Appellants, Barry Brewer, are insurance agents in the city of Greenwood. On October 18, 1930, they issued and delivered to John Dahmer a fire insurance policy for seven thousand five hundred dollars on a store building owned by Dahmer in said city; and on November 2, 1930, another policy for five thousand dollars on the same building. Each of said policies was for one year, and the premium on the first was one hundred eighty-six dollars and seventy-five cents, and on the second one hundred twenty-four dollars and fifty cents. The policies were issued upon the application of Dahmer, but the appellee, Wright, held a mortgage on the insured property, and the policies, with mortgage clauses in Wright's favor, were upon issuance delivered to and were kept by Wright. The policies were issued on terms of sixty days' premium credit to Dahmer, and the amounts of the premiums were charged on the agents' books to the account of Dahmer. Under the agency contract between the insurance agents and the company or companies for whom they acted, there was an obligation on the part of the agents to pay to the company or companies any premium or premiums, less agent's commissions, which had been due for more than sixty days. Dahmer did not pay the premiums or either of them at the end of sixty days, and in accordance with their contract aforesaid the agents remitted to the company the premiums, less agent's commissions. *Page 224
Thereafter, on August 18, 1831, and while these premiums remained wholly unpaid by Dahmer, there was a damage by fire to the insured building, which damage amounted to the sum of one hundred dollars and fifty cents under the first policy and sixty-seven dollars under the second, a total of one hundred sixty-seven dollars and fifty cents. Shortly after this fire, and before the expiration of the year from the date of the policies, appellants for the first time demanded of Wright the payment of the premiums, to which demand Wright declined to accede. Appellants then requested that the company checks for the amount of the said loss might be retained by appellants as a credit on the premiums, and this Wright also refused. Wright, the mortgagee, took the defensive position that the premiums had already been paid to the insurance company, although paid by the agents as aforesaid, and that even if not paid, there was no liability against him for the premiums until demand made on him therefor, and that no such demand was made until after the fire and the loss had occurred. Dahmer was later adjudged a bankrupt, and although the policies have expired, no part of the premiums have been paid either by Dahmer or by Wright.
Some time after the expiration of the policies, the insurance company delivered the said sum of one hundred sixty-seven dollars and fifty cents into court, and filed therewith its bill of interpleader making Dahmer, and Wright and the insurance agents, parties, so that said parties defendant could appear and litigate the issue as to which of them was entitled to said fund. The appellants, insurance agents, and Wright, the mortgagee, by appropriate pleadings accepted the issue and, upon the hearing, the court awarded the funds to Wright and the insurance agents appealed.
The first question that we must notice is the contention on the part of appellee that the agents are not entitled to recover in their own names or for their own account; that *Page 225 they were mere volunteers in making the payment of the premiums to the company; and that no premium is in default, the company having already received the premiums. We have no difficulty on that question. We are all in accord upon it, and we hold that where an insurance company looks to its agent for the payment of premiums on insurance written by him and credit has been extended to an insured by the agent who thereafter, in the discharge of the aforementioned obligation due to his principal, pays a premium which the insured has failed to pay, the agent upon such payment is subrogated to all the rights and remedies of the insurance company in respect to the premiums, and may demand and sue for the same in his own right and in his own name. Lamb v. Connor, 84 Wn. 121, 146 P. 174, and cases there cited. See, also, Boston Co. v. Thomas, 59 Kan. 470, 53 P. 472; Weisman Insurance Agency v. Bass, 14 La. App. 207, 127 So. 635; 26 C.J., p. 116; 33 C.J., p. 67; 24 R.C.L., p. 878.
The principal question argued is whether the mortgage clause, section 5185, Code 1930, creates as against the mortgagee, to whom there has been delivered a policy with that clause attached in his favor, a covenant or absolute promise on his part to pay the premium on the owner's default, or whether that clause, as it appears in the statute, imports a mere condition by which the mortgagee at his option, when demand is made of him for the premium, may avail himself of the benefits of the clause by the payment of the premium demanded, or by the payment of that part of the premium which is apportionable to the amount of the mortgagee's interest in the property.
