CHRISTENSON v. FIDELITY INSURANCE COMPANY. [117 Iowa, 77, 90 N. W. 495.] INSURANCE-Mortgagee's Right of Action Upon.-Under an indorsement in a policy of insurance that the loss, if any, is payable to the mortgagee as his interest may appear at the time, he has such an interest that, in the event of a loss, he may maintain an action. (p. 287.) INSURANCE-Mortgagee, When Affected by the Acts of the Insured.-Under an indorsement on a policy of insurance that the loss, if any, is payable to the mortgagee as his interest may appear, the policy may be forfeited because of the acts or omissions of the mortgagor. (p. 287.) INSURANCE-Mortgagee's Right-When Preserved Notwithstanding a Forfeiture.-If a policy of insurance declares that if an interest shall exist under it in favor of a mortgagee, the conditions thereof shall apply in the manner expressed in such provisions of the insurance relating to such interest as shall be written upon, or attached, or appended thereto, and such policy is by an indorsement made payable to the mortgagee as his interest may appear, his right to recover is not affected by a condition in the policy that it shall be void, if, with knowledge of the assured, foreclosure proceedings shall be commenced. (p. 288.) Action by an administrator of the mortgagor to recover upon a policy of insurance. The mortgagee intervened, claiming under a mortgage clause. Judgment for the defendant, and the plaintiff and intervener appealed. G. R. Struble, for the appellants. McVey & McVey, for the appellee. 77 LADD, C. J. The property insured had been mortgaged to H. J. Stevens, since deceased, of whose estate the intervener is administrator. It was consumed by fire January 78 10, 1899. Among its provisions is the stipulation that it, "unless otherwise provided by agreement indorsed hereon or added thereto, shall be void. .... if the property, real or personal, covered by this policy, or any part thereof, be or become encumbered by a mortgage, trust deed, judgment or otherwise, or, with the knowledge of the insured, foreclosure proceedings be commenced." September 27, 1898, foreclosure proceedings were begun with the knowledge of the insured, though unknown to the company until after the loss. It is likely that, cwing to this breach of condition, loss cannot be recovered by the insured. But the policy also contained the stipulation: "Loss, if any, payable to H. J. Stevens, mortgagee, as his interest may appear at the time of same." Probably this alone, as contended by appellee, cannot be treated as an independent contract between the company and the mortgagee. Certainly, the weight of authority is to the effect that it amounts to no more than a stipulation to pay from the proceeds of the policy so much as shall be required to satisfy the mortgage, the contract being solely with the assured: Grosvenor v. Atlantic Fire Ins. Co., 17 N. Y. 391; Williamson v. Michigan etc. Ins. Co., 86 Wis. 393, 39 Am. St. Rep. 906, 57 N. W. 46; Continental Ins. Co. v. Hulman, 92 Ill. 145, 34 Am. Rep. 122; Milliken V. Woodward, 64 N. J. L. 444, 45 Atl. 796. See cases collected in 13 Am. & Eng. Ency. of Law, 202. But see Burrows v. McCalley, 17 Wash. 269, 49 Pac. 508. Without passing on the question, it will suffice to say that this court is committed to the doctrine that the mortgagee has such an interest in the policy that, in event of loss, he may maintain an action thereon as the real party in interest: Mershon v. National Ins. Co., 34 Iowa, 87; Bartlett v. Iowa State Ins. Co., 77 Iowa, 86, 41 N. W. 579. Without more, however, this clause would not interfere with the forfeiture of the policy by the acts or the omissions of the assured: See cases cited in 13 Am. & Eng. Ency. of Law, 202. That result is obviated by another condition of the policy 70 which reads: "If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto." The loss payable clause clearly confers "an interest under this pol icy." It may not be an interest in the policy resulting from any contract between the company and the mortgagee. But this was not necessary, as the insured and the company could create an interest in favor of a third party without his participation, or even knowledge. If they contracted that the mortgagee, in event of a loss should have the proceeds derived from the policy as they did then the right thereto is certainly an interest under, if not technically in the policy. The mortgagee had an interest in the property insured, and the purpose of this provision seems to have been to afford him the same protection secured under the so-called "union mortgage clause." The rule that, when the language of an insurance contract is of doubtful construction and of ambiguous meaning, the courts lean to the construction favorable to the insured, must not be overlooked. Insurance policies are not deliberated upon clause by clause, and agreed to after extended negotiations. The form is prepared by the insurer alone, and when a condition for its protection is inserted it should be clearly expressed, and, if ambiguous in meaning, the language will be taken most strongly against the company. But there can be little doubt as to what was intended. The policy was taken out by the owner, not the mortgagee. A mortgage existed against the property. The condition quoted may be reasonably construed as applicable to the interest of the mortgagee named in the policy. If not, what was intended? It is open to this 80 construction, and, if this is not adopted, the condition is meaningless. True, the form of the policy was for general use. So the loss payable clause is in general use, and for this reason the insurer may well have had it in mind in drafting