ing v. Home Ins. Co. 71 N. Y. 508, 27 Am. Rep. 86; Phenix Ins. Co. v. Caldwell, 187 Ill. 73, 58 N. E. 314; Hill v. Cumberland Valley Mut. Protection Co. 59 Pa. 474; O'Neil v. Franklin F. Ins. Co. 159 App. Div. 313, 145 N. Y. Supp. 432, affirmed in 216 N. Y. 692, 110 N. E. 1045; Trumbull v. Portage County Mut. Ins. Co. 12 Ohio, 305; Arkansas F. Ins. Co. v. Wilson, 67 Ark. 553, 48 L.R.A. 510, 77 Am. St. Rep. 129, 55 S. W. 933; Pringle v. Des Moines, 107 Iowa, 742, 77 N. W. 521; International Wood Co. v. National Assur. Co. 99 Me. 415, 105 Am. St. Rep. 288, 59 Atl. 544, 2 Ann. Cas. 356; Boston & S. Ice Co. v. Royal Ins. Co. 12 Allen, 381, 90 Am. Dec. 151; Washington F. Ins. Co. v. Kelly, 32 Md. 421, 3 Am. Rep. 149; Zeitler v. Concordia F. Ins. Co. 169 Mich. 555, 135 N. W. 332; Masters v. Madison County Mut. Ins. Co. 11 Barb. 624; Russell v. Cedar Rapids Ins. Co. 4 L.R.A. 538, note; National F. Ins. Co. v. Itasca Lumber Co. 148 Minn. 170, 181 N. W. 337; King v. Hartford F. Ins. Co. 133 Minn. 322, 158 N. W. 435, Ann. Cas. 1918D, 861.

Plaintiff complied with all the terms of the policy.

19 Cyc. 710; Westchester F. Ins. Co. v. Foster, 90 Ill. 121; Hartford F. Ins. Co. v. Williams, 11 C. C. A. 503, 24 U. S. App. 493, 63 Fed. 925; Feibelman v. Manchester F. Assur. Co. 108 Ala. 180, 19 So. 540; Wertheimer-Swarts Shoe Co. v. United States Casualty Co. 172 Mo. 135, 61 L.R.A. 766, 95 Am. St. Rep. 500, 72 S. W. 635.

Mr. Rollo N. Chaffee for respondent intervener.

Dibell, J., delivered the opinion of the court:

Action on two policies of fire insurance aggregating $3,000, issued by the defendant to the plaintiff on a building in Duluth. The Northern Title Company, a mortgagee of the plaintiff, intervened, claiming that the insurance company agreed, but failed, to attach a mortgage clause to the policies, making the insurance payable to it, and asked a reformation. The trial court found that the loss was total, decreed a reformation, and directed judgment for the plaintiff for one sum and for the intervener for an

other, the two sums aggregating

$3,000 and interest. The defendant appeals from the judgment.

1. The policies are of the Minnesota standard form. They provide for forfeiture "if without such assent [of the insurer] the situation or circumstances affecting the risk shall, by or with the knowledge, advice, agency, or consent of insured, be so altered as to cause an increase of such risks, or if, without such assent, the property shall be sold or this policy assigned.

Gen. Stat. 1913, § 3318. The issue between the plaintiff and the defendant is whether the property was "sold" within the meaning of the policy. There is no claim that there was an assent by the insurer.

The facts are not in dispute. One policy was dated February 26, 1921; the other March 31, 1921. The property was destroyed by fire on August 18, 1921. On May 13, 1921, the plaintiff entered into a contract of sale with one Radovich for $3,680. He paid $400 in cash, assumed two mortgages made by the plaintiff to the intervener, aggregating $1,800, agreed to pay the balance of $1,480 in monthly instalments, and took possession. The plaintiff endeavored to sell to the People's State Bank. He was engaged in building and selling houses and wanted to buy property and build. The bank refused to purchase, but offered to advance the money due on the contract if Radovich would make a note directly to the bank, and the plaintiff would indorse it. The plaintiff accepted. The bank paid $300 in cash. The balance was represented by two lots deeded to the plaintiff by an officer of the bank. The plaintiff, his wife joining, exerty, the name of the grantee blank, ecuted a deed of the insured propand delivered it to the bank to be delivered to Radovich when his payments were completed. Such a transaction passes the equitable title in fee to the vendee, leaving the legal title in fee in the vendor as se- forfeiturecurity; and when instalment sale formed the vendor holds the legal the contract is per

Insurance

of property.

