render the general conditions of the policy applicable to the inter-est of a mortgagee, there must be written upon, attached, or appended to the policy, relating to the interest of the mortgagee, some provisions or conditions Xpressing in what manner the conditions of the policy shall be so applicable." He then further reasons that no conditions were written upon or attached or appended to the policy, and hence that the general provisions should not apply. The clearest statement of the position is contained. in a later case. Christenson v. Fidelity Ins. Co., 117 Iowa, 77, 90 N. W. 495, 94 Am. St. Rep. 286. The court, after quoting a part of the clause, says:

A

"This means that, in order that they become applicable to the interest of the mortgagee, the manner thereof must be indicated by an indorsement or some writing attached to the policy. Nothing of the kind was indorsed on or ap pended thereto, and for this reason the conditions do not apply."

Other cases to the same purpose are Senor & Muntz v. Fire Insurance Co., 181 Mo. 104, 79 S. W. 687; East v. New Orleans Insurance Association, 76 Miss. 697, 23 South. 358; Queen Ins. Co. v. Dearborn Sav., Loan & Building Ass'n, 175 Ill. 115, 51 N. E. 717; Northern Assurance Co. v. Chicago Mut. B. & L. Ass'n, 98 Ill. App. 152; Boyd v. Thuringia Ins. Co., 65 Pac. 785, 25 Wash. 447, 55 L. R. A. 165. Opposed to this view is a case in the United States Court of Appeals for the Eighth Circuit, before Caldwell, Sanborn, and Thayer, Circuit Judges. The opinion is by Mr. Justice Sanborn. After stating the contention of counsel for the defendant in error, which is the same as that made by counsel for plaintiff here, he says:

"But the clause which these parties selected and attached to the policy had a known, definite, and adjudicated meaning. It had a settled legal effect when they chose and appended it to the contract. The meaning and effect that the indemnity thereby secured to the mortgagees was subject to the risk of every act and neglect of the mortgagor which would avoid the original policy in his hands. No form of words could have been devised or adopted, relating to the insurance of these mortgagees, which would so clearly and conclusively have expressed the intention of the parties to this contract to subject the indemnity secured by the mortgagees to the risk of the acts and omis sions of the mortgagor as the clause which they selected and attached to the policy, because a long line of adjudications, covering more than 40 years. had established the fact that this was its true meaning and effect."

After citing authorities, he continues:

mort

"The true construction of the clause 'Loss, if any, payable to gagee, as his interest may appear,' or of words of similar import, when at tached to policies of fire insurance, is, and has been for more than 40 years, that the mortgagee is thereby made the simple appointee of the mortgagor. and that his indemnity is at the risk of the acts and omissions of the latter which would avoid, terminate, or affect the mortgagor's insurance under the original policy." Delaware Ins. Co. of Philadelphia v. Greer, 120 Fed. 916, 57 C. C. A. 188, 61 L. R. A. 137.

A later case by the same court, composed of Circuit Judges Sanborn. Van Devanter, and Hook, has this to say on the subject:

"But the question under consideration is not solved by merely ascertaining the meaning of the words 'as their interest may appear.' They do not stand alone, and are not controlling. By the plain terms of the indorsement the consent to pay the loss to Dodge and Stevenson was made 'subject to all the conditions' of the policy. This qualifying clause means that the consent was given upon the express condition that the conditions of the policy were not thereby abrogated or waived, but that they should have effect and be respected in like manner as if the indorsement had not been made. It means that a loss to be payable to Dodge and Stevenson under the indorsement, must be one which, under the conditions of the policy, would be payable to the insured. and that whatever, under those conditions, would defeat the insured's right to payment in the absence of the indorsement, will equally defeat it in the presence of the indorsement." Atlas Reduction Co. v. New Zealand Ins. Co.. 138 Fed. 497, 504, 71 C. C. A. 21.

Franklin Ins. Co. v. Wolff, 54 N. E. 772, 23 Ind. App. 549, decided by the Court of Appeals of Indiana, is to the same purpose.

These latter authorities appear to me as announcing the better doctrine. The paragraph in question reads:

"If

an interest

shall exist in favor of a mortgagee, ⚫ the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto.".

"Conditions hereinbefore contained" unquestionably refers to preceding conditions set out in the policy of insurance, or contained on the back thereof. Now, it is stipulated that they shall apply where there is an interest in favor of a mortgagee, which has been assented to or recognized by the company. If nothing further had been said, no question or confusion could arise. But it is significant, as a premise, that the agreement is that they shall apply. Now we inquire how, or in what manner, shall they apply, for in all events they are to have application, unless it be further stipulated, by reasonable intendment, that they shall not apply notwithstanding the agreement that they shall. They "shall apply in the manner expressed in such provisions and conditions * * as shall be written upon, attached, or appended hereto"; that is, written upon, attached, or appended to the policy. Here is a plain recognition that they shall apply in some manner, and the manner pointed out is, as is expressed in the provisions and conditions, written upon, attached, etc. The slip appended in the present case contains an additional paragraph, as follows: "Permission granted to make additions, alterations and repairs"-and a warranty by the insured that, when the sawmill is idle, competent watchmen shall be employed, and that, if it remains idle for a period of more than 30 days without the written consent of the company, the policy shall become void. These are concluded by a stipulation that:

This slip is attached to and made part of policy No. 1328999 issued to the George W. Cone Lumber Company by the Law, Union & Crown Insurance Company."

The permission to make additions, etc., is an enlargement, in a manrer, of the assured's rights, and the warranty may be considered a restriction thereof. These are provisions and conditions appended to the policy, but they do not appear to relate to the interest in favor of the bank any further than they modify the general provisions contained elsewhere in the policy; so that there are no provisions or conditions expressing the manner of application of the conditions contained in the policy, or on the back thereof, preceding the clause under discussion. Does this mean that the preceding conditions shall not apply at all, or, in other words, was it necessary, to give them application, that they should have been repeated or set out again upon the slip, or an appropriate affirmative provision written thereon, saying in effect that such preceding conditions shall apply when it had been as plainly stipulated as could be that they should apply? Any other answer but one, namely, that they were intended to apply in connection with such provisions and conditions as should be written upon the slip, and as modified thereby, would lead to a palpable absurdity, and hence it may be reasonably concluded that the conditions were intended to apply in all events, but as modified by whatever might be written upon the