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Altshuler v. New Brunswick Fire Insurance Co.

Decided: January 15, 1935.

JACOB ALTSHULER AND WILLIAM ALTSHULER, PLAINTIFFS-APPELLANTS,
v.
NEW BRUNSWICK FIRE INSURANCE COMPANY OF NEW BRUNSWICK, NATIONAL FIRE AND MARINE INSURANCE COMPANY OF ELIZABETH, MASSACHUSETTS FIRE AND MARINE INSURANCE COMPANY OF BOSTON, THE EMPLOYERS FIRE INSURANCE COMPANY OF BOSTON, THE GIRARD FIRE AND MARINE INSURANCE COMPANY OF PHILADELPHIA, DEFENDANTS-RESPONDENTS



On appeal from the Supreme Court (Passaic Circuit).

For the plaintiffs-appellants, Joseph Thomas Lieblich.

For the defendant-respondent Girard Fire and Marine Insurance Company, Lum, Tamblyn & Fairlie.

For the other defendants-respondents, Arthur T. Vanderbilt.

Wells

The opinion of the court was delivered by

WELLS, J. This is an appeal from a judgment of the Supreme Court (Passaic Circuit) entered on the verdict of a jury directed by the trial court in favor of the defendants.

The pertinent facts are that David Gordon was the owner of two tracts of land and premises in Paterson, New Jersey, upon which there were numerous mortgages. The plaintiffs, Altshulers, were the holders of a mortgage which was a third mortgage on one of the tracts and a second on the other. On June 20th, 1929, after the death of David Gordon, the first mortgagee, the Hamilton Trust Company, began foreclosure

proceedings, but by an arrangement made between the Hamilton Trust Company and the plaintiffs these proceedings were discontinued and on July 19th, 1929, foreclosure proceedings were instituted by the plaintiffs. On January 7th, 1930, a final decree was entered therein and the following day a fieri facias was issued to the sheriff of Passaic county directing him to sell the mortgaged premises.

Shortly prior to the sheriff's sale, which took place February 14th, 1930, the plaintiffs and one Rafelson, who was financially interested in a materialman's lien which had stood after the plaintiffs' mortgage, entered into an agreement whereby the plaintiffs were to permit Rafelson to purchase the property at the sale for a nominal bid of $1,000. In return Rafelson was to pay the plaintiffs the amount of their deficiency. This agreement was carried out on the date of the sheriff's sale. None of these agreements and proceedings were known to the defendants.

The mortgagees, including the plaintiffs, had rights under several insurance policies in the defendant companies which Gordon, as owner, and after his death, his wife, had taken out, some being issued before the institution of plaintiff's foreclosure suit and some subsequently. The Gordons were not only the owners of the mortgaged premises but also agents for the defendant insurance companies.

To each of the policies was attached the standard mortgagee clause in the form prescribed by the legislature, providing that the loss or damage, if any, should be payable to the mortgagees (naming them in the order of the priority of their respective mortgages), and specifying among other things, "that this insurance, as to the interest of the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings, nor by any change in the title or ownership of the property," &c.

On January 13th, 1930, less than a week after the entry of the final decree in the foreclosure suit, a fire occurred resulting in damages amounting to $6,800, to recover which the plaintiffs brought this suit.

The first knowledge that defendants had of the foreclosure suit was after the properties had been sold by the sheriff to Rafelson. This knowledge came to the defendants by reason of the fact that Bessie Gordon, as agent for the defendants, had attached to and made a part of each of the ...


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