RECENT DECISIONS.

Affidavits of fellow jurors-Relationship of juror.-Tegarden v. Phillips (Ind.), 39 N. E. 212. Affidavits of fellow jurors offered to show that a juror related to one of the parties did not know it, and in the jury room cast his vote in favor of the other party, cannot be considered in determining his competency.

Attachment.-Time for beginning suit.—Hecht et al. v. Feldman, 39 N. E. 121. A court has no jurisdiction to try an attachment suit before the term to which it must, by statute, be brought, unless by consent of both parties.

Contracts. Where parties have exchanged letters and telegrams and have arrived at a point where a clear and definite proposition is made on one side and accepted on the other, with an understanding between the parties that the agreement is to be reduced to a formal writing, the contract is complete and enforceable, although on account of one party refusing to execute, except on insertion of additional conditions-the writing is never executed. Early, Gray and Bartlett, J. J., dissenting. Judgment of court below reversed. Sanders, et. al. v. Pottlitzer Bros. Fruit Co., 39 N. E. R. (N. Y.) 75.

Contracts.-The use by a street railway company of electricity by the Trolly system is not the employment of "steam as a motive power" within the meaning of a clause rendering a contract defeasable by either party in case of such use of steam. Prospect Park & C. I. Ry. Co. v. Coney Island & B. R. Co., 39 N. E. R. (N. Y.) 17.

Contract of opera singer-Breach.-Rice v. D' Arville (Mass.), 39 N. E. 180. The defendant engaged to sing under the management of the plaintiff for a certain number of weeks, but before the time expired the plaintiff having assured her of his inability to pay her unless the season was a successful one, and he already having failed to pay several weeks salary, in consequence of which she had refused to further carry out the contract, it was held that the plaintiff would not be entitled to an injunction, enjoining her from engaging with another manager. The fact that the plaintiff at the hearing of the bill, filed a bond for the full performance of his part of the contract will not entitle him to the relief prayed for.

Continuance.-Sickness of party.-Post v. Cecil, 39 N. E. 222 (Ind.).— Where from the affidavit of counsel it appears that his client because of a sudden illness is unable to attend and it further appears that counsel is unable to proceed without the presence of his client, the court has no discretion but must grant the motion for a continuance. Luts, J., in his dissenting opinion said: "A motion for a continuance is addressed to the sound discretion of the trial court and a judgment should not be reversed on account of a ruling thereon unless it very clearly appears that his discretion has been abused."

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Deed-Construction.-Jones v. Van Bochare, 61 N. W. (Mich.) 342. A certain cement company had obtained a deed from one Winslow, which contained a granting clause reading: "All that certain piece or parcel of land situate * * and described as follows, to-wit: The right of way for a railroad running from the marl bed of said cement company to their works, on west side of Kalamazoo river, and described as follows: 'A strip of land forty feet wide; * and being nine hundred fifty--two feet in length."" Held: that the grantee acquired only an easement. Citing Flaten v. City of Moorhead (Minn.), 53 N. W. 807; Robinson v. R. R. Co., 59 Vt. 426.

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Injunction-Strike.-An employer is not entitled to an injunction against striking employés to prevent them from inducing others by entreaty or persuasion to leave his employment, when no intimidation is used. Reynolds, et al., v. Everett, et al., 39 N. E. R. (N. Y.) 72.

Jury.-Conduct of foreman.-Hutchings v. State, 39 N. E. 243 (Ind.). — The foreman of a jury cannot make and enforce rules preventing any juror from speaking unless he first arises and addresses him as chairman.

Obstruction of street.—Action by property owners.—Dantyer, et. al. v. Indianapolis Union Ry. Co., 39 N. E. 223 (Ind.).—In an action for the impairment of property rights by the obstruction of a public street, complainant must show a damage different in kind from that which is suffered by those who have property rights in the vicinity of the obstruction and stand in relatively the same position to it as the complainant. 102 Ill. 379 and 64 cited.

Trover-Attachment as defense.-Plaintiff sued in trover for the value of three pianos which defendant refused to give up on plaintiff's demand. Subsequent to the demand an attachment issued in favor of defendant, in a suit against a third party, and the pianos were sold by the sheriff. Held, that such attachment is no defense to the action of trover. Guest v. Heinly, et al., 61 N. W. (Ia.), 404.

Following trust funds.-Defendant bank had received certain mortgages to collect for plaintiff, with instructions to hold the money for plaintiff and not to place it to his account. This money was, after a time, in disobedience to such instructions, placed with the funds of the bank to plaintiff's account. Upon the bank's assignment in insolvency, held: that plaintiff should be paid the amounts collected on the mortgages in preference to other creditors; that these moneys were trust funds, and could be followed so long as the funds of the bank did not fall below the amount of the trust. In re Johnson, Sherwood v. Cent. Mich. Savings Bank, 61 N. W. (Mich.) 352.

A court of last resort will not decide a constitutional question unless it is absolutely necessary to the disposition of the cause on its merits. State v. Atkinson, 39 N. E. R. (Ind.) 51.

NORTHWESTERN LAW REVIEW

VOL. III.

MARCH, 1895.

No. 6.

