Westchester Fire Insurance v. Coverdale

1. Fobeign Insubanoe Company — Service of Summons. Where an action is commenced against an insurance company of another state or of a foreign government, doing business in this state, and the only-service obtained upon the company is through the superintendent of insurance of the state, the summons must be directed to the superintendent, and require the defendant to answer by a certain day, not less than i.0 days from its date; but the form of the summons is the same as prescribed in $ 59 of the code, except it is directed to the superintendent of insurance, and not to the sheriff of the county where the action is pending. 2. Action on Policy — Rights of Mortgagee. An insurance company issued a policy of fire insurance to O. upon his frame building. A loan and investment company held a mortgage thereon, and, at the issuing of the policy, the insurance company, with the consent of the holder of the premises, made a written indorsement or stipulation thereon, to the effect that the loss, if any, was payable to the loan and investment company. It stated, in substance, that the insurance, as to the interest therein of the mortgagee only, should not be invalidated by any act or neglect of the mortgagor or owner, and that whenever the company should pay the mortgagee any sum for loss, claiming that as to the mortgagor or owner no liability therefor existed, the company should be subrogated to all the rights of the mortgagee in any securities held for the mortgage debt, not affecting, however, the right of the mortgagee to recover the whole of his claim; or, that the company might, at its option, pay the whole of said claim and take an assignment of the mortgage at the time of such payment. Held, That the loan and investment company has, by the “mortgage clause” of the policy, a contract with the insurance company, and the mortgagor cannot maintain an action on the policy, unless the mortgage is paid, or the owner has' authority from the loan and investment company so to do.

Error from Sumner District Court. On the 6th day of August, 1888, the Westchester Fire Insurance Company, doing business in this state, issued its policy of insurance for $800 on a 2J-story frame building, on lot 5, block 67, in the city of Wellington, owned by W- T. Cover-dale. Attached to the policy, and as a part thereof, was the following written “ mortgage clause,” or stipulation: “ Loss, if any, payable to the Southern Kansas Farm Loan and Investment Company, mortgagee or assigns, as hereinafter provided; it being hereby understood and agreed that this insurance, as to the interest of the mortgagee, shall not be invalidated by any act or 'neglect of the mortgagor or owner of the property insured, nor by the occupation of the premises for purposes more hazardous than are permitted by the terms of this policy: Provided, That in case the mortgagor or owner neglects or refuses to pay any premium due under this policy, then, on demand, the mortgagee shall pay the same: Provided, also, That the mortgagee shall notify this company of any change of ownership or increase of hazard which shall come to his or their knowledge, and shall have permission for such change of ownership or increase of hazard duly indorsed on this policy: And provided further, That every increase of hazard not permitted by the policy to the mortgagor or owner shall be paid for by the mortgagee on reasonable demand, and after demand made by this company upon and refusal by the mortgagor or owner to pay, according to the established schedule of rates. It is, however, understood that this company reserves the right to cancel this policy, as stipulated in the printed conditions in said policy; and also to cancel this agreement, on giving 10 days’ notice of their intention to the mortgagee named therein, and from and after the expiration of the said 10 days this policy shall be null and void. It is also agreed, that whenever this company shall pay the mortgagee any sums for loss under this policy, and shall claim that as to the mortgagor or owner no liability therefor exists, it shall at once and to the extent of such payment be legally subrogated to all the rights of the party to whom such payments shall be made, under any and all securities held by such party for the payment of said debt. But such subrogation shall be in subordination to the claim of said party for the balance of the debt so secured; or said company may, at its option, pay the said mortgage, the whole debt so secured, with all the interest which may have accrued thereon to the date of such payment, and shall thereupon receive from the party to whom such payment shall be made an assignment and transfer of said debt, with all securities held by said parties for the payment thereof. To attach to policy No. 216183 of the Westchester Insurance Company, of New York; issued at its Wellington, Kas., agency. A. H. Shirley, Agent.” The building was destroyed by fire in September, 1888. On the 23d day of April, 1889, W. T. Coverdale brought his action against the Westchester Fire Insurance Company to recover $800, the amount of the insurance. His petition alleged, among other things, that the policy of insurance was issued to him in consideration of $20 paid by him; that the property therein insured was destroyed by fire in September, 1888; that he had kept and performed the covenants, provisions and conditions of the policy, and that he was entitled to recover from the insurance company on such policy of insurance $800, with interest from the 1st of October, 1888. He attached to this petition and made a part of it, as “Exhibit A,” the policy of insurance, with the “written mortgage clause,” or stipulation referred to. Upon a prcecipe filed with the clerk, requesting a summons to issue against the Westchester Fire Insurance Company, and to be directed to the superintendent of insurance of the state, a summons in the following form was issued by the clerk of the district court of Sumner county: “State of Kansas, Sumner County, ss. “The State of Kansas, to the Superintendent of Insurance within and for the State of Kansas, greeting: “You are hereby commanded to notify the Westchester Fire Insurance Company, of New York, that it has been sued in the district court within and for the county of Sumner, in the nineteenth judicial district of the state of Kansas, and must answer the petition filed by the plaintiff, W. T. Coverdale, on or before the 3d day of June, 1889, or the said petition will be taken as true and j udgment rendered accordingly. And return this writ on the 3d day of May, A. D. 1889. “In Witness Whereof, I have hereunto set my hand and affixed the seal of said court, at my office at Wellington, in said county, this 23d day of April, A. D. 1889. [seal.] Tom: Donohue, Clerk of the District Court. By J. D. Decker, Deputy.” Indorsed on back: “No. 5182. Summons. W.T. Cover-dale, plaintiff, v. Westchester Fire Insurance Company, defendant. If the defendant fail to answer, the plaintiff will take judgment for $800, with interest thereon at the rate of 7 per cent, per annum from the 1st day of October, 1888, and costs of suit. Tom Donohue, Clerk. By J. D. Decker.” Hon. D. "VY. Wilder, the superintendent of insurance for the state, after receiving the summons, returned to the district court that he had received the same on the 23d day of April, 1889, at 3 o’clock p. M.; that he forwarded a duly-certified copy thereof on the 25th day of April, 1889, to Mr. J. G. Underhill, the secretary of the Westchester Fire Insurance Company, of New York, at New York city, there being no general agent of the company in this state. Subsequently, Messrs. Ware, Biddle & Cory, attorneys at law, made a special appearance for the insurance company, and asked that the summons, service and return thereof be set aside, upon the ground that the summons was not issued in conformity with law, and that the service and return thereof were not sufficient. On the 7th day of June, 1889, the motion to quash the summons and to set aside the service and return thereof was overruled, in the absence of Messrs. Ware, Biddle & Cory, and without any answer being filed; and, in the absence of the attorneys of the insurance company, the plaintiff below, having introduced some evidence, obtained judgment against the insurance company for $838.35. The court directed execution to issue therefor. The Insurance Company brings the record to this court, and complains of the proceedings of the court below.