Rosario-Paolo, Inc. v. C & M Pizza Restaurant, Inc.

—In an action to recover the proceeds of a fire insurance policy, the plaintiff appeals from so much of an order of the Supreme Court, Westchester Court (Delaney, J.), dated January 30, 1991, as denied that branch of its motion which was for summary judgment against the defendant Investors Insurance Company of America, Inc., and granted that defendant’s cross motion *777for summary judgment dismissing the complaint insofar as it is asserted against it.

Ordered that the order is affirmed insofar as appealed from, with costs.

On or about March 6, 1987, the plaintiff, Rosario-Paolo, Inc., sold its pizza restaurant business to the defendant C&M Pizza Restaurant, Inc. (hereinafter C&M Pizza). In order to secure the payment of the unpaid balance of the purchase price, the plaintiff and C&M Pizza entered into a security agreement which provided that C&M Pizza would keep the premises insured against fire and provide a copy of the insurance policy, listing the plaintiff as a beneficiary, to the plaintiff.

C&M Pizza procured a fire insurance policy from the defendant The Investors Insurance Company of America (hereinafter the carrier) which covered the premises from March 9, 1987, through March 9, 1988. However, the policy failed to name the plaintiff as a loss beneficiary. The only beneficiary named on the policy was C&M Pizza.

On January 19, 1988, the business premises was totally destroyed by a fire. Thereafter, by certified letter dated April 13, 1988, the plaintiff notified the carrier of its claim to the proceeds of the fire insurance policy. However, on or about May 18, 1988, the carrier sent C&M Pizza a check for $49,598.52. The plaintiff was not named as a payee on the check. The check was endorsed by the owner of C&M Pizza, and deposited into an individual account.

As a result, the plaintiff commenced this action against C&M Pizza and the carrier to recover the proceeds of the fire insurance policy. The plaintiff claimed, inter alia, that the carrier acted negligently when it issued the check to C&M Pizza, despite the fact that the plaintiff had previously notified the carrier of its claim to the proceeds of the fire insurance policy.

Thereafter, the plaintiff moved for summary judgment on its complaint. The carrier cross-moved for summary judgment against the plaintiff and C&M Pizza. The Supreme Court denied that branch of the plaintiff’s motion which was for summary judgment against the carrier and granted the carrier’s cross motion for summary judgment dismissing the complaint insofar as it is asserted against it.

On appeal, the plaintiff argues that the Supreme Court improperly denied that branch of its motion which was for summary judgment against the carrier and granted the carrier’s cross motion for summary judgment dismissing the com*778plaint. Specifically, the plaintiff argues that it had an equitable lien on the proceeds of the fire insurance policy, and thus, the carrier was negligent in failing to name the plaintiff as a payee on the proceeds check. We disagree.

Although the plaintiff obtained an equitable lien on the proceeds of the insurance policy as a result of C&M Pizza’s breach of the security agreement (see, Nor-Shire Assocs. v Commercial Union Ins. Co., 25 AD2d 868; Andrello v Nationwide Mut. Fire Ins. Co., 29 AD2d 489; Villano v Gable Professional Adjusters, 139 AD2d 957; 71 NY Jur 2d, Insurance, § 1845), we find that the carrier did not have a duty to investigate the legitimacy of the plaintiff’s claim to the proceeds of the insurance policy, since the plaintiff was not a party to the insurance contract (see, McGraw-Edison Credit Corp. v Allstate Ins. Co., 62 AD2d 872). As this Court held in McGraw-Edison Credit Corp. v Allstate Ins. Co. (supra), a secured creditor is in the best position to police the enforcement of its agreement with its debtor with respect to insurance coverage on collateral. Therefore, we find that the Supreme Court properly granted the carrier’s cross motion for summary judgment dismissing the complaint insofar as it is asserted against it. Thompson, J. P., Miller, and Pizzuto, JJ., concur.