CREDITOR I\ DEBTOR'S PROPERTY   713 (b) A JUDGMENT CREDITOR.

GREVEJIEY ER v. SOUTHERN MUT. FIRE INS. CO.
Supreme Court of Pennsylvania, 1S69. 62 Pa. 340, 1 Am. Rep. 420.

THOMPSO\, C. J. Four years after the plaintiff had effected an insurance on the property covered by the policy of the defendant on which the suit was brought, he sold and conveyed it to a third party, one Donahoe, and having received a portion of the purchase-money, took a judgment for the balance. Some months after this property was destroyed by fire. Not having assigned the policy to the purchaser, he now claims to recover on it in satisfaction of his judgment, on the ground that to that extent he has an interest in the property sold and conveyed.

That there is material difference, especially in the law of insurance, between a mortgage and judgment is beyond question. The able argument of the counsel for the defendant in error, and the authorities cited by them, very clearly show this. In Britton's Appeal. 9 Wright, 172, Strong. J., said: "They (mortgages) are in form defeasible sales, and in substance, grants of specific security, or interest in land for the purpose of security. Ejectment may be maintained by a mortgagee, or he may hold possession on the footing of ownership and with all its incidents."

That a mortgagee has an insurable interest on property is so well understood, that it would be a waste of time to cite authorities to prove it. Hence it is a very common thing to strengthen the security by insurance of the property for the benefit of the mortgagee. That its purpose is ordinarily a security, does not destroy the legality of the insurance. The interest in the property pledged or mortgaged is co-extensive with the security it is to satisfy. Being a specific lien, no other property is answerable. It is

prior to that of the trustee in bankruptcy? That he would have priority, see Far-well v. Johnson (1923) 121 Misc. 556, 201 N. Y. S. 327. In this ease both the debtor and the creditor were named as payees of the policy. The debtor's share was paid to the trustee in bankruptcy, but the creditor's share was paid to him.

It would seem that if a policy taken out by a debtor is made payable to the creditor "as his interest may appear" the creditor could recover only to the extent of the debt, the residue, if any, going to the debtor but if the policy is payable to the creditor unqualifiedly, he may recover the full amount due on the policy. The excess over the debt, however, would he held in trust for the debtor. The net result in either case would be to first pay the creditor his claim, with the excess if any going to the debtor. For a further discussion of the various de-vices of a debtor for protecting his unsecured creditor, see E. W. Patterson's able article, Unsecured Creditors' Insurance (1931) 31 Colum. L. Rev. 212.

Is it socially desirable to protect one unsecured creditor over another? Prof. Patterson, op. cit. p. 234, supra says: "It is arguable * * * that to encourage the use of devices by which one creditor may gain a better protection than others is contrary to the policy of the law, as well as inconsistent with the practice of cooperation between creditors in dealing with insolvencies."

For a consideration of the problems involved in insurance covering credit trans-action losses, see Hanna, John, Credit Insurance (1931) 79 U. of Pa. L. Rev. 521.