(— Minn. —, 198 N. W. 1003.) title as trustee. This is settled law in Minnesota. Shraiberg v. Hanson, 138 Minn. 80, 163 N. W. 1032, and cases cited; Re Consolidation School Dist. 146 Minn. 403, 178 N. W. 892, and cases cited. The vendee is a freeholder within Gen. Stat. 1913, 6656, defining "estates of inheritance" as freeholds. Re Consolidation School Dist. 140 Minn. 475, 168 N. W. 552. So is the vendor. Re Consolidation School Dist. 146 Minn. 403, 178 N. W. 892. The interest of each is subject to a judgment lien. Minneapolis & St. L. R. Co. v. Wilson, 25 Minn. 382; Reynolds v. Fleming, 43 Minn. 513, 45 N. W. 1099; Hook v. Northwest Thresher Co. 91 Minn. 482, 98 N. W. 463. The interest of the vendor is as stated, though it passes as personalty upon his death. State ex rel. Hilton v. Probate Ct. 145 Minn. 155, 176 N. W. 493. If the contract of sale does not forfeit the policy, the depositing of a deed in escrow, to be delivered on completion of the payments, does not. Moore v. St. Paul F. & M. Ins. Co. 176 Iowa, 549, 156 N. W. 676. The deposit in escrow does not make the contract of sale anything more. The plaintiff remained liable on the mortgage notes. In the mortgages he had agreed to procure insurance for the protection of the mortgagee. He was liable on the Radovich note of $1,480. He was, in reality, borrowing from the bank. He had an insurable interest in the property; so had Radovich. See Banner Laundry Co. v. Great Eastern Casualty Co. 148 Minn. 29, 180 N. W. 997, and authorities cited; National F. Ins. Co. v. Itasca Lumber Co. 148 Minn. 170, 181 N. W. 337; 2 Joyce, Ins. §§ 977, 983; Cooley, Briefs on Ins. & Supp. 188-190; 14 R. C. L. 916.

ance if the insurer is not the entire, unconditional, and sole owner.

In construing such or similar conditions some courts emphasize the change of moral hazard attendant upon a change of interest or a change of possession; others direct serious attention to the question whether the insured retains an insurable interest. Both are legitimate considerations. In King v. Hartford F. Ins. Co. 133 Minn. 322, 158 N. W. 435, Ann. Cas. 1918D, 861, involving a Canadian policy forfeiting the insurance "if the property insured is assigned without a written permission indorsed hereon," it was held that an assignment of the property by way of security did not forfeit the insurance. Mr. Justice Bunn said: "The cases hold quite generally that what such a provision as the one under discussion is intended to provide against is a transfer or assignment of the insured's entire interest in the property, so that he does not retain an insurable interest and that a chattel mortgage is not such a transfer or assignment."

We are not cited a case construing a policy with a condition of forfeiture in the precise language of the one before us. Some policies protect against an alienation; others against a sale or conveyance or encumbrance; others against change in title, interest, or possession; and others avoid the insur

a

The plaintiff cites Gibb v. Fire Ins. Co. 59 Minn. 267, 50 Am. St. Rep. 405, 61 N. W. 137. The policy contained a condition of forfeiture "if any change other than by the death of an insured takes place in the interest, title, or possession of the subject of insurance." It was held that an executory agreement to convey under which the vendee took possession and paid a portion of the purchase price worked a forfeiture because of the change of interest. The court said: "It is held by the great weight of authority that, where the condition is against any change in the title, there is no breach unless there is a change in the legal title-that, as long as the insured retains the legal title and an insurable interest in the premises, the policy is not avoided by a transfer of the equitable title or of equitable interests; but we cannot. apply this doctrine to a condition. against any change of interest. The terms are not synonymous, as contended by counsel. The word 'in