AN INSURER'S RIGHT OF SUBROGATION TO THE RIGHTS OF AN INSURED MORTGAGEE.

I shall attempt to show that, both on principle and on authority, the insurer of a mortgagee's interest has a right, independent of contract, to be subrogated to the right of the mortgagee in the mortgage debt.

It is settled in Massachusetts that this right does not exist. But I doubt if a single adjudication can be found outside of Massachusetts where this right is denied. And as to the text writers: Wood on Insurance (sec. 782) denies this right, relying on the Massachusetts authorities; nor does he consider other authorities. The general statement in May on Insurance at section 456, seems also to deny the right; but at paragraph 457 c. (3rd Ed. 1891), he says: "If an insurance company pay a mortgagee the loss, it is subrogated to the rights of the mortgagee, and may proceed against the mortgagor on the mortgage. The right does not rest on contract, but on principles of justice."

In our consideration of the subject, it may be well to have a concrete case in mind. "A" mortgages property to "B" for one thousand dollars. And "B" takes out insurance on the property with "C," in the sum of one thousand dollars. This without the Consent, direction, or knowledge of "A" Now, while the debt is wholly unpaid, and the policy still running, the property is destroyed by fire. "C" pays "B" one thousand dollars. And the question is what are the rights of the parties. And first is the debt satisfied?

Justice Hoar, in Suffolk Co. v. Boyden, 9 Allen, 123, said: "But why should not the mortgagor have the benefit of the insur

ance? The equitable argument in his favor would seem to be at least as strong as that in favor of allowing the insurer the advantage of a subrogation of the debt. The whole interest of the mortgagee in the property, in its inception, and while it continues, is only for the purpose of indemnity. He takes it as a security from which he may recover what is due to him, if the debt is not paid. If the insurer pays a loss by fire, equal to the whole debt, the mortgagee receives, through his title to the property held as a security, the amount of his debt, except only the premiums paid, which may be a very trifling proportion of it. The mortgagor has lost the same amount. Why should not the mortgagor pay the premiums and be entitled to treat the debt as canceled? The sufficient answer is, because the insurance is a wholly collateral contract, which the law allows the mortgagee to make, and with the results of which the mortgagor has no concern. The whole consideration proceeds from the mortgagee. If there is no loss by fire, he loses the whole amount of premiums paid, without any claim upon the mortgagor for compensation.. * It would be manifestly unjust that the mortgagor should have the advantage of indemnity, when he has borne no part of the expenses of obtaining it." Now, although I cannot entirely agree with some of the argument just quoted, I believe that it conclusively shows why the debt is not to be considered as satisfied. If the owner, the mortgagor of the property, wishes protection, he should insure the property. He has an insurable interest to the full value. It is true the mortgagor has lost the property when it is destroyed, but his loss is no greater from the fact that an insurer has paid the mortgagee his loss. The mortgagor is still liable to some one, the only question is to whom.

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In order to understand the rights as between the mortgagee and the insurer we must look to the motive inducing the insurance, and to the grounds on which the courts have sustained the legality of this form of insurance. As to the motive, it is clear that it was to prevent a possible loss of the debt, or more exactly, a loss of the security. And the courts, in order to sustain this form of contracts, must necessarily have considered that the object was in no sense the hope of gain further than as a security or an indemnity. Justice Folger in Excelsior Co. v. Royal Co., 55 N. Y. 343, con

sidering the reason why a mortgagee may insure says that fire underwriters in this country are creatures of the statute and can do nothing but what they are impowered to do. They could not guarantee debts, nor the sufficiency of securities. They could agree to pay such loss or damage as happened by fire to property. But how could they help the mortgagee? He was not the owner of the property. (Page 358). "And the effort was not to enlarge the powers of the insurer so that it might insure the debt, but to bring the lienor within the scope of that power, so that the property might be insured for his benefit. And it was done by holding that, as his security did depend upon the safety of the property, he had an interest in its preservation, and so had such interest that he might take out a policy upon it against loss by fire, without meeting the objection that it was a wagering policy. The policy did not, therefore, become one upon the debt, and for indemnification against its loss, but still remained one upon the property and against loss or damage to it. It is doubtless true, as is said by Gibson, J., in 17 Pa. St., 253, that in effect it is the debt which is insured. It is only as an effect, however, an effect resulting from the primary act of insurance of the property which is the security for the debt. It is the interest in the property which gives the right to obtain insurance. The agreement is usually, as it is in fact in this case, for insuring, from loss or damage by fire, the property. The interest of the mortga ee is in the whole property, just as it exists undamaged by fire at the date of the policy. If that property is consumed in part, though what is left of it is equal to the amount of the mortgage debt, the mortgage interest is affected. It is not so great, or so safe, or so valuable, as it was before. It was for indemnity against this very deterioration, this very decrease in value, that the mortgagee sought insurance and paid his premiums,"

We must not attempt to draw analogies from the law of life insurance. Life policies are governed by a radically different set of rules from those governing fire insurance policies. Where "A" insures, for his own benefit, the life of "B" he must have some in erest in the continuance of "B's" life; but after a life policy once legally taken out courts will protect the policy regardless of the continuance of that interest. No such doctrine was ever applied to fire insurance.