the plaintiffs purchased the same for the full amount due on the debt; that no redemption had been made within the statutory period; that, at the date the mortgage was delivered, and when the policy was issued, the mortgagors were not the owners, in fee or otherwise, of a portion of the mortgaged premises, nor were they in possession, but, to the contrary, said portion was then, and ever since has been, owned and in the actual adverse possession and occupancy of other persons; and that, prior to the issuance of the policy, the mortgagors had been evicted therefrom.

Sec. 420. Insurance of title to land-Construction of policy-Defects of title excepted. It is the position of defendant's counsel that, from the allegations of this complaint, it appears that the case in hand was expressly excepted from the policy because of the words in the schedule, "Tenancy of the present occupants." If we were to give these words their broadest signification, and construe them without regard to the object or purpose of the contract, or the language used elsewhere, the position would be quite easily sustained; for the broad definition of a "tenant" is one who holds or possesses lands or tenements by any kind of right or title, whether in fee, for life, for years, at will, or otherwise. The persons mentioned in the complaint as having been, and as still continuing, in adverse possession, are certainly tenants, within this comprehensive definition. But, when we read the entire policy, and consider its object and alleged purpose,— that it purported to be a contract to indemnify plaintiffs, as mortgagees, against loss or damage sustained by reason of defects in the mortgagors' title; that, if the construction contended for by counsel for the defendant should prevail, it would apply in cases where the entire premises were in the adverse possession of another, as well as those, like the present, where only a part is held adversely, leaving the policyholder remediless when he has actually bought and paid for protection; that, if the design of the defendant was to exclude from its policy all liability as to the title" of the present occupants," it could have said so by simply changing one word of the phrase, "tenancy of the present occupants," which, at most, is ambiguous only; that, where an expression in an

insurance policy is of such a character, the ambiguity is to be construed against the insurer, and in favor of the insured; that the word "tenant " is generally used in a popular sense, and, as mentioned in this sense, according to Webster, "one who has the occupation or temporary possession of lands or tenements whose title is in another; correlative to landlord;" and also that, without a provision of this import, the insurer would probably incur a liability if there were outstanding leases, and the insured could not obtain possession at any moment,—we are decidedly of the opinion that the tenancy mentioned in the schedule was that which has arisen through the occupation or temporary possession of part or all of the premises by those who were tenants, in the popular sense in which that word is used. See Caplis v. Insurance Co., 60 Minn. 376 (62 N. W. Rep. 440; 51 Am. St. Rep. 535).

Sec. 421. Insurance of title to land-Construction of policy-Condition precedent to right of action upon the policy. As the complant fails to allege the occurrence of any of the conditions precedent, hereinbefore quoted, as found in the policy, counsel for appellant urge this as another reason why the general demurrer should have been sustained. A final judgment upon a lien or incumbrance certainly has no reference to a case like this. And counsel practically concede that the condition requiring actual eviction under adverse title has no application, for the defect upon which plaintiffs base their cause of action is inability to obtain possession, and entire want of title, and nothing else. It is really admitted by counel that, if any of these conditions precedent stand in the way of a recovery upon the present complaint, it must be that which prohibits recovery unless the insured has contracted to sell the estate or interest insured, and the title has been declared by a court of last resort of competent jurisdiction defective or incumbered by reason of a defect or incumberance for which the company would be liable under the policy. If this condition was intended to apply to a case of this character, it demands of plaintiffs that, with full knowledge of a total want of title to a part of the premises, they find some one upon whom they can impose by entering into a contract to sell that which they do not own, or that they enter

into a sham contract of sale, have the vendee refuse to perform, bring a suit against him, and then go through the form of an action which is fictitious from start to finish, and a fraud upon the court in which it is prosecuted. They are either compelled to perpetrate a fraud upon the innocent vendee, or a fraud upon the court in which they bring the action. We can rot believe that the defendant company ever intended the condition in question to cover a case like this, but, rather, that it was designed to guard against actions for nominal damages, instituted by persons who had ascertained that defects existed in their titles, but whose possession remained undisturbed, and who had suffered no loss. It was an adaptation of the law relating to covenants in a deed, that actual loss must precede actual compensation, to the title insurance business. None of the conditious found in the quoted language apply to a case where not only does another party hold possession of the land adversely to the insured but the latter has lost it absolutely by reason of a defect in the insured title. Order affirmed.

Sec. 422. Title insurance. A policy of insurance issued upon a mortgage which covenants to indemnify the holder against "all loss * * * by reason or defects of unmarketableness of the title to the

*

*

estate or interest insured, * or because of liens or incumbrances charging the same at the date of this policy, *** saving * * * defects or objections to title, and liens, charges and incumbrances thereon, which do or may now exist," including "unmarketability by reason of the possibility of mechanics' liens, and municipal liens," but not "actual losses by reason of such liens," insures only against liens the rights to which are already inchoate at the date of the policy. Wheeler v. Real Estate Tit. Ins. & T. Co., 160 Pa. St. 408 (28 Atl. Rep. 849). Where a policy of insurance of title provides that any untrue answer to questions contained in the application shall avoid the policy, the answers amount, in effect, to a warranty, and the matter of their materiality is not open. A question in an application, “What was the last price paid?"—calls for the actual, and not merely a nominal price,—the price in money or money's worth. Stensgaard v. St. Paul Real Estate Tit. Ins. Co., 50 Minn. 429 (52 N. W. Rep. 910; 17 L. R. A. 575). A title insurance company is not relieved from liability under a policy providing for indemnification of a mortgagee from all loss or damage not exceeding the mortgage debt, by reason of defects in the title or of liens or incumbrances existing thereon at the date of the policy, by the purchase by the mortgagee, on foreclosure of the mortgage, of the premises for the full amount of the mortgage debt, where there were prior mechanics' liens which he was obliged to discharge, especially where the policy provides that satisfaction of the