(— Minn. -, 198 N. W. 1003.)

defendant refers to this rule, and cites many cases holding that, under policies requiring the ownership of the insured to be sole, unconditional, and entire, the vendee has an insurable interest, and his equitable title satisfies the condition. Phenix Ins. Co. v. Kerr, 66 L.R.A. 569, 64 C. C. A. 251, 129 Fed. 723; Milwaukee Mechanics' Ins. Co. v. Rhea, 60 C. C. A. 103, 123 Fed. 9; Pennsylvania F. Ins. Co. v. Hughes, 47 C. C. A. 459, 108 Fed. 497; Loventhal v. Home Ins. Co. 112 Ála. 108, 33 L.R.A. 258, 57 Am. St. Rep. 17, 20 So. 419; Arkansas Ins. Co. v. Cox, 21 Okla. 873, 20 L.R.A. (N.S.) 775, 129 Am. St. Rep. 808, 98 Pac. 552; Johannes v. Standard Fire Office, 70 Wis. 196, 5 Am. St. Rep. 159, 35 N. W. 298; Imperial F. Ins. Co. v. Dunham, 117 Pa. 460, 2 Am. St. Rep. 686, 12 Atl. 668. The cases of this kind are in substantial harmony. An occasional suggestion is found that there cannot be such ownership in the vendee and a like ownership in the vendor; but we do not take it to follow that, because the vendee's insurance is not forfeited by such a condition, the insurance of the vendor is forfeited because of a condition against a change of title, or sale, or a similar condition. The cases hardly say so. The law dislikes a forfeiture of the vendee's insurance, and it dislikes a forfeiture of the vendor's insur

ance.

The cases involving forfeitures are in confusion; partly so, because of the variant conditions of the policies, and partly because of the angle of approach taken by different courts in coming to a construction of them. We are of the view that the plaintiff's position is the better supported by the authorities. It may be noted that the condition of the standard policy provides a forfeiture in the event of an increase of risk through a change of situation or circumstances with the knowledge or consent of the insured and without the assent of the insurer. The insurer is not without

protection against an increase of hazard. We hold that the contract of sale did not forfeit the plaintiff's insurance.

2. The plaintiff covenanted in his mortgages to keep the property insured in the sum of $3,000 for the protection of the mortgagee. It seems that the plaintiff would be entitled in equity to a lien or charge upon the insurance money, there being no forfeiture, upon a failure. of the mortgagor to make the policy payable in case of loss to the mortgagee. Ames v. Richardson, 29 Minn. 330, 13 N. W. 137. Probably the mortgagee could come into the mortgagor's action on the policy and impress the proceeds with a lien. Under our holding that there was not a forfeiture, the defendant must pay somebody the full amount of the loss-either the plaintiff, or the plaintiff and the intervener. If the contract of sale forfeited the policy, then, under Gen. Stat. 1913, § 3318, protecting the rights of a mortgagee, when loss is payable to him, against a forfeiture for an act of the mortgagor, the question whether the intervener was entitled to relief by way of specific performance or reformation would be a practical one. Sterling F. Ins. Co. v. Beffrey, 48 Minn. 9, 50 N. W. 922; Magoun v. Fireman's Fund Ins. Co. 86 Minn. 486, 91 Am. St. Rep. 370, 91 N. W. 5; Moore v. Sun Ins. Office, 100 Minn. 374, 111 N. W. 260. It does not seem important here; but the question whether the defendant agreed to make the policies payable to the intervener is before us for decision.

There is evidence that the intervener telephoned to the agent of the insurance company, requesting him to make the policies payable, in case of loss, to the mortgagee, and that he promised to do so. This the agent denies. There are circumstances in the case supporting the intervener's claim, and there are circumstances sustaining the insurance company's denial. There is evidence that the intervener relied

ANNOTATION.

What amounts to a sale within forfeiture provision of insurance policy forbidding property to be sold or conveyed without assent of insurer.