§ 60 b. In Dobson v. Laud, before Vice-Chancellor Wigram,1 the question was upon the other branch of the proposition,2 whether a mortgagee in possession, on stating his account under a bill to redeem, had a right to charge premiums of insurances, obtained by himself, on buildings constituting part of the mortgaged property, and add the same to the principal and interest of his debt; and it was decided that he could not. It was conceded that this involved the correlative proposition that if the mortgagee had received

money expressed. Taking the risk or remoteness of the contingency into consideration, (in other words, the computed chances of loss,) the premium paid and the sum to be received are intended to be, and in theory of law are, precisely equivalent. He then pays the whole consideration, for a contract made without fraud or imposition; the terms are equal, and precisely understood by both parties. It is in no sense the same debt. It is another and distinct debt, arising on a distinct contract, made with another party, upon a separate and distinct consideration paid by himself. The argument opposed to this view seems to assume that it would be inequitable, because the creditor seems to be getting a large sum for a very small one. This may be true of any insurance. A man gets $1,000 insured for $5, for one year, and the building is burnt within the year; he gets $1,000 for $5. This is because, by experience and computation, it is found that the chances are only one in two hundred that the house will be burnt in any one year, and the premium is equal to the chance of loss. But suppose for in order to test a principle we may put a strong case - suppose the debt has been running twenty years, and the premium is at five per cent., the creditor may pay a sum, equal to the whole debt, in premiums, and yet never receive a dollar of it from either of the other parties. Not from the underwriters, for the contingency has not happened, and there has been no loss by fire; nor from the debtor, because, not having authorized the insurance at his expense, he is not liable for the premiums paid. What, then, is there inequitable, on the part of the mortgagee, towards either party, in holding both sums? They are both due upon valid contracts with him, made upon adequate considerations paid by himself. There is nothing inequitable to the debtor, for he pays no more than he originally received, in money loaned; nor to the underwriter, for he has only paid upon a risk voluntarily taken, for which he was paid by the mortgagee a full and satisfactory equivalent."

1 Dobson v. Laud, 8 Hare, Ch. R. 216.

2 Per Shaw, C. J., in King, &c., ubi sup.

any sum by way of loss on such policies, he would be under no obligation in equity to credit it to the mortgagor, or be responsible to him for it.

§ 61. The consent of the insurers, that a policy previously issued to the owners of the property, may be assigned to the holder of a mortgage, will be deemed in the nature of a contract with him, by which he becomes insured, to the amount which the assignment was intended to secure.1

§ 62.. Whenever a mortgagor is bound to insure the premises, for the protection and indemnity of another person, the latter will have an equitable lien for the money due on the policy to the extent of his interest in the property destroyed by the fire; so that whenever a mortgagor covenants with the mortgagee to keep the premises insured during the continuance of the mortgage thereon, and the buildings on the premises are destroyed by fire, the mortgagee has an equitable lien upon the money due upon the policy.2 Where the mortgagor covenanted with the mortgagee, that he would keep the premises insured during the continuance of the lien of the mortgage, and, in case of loss, that the amount received on the policy should be applied to the rebuilding of the property, the Court of Chancery in Maryland decided, that the mortgagee had an equitable lien upon the fund received by the mortgagor under the policy to satisfy the balance due upon the mortgage, which could not be collected on a foreclosure and sale of the mortgaged premises.3

1 Tillou v. Kingston Mutual Ins. Co. 7 Barb. (N. Y.) Sup. Co. R. 570; and see Robert v. Traders Ins. Co. 17 Wend. (N. Y.) R. 631. See post, Chap. IX. § 211.

2 Carter v. New York Fire Ins. Co. 4 Paige, Ch. R. 437.

3 Thomas's Ex'rs v. Van Kaff's Ex'rs, 6 Gill & Johns. (Md.) R. 372. And see Vernon v. Smith, 5 B. & Ald. R. 1; Tillou & Kingston Mutual Fire Ins. Co. 7 Barb. (N. Y.) Sup. Ct. R. 590.

