Plaintiff-mortgagee sued defendant insurance company to recover the amount allegedly due plaintiff under a fire insurance policy covering a mortgaged building. Plaintiff based its right to recovery on a New York standard mortgagee clause incorporated into a New York standard fire insurance policy. Before the suit was instituted, defendant had tendered payment to plaintiff in accordance with the findings of an appraisal of loss conducted by the mortgagor and defendant, which fully complied with the terms of the policy. This tender was rejected by plaintiff, which had no notice of, and did not participate in, the appraisal. Plaintiff contended it was not bound by the appraisal and asserted its rights to take part in selection of the appraiser and formulation of the award. The supreme court, trial term, entered judgment in favor of plaintiff for the amount previously tendered by defendant. Plaintiff appealed to the supreme court, appellate division, which unanimously affirmed the trial court's judgment. On appeal to the New York Court of Appeals, held, reversed, three judges dissenting. A standard mortgagee clause in an insurance policy creates a separate and independent insurance of the mortgagee's interest, and operates to free the mortgagee from any act or neglect of the owner, despite the fact that the owner may be, in his own right, proceeding strictly in accordance with the policy terms and conditions applicable to him when the loss occurs. Syracuse Savings Bank v. Yorkshire Insurance Company, 301 N. Y. 403, 94 N.E. (2d) 73 (1950).
INSURANCE-CONSTRUCTION-MORTGAGEE'S INTEREST UNDER AN APPRAISAL CLAUSE,
Mich. L. Rev.
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