American Ice Co. v. Eastern Trust Co.,
188 U.S. 626 (1903)

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U.S. Supreme Court

American Ice Co. v. Eastern Trust Co., 188 U.S. 626 (1903)

American Ice Co. v. Eastern Trust and Banking Company

No. 98

Argued December 2, 1902

Decided February 23, 1903

188 U.S. 626



Although, as held in Farmers' Loan & Trust Company v. Penn Plate Glass Company, 186 U. S. 434, a covenant in a mortgage to keep the property insured does not run with the land so that an actual grantee taking subject to the mortgage comes under a primary obligation to insure, the case is different, under the peculiar language of the covenant contained in the mortgage herein, and where the mortgagor, after failing to insure in accordance with the covenant, transfers the property to a voluntary assignee. In such case, the insurance taken out by the assignee, who stands in the shoes of the assignor, must be assumed to be taken out in fulfillment of the mortgagor's covenant, and, in the event of loss, the amount collected under the policies inures to the benefit of the mortgagee, and cannot be retained by the assignee as representing his interest or that of general unsecured creditors in the equity of the property.

The appellee herein was the complainant in the court of original jurisdiction and commenced its suit in the Supreme Court of the District of Columbia to foreclose a mortgage executed

Page 188 U. S. 627

by the American Ice Company, one of the appellants, to the appellee as trustee, etc. Judgment of foreclosure was entered, from which an appeal was taken to the Court of Appeals of the District, where it was modified by reducing the amount of the indebtedness found due by the trial court and secured by the mortgage, and, as so modified, the judgment was affirmed. 17 App.D.C. 428, also reported on former hearing in the Court of Appeals, 14 App.D.C. 304. Another phase of the controversy appears in 6 App.D.C. 375, and 169 U. S. 169 U.S. 295.

The facts are somewhat numerous, but, for the purpose of presenting the question discussed in the opinion herein, the following only are necessary to be noticed:

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