A mortgagee, unpaid vendor or other person having a limited interest in property may effect insurance either (1) on his own interest merely, or (2) on his own interest as well as the interests of all other persons in the property. For instance, a mortgagee may effect insurance either (1) on his interest as mortgagee, or (2) on the property as a whole, including the equity of redemption. In order that the insurance effected by a mortgagee should cover the property as a whole (a) the mortgagee must have intended to insure the interest of the mortgagor as well as his own, and (b) the policy must not by its terms be limited to the mortgagee's interest in the property. Prima facie the insurance is intended to cover the property as a whole, but the amount of the premium may make it clear that the risk is more limited. If only the mortgagee's interest is insured, the mortgagee is entitled to receive only the amount to which he is damnified, whereas if the property as a whole is insured, he is entitled to receive the whole amount of the damage to the property to the extent of the insurance, holding the surplus over and above his own loss for the mortgagor (k).

If a mortgagee insures the mortgaged property out of his own funds without having any right under the mortgage deed or otherwise to recover the premium from the mortgagor, the insurance is for the benefit of the mortgagee alone, and in the event of loss he is entitled to receive the amount of the policy without giving credit therefor upon the mortgage (l), that is, he may hold the money as security for payment of the mortgage debt (m).

(k) Keefer v. Phoenix Insurance Co., 1901, 31 Can. S. C.R. 144, at pp. 148, 149, quoting from Castellain v. Preston, 1883, 11 Q.B.D. 380, at p. 398, and Insurance Co. v. Updegraff, 1853, 21 Penn. 513, at p. 520.

(l) Russell v. Robertson, 1859, 1 U.C. Chy. Ch. 72; Dobson v. Land, 1850, 8 Hare 216; King v. State Mutual Fire Insurance Co., 1851, 61 Mass. 1.

A contract of fire insurance, like a contract of marine insurance, is a contract of indemnity, and of indemnity only, and the assured, in case of a loss against which the policy has been made is entitled to be fully indemnified but is never entitled to be more than fully indemnified. One of the doctrines adopted in favour of the insurer in order to prevent the assured from recovering more than a full indemnity is the doctrine of subrogation. If an unpaid vendor or a mortgagee insures his interest in property and upon a loss occurring receives the mortgage money, and if he afterwards re oeives the- purchase price or the mortgage money, as the case may be, without deduction on account of the insurance, he is liable to the insurer for an amount equal to the insurance money received by him, because he is not entitled to be more than fully indemnified (n).

So, if a mortgagee, after the occurrence of damage insured against, is paid by the mortgagor, the mortgagee is not entitled to recover from the insurer upon a policy covering his interest only, because he has not been damnified. If, on the other hand, the mortgagee obtains payment of the whole amount of the mortgage debt from the insurer, the insurer is entitled to be subrogated to the rights of the mortgagee and is entitled to a transfer of the mortgagee's securities (o). There can, however, be no right of subrogation unless the mortgagee's claim is wholly satisfied (p).

(m) See also Sec. 376, infra.

(n) Castellain v. Preston, 1883, 11 Q.B.D. 380, especially at pp. 386 ff.

(o) Castellain v. Preston, 1883, 11 Q.B.D. 380; Smith v. Columbia Insurance Co., 1851, 17 Penn. 253; King v. State Mutual Fire Insurance Co., 1851, 61 Mass. 1.

(p) National Fire Insurance Co. v. McLaren, 1886, 12 O.R. 682.

The case of two persons effecting, in different insurance companies, insurance of the same property in different rights has been stated thus (q):

"Where different persons insure the same property in respect of different rights they may be divided into two classes. It may be that the interest of the two between them makes up the whole property, as in the case of a tenant for life and remainderman. Then if each insures, although they may use words apparently insuring the whole property, yet they would recover from their respective insurance companies the value of their own interests, and of course those values added together would make up the value of the whole property. Therefore it would not be a case either of subrogation or contribution, because the loss would be divided between the two companies in proportion to the interests which the respective persons assured had in the property. But then there may be cases where, although two different persons insured in respect of different rights, each of them can recover the whole, as in the case of a mortgagor and mortgagee. But wherever that is the case it will necessarily follow that one of these two has a remedy over against the other, because the same property cannot in value belong at the same time to two different persons. Each of them may have an interest which entitles him to insure for the full value, because in certain events, for instance, if the other person became insolvent, it may be he would lose the full value of the property, and therefore would have in law an insurable interest; but yet it must be that if each recover the full value of the property from their respective offices with whom they insure, one office must have a remedy against the other. I think wherever that is the case the company which has insured the person who has the remedy over succeeds to his right of remedy over, and then it is a case of subrogation."