the provision. Now, the conditions. of the policy previously mentioned "shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon or attached or appended thereto." This means that, in order that they become applicable to the interest of the mortgagee, the manner thereof must be indicated by an indorsement or some writing attached to the policy. Nothing of the kind was indorsed on or appended thereto, and for this reason the conditions do not apply. In this situation the purport of the loss payable clause, when read in connection with the provision quoted must be treated as stipulating indemnity in favor of the mortgagee, independent of the conditions imposed on the insured in the body of the policy. Precisely in point are the following decisions: Oakland Home Fire Ins. Co. v. Bank of Commerce, 47 Neb. 717, 58 Am. St. Rep. 663, 66 N. W. 646; Queen Ins. Co. v. Dearborn Sav. etc. Assn., 175 Ill. 115, 51 N. E. 717; East v. New Orleans Ins. Assn., 76 Miss. 697, 26 South. 691. A contrary conclusion is not vindicated by the reasoning of the appellate court of Indiana in Franklin Ins. Co. v. Wolff, 23 Ind. App. 549, 54 N. E. 772. Reversed. If a Policy of Fire Insurance makes the loss payable to the mortgagee as his interest may appear, and provides that no violation of its conditions by the mortgagor shall affect the mortgagee, the latter may recover, to the extent of his interest, in case of loss, notwithstanding such violation: Magoun v. Fireman's Fund Ins. Co., 86 Minn. 486, 91 Am. St. Rep. 370, 91 N. W. 5, and cases cited in the cross-reference note thereto; Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717, 66 N. W. 646, 58 Am. St. Rep. 663, and note. HAUSBRANDT v. HOFLER. EQUITY-The Power to Reform a Writing is not Restricted to Those Cases in Which There is Something Doubtful or Ambiguous on its Face.-The right to reform writings implies, of necessity, the right to dispute their terms, and to show, ordinarily by parol that their stipulations do not express the intention of the parties. (p. 291.) EQUITY-Reformation of a Promissory Note Because of Mistake of Law as to Its Effect.-If a father gives a sum of money by way of advancement to his daughter, requesting that she give him some writing which will evidence the fact and make her chargeable in the distribution of his estate, and they, through mutual mistake as to the legal effect of the language used, make a promissory note from him to her, she is in equity entitled, upon parol evidence of these facts, to have the writing reformed so as to express the real purpose of its execution. (p. 291.) Action at law upon a promissory note. The defendant alleged that the note was intended as a receipt and not as evidence of indebtedness, and asked for its reformation. The trial court granted the relief thus prayed for, and the defendant appealed. Robert Eggert, for the appellant. P. W. Burr, for the appellees. 103 WEAVER, J. The note sued upon bears date July 9, 1895, and is made payable upon demand to one John Bottcher, father of the defendant, Emma Hofler. Some time in the year Am. St. Rep., Vol. 94-19 1897 Bottcher demanded payment of the note, which was refused, and he thereafter transferred the instrument to plaintiff. The theory of the defense is that Bottcher furnished 104 the sum of one hundred dollars by way of advancement to his daughter, Mrs. Hofler, and requested to be given some writing which would evidence that fact, and make his daughter chargeable therewith in the distribution of his estate; that for such purpose the instrument in suit was executed and delivered, through mutual mistake of the parties as to the legal effect of the language, when the real intent of both parties was to execute an instrument which would operate as a receipt or acknowledgment of such advancement. After this transaction, and before the transfer of the note, Bottcher and his wife separated, and Mrs. Hofler espoused the cause of her mother in the quarrel. After disposing of the note, Bottcher went to Germany, where he still remained at the date of the trial, and was not examined as a witness. It is unnecessary for us to review the testimony in detail. Several witnesses testified that Bottcher voluntarily offered to advance the money to his daughter, explaining that he had made a similar advancement to another daughter, and wished. to treat all his children alike, and then said, in substance, to the defendant: "You give me a writing to show after I am gone that you received this amount." That this was the origin of the note, and that such note was given with the mutual understanding and belief that it would operate as a simple receipt or proof of the advancement, are shown without controversy; and the only question left to be considered is whether, upon such state of facts, the defendants were entitled to & reformation of the writing. In Stafford v. Fetters, 55 Iowa, 484, 8 N. W. 322, this court held that one who had indorsed a promissory note in words which rendered him liable to the indorsee might have the same so reformed as to relieve him from such liability, upon proof that such was the intention of the parties, and there had been a mutual mistake as to the legal effect of the writing. We there said: "If the writing fails to present their agreement, the contract it expresses 105 is not the contract of the parties, and the true contract remains unexecuted. In such a case equity will reform the writing, causing it to express the intention of the parties. This relief will be granted without regard to the cause of the failure of the instrument to express the true contract, whether it be from fraud, mistake in the use of the language employed, or any other |