The decisions are in conflict on that question, and both sides to it are supported by forceful reasoning. St. Paul Fire Marine Ins. Co. v. Upton, 2 N.D. 229, 50 N.W. 702; Boston Safe Deposit Trust Co. v. Thomas, 59 Kan. 470, 53 P. 472; Colby v. Thompson,16 Colo. App. 271, 64 P. 1053; Security Ins. Co. v. Eakin,41 Ga. App. 257, 152 S.E. 606; Stoddart v. Black, 134 Kan. 838, 8 P.2d 305, *Page 226 83 A.L.R. 100; Coykendall v. Blackmer, 161 App. Div. 11, 146 N YS. 631; Home Ins. Co. v. Union Tr. Co., 40 R.I. 367,100 A. 1010, L.R.A. 1917F, 375; Farnsworth v. Refining Co., 35 Wyo. 334,249 P. 555, 47 A.L.R. 1114; Acuff Co. v. Trust Co., 157 Tenn. 99,7 S.W.2d 52; Olmsted Co. v. Ins. Co., 118 Ohio St. 421,161 N.E. 276; Schmitt v. Gripton, 77 Cal.App. 429, 247 P. 505; Whitehead v. Wilson Mills, 194 N.C. 281, 139 S.E. 456, 56 A.L.R. 674; Ormsby v. Ins. Co., 5 S.D. 72, 58 N.W. 301; Trust Co. v. Phoenix Ins. Co., 201 Mo. App. 223, 210 S.W. 98; 26 C.J. 113. It is to be observed, however, that a close analysis of the cases on the subject will reveal that most of them are not here in precise point, because few of them were dealing with a statutory mortgage clause and none of them with a clause in the exact words of our statute. The part of our statute here involved reads as follows: "And in case the mortgagor or owner shall neglect to pay any premium due under this policy the mortgagee (or trustee) shall, on demand, pay the same."
Two of the five judges participating in this decision are of the opinion that the obligation upon the mortgagee under said clause is conditional, and that no liability exists against the mortgagee for the payment of the premium until demand is made upon him therefor, and that even then there is no liability on his part unless he then elects to keep the policy in force.
Two others of the judges are of the opinion that the statute creates a covenant between the insurer and the mortgagee — an obligation on the part of the mortgagee — existent from the time the policy is delivered, to pay the premium, in case the owner or mortgagor fails to do so, and that the provision in respect to demand operates as a maturity date, similarly to the maturity date of a note or account payable on demand.
The position of the two judges last mentioned is, in brief, that Wright as a covenantor was bound to pay these premiums. A result of that position is that, as a matter *Page 227 of law, the insurance company, at the time of the loss, was entitled to retain the one hundred sixty-seven dollars and fifty cents arising from that loss, and to apply it as a credit on the unpaid premium. In this conclusion on this particular point, determinative of this particular case, to-wit, that the insurance company was entitled to retain the said amount, applying it to the unpaid premium — unpaid so far as the mortgagee and the owner are concerned — the writer hereof concurs, and this is stated without entering here upon the reasons which lead the writer to that concurrence. We have already set forth that the agent who has paid the premium, under circumstances such as shown in this case, is subrogated to all the rights of the insurance company in respect to that premium, and may avail of every right in that respect which the insurance company could have asserted or exercised had the premium not been paid to the company. Since then the insurance company could, under the law, have had and retained the money due for the loss, and since the agents here stand in the place and stead of the insurance company with all the rights the company would have had in regard to the premium, it follows that the agents may have the present equivalent of what the company could have had, and in consequence that the agents are entitled to have and recover the money arising from said loss and which has been paid into court as aforesaid. Therefore the judgment of the court below must be reversed, and the cause remanded, with directions to proceed in accordance with this opinion.
Reversed and remanded.
Anderson, J., disqualified, takes no part.