§ 62 a. In the State of Maine, the right which a mortgagor has to redeem against an execution sale of his right of redemption, is to be exercised within one year from the sale; and it has been held, that the insurance money which a purchaser may receive within the year upon an insurance effected on the property by himself, for his benefit, belongs to him and not to the mortgagor. Thus, the purchaser of such a right, acting for his own benefit, insured against fire a building standing upon the land, and within the year received the insurance money, the building having been burnt; in redeeming against the sale, the mortgagor had no claim to the benefit of the insurance; the contract not running with the land.1

§ 63. There is a manifest difference between a mortgage of real, and one of personal, property, inasmuch as the former is merely a security for a debt, so that the mortgagee has only a chattel interest, the freehold remaining in the mortgagor. The interest of the mortgagor cannot be sold on default without a bill of foreclosure; whereas a mortgage of personal property transfers the whole interest, and in fact the mortgagee becomes the owner, and so absolute is his interest in the thing mortgaged, that the mortgagor cannot, by tendering the debt, entitle himself to an action of trover against the mortgagee.2 In Lockwood v. Ewer,3 a bill was brought to redeem £2,500, East India stock, transferred to secure the payment of £2,000, and interest. The Lord Chancellor considered it a plain case for the defendants; and held, that although on a mortgage of land, a bill of foreclosure ought to be brought, yet on a mortgage of stock, it was not neces

2 After condition forfeited. Rogers v. Traders Bank, 6 Paige, (N. Y.) Ch. R. 583; Conard v. Atlantic Ins. Co. 1 Peters, (U. S.) R. 441, 446; Brown v. Bement, 8 Johns. (N. Y.) R. 96; Ackley v. Finch, 7 Cow. (N. Y.) R. 290.

3 Lockwood v. Ewer, 2 Atk. R. 303.

sary. Where the agents for the proprietors of a steamboat effected an insurance upon the boat for the benefit and on account of whomsoever it might concern, at the time of loss, if any should occur; it was held, that a mortgagee of the interest of one who was an owner at the time of the insurance, and for whose benefit the policy was underwritten, had a right in the mortgagor's portion of the insurance money, to the extent of the debt secured by the mortgage.1 The Chancellor, in delivering his opinion, said, "In this case, the underwriters contemplated that a change in the ownership of the boat might take place during the continuance of the risk, and intended to insure whoever might be the owners from time to time, so that those who should be interested as such owners at the time when any loss should occur, should have the benefit of the policies. But as the policy in terms insured whoever should be the owner of the boat at the time of loss, and Stow was then the owner of one quarter, by virtue of the assignment from D., all pretence of a lien upon that portion of insurance money for any general balance which might be due from D. & Co., entirely fails." In England, before the registry act of Geo. 4, c. 140, the mortgagee of a ship was in point of law the owner, and might insure to the full extent of the ship's value to the mortgagor as well as to himself; but by that statute the interests of mortgagor and mortgagee are more distinctly severed than they formerly were; and the mortgagor now does not cease to be an owner.2

§ 64. Of course a husband whose wife has title to real property, and who has had issue born alive to the husband, has an insurable interest in the buildings thereon; even though the wife's title is only in the right of a joint tenant.

1 Rogers v. Traders Ins. Co. 6 Paige, (N. Y.) Ch. R. 583.

2 Irving v. Richardson, 6 B. & Adol. R. 193.

3 Franklin Ins. Co. v. Drake, 2 B. Mon. (Ky.) R. 47.

§ 65. A tenant from year to year has an insurable interest in buildings demised to him, though he cannot recover the value of such buildings in case of loss by fire; the interest of the assured being merely his right to possess and occupy them, for the unexpired portion of the year for which they were demised.1 In Laurent v. Chatham Fire Insurance Company, the company had insured $800 on a building, which was destroyed by fire. It was proved on the trial that the plaintiff was the lessee of the land on which the building stood, and although he had erected it himself, and was entitled to remove it at the end of his term, the lease had only seventeen days to run when the fire occurred. The value of the building, as it stood, was worth $1,000, but if it were necessary to remove it from the lot demised, it was not worth, for that purpose, more than $200. The court decided that the value as it stood, was the measure of damages under the circumstances in which he was placed. The argument of Chief Justice Jones in this case, is elaborate, and satisfactorily shows, that as it is upon the tenement upon which the insurance was made, so the actual value of the tenement, as a building, was the loss of the assured, on its destruction by fire; that however unproductive the property might be, or however great might be the extent of the revenue derived from it, the measure of indemnity, in case of loss, is simply its value as a building.3

§ 66. It is a fact of public notoriety, that in common parlance, the person who is in possession of real property as owner, under a valid and subsisting contract for the purchase thereof, whether he has paid the whole purchase-money, and

1 Niblo v. North American Fire Ins. Co. 1 Sand. (N. Y.) Sup. Co. R. 551; and see Fletcher v. Commonwealth Ins. Co. 18 Pick. (Mass.) R. 419. 2 Laurent v. Chatham Fire Ins. Co. 1 Hall, (N. Y.) R. 41.

3 And see Wright v. Sun Fire Office, 3 Nev. & Mann. 819; S. C., 1 Adol. & Ell. R. 621; Brough v. Higgins, 2 Gratt. (Va.) R. 408.