Gaulkin, Collester and Labrecque. The opinion of the court was delivered by Gaulkin, S.j.a.d.
This is a fire insurance subrogation case. The New Hampshire Insurance Company (New Hampshire) paid Foster Estates, Inc. (Foster) $12,498 for damage by fire to Foster's building. New Hampshire, claiming that defendant Wolek, Foster's tenant, negligently caused the fire, instituted this action in the name of Foster against Wolek for the damage caused by the fire. Wolek moved for summary judgment on the ground that, pursuant to the lease, he had bought and paid for the New Hampshire policy and therefore New Hampshire was not entitled to subrogation against him even if his negligence caused the fire. The motion was denied and we granted Wolek leave to appeal.
The facts are not in dispute. On January 15, 1962 Foster leased to Wolek certain premises upon which Foster agreed to erect a building to be used by Wolek to carry on the business of ornamental iron works. The lease was for ten years after completion of the building. It was prepared by Foster's attorney and consisted of a "Blumberg" printed form (Form No. 880) to which was appended a typewritten
face page and a typewritten concluding page. It contained, inter alia, the following paragraph:
"Twenty-ninth. -- The Tenants agree to keep the building to be erected on the demised premises insured against loss or damage by fire, with extended coverage, in an insurance company satisfactory to the Landlord * * * and to deliver all such insurance policies to the Landlord * * * with evidence of payment of the premiums therefor."
Wolek procured the New Hampshire policy, with extended coverage, naming Foster Estates as the insured, paid the premium thereon and delivered it to Foster.
On March 18, 1965, after Wolek had finished welding a loose fender on a truck, the truck or gasoline beneath the truck caught fire, setting fire to the building. Foster used the money received from New Hampshire in settlement of the loss to repair the damage. Wolek has continued to occupy the property and to pay the rent.
The rights of a subrogated insurer can rise no higher than the rights of its insured. Furthermore, a subrogee is subject to all legal and equitable defenses that the alleged tortfeasor may have either against it or against the insured, and there can be recovery only if the cause is just and consonant with right and justice. Standard Accident Insurance Co. v. Pellecchia, 15 N.J. 162, 172, 173 (1954); Board of Education, Woodbridge Tp. v. Kane Acoustical Co., 51 N.J. Super. 319, 327 (App. Div. 1958); Larstan Industries, Inc. v. Res-Alia Holding Co., 96 N.J. Super. 37, 44 (App. Div. 1967). Cf. Fry v. Jordan Auto Company, 224 Miss. 445, 80 So. 2 d 53, 57 (Sup. Ct. 1955).
In 29A Am. Jur., Insurance, § 1731, pp. 807-808 it is said:
"Where insurance on mortgaged property has been obtained by the mortgagor, or at his request and expense, the insurer is not entitled to subrogation to the rights of the mortgagee on a payment of the loss to him, in the absence of a specific provision therefor in the policy; and this rule is applicable notwithstanding the insurance is taken in the name of the mortgagee."
We hold that, in the absence of facts showing a contrary intention, the same rule applies when a policy insuring the landlord is obtained and paid for by the tenant, even though the tenant is not named in the policy. Cf. Larstan Industries, Inc. v. Res-Alia Holding Co., supra; Mayfair Fabrics v. Henley, 97 N.J. Super. 116 (Law Div. 1967), affirmed sub nom. Natell v. Henley, 103 N.J. Super. 161 (App. Div. 1968). (Hereafter this case will be called Mayfair II to distinguish it from Mayfair Fabrics v. Henley, 48 N.J. 483 (1967) ...