Certain Underwriters at Lloyd's, London v. Kirkland

Summary

The Supreme Court of Alabama considered the priority of mortgage interests after an insurer paid a first mortgagee under a standard mortgage clause and received an assignment of part of that mortgage interest. The court held that the Kirklands' assigned interest in the remaining portion of the first mortgage retained priority over the insurer's assigned interest, but that the insurer's assigned first-mortgage interest retained priority over the Kirklands' second mortgage. The judgment was affirmed in part, reversed in part, and rendered in favor of the insurer on the second-mortgage issue.

Holdings

1. The Kirklands' interest in the first mortgage had priority over Underwriters' assigned interest because the insurance policy expressly preserved Vision Bank's right to recover the full amount of its claim, and the Kirklands acquired Vision Bank's retained interest by assignment.
2. Underwriters' interest in the first mortgage retained priority over the Kirklands' interest in the second mortgage.

Questions Presented

1. Whether the Kirklands' interest in the first mortgage, acquired by assignment from Vision Bank, had priority over Underwriters' interest in the same first mortgage, also acquired by assignment from Vision Bank.
2. Whether the Kirklands' interest in the second mortgage had priority over Underwriters' assigned interest in the first mortgage under the insurance policy's nonimpairment clause.

Disposition

reversed