Lumbermen's National Bank of Menominee v. Corrigan

WiNsnow, O. J.

It is not deemed necessary to take up the contentions urged by the appellants in detail; they will be sufficiently answered by the statement of some general propositions.

We regard this as a typical case where justice demands the settling in one action of a number of conflicting claims, all very closely connected. The situation was this: The original mortgagor (Corrigan) had deeded the mortgaged premises to Selin, who had agreed to pay the mortgage; thus, as between Corrigan and Selin, Selin became the principal debtor and Corrigan a surety. Both Corrigan and Selin insured the building on the premises, and the building thereafter burned. Selin having defaulted, foreclosure is begun. Corrigan .comes in and claims that by reason of certain facts the insurance companies are legally liable to pay their respective losses directly to the mortgagee, and thus pro tanto discharge the mortgage before recourse is had to the property itself. The insurance companies contest this claim and in *86 sist that they are not liable to the mortgagee, though not contesting the validity of the policies. 'It is manifest that these claims are all closely connected with the subject of the foreclosure action, and that subject is (under the rule laid down in McArthur v. Moffet, 143 Wis. 564 , 128 N. W. 445 ) the primary right of the mortgagee to enforce his lien upon the mortgaged property together with the property itself. That these parties should be compelled to settle their rights and liabilities in several separate actions, thus duplicating expense and dragging out the controversy • through a series of years, is not and never has been the idea of our code of procedure but rather the contrary. As said in Hemenway v. Beecher, 139 Wis. 399 , 121 N. W. 150 , speaking of secs. 2610 and 2656a, Stats., “The idea in both sections is to enable the court to grasp all the issues germane to the main ■controversy, whether arising between the plaintiff and the defendant, or between defendants, or between a defendant and an outside party, and dispose of them in one and the same action, and thus avoid circuity of action and multiplicity of suits.” It has been and still is the aim of this court to carry out this beneficent idea and thus realize as fully as possible the constitutional guaranty of justice administered “promptly and without delay.”

This brings us to a consideration of .the merits. When a third party is brought in and made a defendant under the provisions of sec. 2656a to answer to a cross-complaint, his concern is with the cross-complaint rather than with the original complaint. No reason is perceived why it was necessary in the present case that the original complaint should have been amended at all. In many cases the plaintiff may know nothing of the facts .which the defendant who makes the cross-complaint relies on, and in fact the plaintiff’s interest may be rather with the interpleaded person than with cross-complainant. It is evident that, in all. ordinary cases at least, the pleading to which the new party should answer or *87 demur is tbe cross-complaint. Doubtless be may answer tbe original complaint if be chooses, but any demurrer on bis part to tbe original complaint is out of place; it should be directed to tbe cross-complaint, for that is tbe pleading which asks relief as against him. We think tbe cross-complaint in tbe present case stated a good cause of action against tbe insurance companies, and, tbe findings of tbe court being in accordance with its allegations, it follows that tbe judgment must be affirmed.

It is clear that Corrigan bad an insurable interest resulting from tbe fact that be was liable for tbe payment of tbe 'mortgage debt. Williams v. Roger Williams Ins. Co. 107 Mass. 377 . Having such insurable interest, we know of no reason either in law or morals why be .could not take out a valid insurance policy on tbe premises in tbe name of tbe owner, with a provision that'the loss, if any, should be payable to tbe mortgagee, tbe facts all being known to the insurance company. True, tbe policy taken out by Corrigan was not on its face payable to tbe mortgagee, but tbe court found that such was tbe intention of tbe parties and that tbe 'rider was placed in tbe policy under tbe mistaken idea on both sides that it expressed that intent;, and, while tbe judgment did not in terms reform tbe policy, all tbe facts were found which justified and called for reformation, and tbe judgment can only be sustained on*tbe theory of reformation. Under such circumstances it must be considered that the omission to enter a formal judgment of reformation should not be allowed to prejudice tbe result here. Tbe sum and substance of tbe matter is, in relation to tbe North River policy taken out by Corrigan, that a man having an insurable interest in mortgaged property took out and paid for a .policy of insurance thereon and-,presented it to tbe mortgagee, and tbe mortgagee accepted it and is enforcing it. Tbe insurance company thereby made a valid contract with Corrigan not merely for Corrigan's benefit, but for tbe bene *88 fit of the mortgagee, and we know of no reason why the mortgagee should not enforce it as is being done here. Tweeddale v. Tweeddale, 116 Wis. 517 , 93 N. W. 440 .

As to the North British policy taken out and paid for by the owner, Selin, in his own name, all moneys to become due thereon (not exceeding $2,400) were assigned by Selin to Corrigan after the fixe to be applied on the mortgage, the excess if any to be paid to Selin. .There was no excess, as we have seen. Why the amount due on this policy should not be applied as directed by the assignment to Corrigan does not appear. It is said that the assignment to Corrigan is only an assignment in trust and gives him no right of action, but makes him merely an appointee, and that the property in the policy still remains in Selin.

If this be admitted, still we think the judgment right; both Corrigan and Selin are parties to this action and between them they represent the full ownership of the policy. Selin malees no claim to control the policy, but is content to stand by his assignment: he is bound by the results of the action. We see no reason why the court should not deal with and enforce the policy as the rights of the parties appear to be, all the parties interested being before the court. There was no abuse of discretion in awarding costs in favor of Corrigan against the appellants.

By the Court. — Judgment affirmed.