mortgage debt, except by foreclosure of the mortgage, shall terminate the policy. Minnesota Tit. Ins. Co. v. Drexel, 36 U. S. App. 50 (17 C. C. A. 56; 70 Fed. Rep. 194). Where a title insurance company which agreed to indemnify, save harmless, and insure the insured mortgagee against loss, not exceeding a specified amount, by reason of incumbrance on the mortgaged premises and defects in the title to the same, having an option, in case suit is brought on account of claim against the property, to defend the suit, pay the claim, or pay the insured the amount of its liability under the policy, elects to defend such a suit, it will be held liable to the insured for damages resulting to him on account of its negligence in conducting such defense and the amount of recovery for loss caused by such negli gence is not limited to the amount of the insurance provided for in the policy. Quigley v. St. Paul Tit. Ins. & Trust Co., 60 Minn. 275 (62 N. W. Rep. 287). Where the insurer of the priority of a mortgage discharges other liens which have been adjudged prior to the mortgage, it is entitled, as against the mortgagor, to be subrogated to the mortgagee's rights in all securities held by him to protect his interest as mortgagee against such liens. St. Paul Title Ins. & T. Co. v. Johnson, 64 Minn. 492 (67 N. W. Rep. 543). A recent statute in North Carolina provides for the organization of companies "for the purpose of examining titles to real estate, of furnishing information in relation thereto, and of insuring owners and others interested therein against loss by reason of incumbrances and defective title." Laws 1899, p. 162. Ky. Stat. 1894, §§ 730 734 being part of an act to provide for the creation and regulation of real estate title insurance companies are amended by Laws 1898, p. 117.

EPITOME OF CASES.

Sec. 423. Insurable interest. An owner of land has an insurable interest in buildings in course of erection thereon, by a contractor who has furnished all materials and labor, to be paid upon the completion of the work. Foley v. Mft'rs & Bldrs. Fire Ins. Co., 152 N. Y. 131 (46 N. E. Rep. 318). A son, in possession and control of land which his father has devised to him, has an insurable interest in buildings thereon, although the father bought the land at a partition sale and is awaiting his deed for the confirmation of the report. Home Ins. Co. v. Mendenhall, 164 Ill. 458 (45 N. E. Rep. 1078; 36 L. R. A. 374). Where there has been a foreclosure sale of real estate, and on account of the purchaser's failure to comply with his purchase, the attorneys of the mortgagor procure an order of court for a resale at the risk of the purchaser, they have an insurable interest in the property. Hartford Fire Ins. Co. v. Keating, 86 Md. 130 (38 Atl. Rep. 29; 63 Am. St. Rep. 499).

Sec. 424. Insurance by life tenant. Where the expense of insurance is made a charge against a person entitled to receive for life the income of the property such a lifetenant shall at the risk of the consequences of committing waste if neglected, insure, for the benefit of the whole property, its principle or corpus, so that, in case of loss, the proceeds may be either expended in the way of repair or be preserved as a substitute for the property lost. Hopkins v. Keazer, 89 Me. 847 (36 Atl. Rep. 615). In South Carolina it is held that a life tenant insuring buildings upon the premises in his own name, occupies a trust relation, and money collected on account of such insurance should be used in rebuilding or should go to the remaindermen, reserving the interest for life for the life tenant. Geeen v. Green, 50 S. C. 514 (27 S. E. Rep. 952; 62 Am. St. Rep. 846). Following, Clyburn v. Reynolds, 31 S. C. 118 (9 S. E. Rep. 973). See Ballards' Law Real Prop., Vol. V, §§ 402, 403.

Sec. 425. Rights of mortgagee as to insurance. A vendor who takes a purchase money mortgage to secure the payment of the purchase price, which stipulates that the mortgagor shall keep the property insured for the benefit of the mortgagee, does not, by assigning an existing policy of insurance on the property to the vendee, release his right to share in its proceeds as mortgagee. McDonold v. Basom, 102 Ia. 419 (71 N. W. Rep. 341). Where the policy provides for the payment of any loss to the mortgagee as his interest may appear, he may maintain an action on the policy alone in case of loss, where his debt exceeds the loss. Peck v. Girard Fire &. M. Ins. Co., 16 Utah 121 (51 Pac. Rep. 255); Lowry v. Insurance Co., 75 Miss. 43 (21 So. Rep. 664; 65 Am. St. Rep. 587; 37 L. R. A. 779). In the last case the court reviews the conflicting authorities and cites in support of its holding, Chipman v. Carroll, 53 Kan. 163 (35 Pac. Rep. 1109; 25 L. R. A. 305); Motley v. Insurance Co., 29 Me. 337 (50 Am. Dec. 591); Maxcy v. Insurance Co., 54 Minn. 272 (55 N. W. Rep. 1130; 40 Am. St. Rep. 325); Pitney v. Insurance Co., 65 N. Y. 6. But there can be no recovery by the mortgagee where the property is burned by the owner for the purpose of realizing on the policy. Hocking v. Virginia Fire & M.